Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 851

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 7A
Chunk 851
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 net
operating loss carryforwards as of March 31, 2025 and March 31, 2024 of approximately $2.3 million and $2.0 million, for which a deferred
tax asset is recorded but was fully reserved and written down to zero as uncertain tax benefits in the period ended March 31, 2024. As
the net operating losses are utilized on federal tax returns, and the statute of limitations lapses on such tax returns, the benefits
of the net operating losses will be recognized in the financial statements as a reduction of tax expense.

The
Company recognized interest and penalties associated with uncertain tax positions of less than $0.1 million in the years ended March
31, 2025 and March 31, 2024, respectively. As of March 31, 2025, the Company has accumulated interest and penalties associated with uncertain
tax positions of less than $0.1 million.

On
July 4, 2025, subsequent to the balance sheet date, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA
makes significant changes to US tax law, including allowing for an immediate deduction for research & development expenses, among
other changes. The financial effects of the OBBBA are still being evaluated and an estimate of the financial impact is not yet practicable
at the time of issuance of these financial statements.

16.
Subsequent Events

On
April 30, 2025, the Company received a Notice of Default (the “Notice”) on its Revolving Credit, Security, and Guaranty Agreement
(the “Credit Agreement”) with FGI Worldwide LLC (the “Lender”) as a result of, among other things, being non-compliant
with its Fixed Cost Coverage Ratio covenant (as defined in the Credit Agreement) and one additional non-financial covenant and failing
to cure the non-compliance (collectively, the “Existing Defaults”). The Existing Defaults are primarily 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 (