Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 278

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 1A
Chunk 278
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 rent escalation clauses. The Company is typically required to make fixed minimum rent payments relating to
its right to use an underlying leased asset.

The
Company determines if an arrangement is a lease at inception and classifies its leases at commencement. Operating leases are presented
as right-of-use (“ROU”) assets and the corresponding lease liabilities are included in operating lease liabilities, current
and operating lease liabilities on the Company’s consolidated balance sheets. ROU assets represent the Company’s right to
use an underlying asset, and lease liabilities represent the Company’s obligation for lease payments in exchange for the ability
to use the asset for the duration of the lease term. The Company does not recognize short term leases that have a term of twelve months
or less as ROU assets or lease liabilities.

ROU
assets and lease liabilities are recognized at commencement date and determined using the present value of the future minimum lease payments
over the lease term. The Company uses an incremental borrowing rate based on estimated rate of interest for collateralized borrowing
since the Company’s leases do not include an implicit interest rate. The estimated incremental borrowing rate considers market
data, actual lease economic environment, and actual lease term at commencement date. The lease term may include options to extend when
it is reasonably certain that the Company will exercise that option. The Company recognizes lease expense on a straight-line basis over
the lease term.

The
Company has lease agreements which contain both lease and non-lease components, which it has not elected to account for as a single lease
component. As such, minimum lease payments exclude fixed payments for non-lease components within a lease agreement, in addition to excluding
variable lease payments not dependent on an index or rate, such as common area maintenance, operating expenses, utilities, or other costs
that are subject to fluctuation from period to period.

    F-14

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