Company: ZRCN
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006748
Chunk: 3

Company: ZRCN Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Item 8
Chunk 3
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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).

    9

ZRCN
Inc.

CONDENSED
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE NINE MONTHS ENDED DECEMBER 31, 2024 AND 2023

Non-controlling
Interests

The
Company follows ASC 810, which governs the accounting for and reporting of non-controlling interests (“NCIs”) in partially
owned consolidated entities and the loss of control of those entities. Non-controlling