Company: STAK
Filing Date: 2025-02-26
Form Type: 424B4
Source: 0001493152-25-008310
Chunk: 78

Company: STAK Inc.
Filing Date: 2025-02-26
Form: 424B4
Chunk 78
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, useful lives and impairment of long-lived assets, accounting for deferred
income taxes and valuation allowance for deferred tax assets, inventories write-downs. Changes in facts and circumstances may result
in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated
financial statements.

We believe the following critical
accounting policies involve a higher degree of judgment and complexity than our other accounting policies. Therefore, these are the policies
we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations.

Accounts receivable, net

Accounts receivable, net are
stated at the original amount less an allowance for credit losses.

Accounts receivable, net are
recognized in the period when we have provided services to our customers and when our right to consideration is unconditional. On July
1, 2023, we adopted ASU 2016-13, “Financial Instruments — Credit Losses (Accounting Standards Codification (“ASC”
Topic 326): Measurement on Credit Losses on Financial Instruments”, including certain subsequent amendments, transitional guidance
and other interpretive guidance within ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, ASU 2020-02 and ASU 2020-03 (collectively,
including ASU 2016-13, “ASC 326”). ASC 326 introduces an approach based on expected losses to estimate the allowance for
credit losses, which replaces the previous incurred loss impairment model.

We evaluate our accounts receivable
for expected credit losses on a regular basis. We maintain an estimated allowance for credit losses to reduce our accounts receivable
to the amount that we believe will be collected. Our estimation of allowance for credit losses considers factors such as historical credit
loss experience, age of receivable balances, current market conditions, reasonable and supportable forecasts of future economic conditions,
as well as an assessment of receivables due from specific identifiable counterparties to determine whether these receivables are considered
at risk or uncollectible. We adjust the allowance percentage periodically when there are significant differences between estimated bad
debts and actual bad debts. If there is strong evidence indicating that the accounts receivable are likely to be unrecoverable, we also
make specific allowance in the period in which a loss is determined to be probable. Accounts receivable balances are written off after
all collection efforts have been exhausted.

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