Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 225

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 1A
Chunk 225
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 manage future introductions and transitions of products and services.

We
depend on product manufacturing and logistical services provided by outsourcing partners, many of which are located outside of the U.S.

Much
of our manufacturing is performed by outsourcing partners located in China, Malaysia, and Mexico. A significant concentration of this
manufacturing is currently performed by a small number of outsourcing partners, often in proximity to one another. We have also outsourced
much of our transportation and logistics management to our affiliate, Zircon de Mexico. While these arrangements can lower operating
costs, they also reduce our direct control over production. Such diminished control has, from time to time and may in the future, have
an adverse effect on the quality or quantity of products manufactured, or adversely affect our flexibility to respond to changing conditions.
Although we have a robust source inspection process and arrangements with partners contain provisions for product defect expense reimbursement,
we remain responsible to the consumer for warranties in the event of product defects. Because of this we may experience an unanticipated
product defect liability. While we rely on our partners to adhere to our quality standards, deviations may occur from time to time and
could adversely affect our business, reputation, results of operations and financial condition.

9

We
rely on outsourcing suppliers in Mexico and China to manufacture our product. Any failure of these partners to perform can have a negative
impact on our cost or finished goods. In addition, manufacturing and logistics or transit to final destinations can be disrupted for
a variety of reasons, including natural and man-made disasters, information technology system failures, commercial disputes, military
actions, economic, business, labor, environmental, public health or political issues, or international trade disputes.

We
have invested in certain manufacturing equipment, much of which is held by certain of our outsourcing partners. While these arrangements
help ensure the supply of the products, if these outsourcing suppliers experience severe financial problems or other disruptions in their
business, such continued supply can be reduced or terminated, and the recoverability of manufacturing process equipment or prepayments
can be negatively impacted or impossible.

We
have no long-term contracts with the majority of our third-party suppliers that guarantee volume or the continuation of payment terms,
making us vulnerable to supply problems and price fluctuations.

We
have no long-term contracts with the majority of our third-party suppliers that guarantee volume or the continuation of payment terms.
We depend on our suppliers to provide us with materials in a timely manner that meet our quality, quantity and cost requirements. The
forecasts of demand