Company: ZDAN
Filing Date: 2025-07-28
Form Type: F-1/A
Source: 0001683168-25-005450
Chunk: 292

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-07-28
Form: F-1/A
Chunk 292
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 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 agreements, which are applied against trade accounts payable when the materials or services are
received. These advances are interest free, unsecured, short-term in nature and are reviewed periodically to determine whether their
carrying value has become impaired.

The Company reviews a supplier’s credit
history and background information before advancing a payment. If the financial condition of its suppliers were to deteriorate, resulting
in an impairment of their ability to deliver goods or provide services, the Company would recognize expense in the period they are considered
unlikely to be collected.

Deposits and other current assets mainly consist
of security deposits on rental and other miscellaneous receivables from staffs and subsidies receivables from governments.

Property and Equipment, net

Property and equipment are recorded at cost less accumulated depreciation.
Deprec