Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 147

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 1
Chunk 147
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.1 million, a bank overdraft of $0.4 million
offset by repayment of debt assumed as part of the Harmony merger of $0.3 million and repayments of notes payable of $0.3 million.

Liquidity,
Capital Resources and Sources of Financing 

As
of March 31, 2025, the Company had a cash balance of $1.4 million and working capital of $3.5 million. Working capital as of March
31, 2024 was $13.4 million. This decrease of $9.9 million was driven primarily by an increase cash of $0.9 million, a decrease in
accounts payable and accrued expenses of $1.7 million, and a decrease in the current portion of notes payable of $75,000 offset by a
reclass of the $8.4 million line of credit to current liabilities from non-current liabilities, a decrease in accounts receivables
of $2.5 million, a decrease in inventory of $1.6 million, and a decrease in prepaids of $0.1 million. To date the Company has been
financed primarily through retained earnings, loans and credit lines 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, 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.

On
May 31, 2024, the Company entered into a Revolving Credit Agreement (the “Credit Agreement”) with FGI Worldwide LLC, as Agent
for the lender (“FGI”). The Credit Agreement provides for a $15 million senior secured revolving credit facility (the “Credit
Facility”) available to be used by the Company, Zircon and its