2. Liquidity and Going Concern

As of September 30, 2025, the Company had $0.04 million in cash and working capital of $1.23 million. To date, ZRCN has been financed primarily through secured loans and a revolving line of credit. The Company has incurred recurring losses and believes that its existing cash resources are not sufficient to meet its anticipated cash needs over the next 12 months. As of September 30, 2025, the Company was not in compliance with certain covenants under its revolving credit facility with FGI Worldwide, LLC (“FGI”) and entered into a series of forbearance agreements with FGI. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management is actively pursuing options to improve liquidity, including negotiating waivers or amendments to existing debt covenants, reducing discretionary spending, and evaluating potential capital raises. While these plans are intended to mitigate the risk, there can be no assurance that they will be successful in eliminating the substantial doubt.

From July 2025 through March 2026, the Company and FGI entered into multiple forbearance agreements and amendments to the Credit Agreement, which temporarily waived existing covenant defaults and imposed additional operational and reporting requirements while the Company pursued strategic and financing alternatives. Management considered the refinancing and repayment of the FGI credit facility subsequent to the balance sheet date as part of its evaluation of the Company’s liquidity and ability to continue as a going concern.

On March 17, 2026, the Company entered into a Loan and Security Agreement with Altriarch Holdings SPV, LLC providing for a $12.5 million senior secured revolving credit facility. Proceeds under the facility were used, in part, to repay and terminate the Company’s prior $15.0 million credit agreement with FGI Worldwide, LLC, with no further obligations remaining.

The facility matures on March 17, 2029 (subject to potential extension) and bears interest at a variable rate based on the secured overnight financing rate (SOFR) plus an applicable margin. The agreement contains customary affirmative and negative covenants, financial covenants (currently waived through August 31, 2026), and events of default. The facility also permits, subject to lender approval, incremental borrowings of up to $5.0 million in the aggregate.

Additional terms of the Credit Facility are described in Note 9, Debt.