Company: ZDAN
Filing Date: 2025-01-10
Form Type: DRS/A
Source: 0001683168-25-000168
Chunk: 295

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-01-10
Form: DRS/A
Chunk 295
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 technical support service and upgrade service are recognized
over the contract period as these services are provided over the contract period and the performance obligation are satisfied over the
contract period. Revenue derived from PCS service, technical support service and upgrade service are not material.

| F-14 |

Software Term License

The Company derives its software term license
revenue by authorizing software license and providing related technical support services within the contract period. For customer contracts
that contain license and technical support services that are not considered distinct, both the license and technical support services
are determined to be a single performance obligation and the revenue is recognized over time based upon the Company's efforts to satisfy
the performance obligation.

Standalone Selling Price Estimate

The company allocated the contract price to both
the software products and the service elements. The Company do not sell its installation service, post-contract consulting and training
service, technical support service and upgrade service separately from its software license contract, so the price is not readily available.
However, there are independent 3rd party engineers who provide similar services in the open market and the service prices are readily
available in the market. The company applies adjusted market assessment approach to estimate the standalone selling price for each service.
The price for software product is the total selling price deducted by the allocated amount to installation service, post-contract consulting
and training service, technical support service and software upgrade service. There is no variable consideration for the contract price.
Revenue derived from PCS service, technical support service and upgrade service are not material.

Principal and Agent Considerations

GAAP requires us to evaluate, using a control model, whether the Company
itself promises to provide services to the customers (as a principal) or to arrange for services to be provided by another party (as an
agent). The company controls the software and the service before it transfers to the customer. The company is a principal as it is primarily
responsible for fulfilling the promise to provide the specified software and services. Based on the Company’s evaluation using a
control model, the Company determined that in all of its major business activities, it serves as a principal rather than an agent within
their revenue arrangements.

Contract costs

Contract costs include contract acquisition costs
and contract fulfillment costs which are all recorded within prepayments, deposits, and other assets in the consolidated balance sheets.

Contract acquisition costs consist of incremental
costs incurred by the Company to originate contracts with customers. Contract acquisition costs, which generally include costs that are
only incurred as a result of obtaining a contract