Company: ZRCN
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006748
Chunk: 21

Company: ZRCN Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Item 8
Chunk 21
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 of December 31, 2024, the Company was not in compliance with the fixed charge coverage ratio and is working with the
lender to obtain a waiver.

    19

ZRCN
Inc.

CONDENSED
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR
THE NINE MONTHS ENDED DECEMBER 31, 2024 AND 2023

The
Company recognized deferred financing costs of approximately $0.3 million for bank fees which will be amortized over three years and
recorded as interest expense. For the three and nine months ended December 31, 2024, the Company recognized approximately $0.1 million
as interest expense for the amortization of deferred financing costs. For the three and nine months ended December 31, 2023, the Company
recognized $0 as interest expense for the amortization of deferred financing costs. For the three and nine months ended December 31,
2024, interest expense on the line of credit totaled $0.2 million and $0.6 million, respectively. For the three and nine months ended
December 31, 2023, interest expense on the line of credit totaled $0.3 million and $0.6 million, respectively.

The
outstanding balances of the Credit Agreement as of December 31, 2024 and March 31, 2024, respectively were $8.9 million and $8.0 million,
respectively.

Notes
payable to Stauss Family Administrative Trust

The
Company has notes payable to the Stauss Family Administrative Trust to repay loans made to the Company. As of December 31, 2024, the
principal balance of approximately $0.7 million is due and payable in December 2025. Interest accrues at 5.5% per annum, is paid quarterly
and included in accrued expenses. The note is subordinated to the Credit Agreement and no payment is to be made on the note without prior
approval from the bank. In the second quarter of 2023, a portion of the notes payable to Stauss Family Administrative Trust was settled
as a noncash transaction against the note receivable from one stockholder for $0.2 million.

On
March 31, 2024 the Stauss Family Administrative Trust and the Company agreed to extend the maturity date of the Notes Payable to the
trust to December 31, 2025.

For
the three and