Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 703

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 5
Chunk 703
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 Inc.

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEARS ENDED MARCH 31, 2025 AND 2024

The
tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities are as follows:

 Schedule
of Deferred Tax Assets and Liabilities 

    As of March 31, 2025  
    As of March 31, 2024 
  
    (In thousands) 

    Deferred tax assets: 

    Accrued vacation 
    $89  
    $105 
  
    Inventory reserve 
     288  
     122 
  
    Capitalized research and development 
     787  
     558 
  
    Interest expense limitation 
     148  
     — 
  
    Lease liability 
     160  
     215 
  
    Net operating loss carryforward 
     104  
     — 
  
    Research and development tax credit 
     38  
     — 
  
    Other 
     21  
     15 
  
    Total gross deferred tax assets 
     1,635  
     1,015 
  
    Less: Valuation allowance 
     (1,345) 
     — 
  
    Total deferred tax assets 
     290  
     1,015 

    Deferred tax liabilities 

    ROU 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