Company: ZDAN
Filing Date: 2025-01-10
Form Type: DRS/A
Source: 0001683168-25-000168
Chunk: 156

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-01-10
Form: DRS/A
Chunk 156
---
 property, plant and equipment, intangible assets,
and income taxes related to realization of deferred tax assets and uncertain tax position. Actual results could differ from those estimates.

| 90 |

Revenue Recognition

The Company adopted ASC
Topic 606, Revenue from Contracts with Customers, effective as of January 1, 2019. Accordingly, the consolidated financial statements
for the years ended September 30, 2024 and 2023 are presented under ASC 606. The core principle of the guidance is that an entity
should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services. Revenue is the transaction price the Company expects
to be entitled to in exchange for the promised services in a contract in the ordinary course of the Company’s activities and is
recorded net of value-added tax (“VAT”). To achieve that core principle, the Company applies the following steps:

Step 1: Identify the contract (s) with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance
obligations in the contract

Step 5: Recognize revenue when (or as)
the entity satisfies a performance obligation

The Company generates revenues
from software licensing and providing related services through its distribution network. The distributors are considered as customers.

The Company typically enter
into purchase agreements with its distributors, which specify the cooperation scope, payment terms, rights and obligations of both parties,
restrictive covenants, delivery terms, refunds or replacements, breach and termination, and dispute resolutions. The distributors make
payment to the Company in accordance with the agreed-upon terms. After the payment has been received from the distributors, software
products are delivered in accordance with the contractual obligations in the purchase agreements to the distributors through an activation
code. After delivery of the software product, the Company works together with distributors to provide after-sales support and maintenance
services. Revenue recognition policies for each type of revenue stream are as follow:

Software Perpetual License

The Company derives its
software perpetual license revenue by selling software perpetual license and providing related services based on customers’ order.
There are two performance obligations. Software license and related pre-installation debugging service is considered one performance
obligation. Usually the physical possession of the software is transferred to the Customers immediately upon the delivery of software
and the activation code