Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 547

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 2
Chunk 547
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 due to reduced revenues
and duties incurred on products imported from China. The Company continues to be able to borrow and receive advances under the Credit
Agreement.

    F-28

ZRCN
                                            Inc.

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE YEARS ENDED MARCH 31, 2025 AND 2024

On
July 15, 2025, the Company entered into a forbearance agreement and first amendment to Credit Agreement (the “Forbearance Agreement”)
with FGI Worldwide LLC, as Agent for the lender (“FGI”) amending, modifying and other wise affecting that certain Revolving
Credit Agreement, dated May 31, 2024.

Pursuant
to the Forbearance Agreement, the Agent has agreed to forbear from exercising any of its rights and remedies arising under the Credit
Agreement and applicable law as a result of the occurrence and continuance of certain specified existing events of default until the
earlier of (a) February 28, 2026 and (b) the date on which any Termination Event (as defined in the Forbearance Agreement) occurs (the
“Forbearance Period”). The Forbearance Agreement, among other things: (i) permits the Company to not comply with its Fixed
Cost Coverage Ratio covenant until the end of the Forbearance Period, (ii) increases the Revolving Interest Rate (as defined in the Credit
Agreement) from 3.0% to 3.3%, (iii) increases the Management Fee (as defined in the Credit Agreement) from 0.2% to 0.3%, (iv) requires
the Company to prepare and deliver to Agent a budget on a weekly basis, (v) requires the Company to enter into a payment plan with its
Key Supplier (as defined in the Forbearance Agreement), (vi) requires the Company to maintain certain minimum consolidated EBITDA through
the Forbearance Period, (vii) requires the Company to use commercially reasonable efforts to contribute $2,000,000 to the capital of
Zircon on or prior to February 28, 2026, which amounts shall be held in a Blocked Account (as defined in the Credit Agreement), and (viii)
requires Zircon to engage the services of a third party consultant to advise on all aspects of the business, operations and properties
of the Company and Zircon within 21 days of the