Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 764

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 7
Chunk 764
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ger with Harmony Energy Technologies Corporation

On
April 14, 2023 (the “Closing Date”), Harmony closed the Merger with Zircon, as a result of which Zircon became a wholly-owned
subsidiary of Harmony. While Harmony was the legal acquirer of Zircon in the Merger, for accounting purposes, the Merger is treated as
a reverse recapitalization, whereby Zircon is deemed to be the accounting acquirer, and the historical financial statements of Zircon
became the historical financial statements of Harmony (renamed ZRCN Inc.) upon the closing of the Merger. Under this method of accounting,
Harmony was treated as the “acquired” company and Zircon is treated as the acquirer for financial reporting purposes.

    F-16

ZRCN
                                            Inc.

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEARS ENDED MARCH 31, 2025 AND 2024

Accordingly,
for accounting purposes, the Merger was treated as the equivalent of Zircon issuing stock for the net assets of Harmony, accompanied
by a recapitalization. The net assets of Harmony were stated at historical cost, with no goodwill or other intangible assets recorded.

As
part of the Merger and reverse recapitalization, the Company assumed certain operating liabilities of Harmony, including certain payables
due to vendors and employees, as well as notes payable to noteholders. In addition, Zircon and Harmony effectuated a share exchange whereby
the shareholders of Zircon exchanged 500,000 common shares representing 100% of the total outstanding shares of Zircon, for 8,865,234
newly issued common shares of Harmony, or approximately 89% of the total outstanding shares of Harmony. Harmony shareholders thus retained
1,057,754 common shares according to the terms of the merger. In connection with the Merger, the Company entered into a warrant exchange
agreement, dated April 14, 2023 (the “Warrant Exchange Agreement”), with certain holders of the Company’s warrants
under which such holders received 25,284 shares of Common Stock in exchange for their warrants, bringing the total shares of the combined
organization owned by Harmony’s pre-Merger shareholders to 1,083,038 shares.

Zircon
agreed to pay the operating liabilities of Harmony, up to and including an aggregate of $0.2 million through December 31, 2022,