Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 701

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 5
Chunk 701
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through the quarter ended September 30, 2023. The Agreement also entitles the Executive to participate in employee benefit plans of the
Company consistent with the benefit plan requirements for all employees. The Executive is also entitled to prompt reimbursement by the
Company for all reasonable ordinary and necessary travel, entertainment and other expenses incurred by the Executive during the employment
period. The Agreement has been extended through March 31, 2027.

15.
Related Party Transactions

Zircon
is a member of a controlled group of companies and has revenue and cost-sharing activities with other members of the controlled group.
Results of operations and financial condition may not represent amounts that would have been reported if Zircon operated as an unaffiliated
entity.

Zircon
has an exclusive manufacturing and technical assistance agreement with Zircon de Mexico S.A. de C.V. (the “Contractor”),
an entity which is owned by certain shareholders of Zircon. Under the terms of the agreement, Zircon provides materials, technical assistance,
and expertise to the Contractor, and the Contractor assembles certain of Zircon’s products.

In
September 2017, an affiliated company, Zircon Corporation Limited, was established in the United Kingdom to facilitate the sale of Zircon’s
products to European customers and operations began during the year ended March 31, 2019. The ownership structure of the affiliate is
similar to the ownership of the premerger ownership of Zircon.

The
Company leases from the Stauss Family Administrative Trust a 14,000 square foot facility owned by the Trust.

    F-25

ZRCN
                                            Inc.

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEARS ENDED MARCH 31, 2025 AND 2024

The
Company has notes payable to the Stauss Family Administrative Trust to repay loans made to the Company. As of March 31, 2025, principal
balance of $0.7 million is due and payable in December 2027. Interest accrued at 5.5% per annum is paid quarterly and included in accrued
expenses. The note is subordinated to the line of credit note payable to the bank and no payment is to be made on the note without prior
approval from the Company’s lender. For the years ended March 31, 2025 and 2024, the interest expense on notes payable to the Stauss
Family Administrative Trust totaled less than $0.1 million, respectively.

16.