Company: ZDAN
Filing Date: 2025-01-10
Form Type: DRS/A
Source: 0001683168-25-000168
Chunk: 155

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-01-10
Form: DRS/A
Chunk 155
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 contract dispute with one of its previous suppliers, Shenzhen Youwei Communication Technology Co., Ltd.
(“Youwei”). Zhenglian Shenzhen sued Youwei on March 23, 2023 in connection with a cooperative purchasing
agreement and a relevant supplementary agreement (the “Youwei Purchase Agreements”) between Youwei and Zhenglian
Shenzhen in Shenzhen Qianhai Cooperation Zone People’s Court (“Qianhai Court”). Zhenglian Shenzhen claimed
that Youwei failed to provide Zhenglian Shenzhen with the customized mobile phones that meet the Zhenglian Shenzhen’s
requirements in accordance with the Youwei Purchase Agreements. Zhenglian Shenzhen has claimed total compensation of approximately $1.1
million. In June of 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 accounting principles generally accepted by the 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