Company: ZRCN
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006748
Chunk: 37

Company: ZRCN Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Item 8
Chunk 37
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0.6 million and repayment of
debt assumed as part of the Harmony merger of $75,000.

During
the nine months ended December 31, 2023, net cash provided by financing activities was $1.6 million. This increase was due to net borrowings
under the Company’s line of credit of $2.2 million offset by repayments of debt assumed as part of the Harmony merger of $0.3 million,
and repayment of notes payable of $0.3 million.

29

Liquidity,
Capital Resources and Sources of Financing

As
of December 31, 2024 the Company had a cash balance of $1.9 million and working capital of $13.5 million. Working capital as of March
31, 2024 was $14.1 million. The decrease of $0.6 million was driven primarily by a decrease in accounts receivable of $1.7 million, a
decrease in inventories of 1.2 million, a reclass to short-term of the note payable to the Status Family Trust of $0.7 million offset
by an increase in cash of $1.4 million and a decrease in accounts payable accrued expenses of $1.4 million, a decrease of other notes
payable of $0.1 million, and an increase 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. The Company believes that it has sufficient
liquidity and access to loans and credit lines to fund its operations and working capital requirements for the next 12 months.

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 Affiliates for replacement and discharge of the Company’s
current US Bank loan of $8,750,000 and matures on May 31, 2027. The Company, Zircon and the Affiliates are guarantors of all obligations
under the Credit Agreement and the Company’s four principal shareholders are limited guarantors thereof.

The
Credit Agreement stipulates a base rate measured by the sum of Term SOFR for a period of one