Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 127

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 1
Chunk 127
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 sheet. While we believe that we have the ability to sufficiently
fund our planned operations and capital expenditures for the foreseeable future, various risks to our business could result in circumstances
that would materially affect our liquidity. For example, cash flows from our operations could be affected by changes in consumer spending
habits, macroeconomic conditions, the failure to maintain favorable vendor payment terms or our inability to successfully implement sales
growth initiatives, among other factors. We may be unsuccessful in securing alternative financing when needed on terms that we consider
acceptable.

As
of March 31, 2025, there was $8.4 million outstanding under the Credit Facility. Any significant increase in our leverage could have
the following risks:

our
ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired
in the future;

13

our
failure to comply with the financial and other restrictive covenants governing our debt, which requires us to comply with Fixed Cost
Coverage Ratio (“FCCR”) and limits our ability to incur additional debt and sell assets, could result in an event of default
that, if not cured or waived, could have a material adverse effect on our business, financial condition and results of operations; and

Our
exposure to certain financial market risks, including fluctuations in interest rates associated with bank borrowings could become more
significant.

If
we are unable to remain in compliance with our debt covenants, our lenders may restrict our ability to draw on our Credit Facility, which
could have a negative impact on our operations, ability to pay dividends, and growth potential, including our ability to complete acquisitions.

The
Company’s debt covenants may affect its liquidity or limit its ability to pursue acquisitions, incur debt, make investments, sell
assets or complete other significant transactions.

The
Company’s Credit Facility contains the usual and customary covenants regarding significant transactions, including restrictions
on other indebtedness, liens, investments and acquisitions, merger or consolidation transactions, transactions with affiliates and changes
in or amendments to the organizational documents for the Company and its subsidiaries. Unless waived by the Company’s lender, these
covenants could limit the Company’s ability to pursue opportunities to expand its business operations, respond to changes in business
and economic conditions and obtain additional financing, or otherwise engage in transactions that the Company considers beneficial.

The
Company’s ability to comply with its credit facility is subject to future performance and other factors.

The
Company’s ability to make required payments of principal