Company: ZRCN
Filing Date: 2025-09-10
Form Type: 10-K
Source: 0001641172-25-027037
Chunk: 628

Company: ZRCN Inc.
Filing Date: 2025-09-10
Form: 10-K
Item: Item 3
Chunk 628
---
.

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 date of execution of the Forbearance Agreement. The Company did not meet its EBITDA target for July 2025 but was granted a waiver from the lender on September 5,
2025.

In
accordance with an agreement with S.C.E. Partners (“SCE”) dated May 15, 2023 and amended on July 15, 2024, the Company will
issue an additional 48,998
common shares to SCE for the six months ended September 4,
2025. The agreement with SCE was not renewed and is not terminated.

F-29

ITEM
9A. CONTROLS AND PROCEDURES

Disclosure
Controls and Procedures

We
maintain “disclosure controls and procedures