ZRCN Inc. (ZRCN) faces loan default after EBITDA covenant breach

Rhea-AI Filing Summary

ZRCN Inc. reported that it received a formal notice of default from its lender under its revolving credit agreement after failing to meet a required minimum consolidated EBITDA covenant set in a prior forbearance agreement. This default allows the lender, FGI Worldwide LLC, to use remedies under the credit documents, including accelerating all outstanding principal and interest and potentially foreclosing on the company’s assets and personal property interests, subject to applicable law.

As of the notice date, the lender has not accelerated the debt, imposed default interest, foreclosed on collateral, or exercised other remedies, but retains the right to do so. ZRCN is in discussions with the lender to address the specified defaults, while cautioning there is no assurance any new arrangements will be reached.

Positive

• None.

Negative

• ZRCN Inc. has received a notice of default under its revolving credit agreement due to failing a minimum consolidated EBITDA covenant, exposing it to potential acceleration of all amounts owed and foreclosure on its assets.

Insights

Credit risk and restructuring analyst

ZRCN’s EBITDA covenant breach has triggered a loan default that gives its lender powerful remedies, increasing financial and operational risk.

ZRCN Inc. discloses an event of default under its revolving credit agreement after failing to satisfy a minimum consolidated EBITDA covenant established in a prior forbearance agreement. This shifts the loan from a normal status into default, which typically tightens liquidity and can constrain day-to-day operations if not resolved.

The lender, FGI Worldwide LLC, now has contractual rights to accelerate all unpaid principal and interest and to foreclose on collateral and security interests, as allowed by law. While the lender has not yet accelerated, charged default interest, or foreclosed, the filing makes clear there is no assurance it will refrain from exercising these rights, underscoring elevated uncertainty around the company’s capital structure.

The company states it is working with the lender to address the specified defaults, but explicitly notes there is no assurance any arrangement will materialize. Future company disclosures about any amendment, waiver, additional forbearance, or enforcement actions will be important for understanding how this default affects ZRCN’s leverage, access to credit, and ability to operate under its existing capital structure.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (date of earliest event reported): September 17, 2025

ZRCN Inc.

(Exact name of Registrant as specified in its charter)

Delaware		000-56380		83-2756695
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

1580 Dell Avenue, Campbell, CA 95008

(Address of principal executive offices and zip code)

(408) 963-4550

Registrant’s telephone number, including area code:

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered under Section 12(b) of the Exchange Act: None

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, par value $0.0001 per share

(Title of class)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.04 Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement

As previously announced, on July 15, 2025, ZRCN, Inc. (the “Company”), and its wholly owned subsidiary, Zircon Corporation (“Zircon”), and its affiliates, Zircon de Mexico, S.A. de C.V. and Zircon Corporation Ltd. (collectively the “Affiliates”), entered into a forbearance agreement and first amendment to Credit Agreement (the “Forbearance Agreement”) with FGI Worldwide LLC, as Agent for the lender (“Lender”) amending, modifying and other wise affecting that certain Revolving Credit Agreement, dated May 31, 2024 (the “Credit Agreement”). The Forbearance Agreement, among other things, required the Company to maintain certain minimum consolidated EBITDA through the Forbearance Period (the “EBITDA Covenant”).

On September 17, 2025, the Company and its Affiliates received a Notice of Default under the Credit Agreement (the “Notice”) as a result of its failure to satisfy the EBITDA Covenant (the “Specified Defaults”).

The Notice constitutes a notice of default under Section 10.5 of 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 has no assurance that the Lender will not seek to enforce its rights in the future. The Company is currently continuing to work with the Lender to address the Specified Defaults, however, there can be no assurance that any arrangements will ever materialize between the parties.

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

Item 9.01 Financial Statements and Exhibits.

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ZRCN Inc.
Date: September 25, 2025	By:	/s/ Jeff Parsons
		Jeff Parsons
		Chief Financial Officer

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FAQ

What did ZRCN Inc. disclose in this 8-K filing?

ZRCN Inc. disclosed that it and its affiliates received a notice of default under their revolving credit agreement after failing to meet a minimum consolidated EBITDA covenant set in a prior forbearance agreement.

Why is ZRCN Inc. in default under its credit agreement?

The default arose because ZRCN Inc. did not satisfy the minimum consolidated EBITDA requirement, known as the EBITDA Covenant, that was imposed during a forbearance period under an amended credit agreement.

What actions can ZRCN Inc.’s lender take following the default?

Under the credit agreement, the lender may accelerate the due date of all unpaid principal and accrued interest and, in accordance with applicable law, foreclose on the company’s assets and security interests and exercise other contractual remedies.

Has the lender already accelerated ZRCN Inc.’s debt or foreclosed on assets?

As of the disclosure, the lender has not accelerated or demanded payment, has not imposed default interest, has not foreclosed on any lien or security interest, and has not exercised other remedies, although it reserves the right to do so.

Is ZRCN Inc. working to resolve the credit agreement default?

Yes. ZRCN Inc. states that it is continuing to work with the lender to address the specified defaults but cautions that there can be no assurance any new arrangements will be reached.

What prior agreements are related to ZRCN Inc.’s current default?

The default relates to a Revolving Credit Agreement dated May 31, 2024, as amended by a Forbearance Agreement and first amendment to the credit agreement entered into on July 15, 2025.