Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 227

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 1A
Chunk 227
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 also exist in components and so products. Component
defects could make our products unsafe and create a risk of environmental or property damage and personal injury. These risks may increase
as our products are introduced into specialized applications, including healthcare. There can be no assurance that we will be able to
detect and fix all issues and defects in the products we offer. Failure to do so can result in widespread technical and performance issues
affecting our products. In addition, we can be exposed to product liability claims, recalls, product replacements or modifications, write-offs
of inventory, property, plant and equipment, and/or intangible assets, and significant warranty and other expenses, including litigation
costs and regulatory fines. Quality problems can also adversely affect the experience for users of our products, and result in harm to
our reputation, loss of competitive advantage, poor market acceptance, reduced demand for products, delay in new product introductions
and lost sales.

We
are exposed to the risk of write-downs on the value of our inventory and other assets, in addition to purchase commitment cancellation
risk.

We
record write-downs for inventories that have become obsolete or exceed anticipated demand, or for which cost exceeds net realizable value.
We review long-lived assets, including capital assets and consigned inventory held at our suppliers’ facilities, for impairment
whenever events or circumstances indicate the assets may not be recoverable. If we determine that an impairment has occurred, we record
a write-down equal to the amount by which the carrying value of the asset exceeds its fair value. Although we believe our inventory,
capital assets, prepayments and other assets and purchase commitments are currently recoverable, there can be no assurance we will not
incur write-downs, fees, impairments and other charges.

We
are exposed to the risk of maintaining inventory levels that could misalign with sales depending upon changing market conditions.

We
order our products and build inventory in advance of product announcements and shipments. Manufacturing purchase obligations cover our
forecasted component and manufacturing requirements, typically for periods up to 90 days but with some as long as 18 months. Because
the markets are volatile, competitive and subject to technology and price changes, there is a risk we will forecast incorrectly and order
or produce excess or insufficient amounts of products or not fully utilize firm purchase commitments.

10

We
compete globally with companies that are often larger and better capitalized and if we cannot compete effectively, our business may be
negatively affected.

The