Company: ZDAN
Filing Date: 2025-02-18
Form Type: DRS/A
Source: 0001683168-25-001085
Chunk: 300

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-02-18
Form: DRS/A
Chunk 300
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 the consolidated balance sheet as a contract asset or a contract liability, depending on the relationship
between the Company’s performance and the customer’s payment. The contract assets consist of accounts receivable and deferred
cost. Accounts receivable represent revenue recognized for the amounts invoiced and/or prior to invoicing when the Company has satisfied
its performance obligation and has unconditional right to the payment. Deferred cost is deferred for the contract preparation and will
be recognized as cost of revenues when goods or services are transferred to customers.

| F-15 |

The contract liabilities consist of advance from
customers, which represent the billings or cash received for services or product sales in advance of revenue recognition and is recognized
as revenue when all of the Company’s revenue recognition criteria are met. For the years ended September 30, 2024 and 2023, the
contract liabilities at the beginning of the reporting period, which amounted to $287,369 and $5,909,534 respectively, have been recognized
as revenue during the years. The Company’s contract liability amounted to $420,756 and $363,433 as of September 30, 2024 and 2023,
respectively. The Company expects to recognize this balance as revenue over the next 12 months.

Government Subsidies

Government subsidies are recognized when received
and all the conditions for their receipt have been met with no restrictions.

Government subsidies as the compensation for
expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related cost
are recognized in profit or loss in the period in which they become receivable.

For the years ended September 30, 2024 and 2023, the Company received government subsidies for value-added tax (“VAT”) credit refund of $450,450 and $534,410 respectively. According to Ministry of Finance and State Administration of Taxation Notice on Value-Added Tax Policy for Software Products (Caishui [2011] No. 100), general VAT taxpayers who sell software products developed and produced by themselves are subject to VAT at the current tax rate. After the VAT is levied, the portion of the VAT actual burden that exceeds 3% is eligible for an immediate refund policy. The Company met the criteria of this VAT credit refund policy and was entitled to apply for tax refund on a monthly basis. The grants were recorded as other income in the consolidated financial statements.

Research and Development Costs

Research and development activities are directed
toward the development of new software as well