Update:

After reading thru the code I figured out where I can intercept the code and modified it to best suits my needs. In case anyone interested.

the file is includes/templates/MY TEMPLATE/sideboxes/tpl_categories.php around line 35

if (zen_get_product_types_to_category($box_categories_array[$i]['path']) == 3 or ($box_categories_array[$i]['top'] != 'true' and SHOW_CATEGORIES_SUBCATEGORIES_ALWAYS != 1)) {
// skip if this is for the document box (==3)
} else {
/////////////////////////////1.1/////////////////////////
if($box_categories_array[$i]['has_sub_cat'] && $new_style == 'category-top' ){

if($ul_close=='NO'){
$content =$content.'</ul></li>';
$ul_close='YES';
}
$ul_close='NO';
if ($box_categories_array[$i]['name'] == '* PROMOTIONS *')
{
$sub = get_latest_child();
$content .= '<li><a class="' . $new_style . '" href="' . zen_href_link(FILENAME_DEFAULT, $box_categories_array[$i]['path']) . '_' . $sub . '">';
}
else
{
$content .= '<li><a class="' . $new_style . '" href="' . zen_href_link(FILENAME_DEFAULT, $box_categories_array[$i]['path']) . '">';
}
$content .= $box_categories_array[$i]['name'];

$content =$content.'</a><ul>';
}


function get_latest_child()
{
global $db;
$sql = 'Select * from zen_categories where parent_id = 5 order by sort_order limit 1';
$result = $db->Execute($sql);
return $result->fields['categories_id'];

}