Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 119

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 1
Chunk 119
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 transitions of products.

Due
to the competitive nature of the industry in which we compete, we must continue to introduce new product features and innovations and
enhance existing products. We must continue to develop new technologies to stimulate consumer demand for new and upgraded products. We
must successfully manage the transition to these new and upgraded products. The success of new product introductions depends on a number
of factors, including timely and successful development, market acceptance, our ability to manage the risks associated with production
ramp-up issues, the effective management of inventory levels in line with anticipated product demand, the availability of products in
appropriate quantities and at expected costs to meet anticipated demand, and the risk that new products may have quality or other defects
or deficiencies. There can be no assurance we will successfully 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