Company: ZDAN
Filing Date: 2025-06-30
Form Type: F-1
Source: 0001683168-25-004840
Chunk: 296

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-06-30
Form: F-1
Chunk 296
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 based on historical collection trends, aging of receivables and
other information available. Additionally, the Company evaluates individual customer’s financial condition, credit history, and
the current economic conditions to make specific provision of credit loss when it is considered necessary, based on (i) the Company’s
specific assessment of the collectability of all significant accounts; and (ii) any specific knowledge we have acquired that might indicate
that an account is uncollectible. The facts and circumstances of each account may require the Company to use substantial judgment in
assessing its collectability. The allowance is based on management’s best estimates of specific losses on individual exposures,
as well as a provision on historical trends of collections. Account balances are charged off against the allowance after all means of
collection have been exhausted and the potential for recovery is considered remote. The Company’s management continues to evaluate
the reasonableness of the valuation allowance policy and update it if necessary.

| F-11 |

From January 1, 2023, the Company adopted ASU
2016-13 Financial Instruments — Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments, which replaced
the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”)
methodology. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, including
accounts receivable. After the Company’s assessment of CECL, no material difference was found comparing to the amount recorded
in accordance with the previous method.

Inventories

The nature of the inventories includes raw materials
and finished goods. The finished goods mainly include Smart Metaverse Box.

Inventories are stated at the lower of cost or
net realizable value. The cost of inventories is calculated using the weighted-average method.

The Company periodically assesses the recoverability
of all inventories to determine whether adjustments are required to record inventories at the lower of cost or net realizable value.
Inventories that the Company determines to be obsolete or in excess of forecasted usage are reduced to its estimated realizable value
based on assumptions about future demand and market conditions. If actual demand is lower than the forecasted demand, additional inventory
markdown may be required.

Prepayments, deposits and other current assets

Prepayments, deposits and other current assets
mainly represents advances to suppliers and other receivables.

Advances to suppliers refers to advances for
purchase of materials or other service