Company: ZDAN
Filing Date: 2025-07-28
Form Type: F-1/A
Source: 0001683168-25-005450
Chunk: 155

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-07-28
Form: F-1/A
Chunk 155
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 accordance with the Youwei Purchase Agreements. Zhenglian Shenzhen has
claimed total compensation of approximately $1.1 million. In June 2023, Youwei filed a counterclaim against Zhenglian Shenzhen. As of
September 30, 2024, the case was still pending for the court’s judgement. We do not believe this legal proceeding will have any
material adverse effect on our operation in China. As of September 30, 2024, the Company was not aware of any other litigation or lawsuits
against it.

<div align='center'>Critical Accounting Policies</div>

We prepare our consolidated
financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect our reported
amount of assets, liabilities, revenue, costs and expenses, and any related disclosures. Although there were no material changes made
to the accounting estimates and assumptions in the past two years, we continually evaluate these estimates and assumptions based on the
most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under
the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ
from our expectations as a result of changes in our estimates.

We believe that the following
accounting policies involve a higher degree of judgment and complexity in their application and require us to make significant accounting
estimates. Accordingly, these are the policies we believe are the most critical to understanding and evaluating our consolidated financial
condition and results of operations.

Use of Estimates

The preparation of the consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported
and disclosed in the consolidated financial statements and the accompanying notes. Such estimates include, but are not limited to, the
allowance for credit losses of accounts receivable, inventory valuation, useful lives of 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.

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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