Company: ZDAN
Filing Date: 2025-01-10
Form Type: DRS/A
Source: 0001683168-25-000168
Chunk: 61

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-01-10
Form: DRS/A
Chunk 61
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so that they continue operating within the network, or it could have a material adverse effect on our business, results of operations
or financial condition.

The distributed network may face scalability challenges as it expands to a greater number of users.

Although the VIE has considered
scalability issues for its distributed network and generally the network is scalable and actually increases in efficacy with an increased
number of users, if the VIE has missed or failed to consider certain consequences that may arise as a result of scaling or usage by an
increasing number of users, such failure could lead to a failure in the distributed network or a reduction in the efficacy thereof and
could cause substantial reputational harm to the VIE and could damage relationships with existing users, reduced demand for the VIE’s
products and services, and consequently adversely affect the market price of our Ordinary Shares.

Issues with the VIE’s programming code and damage to nodes could hurt users’ ability to effectively establish and maintain networks resulting in an inability to provide applications on such networks, which could damage the VIE’s reputation and harm our results of operations.

The ability to establish
and maintain networks, as well as the applications that run on such networks depends on the VIE’s programming code. In addition,
although the benefit of a decentralized network is that redundancies and distribution of information is achieved over numerous devices
(nodes), if there is damage to enough of the nodes on a network, e.g. through wars, nuclear holocaust, or other globally destructive
catastrophes, widespread targeted node attacks at numerous locations throughout the globe, floods, fires, power loss, telecommunications
failures or hackers, this could result in network interruptions and consequently interruptions to applications on the network. Issues
with the VIE’s programming code and damage to enough nodes on a network could damage our brand and have a material adverse effect
on our business, results of operations or financial condition.

If the VIE continues to sell hardware products, a significant interruption in the VIE’s suppliers could potentially disrupt the VIE’s operations.

The VIE has limited control
over the operations of their third-party suppliers. Any significant interruption in such suppliers’ operations may have an adverse
impact on the VIE operations. We generally rely on our suppliers for hardware equipment, motherboards, storage devices, computing devices,
and software component materials and other related products to operate our software products. For example, significant interruptions
in the operations of the suppliers’ manufacturing facilities could cause delay or failure of shipment of such hardware equipment,