Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 268

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 1A
Chunk 268
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 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 obligation to absorb losses and receive benefits that potentially
    could be significant to the VIEs;

    c.
    the
    equity at risk of the entities is not sufficient to finance the entities’ activities without additional subordinated financial
    support by the Company (i.e., the entities are thinly capitalized).

    F-8

ZRCN
Inc.

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEARS ENDED MARCH 31, 2025 AND 2024

The
following table summarizes the carrying amount of the assets and liabilities of ZDM included in the Company’s consolidated balance
sheets at March 31