Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 273

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 1A
Chunk 273
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 Company’s revenue is recognized at
a point in time, at shipment.

Provisions
for customer volume rebates, product returns, discounts and allowances are variable consideration and are recorded as a reduction of
revenue in the same period the related sales are recorded. Such provisions are calculated using historical averages adjusted for any
expected changes due to current business conditions. Consideration given to customers for cooperative advertising is recognized as a
reduction of revenue except to the extent that there is a distinct good or service and evidence of the fair value of the advertising,
in which case the expense is classified as marketing and selling expense. Advertising expenses included within marketing and selling
expenses were $0.1 million and $0.1 million for the years ended March 31, 2025 and 2024, respectively. Sales tax for the sale of products
is applied to the invoice and recorded as an accrued liability.

Research
and Development

The
Company incurs research and development costs of products for use in scanning behind opaque surfaces. The Company will continue to invest
in research and development to develop additional components and products of its scanning product offerings and remains committed to
providing its customers and partners with best-in-class scanning products and services. Such research and development costs, software
development costs, and any new product development costs, are expensed as incurred, and include personnel-related costs, depreciation
related to engineering and test equipment, allocated costs of facilities and information technology, outside services and consultant
costs, supplies, software tools and product certification.

    F-11

ZRCN
                                            Inc.

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEARS ENDED MARCH 31, 2025 AND 2024

Share
Based Compensation

The
Company expenses share based compensation to employees and non-employees over the requisite service period based on the estimated grant-date
fair value of the awards. The Company accounts for forfeitures as they occur. Share-based awards with graded-vesting schedules are recognized
on a straight-line basis over the requisite service period for each separately vesting portion of the award. For awards with performance
conditions, compensation cost is recognized over the requisite service period based on the actual or expected achievement of the performance
condition. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions
used in calculating the fair value of share-based awards represent management’s best estimates and involve inherent uncertainties
and the application