Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 577

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 3
Chunk 577
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 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. As of March 31, 2025,
the outstanding balance on the FGI Credit Facility was approximately $8.4 million.

The
Credit Agreement stipulates a base rate measured by the sum of Term SOFR for a period of one 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 a maximum total net leverage of $15.0 million and a minimum fixed charge coverage
ratio of 1.10. As of March 31, 2025, the Company was not in compliance with the fixed charge coverage ratio and is working with the lender
to obtain a waiver and has entered into a forbearance agreement with regard thereto along with additional covenants.

25

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 March 31, 2025 

    Common shares issued and outstanding 
     10,306,426 
  
    Potential issuance of common shares 

    Warrants 
     217,184 
  
    Stock options 
     3,216,500 
  
    Fully diluted shares 
     13,740,110 

In
accordance with a services agreement with Semi-Cap Equity. Partners (“SCE”), an investment bank, dated May 15, 2023 and amended on July 15, 2024, the Company
will issue an additional 49,998 common shares