Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 669

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 5
Chunk 669
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 31, 2027 (Note 10).
The line of credit is secured by accounts receivable, inventory and fixed assets. 

We
do not believe our existing cash and cash equivalents along with borrowing capacity from our current lender will be sufficient to
meet our anticipated cash needs over the next 12 months. The Company has incurred losses and anticipates that existing cash and
available credit may not be sufficient to meet its operating and debt service needs for the next 12 months. As of March 31, 2025,
the Company is not in compliance with its Credit Agreement covenants and is operating under a forbearance agreement. These
conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management is actively pursuing
options to improve liquidity, including negotiating waivers or amendments to existing debt covenants  (Note 16), reducing discretionary
spending, and evaluating potential capital raises. While these plans are intended to mitigate the risk, there can be no assurance
that they will be successful in eliminating the substantial doubt.

3.
Summary of Significant Accounting Policies

Basis
of Presentation

The
accompanying consolidated financial statements of the Company are prepared on the accrual basis of accounting in accordance with accounting
principles generally accepted in the United States of America (GAAP). On this basis, revenue and the related assets are recognized when
services are performed and products are sold, and expenses and related liabilities are recorded when the obligation is incurred.

    F-6

ZRCN
Inc.

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEARS ENDED MARCH 31, 2025 AND 2024

During
the preparation of the Company’s consolidated financial statements for the year ended March 31, 2025, the Company’s management
identified immaterial error related to previously issued consolidated financial statements in the prior year.

    a.
    Management
    determined that the Shareholder distribution for approximately $0.7 million should have been reported in the year ended March 31,
    2024 financial statements. The Company previously reported the Shareholder distribution in the first quarter of the 2025 fiscal year.

In
accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering
the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated
the correction and has determined that the related