Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 228

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 1A
Chunk 228
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Company has several large competitors who have entered the market over the years, notably Stanley, Black and Decker, DeWalt and Ryobi.
They, along with Franklin Sensor, have offered products in the wall scanning market. While our competitors have made inroads in the market,
the Company believes its products outperform the competitors’ products.

Customer
consolidation could have a material adverse effect on our business.

The
emergence of ‘Big Box’ retail home stores in the hardware and tool retail market has forced many small retailers out of business
and reduced the overall number of potential retailers able to purchase our tools. The growth of big box stores has not reduced the number
of potential end user customers. However, the effect has been to consolidate buying power in fewer retailers. While the pace of the consolidation
has slowed, there remains a risk that the top retailers could absorb or acquire the larger regional retailers, further enhancing their
buying power which may put pressure on our prices and profitability.

Demand
for new products below expectations and our ability or inability to develop and introduce new products at favorable economic levels could
adversely impact our financial results and prospects for growth.

Historically,
consumer demand for our products correlates to housing industry trends such as existing home turnover and new home construction. Housing
turnover and new home construction are affected by inflation and interest rates. Both increased inflation and higher interest rates can
impact demand for homes and new home construction. While the inflation rate has recently been decreasing because of US monetary policy,
interest rates remain elevated. There can be no guarantee the fed policies will be successful in mitigating all aspects of inflation
that affect home turnover and purchasing, nor can we predict future interest rates. If inflation were to continue increasing and interest
rates continue to rise, we may not be able to mitigate all adverse impacts on end user demand for our products through traditional methods
such as pricing adjustments or internal cost reductions.

A
significant portion of our revenue is dependent upon a small number of customers, and our two largest customers that collectively accounted
for approximately 61% and 63% of net revenue in fiscal 2025 and fiscal 2024, respectively. The loss of any one of these customers would
negatively impact our revenues and our results of operations.

Sales
to our top five customers accounted for approximately 76% and 78% of our net sales for the years ended March 31, 2025 and 2024,
respectively. Sales to our largest customer accounted for approximately