Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 604

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 3
Chunk 604
---
ZRCN
                                            Inc.

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEARS ENDED MARCH 31, 2025 AND 2024

Warrants

The
Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”)
and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial
instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements
for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether
the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control,
among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the
time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For
issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component
of stockholders’ equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification,
the warrants are required to be liability classified and recorded at their initial fair value on the date of issuance and remeasured
at fair value and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash
gain or loss on the statements of operations. The fair value of the private placement warrants was estimated using a Black Scholes valuation
approach with assumptions relevant on the date of issuance and the fair value of the advisor warrants issued in connection with the Merger
was estimated using the intrinsic value method (see note 13).

Recently
Issued Accounting Pronouncements

As
an emerging growth company, the Company will have the option of adopting new accounting pronouncements on a delayed basis and has opted
to take advantage of this option. As a result, the Company has been adopting new accounting standards based on the timeline for adoption
afforded to privately held companies, unless it chooses to early adopt a new accounting standard.

Accounting
Standards Adopted

In
November 2023, the FASB issued ASU 202