Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 706

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 5
Chunk 706
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 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 (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.