Acceleration/Increase of Financial Obligation (Form 8-K)

Item 2.04 Triggering event and Notice of Default from Lender

On April 30, 2025, ZRCN Inc. (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 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.

The Notice constitutes a notice of default under Section 10.5 of the Credit Agreement. The Lender requested that the Company cure each of the Existing Defaults which have occurred pursuant to the Credit Agreement. The Notice advises, and the Credit Agreement provides, that upon the occurrence of an event of default, the Lender may exercise a variety of remedies afforded to the Lender under the Credit Agreement or by applicable law or equity, including without limitation, acceleration of the due date of the unpaid principal balance of the Credit Agreement and all accrued but unpaid interest thereon. Further, according to the Credit Agreement, the Lender may, during an event of default and in accordance with applicable law, foreclose on the Company's assets and its security interest in the Company's personal property and exercise any other remedies provided therein. At this time, the Lender has not: (i) accelerated or demanded any payment; (ii) applied interest under the Credit Agreement at the default rate; (iii) foreclosed on all or any part of any lien or security interest created by any of the loan documents; and (iv) exercised any other right or remedy that may be available to it. The Company and the Lender have engaged in discussions since receipt of the Notice and have reached an agreement in principle which would amend the terms of the Credit Agreement and have agreed to a forbearance on the Existing Defaults; however, such amendment and forbearance is subject to the review and approval of appropriate documentation. There are no assurances that the Company and Lender will reach a final agreement or enter into any forbearance for the Existing Defaults.

A description of the Credit Agreement and related agreements is contained in the Company's reports filed with the Securities and Exchange Commission, which are incorporated herein by reference.