Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 98

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 13
Chunk 98
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 reduce the payable
balance and to control the timing of the expected cash payments. The outstanding loan balance on December 31, 2022, was at $0.8 million.
The note bears interest at the current Federal funds rate not to exceed 5% and is limited to an increase of no more than 2% annually.
The entire principal balance is due and payable in December 2024 and is subordinated to the line of credit agreement the company has
with the bank. On March 27, 2025 the maturity date for both notes was extended to December 31, 2027.

In
September 2017, an affiliated company, Zircon Corporation Limited, was established in the United Kingdom to facilitate the sale of Zircon’s
products to European customers and operations began during the year ended March 31, 2019. The ownership structure of the affiliate is
similar to the ownership of Zircon. The company pays certain administrative and selling expenses of the affiliate. During the 12-month
periods ended March 31, 2025, and 2024, the company recorded sales to the affiliate of approximately $35,000 and $35,000, respectively.
As of December 31, 2025, and 2024, the company had a receivable from the affiliate of approximately $0.1 million and $0.1 million, respectively.

Notes
Payable

The
Company has notes payable to the Stauss Family Administrative Trust to repay loans made to the Company. As of March 31, 2025, the principal
balance of approximately $0.7 million is due and payable in December 2025. Interest accrues at 5.5% per annum, is paid quarterly and
included in accrued expenses. The note is subordinated to the Credit Agreement and no payment is to be made on the note without prior
approval from the lender.  On March 27, 2025, the Stauss Family Administrative Trust and the Company agreed to extend the maturity
date of the Notes Payable to the trust to December 31, 2027. There was no change to the principal amount or the annual interest rate.
For the years ended March 31, 2025 and 2024 the interest expense on the notes payable to the Stauss Family Administrative Trust was $37,000
and $30,000, respectively.

Director
Independence

Our
board of directors undertook a review of the independence of our directors and