Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 849

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 7A
Chunk 849
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 Asset 
     (153) 
     (206)
  
    Fixed assets 
     (137) 
     (310)
  
    Total deferred tax liabilities 
     (290) 
     (516)

    Net deferred tax asset 
    $—  
    $499 

Management
considers that it is not more likely than not that deferred tax assets will be realizable as of March 31, 2025. Therefore a full valuation
allowance has been established against deferred tax assets. In the tax years ended March 31, 2025 and March 31, 2024, respectively, the
valuation allowance increased by $1.3 million and $0, respectively. As of March 31, 2025 and March 31, 2024, the Company recorded a valuation
allowance of $1.3 million and $0, respectively, against the deferred tax asset balance as realization is uncertain due to a history of
operating losses.

The
Company has federal net operating loss carryforwards as of March 31, 2025 and as of March 31, 2024 of approximately $2.3 million and
$2.0 million, respectively. The net operating loss as of March 31, 2024 was acquired via the acquisition of Harmony Energy Technologies
Corporation and is subject to Section 382 loss limitations. The federal net operating losses were generated in years later than the 2017
tax year and are thus not subject to expiration under the Tax Cuts and Jobs Act. Federal net operating losses may offset up to 80% of
federal taxable income in any tax year, subject to Section 382 loss limitations. The Company is subject to a federal Section 382 annual
limitation of approximately $0.1 million, and net operating losses of approximately $0.1 million and $.1 million are deducted in the
years ended March 31, 2025 and March 31, 2024, respectively. No formal Section 382 study has been completed, and therefore the Company
has determined to reflect these net operating losses as uncertain tax benefits.

The
Company has federal Section 163(j) interest expense carryforwards of $0.7 million and $0 as of March 31, 2025 and March 31, 2024, respectively.
Section 163(j) attributes carry forward indefinitely. The Company has federal Research & Experimentation tax credits of less than
$