Company: ZRCN
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006748
Chunk: 15

Company: ZRCN Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Item 8
Chunk 15
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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 transaction costs and advisory fees allocated to ZRCN equity (refer to Note 13 for further detail regarding these warrants).

The
following table reconciles the elements of the Merger to the unaudited consolidated statements of changes in stockholders’ equity
for the nine months ended December 31, 2023:

Schedule
of Consolidated Statements of Changes in Stockholders Equity 

    (In thousands) 
    Recapitalization 
  
    Cash 
    $— 
  
    Non-cash net working capital assumed from Harmony 
     (579)
  
    Less: cash transaction costs and advisory fees allocated to ZRCN equity 
     (519)
  
    Effect of Merger, net of transaction costs 
    $(1,098)

The
following table details the number of shares of common stock issued immediately following the consummation of the Merger:

Schedule
of Number of Shares of Common Stock 

    Number of Shares 
  
    Common stock of Harmony prior to Merger 
     1,057,754 
  
    Shares issued for Warrant Exchange Agreement 
     25,284 
  
    Common stock owned by Harmony’s pre-Merger shareholders 
     1,083,038 
  
    Common stock issued in exchange for Zircon common stock 
     8,865,234 
  
    Total shares of common stock immediately after Merger 
     9,948,272 

Debt
Settlement Agreement

In
connection with the Merger, the Company entered into debt settlement agreements (the “Debt Settlement Agreements”) with certain
third-party creditors of the Company under which the Company agreed to make certain payments over the 12 months following the Merger
to the