Company: ZDAN
Filing Date: 2025-02-18
Form Type: DRS/A
Source: 0001683168-25-001085
Chunk: 259

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-02-18
Form: DRS/A
Chunk 259
---
 their management decisions, but also because we are entitled to the economic benefits associated
with the VIE for accounting purposes because we have met the conditions under U.S. GAAP to consolidate the VIE, and as a result, we are
treating the VIE as our wholly-owned subsidiary for U.S. federal income tax purposes. If we are not treated as owning the VIE for United
States federal income tax purposes, we would likely be treated as a PFIC. In addition, because the value of our assets for purposes of
the asset test will generally be determined based on the market price of our Ordinary Shares and because cash is generally considered
to be an asset held for the production of passive income, our PFIC status will depend in large part on the market price of our Ordinary
Shares and the amount of cash we raise in this offering. Accordingly, fluctuations in the market price of the Ordinary Shares may cause
us to become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty in several respects and the composition
of our income and assets will be affected by how, and how quickly, we spend the cash we raise in this offering. We are under no obligation
to take steps to reduce the risk of our being classified as a PFIC, and as stated above, the determination of the value of our assets
will depend upon material facts (including the market price of our Ordinary Shares from time to time and the amount of cash we raise
in this offering) that may not be within our control. If we are a PFIC for any year during which you hold Ordinary Shares, we will continue
to be treated as a PFIC for all succeeding years during which you hold Ordinary Shares. If we cease to be a PFIC and you did not
previously make a timely “mark-to-market” election as described below, however, you may avoid some of the adverse effects
of the PFIC regime by making a “purging election” (as described below) with respect to the Ordinary Shares.

If we are a PFIC for your
taxable year(s) during which you hold Ordinary Shares, you will be subject to special tax rules with respect to any “excess
distribution” that you receive and any gain you realize from a sale or other disposition (including a pledge) of the Ordinary Shares,
unless you make a “mark-to-market” election as discussed below. Distributions you receive in a taxable year that are greater
than 125% of the