Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 593

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 3
Chunk 593
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 810”), the Company assesses whether it has an explicit or implicit variable
interest in legal entities in which it has a financial relationship and, if so, whether or not those entities are variable interest entities
(“VIEs”). Variable interests are contractual, ownership, or other pecuniary interests in an entity whose value changes with
changes in the fair value of the entity’s net assets, exclusive of variable interests. Explicit variable interests are those which
directly absorb the variability of a VIE and can include contractual interests such as loans or guarantees as well as equity investments.
An implicit variable interest acts the same as an explicit variable interest except it involves the absorbing of variability indirectly,
such as through related party arrangements or implicit guarantees. The analysis includes consideration of the design of the entity, its
organizational structure, including decision making ability over the activities that most significantly impact the VIE’s economic
performance. For those entities that qualify as VIEs, ASC 810 requires the Company to determine if the Company is the primary beneficiary
of the VIE, and if so, to consolidate the VIE.

If
an entity is determined to be a VIE, the Company evaluates whether the Company is the primary beneficiary. The primary beneficiary analysis
is a qualitative analysis based on power and economics. The Company consolidates a VIE if both power and benefits belong to the Company
- that is, the Company (i) has the power to direct the activities of a VIE that most significantly influence the VIE’s economic
performance (power), and (ii) has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially
be significant to the VIE (benefits). The Company consolidates VIEs whenever it is determined that the Company is the primary beneficiary.

The
Company has determined that ZDM and Zircon UK are variable interest entities with the Company’s wholly owned subsidiary, Zircon,
as the primary beneficiary, and thus the Company, with the ability to exercise control, as determined under the guidance of ASC 810.
In its determination, management considered the following qualitative and quantitative factors:

    a.
    the
    overall purpose and design of the entities, which exist primarily for the benefit of or on behalf of the Company and; 

    b.
    the
    Company’s contractual and common control arrangements with the VIEs, through which it gains both the power to direct the activities
    that most significantly impact their economic performance, and the