Company: ZRCN
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006748
Chunk: 38

Company: ZRCN Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Item 8
Chunk 38
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 month, as published by the CME Group Benchmark
Administration Limited (or any successor administration of Term SOFR) two business days prior to the beginning of the calendar month
and a percentage equal to 0.10% (10 basis points) per annum. If at any time the displayed Term SOFR is less than 0.00%, Term SOFR is
deemed to be 0.00% for the purposes of the credit facility.

The
Credit Agreement bears interest measured by such outstanding amounts on receivable advances and inventory advances that accrue interest
at the greater of 5.25% per annum or 3.00% above the base rate. Interest is charged on the last day of each month on a daily net balance
of funds advanced or otherwise charged to the Company.

The
Credit Agreement requires the Company to comply with maximum total net leverage and minimum fixed charge coverage ratios. As of December
31, 2024 the Company had a liability of approximately $9.0 million outstanding under the Credit Agreement and was compliant with the
maximum total net leverage and but not the fixed charge coverage ratio. The Company is working with the lender to get a waiver regarding
the fixed charge coverage ratio.

Information
on Outstanding Securities

The
following table sets out the number of common shares and warrants outstanding as of the date hereof:

    Information on Outstanding Securities as of December 31, 2024
  
    Common shares issued and outstanding 
     10,075,264 
  
    Potential issuance of common shares 

    Warrants 
     217,184 
  
    Stock options 
     419,000 
  
    Fully diluted shares 
     10,711,448 

As
of February 14, 2025 the Company had 10,075,264 common shares outstanding.

30

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