Company: ZDAN
Filing Date: 2025-02-18
Form Type: DRS/A
Source: 0001683168-25-001085
Chunk: 324

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-02-18
Form: DRS/A
Chunk 324
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IE and the Equity Shareholders are in compliance with
PRC laws and regulations, as applicable, and are legally binding and enforceable. However, uncertainties in the PRC legal system could
limit the Company’s ability to enforce these Contractual Arrangements.

In addition, if the current structure or any
of the Contractual Arrangements were found to be in violation of any existing or future PRC law, the Company may be subject to penalties,
which may include, but not limited to, cancellation or revocation of the Company’s business and operating licenses and being required
to restructure the Company’s operations or terminate the Company’s operating activities. The imposition of any of these or
other penalties may result in a material and adverse effect on the Company’s ability to conduct its operations. In such case, the
Company may not be able to operate or control the VIE, which may result in deconsolidation of the VIE.

21. Commitments and contingencies

From time to time, the Company may become involved
in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties,
and an adverse result in these or other matters may arise from time to time that may harm business. Management is not aware of any such
legal proceedings or claims that could have, individually or in the aggregate, a material adverse effect on the Company’s business,
financial condition, or operating results as of the date hereof.

Zhenglian Shenzhen has a 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 Zhenglian Shenzhen’s requirements in accordance with the Youwei Purchase Agreements. Zhenglian Shenzhen
has claimed total compensation of approximately $1.1 million. Since then Youwei filed a counterclaim against Zhenglian Shenzhen and,
as of September 30, 2024, the case was still pending the Qianhai Court’s judgement. We do not believe this legal proceeding will
have any material adverse effect on our operation in China.

22. Sub