Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 447

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 1C
Chunk 447
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-16

ZRCN
                                            Inc.

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEARS ENDED MARCH 31, 2025 AND 2024

Accordingly,
for accounting purposes, the Merger was treated as the equivalent of Zircon issuing stock for the net assets of Harmony, accompanied
by a recapitalization. The net assets of Harmony were stated at historical cost, with no goodwill or other intangible assets recorded.

As
part of the Merger and reverse recapitalization, the Company assumed certain operating liabilities of Harmony, including certain payables
due to vendors and employees, as well as notes payable to noteholders. In addition, Zircon and Harmony effectuated a share exchange whereby
the shareholders of Zircon exchanged 500,000 common shares representing 100% of the total outstanding shares of Zircon, for 8,865,234
newly issued common shares of Harmony, or approximately 89% of the total outstanding shares of Harmony. Harmony shareholders thus retained
1,057,754 common shares according to the terms of the merger. In connection with the Merger, the Company entered into a warrant exchange
agreement, dated April 14, 2023 (the “Warrant Exchange Agreement”), with certain holders of the Company’s warrants
under which such holders received 25,284 shares of Common Stock in exchange for their warrants, bringing the total shares of the combined
organization owned by Harmony’s pre-Merger shareholders to 1,083,038 shares.

Zircon
agreed to pay the operating liabilities of Harmony, up to and including an aggregate of $0.2 million through December 31, 2022, which
amount included outstanding operating liabilities related to auditing fees, services fees, transfer agent fees, travel reimbursements
and accrued and unpaid salaries as of such date; Harmony loans and notes outstanding totaling $0.6 million were fully settled for $0.4
million, with $0.1 million paid upon closing of the Acquisition and $0.1 million being paid in four subsequent quarterly payments commencing
on the last day of the first full calendar quarter following closing.

Zircon
paid transaction costs of $0.5 million for legal and advisory services and issued warrants to purchase an aggregate 217,184 shares of
common stock to advisors who provided services to effectuate the Merger which had a fair value determined to be $0.3 million and are
included in the