EDGAR 10-K Filing

Company CIK: 915358
Filing Year: 2025
Filename: 915358_10-K_2025_0000915358-25-000018.json

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ITEM 1. BUSINESS
ITEM 1.
BUSINESS

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ITEM 1A. RISK FACTORS
ITEM 1A.
RISK FACTORS
ITEM IB.
UNRESOLVED STAFF COMMENTS
ITEM 1C.
CYBERSECURITY
ITEM 2.
PROPERTIES
ITEM 3.
LEGAL PROCEEDINGS
ITEM 4.
MINE SAFETY DISCLOSURES
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
ITEM 6.
RESERVED
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9.
CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9A.
CONTROLS AND PROCEDURES
ITEM 9B.
OTHER INFORMATION
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11.
EXECUTIVE COMPENSATION
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
ITEM 13.
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
ITEM 16.
FORM 10-K SUMMARY
SIGNATURES
‎
PART I
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:
In addition to historical financial information, this discussion of the business of SigmaTron International, Inc. (“SigmaTron”), its subsidiaries Standard Components de Mexico S.A., AbleMex, S.A. de C.V., Digital Appliance Controls de Mexico, S.A. de C.V., Spitfire Controls (Vietnam) Co. Ltd., and Spitfire Controls (Cayman) Co. Ltd., wholly-owned foreign enterprises Wujiang SigmaTron Electronics Co., Ltd. and Wujiang SigmaTron Electronic Technology Co., Ltd., and its international procurement office, SigmaTron International Inc. Taiwan Branch (collectively, the “Company”) and other Items in this Annual Report on Form 10-K contain forward-looking statements concerning the Company’s business or results of operations. Words such as “continue,” “anticipate,” “will,” “expect,” “believe,” “plan,” and similar expressions identify forward-looking statements. These forward-looking statements are based on the current expectations of the Company. Because these forward-looking statements involve risks and uncertainties, the Company’s plans, actions and actual results could differ materially. Such statements should be evaluated in the context of the direct and indirect risks and uncertainties inherent in the Company’s business including, but not necessarily limited to, the Company’s continued dependence on certain significant customers; the continued market acceptance of products and services offered by the Company and its customers; pricing pressures from the Company’s customers, suppliers and the market; the activities of competitors, some of which may have greater financial or other resources than the Company; the variability of the Company’s operating results; the results of long-lived assets and goodwill impairment testing; the impact of material weaknesses in internal controls over financial reporting; the ability to achieve the expected benefits of acquisitions as well as the expenses of acquisitions; the collection of aged account receivables; the variability of the Company’s customers’ requirements; the impact of inflation on the Company’s operating results; the availability and cost of necessary components and materials; the impact acts of war may have on the supply chain and the Company’s customers; demand challenges resulting from inflation and supply chain uncertainty; the ability of the Company and its customers to keep current with technological changes within its industries; regulatory compliance, including conflict minerals; the continued availability and sufficiency of the Company’s credit arrangements; the costs of borrowing under the Company’s senior and subordinated credit facilities, including under the rate indices that replaced LIBOR; relatively high interest rates; the ability to meet the Company’s financial and restrictive covenants under its loan agreements; the Company’s ability to generate cash from operations or otherwise, necessary to reduce debt or meet debt covenants as expected; changes in U.S., Mexican, Chinese, Vietnamese or Taiwanese regulations affecting the Company’s business, including but not limited to the imposition of tariffs; the turmoil in the global economy and financial markets; governmental actions or the threats of certain actions, such as tariffs imposed or threatened to be imposed by the federal government and any retaliatory tariffs imposed by other countries; public health crises; the continued availability of scarce raw materials, exacerbated by global supply chain disruptions, necessary for the manufacture of products by the Company; the stability of the U.S., Mexican, Chinese, Vietnamese and Taiwanese economic, labor and political systems and conditions; global business disruption caused by the Russian invasion of Ukraine and related sanctions and the conflict in the Middle East; currency exchange fluctuations; and the ability of the Company to manage its growth. These and other factors which may affect the Company’s future business and results of operations are identified throughout the Company’s Annual Report on Form 10-K, and as risk factors, may be detailed from time to time in the Company’s filings with the Securities and Exchange Commission. These statements speak as of the date of such filings, and the Company undertakes no obligation to update such statements in light of future events or otherwise unless otherwise required by law.
ITEM 1. BUSINESS
Overview
SigmaTron is a Delaware corporation, which was organized on November 16, 1993, and commenced operations when it became the successor to all of the assets and liabilities of SigmaTron L.P., an Illinois limited partnership, through a reorganization on February 8, 1994, as part of going public.
On July 28, 2025 (the “Closing Date”), Transom Axis MergerSub, Inc., a Delaware corporation (“Purchaser”), which is a direct wholly owned subsidiary of Transom Axis AcquireCo, LLC, a Delaware limited liability company (“Parent”), which is a wholly owned subsidiary of Transom Axis TopCo, LLC, a Delaware limited liability company, which is controlled by its affiliate Transom Capital Fund IV, L.P., a Delaware limited partnership (together with its affiliates, “Transom”), completed the previously announced acquisition of the Company pursuant to the Agreement and Plan of Merger, dated as of May 20, 2025 (the “Merger Agreement”). On the Closing Date, and following the expiration of the Purchaser’s tender offer to acquire all of the issued and outstanding shares of the Company’s common stock, Purchaser merged with and into the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of Parent (the “Merger”). Prior to the closing of the Merger, the Company’s common stock was traded on the Nasdaq Capital Market under the symbol “SGMA.”
The Company currently operates in one reportable segment as an independent provider of electronic manufacturing services (“EMS”) and provides manufacturing and assembly services ranging from the assembly of individual components to the assembly and testing of box-build electronic products. The Company has the ability to produce assemblies requiring mechanical as well as electronic capabilities. This includes printed circuit board assemblies, electro-mechanical subassemblies and completely assembled (box-build) electronic products.
In connection with the production of assembled products, the Company provides services to its customers, including (1) automatic and manual assembly and testing of products; (2) material sourcing and procurement; (3) manufacturing and test engineering support; (4) design services; (5) warehousing and distribution services; (6) assistance in obtaining product approval from governmental and other regulatory bodies and (7) compliance reporting. The Company provides these manufacturing services through an international network of facilities located in the United States, Mexico, China, Vietnam and Taiwan.
The Company’s headquarters is in Elk Grove Village, Illinois, U.S. which also operates as a manufacturing facility. In addition, the Company has manufacturing facilities in Union City, California, U.S.; Acuna, Coahuila, Mexico; Chihuahua, Chihuahua, Mexico; and Tijuana, Baja California, Mexico; Suzhou, Jiangsu Province, China; and Bien Hoa City, Dong Nai Province, Vietnam. In addition, the Company maintains an International Procurement Office and Compliance and Sustainability Center (“IPO”) in Taipei, Taiwan. The Company also provides design services in its Elk Grove Village location and warehousing services in Del Rio, Texas, U.S.; El Paso, Texas, U.S.; its Elk Grove Village location; and San Diego, California, U.S. The Company has an information technology office in Taichung, Taiwan.
The Company’s international footprint provides our customers with flexibility within the Company to manufacture in China, Mexico, Vietnam or the U.S. We believe this strategy will continue to serve the Company well as its customers continuously evaluate their supply chain strategies.
For the fiscal year ended April, 30 2025, the Company reported a pre-tax loss of approximately $3,900,000. The Company reported sales of approximately $304,700,000. The fiscal year end revenue results decreased 19% compared to the prior fiscal year. The decrease in sales is primarily due to customers that have lowered their demand during fiscal year 2025 which we believe is a response to supply chain limitations and related stocking demands during recent years, as those constraints largely lifted in a more normalized raw materials marketplace during fiscal year 2025 which we believe is a response to supply chain limitations and related stocking demands during recent years, as those constraints largely lifted in a more normalized raw materials marketplace during fiscal year 2025.
The Company’s backlog remains reasonably strong across the vast majority of markets and customers the Company serves. The continued supply chain shortages have improved significantly during fiscal 2025, but certain components continue to be challenging to receive on a timely basis and could impact the Company’s ability to ship the backlog as scheduled. This is a problem faced by customers and competitors in the EMS industry during recent years, but has improved in the current fiscal year and the Company anticipates the situation to continue improving through fiscal 2026.
Products and Services
The Company provides a broad range of electronic and electromechanical manufacturing related outsourcing solutions for its customers. These solutions incorporate the Company’s knowledge and expertise in the EMS industry to provide its customers with an international network of manufacturing facilities, advanced manufacturing technologies, complete supply chain management, responsive and flexible customer service, as well as product design, test and engineering support. The Company’s EMS solutions are available from inception of product concept through the ultimate delivery of a finished product. Such technologies and services include the following:
Manufacturing and Testing Services: The Company’s core business is the assembly and testing of all types of electronic printed circuit board assemblies (“PCBA”) and often incorporating these PCBAs into electronic modules used in all types of devices and products that depend on electronics for their operation. This assembly work utilizes state of the art manufacturing and test equipment to deliver highly reliable products to the Company’s customers. The Company supports new product introduction (“NPI”), low volume/high mix as well as high volume/low mix assembly work at all levels of assembly and test complexity. From simple component assembly through the most complicated industry testing, the Company offers services required to build the vast majority of electronic devices commercially required in the market today.
Design Services: To complement the manufacturing services it offers its customers, the Company also offers design for manufacturability (“DFM”), and design for test (“DFT”) review services to help customers ensure that the products they have designed are optimized for production and testing. The Company also offers complete product design services for certain markets.
Supply Chain Management: The Company provides complete supply chain management for the procurement of components needed to build customers’ products. This includes the procurement and management of all types of electronic components and related mechanical parts such as plastics and metal. The Company’s resources supporting this activity are provided both on a plant specific basis as well as globally through its IPO in Taipei, Taiwan. Each of its sites is linked together using the same Enterprise Resource Planning (“ERP”) system and custom Iscore software tools with real-time on-line visibility for customer access. The Company procures material from major manufacturers and distributors of electronic parts all over the world.
The Company relies on numerous third-party suppliers for components used in the Company’s production process. Certain of these components are available only from single-sources or a limited number of suppliers. In addition, a customer’s specifications may require the Company to obtain components from a single-source or a small number of suppliers. The loss of any such suppliers could have a material impact on the Company’s results of operations. Further, the Company could operate at a cost disadvantage compared to competitors who have greater direct buying power from suppliers. The Company orders material from its suppliers consistent with the purchase orders and binding forecasts it receives from its customers. See “Item 1A. Risk Factors - Raw material price increases and supply shortages could adversely affect results”.
Warehousing and Distribution: The Company provides both in-house and third-party warehousing, including in-bond warehouses, shipping, and customs brokerage for certain border crossings as part of its service offering. This includes international shipping, drop shipments to the end customer as well as support of inventory optimization activities such as kanban and consignment.
Government Compliance, Green, Sustainability, and Social Responsible Initiatives: The Company supports initiatives that promote sustainability, green environment and social responsibility. The Company helps its customers in achieving effective compliance. Those include, but are not limited to, Restrictions of Hazardous Substances (“RoHS”), Restriction of Chemicals (“REACH”) and Conflict Minerals regulations.
Manufacturing Locations and Certifications: The Company’s manufacturing locations are strategically located to support our customers with locations in Elk Grove Village, Illinois U.S.; Union City, California U.S.; Acuna, Chihuahua and Tijuana, Mexico; Suzhou, China; and Bien Hoa City, Vietnam. The Company’s ability to transition manufacturing to lower cost regions without jeopardizing flexibility and service differentiates it from many competitors. Manufacturing certifications and registrations are location specific,
and include ISO 9001:2015, ISO 14001:2004, ISO 14001:2015, IATF 16949:2016, Medical ISO 13485:2016 and FDB Certification and International Traffic in Arms Regulations (“ITAR”) certifications.
The Company sold its Elgin, Illinois property in February 2024, and moved all operations from Elgin to Elk Grove Village, Illinois.
Markets and Customers
The Company’s customers are in the industrial electronics, consumer electronics and medical/life sciences industries. As of April 30, 2025, the Company had more than 100 active customers ranging from Fortune 500 companies to small, privately held enterprises.
The following table shows, for the periods indicated, the percentage of net sales to the principal end-user markets the Company serves.
Percent of Net Sales
Markets
Typical OEM Application
Fiscal 2025%
Fiscal 2024%
Industrial Electronics
Clean energy, off road equipment, controls, smart grid connectivity, gaming equipment, IOT connectivity, etc.
66.2
70.4
Consumer Electronics
Appliances, automotive electronics, carbon monoxide detectors, etc.
28.2
22.9
Medical/Life Sciences
Rehabilitation tables, battery packs, dental equipment, sterilizers, dialysis, etc.
5.6
6.7
Total
100%
100%
For the fiscal year ended April 30, 2025, the Company’s largest customer accounted for 16.8% of the Company’s net sales. For the fiscal year ended April 30, 2024, the Company’s largest customer accounted for 13.1% of the Company’s net sales.
The majority of sales are made to U.S. based customers and denominated in USD. The following geographic data includes net sales based on the country location of the Company’s operation providing the electronic manufacturing service for the year ended April 30, 2025 and 2024:
Location
Net Sales Fiscal 2025
Net Sales Fiscal 2024
United States
$
74,467,053
$
111,520,788
Mexico
181,775,233
217,897,991
China
41,185,139
38,363,805
Vietnam
7,288,694
6,101,237
Total Net Sales
$
304,716,119
$
373,883,821
Sales and Marketing
Many of the members of the Company’s senior management are actively involved in sales and marketing efforts, and the Company has direct sales employees. The Company also markets its services through independent manufacturers’ representative organizations that employ sales personnel in the United States and Canada. Independent manufacturers’ representative organizations receive variable commissions based on orders received by the Company and are assigned specific accounts, not territories. In addition, the Company markets itself through its website.
Mexico, China, Vietnam and Taiwan Operations
The Company’s subsidiary, Standard Components de Mexico, S.A, a Mexican entity, is located in Acuna, Coahuila, Mexico, a border town across the Rio Grande River from Del Rio, Texas, U.S. and is 155 miles west of San Antonio. Standard Components de Mexico, S.A. was incorporated and commenced operations in 1968 and had 784 employees at April 30, 2025. The Company’s subsidiary, AbleMex S.A. de C.V., a Mexican entity, is located in Tijuana, Baja California, Mexico, a border town south of San Diego, California, U.S. AbleMex S.A. de C.V. was incorporated and commenced operations in 2000. The operation had 345 employees at April 30, 2025. The Company’s subsidiary, Digital Appliance Controls de Mexico S.A., a Mexican entity, operates in Chihuahua, Chihuahua, Mexico, located approximately 235 miles from El Paso, Texas, U.S. Digital Appliance Controls de Mexico S.A. was incorporated and commenced operations in 1997. The operation had 408 employees at April 30, 2025. The Company believes that one of the key benefits to having operations in Mexico is its access to cost-effective labor resources while having geographic proximity to the United States.
The Company’s wholly-owned foreign enterprises, Wujiang SigmaTron Electronics Co., Ltd. and Wujiang SigmaTron Electronic Technology Co., Ltd., are located in Suzhou, China. The Company has entered into an agreement with governmental authorities in the economic development zone of Wujiang, Jiangsu Province, Peoples Republic of China, pursuant to which the Company became the lessee of a parcel of land of approximately 100 Chinese acres. The term of the land lease is 50 years. The Company built a manufacturing plant, office space and dormitories on this site during 2004. In fiscal year 2015, the China facility expanded and added 40,000 square feet in warehouse and manufacturing. The total square footage of the facility is 216,950 and the operation had 333 employees as of April 30, 2025. Both Wujiang SigmaTron Electronics Co., Ltd. and Wujiang SigmaTron Electronic Technology Co., Ltd. operate at this site.
The Company’s subsidiary, Spitfire Controls (Cayman) Co. Ltd., owns all of the equity of the subsidiary, Spitfire Controls (Vietnam) Co. Ltd., and does not conduct any other operations. Spitfire Controls (Vietnam) Co. Ltd. is located in Amata Industrial Park, Bien Hoa City, Dong Nai Province, Vietnam, and is 18 miles east of Bien Hoa City. Spitfire Controls (Vietnam) Co. Ltd. was incorporated and commenced operation in 2005 and had 236 employees as of April 30, 2025.
The Company maintains an international procurement office (“IPO”) in Taipei, Taiwan which was incorporated in 1991. The total square footage of the office is 4,685 square feet. The Company has an information technology office in Taichung, Taiwan. The total square footage of the office is 1,650 square feet. The Company had 29 employees located in the Taiwan offices as of April 30, 2025.
The Company provides funds for manufacturing services such as salaries, wages, inventory purchases for certain locations, overhead and capital expenditure items as necessary to operate its Mexican, Vietnamese and Chinese subsidiaries and foreign enterprises and the IPO in Taiwan. The Company provides funding in U.S. Dollars, which are exchanged for Pesos, Dong, Renminbi, and New Taiwan dollars. The fluctuation of currencies from time to time, without an equal or greater increase in inflation, could have a material impact on the financial results of the Company. The impact of currency fluctuations for the fiscal year ended April 30, 2025, resulted in net foreign currency transaction losses of $981,838 compared to net foreign currency losses of $796,315 in the prior fiscal year. In fiscal year 2025, the Company paid approximately $52,550,000 to its foreign subsidiaries for manufacturing services. All intercompany balances have been eliminated upon consolidation.
The consolidated financial statements as of April 30, 2025, include the accounts and transactions of SigmaTron, its subsidiaries, Standard Components de Mexico, S.A., AbleMex S.A. de C.V., Digital Appliance Controls de Mexico, S.A. de C.V., Spitfire Controls (Vietnam) Co. Ltd., and Spitfire Controls (Cayman) Co. Ltd., wholly-owned foreign enterprises Wujiang SigmaTron Electronics Co., Ltd. and Wujiang SigmaTron Electronic Technology Co., Ltd., and its IPO, SigmaTron International, Inc. Taiwan Branch. The functional currency of the Company’s foreign subsidiaries operations is the U.S. Dollar. Intercompany transactions are eliminated in the consolidated financial statements.
Competition
The EMS industry is highly competitive and subject to rapid change. Furthermore, both large and small companies compete in the industry, and many have significantly greater financial resources, more extensive business experience and greater marketing and production capabilities than the Company. The significant competitive factors in this industry include price, quality, service, timeliness, reliability, the ability to source raw components, and manufacturing and technological capabilities. The Company believes it can compete on all of these factors.
Consolidation
As a result of consolidation and other transactions involving competitors and other companies in the Company’s markets, the Company occasionally reviews potential transactions relating to its business, products and technologies. Such transactions could include mergers, acquisitions, strategic alliances, joint ventures, licensing agreements, co-promotion agreements, financing arrangements or other types of transactions. In the future, the Company may choose to enter into these types of or other transactions at any time depending on available sources of financing, and such transactions could have a material impact on the Company’s business, financial condition or operations.
Governmental Regulations
The Company’s operations are subject to certain foreign government, U.S. federal, state and local regulatory requirements relating to, among others, environmental, waste management, consumer, labor and health and safety matters. Management believes that the Company’s business is operated in compliance with all such regulations, which include European regulations known as Restriction of Hazardous Substances (“RoHS”) and Registration, Evaluation, Authorization and Restriction of Chemicals (“REACH”). From time-to-time the Company's customers request REACH required information and certifications on the assemblies the Company manufactures for them. These requests require the Company to gather information from component suppliers to verify the presence and level of mass of any substances of very high concerns (“SVHCs”) greater than 0.1% in the assemblies the Company manufactures based on customer specifications. If any SVHCs are present at more than 0.1% of the mass of the item, the specific concentration and mass of the SVHC must be reported to proper authorities by the Company's customer.
Backlog
The Company relies on binding forecasted orders and purchase orders (firm orders) from its customers to estimate backlog. The Company’s backlog of firm orders as of April 30, 2025, and April 30, 2024, was approximately $265,400,000 and $289,900,000, respectively. The Company believes a significant portion of the backlog at April 30, 2025 will ship in fiscal year 2026. Because customers may cancel or reschedule deliveries, backlog may not be a meaningful indicator of future revenue. Variations in the magnitude and duration of contracts, forecasts and purchase orders received by the Company and delivery requirements generally may result in substantial fluctuations in backlog from period to period. The Company believes the decrease in backlog is largely the result of customers shortening the forecasting period as market conditions and lead times for components have improved.
Human Capital Resources
The Company employed approximately 2,500 full-time employees of which approximately 370 were located in the U.S. as of April 30, 2025. There were approximately 220 engaged in engineering or engineering-related services, 1,880 in manufacturing and 400 in administrative functions, including supply chain, accounting, management and sales and marketing.
The Company makes a considerable effort to maintain a qualified and engaged work force. The Company makes a concerted effort to engage its employees and provide opportunities for growth and the Company believes that its employee relations are good. The Company considers the health and safety of its employees a key priority. The Company is committed to removing conditions that may cause personal injury or occupational illness.
SigmaTron has a labor contract with Chemical & Production Workers Union Local No. 30, AFL-CIO, covering the Company’s workers in Elk Grove Village, Illinois which expires on November 30, 2025. The Company’s Mexican subsidiary, Standard Components de Mexico S.A., has a labor contract with Sindicato De Trabajadores de la Industra Electronica, Similares y Conexos del Estado de Coahuila, C.T.M. covering the Company’s workers in Acuna, Mexico which expires on February 1, 2026. The Company’s subsidiary located in Tijuana, Mexico has a labor contract with Sindicato Mexico Moderno De Trabajadores De La, Baja California, C.R.O.C. The contract does not have an expiration date. The Company’s subsidiary located in Bien Hoa City, Vietnam, has a labor contract with CONG DOAN CO SO CONG TY TNHH Spitfire Controls Vietnam. The contract expires on April 30, 2028.
Since the time the Company commenced operations, it has not experienced any union-related work stoppages.
Available Information
The Company’s website address is www.sigmatronintl.com. The Company announces material information, including press releases and financial information regarding the Company, through a variety of means, including the Company’s website, the Investors subpage of its website (www.sigmatronintl.com/investors/), press releases, filings with the Securities and Exchange Commission (the “SEC”) and social media, in order to achieve broad, non-exclusionary distribution of information to the public. The Investors subpage is accessible by clicking on the tab labeled “Investors” on the Company’s website home page. The Company also uses these channels to expedite public access to time-critical information regarding the Company in advance of or in lieu of distributing a press release or a filing with the SEC disclosing the same information. Therefore, investors should look to these channels for important and time-critical information. In addition, the Company is subject to the informational requirements of the Exchange Act and files or furnishes reports, proxy statements, and other information with the SEC. Such reports and other information filed by the Company with the SEC are available free of charge on its website when such reports are simultaneously available on the SEC’s website at http://www.sec.gov. The Company encourages investors, the media and others interested in the Company to review the information it posts on these various channels, as such information could be deemed to be material information.
The contents of the websites referred to above, including the Company’s social media accounts, are not incorporated into this filing. Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only.
Information about our Executive Officers
Name
Age
Position
Gary R. Fairhead
Chief Executive Officer and Chairman of the Board of Directors. Gary R. Fairhead has been the Chief Executive Officer of the Company and a director since November 1993 and Chairman of the Board of Directors of the Company since August 2011. He was also President from November 1993 until October 2021 and then from August 2022 until January 2023.
John P. Sheehan
President since January 2023. Vice President, Director of Supply Chain, and Assistant Secretary from February 1994 until January 2023.
Frank Cesario
Chief Financial Officer, Vice President of Finance, Treasurer and Secretary since November 2024. He served as Chief Executive Officer and Chief Financial Officer at Yunhong Green CTI from January 2022 until November 2024.
Hom-Ming Chang
Vice President, China Operations since 2007. Vice President - Hayward Materials / Test / IT from 2005 - 2007.
Merger with Transom
On July 28, 2025, Transom completed the previously announced acquisition of the Company pursuant to the Merger Agreement, whereby the Company became a wholly owned subsidiary of Parent in the Merger. On the Closing Date, each issued and outstanding share of Common Stock was converted into the right to receive $3.02 in cash, less applicable taxes and withholdings.
ITEM 1 A. RISK FACTORS
The following risk factors should be read carefully in connection with evaluating our business and the forward-looking information contained in this Annual Report on Form 10-K. Any of the following risks could materially adversely affect our business, operations, industry or financial position or our future financial performance. While the Company believes it has identified and discussed below the key risk factors affecting its business, there may be additional risks and uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect its business, operations, industry, financial position and financial performance in the future.
Business and Operational Risks
Raw material price increases and supply shortages could adversely affect results.
The supply of raw materials to the Company and to its component parts suppliers could be interrupted for a variety of reasons, including availability and pricing. In particular, inflation, changes in trade policies, the imposition of duties and tariffs, potential retaliatory countermeasures, public health crises (such as the COVID-19 pandemic), and geopolitical conflicts (including involving Russia, Belarus, or Ukraine, which supply raw materials, such as neon, palladium and nickel, to the semiconductor industry) could adversely impact the price or availability of raw materials. Prices for raw materials necessary for production have fluctuated significantly in the past and the Company is currently experiencing upward pricing pressure on raw materials. Historically, it has been difficult to pass increased prices for components and raw materials through to our customers in the form of price increases. The Company may not be able to pass along increased raw material and components parts prices to its customers in the form of price increases or its ability to do so could be delayed. Significant price increases for components and raw materials could adversely affect the Company’s results of operations
and operating margins. Consequently, its results of operations and financial condition may be adversely affected.
The Company experiences volatile operating results.
The Company’s results of operations have varied and may continue to fluctuate significantly from period to period, including on a quarterly basis. Consequently, results of operations in any period should not be considered indicative of the results for any future period, and fluctuations in operating results may also result in fluctuations in the price of the Company’s common stock.
The Company’s quarterly and annual results may vary significantly depending on numerous factors, many of which are beyond the Company’s control. Some of these factors include:
- changes in availability and rising component costs
- changes in sales mix to customers
- volume of customer orders relative to capacity
- market demand and acceptance of our customers’ products
- price erosion within the EMS marketplace
- capital equipment requirements needed to remain technologically competitive
- volatility in the U.S. and international economic and financial markets
The volume and timing of sales to the Company’s customers may vary due to:
- component availability
- variation in demand for the Company’s customers’ products
- customers’ attempts to manage their inventory
- design changes
- acquisitions of or consolidation among customers
Most of the Company’s customers’ production schedules are volatile, which makes it difficult to schedule production and achieve maximum efficiency at the Company’s manufacturing facilities and manage inventory levels.
The Company’s inability to forecast the level of customer orders with certainty can make it difficult to schedule production and maximize utilization of manufacturing capacity and manage inventory levels. The Company could be required to increase or decrease staffing and more closely manage other expenses in order to meet the anticipated demand of its customers. Orders from the Company’s customers could be cancelled or delivery schedules could be deferred or accelerated as a result of changes in our customers’ demand, which can put added stress on resources. Sudden decreases in production can lead to excess inventory on hand which may or may not be reimbursed by our customers even when under contract. These and other factors could harm our ability to achieve anticipated levels of profitability and thereby adversely affecting the Company’s results of operations in any given period.
The Company’s inventory levels have been adversely impacted by the global supply chain crisis, with an unprecedented impact on working capital requirements.
The impact of component shortages on sales of finished goods and the resulting increase in inventory levels in prior fiscal years had been unprecedented although inventory levels have decreased significantly during fiscal year 2025. The supply chain uncertainty has significantly lessened during the fiscal year, however there are still certain components that are difficult to obtain on a timely basis. The continued impact of increased inventory levels on working capital requirements materially increases our operating costs and if it continues unabated, could materially and adversely affect our business and results of operations.
If our manufacturing processes and services do not comply with applicable statutory and regulatory requirements, or if we manufacture products containing design or manufacturing defects, demand for our services may decline and we may be subject to liability claims.
We provide a broad range of electronic and electromechanical manufacturing related outsourcing solutions and, in some cases, our manufacturing processes and facilities may need to comply with applicable statutory and regulatory requirements. For example, the products we manufacture or design, as well as the facilities and manufacturing processes that we use to produce them are subject to certain foreign government, U.S. federal, state and local regulatory requirements relating to, among others, environmental, waste management, consumer, labor and health and safety matters. In addition, our customers’ products and the manufacturing processes that we use to produce them often are highly complex. As a result, products that we manufacture may at times contain manufacturing or design defects, and our manufacturing processes may be subject to errors or not be in compliance with applicable statutory and regulatory requirements. Defects in the products we manufacture or design, whether caused by a design, manufacturing or component failure or error, or deficiencies in our manufacturing processes, may result in delayed shipments to customers or reduced or canceled customer orders. If these defects or deficiencies are significant, our reputation may also be damaged. The failure of the products that we manufacture or our manufacturing processes and facilities to comply with applicable statutory and regulatory requirements may subject us to legal fines or penalties and, in some cases, require us to shut down or incur considerable expense to correct a manufacturing process or facility. If our customers are responsible for the defects, they may not, or may not have resources to, assume responsibility for any costs or liabilities arising from these defects, which could expose us to additional liability claims.
We have, and may in the future, encounter complications with acquisitions, which could potentially harm our business.
To integrate acquired businesses, we must implement our management information systems, operating systems and internal controls, and assimilate and manage the personnel of the acquired operations. The integration of acquired businesses may be further complicated by difficulties managing operations in geographically dispersed locations. The integration of acquired businesses may not be successful and could result in disruption by diverting management’s attention from the core business. Also, the acquired business’s products or services may not be accepted by the market. In addition, the integration of acquired businesses may require that we incur significant restructuring charges or other increases in our expenses and working capital requirements, which reduce our return on invested capital. Acquisitions may involve numerous other risks and challenges including but not limited to; potential loss of key employees and customers of the acquired companies; the potential for deficiencies in internal controls at acquired companies; lack of experience operating in the geographic market or industry sector of the acquired business; constraints on available liquidity, and exposure to unanticipated liabilities of acquired companies. These and other factors could harm our ability to achieve anticipated levels of profitability at acquired operations or realize other anticipated benefits of an acquisition, and could adversely affect our consolidated business and operating results.
We are subject to increased regulatory compliance costs associated with climate change and to the potential impacts of severe weather events.
The increasing worldwide attention on climate change has led to evolving stakeholder and societal expectations on companies. In the U.S., changes in climate disclosure requirements and environmental regulations could subject the Company to additional restrictions, costs, or obligations, both directly as we face new environmental and reporting requirements, and indirectly as increased costs are realized in our supply chain.
The Company’s manufacturing facilities and real property are subject to extensive and changing federal, state, local, and foreign environmental laws and regulations, including those relating to discharges in air, water, and land, the handling and disposal of solid and hazardous waste, the use of certain hazardous materials in the production of select products, and the remediation of contamination associated with releases of hazardous substances. Compliance with more stringent laws or regulations, or stricter interpretation of existing laws, may require additional expenditures, some of which could be material.
Environmental regulations or changes in the supply, demand, or available sources of energy, water, or other resources may affect the availability or cost of goods and services, including raw goods and natural resources necessary to run our business. Increases in the cost of energy in particular could reduce our profitability. Given the political significance and uncertainty around these issues, we cannot predict how climate change, and the legal and regulatory initiatives related to climate change, will affect our operations and financial condition.
Market Risks
Adverse market conditions could reduce our future sales and earnings per share.
Uncertainty over the erosion of global consumer confidence amidst concerns about volatile energy costs, geopolitical issues, the availability and cost of credit, declining asset values, inflation, unemployment, and the stability and solvency of financial institutions, financial markets, businesses, and sovereign nations has slowed global economic growth. The economic recovery of recent years is fragile. The Company’s sales and gross margins depend significantly on market demand for its customers’ products. The uncertainty in the U.S. and international economic and political environments could result in a decline in demand for our customers’ products in any industry and the duration of the decline is unpredictable. Further, any adverse changes in tax rates and laws or trade policies affecting our customers could result in decreasing gross margins. Any of these potential negative economic conditions may reduce demand for the Company’s customers’ products and adversely affect the Company’s sales. Consequently, the Company’s past operating results, earnings and cash flows may not be indicative of the Company’s future operating results, earnings and cash flows. Even a short-term decline in sales could create financial pressures on the Company’s performance and exacerbate other risk factors discussed in this Annual Report on Form 10-K.
Persistent inflation could have a material adverse impact on our business, operating results and financial condition.
Inflation has risen globally and has remained persistently at levels not experienced in years. Inflation directly and indirectly increases the costs of operating expenses such as fuel, energy, transportation, materials, and labor. We may not be able to increase our product prices enough to offset these increased costs, and any increase in our product prices may reduce our future customer orders and profitability. Inflation further erodes consumer confidence, and may negatively impact the market for our customers’ products. Persistent inflation could exacerbate other risk factors discussed in this Annual Report on Form 10-K.
Our customers have competitive challenges, that could include decreasing demand from their customers, rapid technological changes, and pricing pressures, which could adversely affect their business and the Company’s business.
Factors affecting the industries that utilize our customers’ products could negatively impact our customers and the Company. These factors include:
- recessionary periods in our customers’ markets
- increased competition among our customers and their competitors
- the inability of our customers to develop and market their products
- the inability of our customers to obtain all necessary material to manufacture their products
- the potential that our customers’ products become obsolete
- our customers’ inability to react to rapidly changing technology
Any such factor or a combination of factors could negatively impact our customers’ need for or ability to pay for our products, which could, in turn, affect the Company’s results of operations.
Our exposure to financially troubled customers or suppliers may adversely affect the Company’s financial results.
On occasion, we provide services to customers and rely upon suppliers that have in the past and may in the future experience financial difficulty. If any of the Company’s customers have financial difficulties, the Company could encounter delays or defaults in the payment of amounts owed for accounts receivable and inventory obligations. Additionally, if our suppliers experience financial difficulties, we could have difficulty sourcing raw material in the amounts and at the times necessary for production requirements. These risks may be heightened by the effects of recent economic volatility. Any financially troubled customer or supplier could have a significant adverse impact on the Company’s results of operations and financial condition.
The Company’s customer base is concentrated.
Sales to the Company’s five largest customers accounted for an aggregate of 57.3% and 49.2% of net sales for the fiscal years ended April 30, 2025, and April 30, 2024, respectively. For the fiscal year ended April 30, 2025, the Company’s largest customer accounted for 16.8% of the Company’s net sales and 8.0% of accounts receivable. For the fiscal year ended April 30, 2024, the Company’s largest customer accounted for 13.1% of the Company’s net sales and 4.6% of accounts receivable. Significant reductions in sales to any of the Company’s major customers or the loss of a major customer could have a material impact on the Company’s operations. If the Company cannot replace cancelled or reduced orders, sales will decline, which could have a material adverse impact on the results of operations. There can be no assurance that the Company will retain any or all of its largest customers. This risk may be further complicated by pricing pressures and intense competition prevalent in our industry.
The Company faces intense industry competition and downward pricing pressures.
The EMS industry is highly fragmented and characterized by intense competition. Many of the Company’s competitors have greater experience, as well as greater manufacturing, purchasing, marketing and financial resources than the Company. Competition from existing or potential new competitors may have a material adverse impact on the Company’s business, financial condition or results of operations. The introduction of lower priced competitive products, significant price reductions by the Company’s competitors or significant pricing pressures from its customers could adversely affect the Company’s business, financial condition, and results of operations.
Customer relationships with start-up companies present more risk.
A small portion of the Company’s current customer base is comprised of start-up companies. Customer relationships with start-up companies may present heightened risk due to the lack of product history. Slow market acceptance of their products could result in demand fluctuations causing inventory levels to rise. Further, the current economic environment could make it difficult for such emerging companies to obtain additional funding. This may result in additional credit risk including, but not limited to, the collection of trade account receivables and payment for their inventory. If the Company does not have adequate allowances recorded, the results of operations may be negatively affected.
International Operations Risks
The Company has significant foreign operations that may pose additional risks.
The Company manufactures product in facilities located in Mexico, China, Vietnam and the United States. These operations may be subject to a number of risks, including:
-the political climate and relations with the United States, including the impact of trade wars, tariffs and trade barriers (including quotas)
-political and economic instability (including acts of terrorism, territorial disputes, pandemics, civil unrest, forms of violence, and outbreaks of war), which could impact our ability to ship, manufacture, or receive product
-the instability of the foreign economies
-burdens of complying with a wide variety of foreign laws and labor practices
-unexpected changes in regulatory requirements and laws
-potentially adverse tax consequences, including changes in tax rates and the manner in which multinational companies are taxed in the United States and other countries
-foreign labor practices, including difficulties in staffing, turnover and managing onshore and offshore operations
-export duties and import controls
-legal authority of the Company to operate and expand its business in foreign countries
-impact of physical and operational risks from natural disasters, severe weather events, and climate change
The Company obtains many of its materials and components through its IPO in Taipei, Taiwan. The Company’s access to these materials and components is dependent on the continued viability of its Asian suppliers.
Approximately 42% of the total assets of the Company are located in foreign jurisdictions outside the United States as of April 30, 2025; 32% and 8% of the total assets were located in Mexico and China, respectively, and 2% in other foreign locations. As of April 30, 2024, approximately 43% of the total assets were located in foreign jurisdictions; 31% and 10% were located in China and Mexico, respectively and 2% in other foreign locations.
There is a risk of fluctuation of various currencies integral to the Company’s operations.
The Company purchases some of its material components and funds some of its operations in foreign currencies. From time to time the currencies fluctuate against the U.S. Dollar. Such fluctuations could have a material impact on the Company’s results of operations and performance. During the past two fiscal years, the U.S. Dollar has weakened against the Mexican Peso and Chinese Renminbi, resulting in net currency translation losses of $981,838 and $796,315 for the fiscal year ended April 30, 2025 and April 30, 2024, respectively. These fluctuations are expected to continue and could have a negative impact on the Company’s results of operations. The Company has not, and does not expect to, utilize derivatives or hedge foreign currencies to reduce the risk of such fluctuations.
Unanticipated changes in our tax position, the adoption of new tax legislation or exposure to additional tax liabilities could adversely affect our financial results.
We base our tax position upon our understanding of the current tax laws of the various countries in which we have assets or conduct activities. Our tax position, however, is subject to review and possible challenge by taxing authorities and to possible changes in law. We cannot determine in advance the extent to which some jurisdictions may assess additional tax or interest and penalties on such additional taxes. Given the scope of our international operations and our international tax arrangements, changes to the manner in which U.S. based multinational companies are taxed in the U.S. could have a material impact on our financial results and competitiveness. Based on current and future tax policy in Washington D.C., our effective tax rates and overall cash taxes may change in the future and could have an impact on our financial results.
Although forgiven, the Company’s Paycheck Protection Program Loan (“PPP Loan”) remains subject to audit.
On April 23, 2020, the Company received a $6,282,973 PPP Loan under the CARES Act, which it used to retain current U.S. employees, maintain payroll and make lease and utility payments. The PPP Loan was forgiven on July 9, 2021. However, due to the size of the PPP Loan, it is subject to audit by the SBA for up to six years after forgiveness. While the Company believes that it satisfied all eligibility criteria for the PPP Loan, there is a risk that on audit, the Company will be determined to have been ineligible to receive the PPP Loan. In that case, the Company could be required to repay the PPP Loan in a lump sum and be subject to additional penalties and interest and adverse publicity and damage to the Company’s reputation. If these events were to transpire, they could have a material adverse effect on the Company’s business, results of operations and financial condition.
Financing and Capital Risks
If we fail to comply with our credit agreements in future periods, we may be unable to secure any necessary waivers or amendments from the lenders and repayment obligations on our outstanding indebtedness may be accelerated.
Our credit agreements contain numerous financial and operating covenants with which we must comply. In August 2024, the Company was able to negotiate amendments and waivers with both J.P. Morgan Chase and TCW Asset Management Company, lenders of our revolving and term loan facilities, respectively, as a result of our failure to maintain certain covenants as of April 30, 2024 and during the first quarter of fiscal year 2025. However, even as amended, the covenants impose tight parameters under which our financial performance is
measured and has increased the Company’s costs. Our continued compliance with our obligations in general and these financial covenants in particular is dependent on our financial results, which are subject to fluctuation as described elsewhere in the risk factors discussed in this Annual Report on Form 10-K. If we fail to comply with the covenants in the future and if our lenders do not agree to waive any future non-compliance, we may be unable to borrow funds and any outstanding indebtedness could become immediately due and payable, which could materially harm our business. On July 28, 2025, pursuant to the Merger, the Company became a wholly owned subsidiary of Parent, and the Company’s obligations under the credit agreements were paid in full.
The Company’s current credit facilities may become unavailable.
We cannot be certain that we will be able to again amend the revolving and term loan credit facilities or revise covenants, if necessary, to accommodate changes or developments in our business and operations. Our ability to meet any current or future financing covenants will largely depend on our financial performance, which in turn will be subject to general economic conditions and financial, business and other factors. The cessation of any of our current credit facilities could cause a material adverse effect on the Company’s business, results of operations and financial condition. Furthermore, it is possible that counterparties to the receivables factoring programs in which we participate may not be willing or able to meet their obligations, either due to instability in the global financial markets or otherwise, which could, among other impacts, increase the duration of our cash collection cycle.
We may fail to secure or maintain necessary additional financing or capital.
If the current credit facilities are not adequate to finance our business and manage the financial impact of current economic challenges, we may seek to raise additional capital by issuing additional equity, modifying our existing or obtaining new credit facilities, or through a combination of these methods. Our ability to issue additional common stock, other equity securities or debt securities may be hampered by any actual or perceived weakness or volatility in our stock price. Any such securities also likely will be dilutive to stockholders’ ownership interests. We may not be able to obtain capital when we want or need it, or on satisfactory terms. The failure to have access to sufficient capital could adversely materially affect the Company’s business, results of operations and financial condition.
Increasing interest rates for our borrowings could adversely affect our results of operations.
The Company pays interest on outstanding borrowings under its secured credit facilities and certain other long-term debt obligations at interest rates that fluctuate. In recent months, persistent global inflation and other factors have resulted in a substantial increase in interest rates, and future borrowing costs may rise further. The amendments to the revolving and term loan facilities increased interest and fees owed to the lenders. Adverse changes in the Company’s interest rates could have a material adverse effect on its financial condition and results of operations.
The price of the Company’s stock is volatile.
The price of the Company’s common stock historically has experienced significant volatility due to fluctuations in the Company’s revenue and earnings, other factors relating to the Company’s operations, the market’s changing expectations for the Company’s growth, overall equity market conditions and other factors unrelated to the Company’s operations. In addition, the limited float of the Company’s common stock also affects the volatility of the Company’s common stock. Such fluctuations are expected to continue in the future.
Regulatory and Legal Risks
Changes in U.S. trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations.
The U.S. government has indicated its intent to adopt a new approach to trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements. It has also initiated tariffs on certain foreign goods, including raw materials utilized by the Company. Changes in U.S. trade policy could result in one or more of the U.S.’ trading partners adopting responsive trade policy making it more difficult or costly for the Company to import components from those countries. This in turn could require
us to increase material billings or prices to our customers which may reduce demand, or, if we are unable to increase material billings or prices, result in a lower margin on products sold.
China has imposed tariffs on U.S. products in retaliation for U.S. tariffs. Additional tariffs could be imposed by China in response to proposed increased tariffs on products imported from China. There is also a concern that the imposition of additional tariffs by the United States could result in the adoption of additional tariffs by other countries. The resulting trade war could have a significant adverse effect on world trade and the world economy. To the extent that trade tariffs and other restrictions imposed by the United States increase the price of or limit the amount of certain raw materials utilized by the Company imported into the United States, the costs of our raw materials may be adversely affected and the demand from our customers for products and services may be diminished, which could adversely affect our revenues and profitability.
We cannot predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business. The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the U.S. economy, which in turn could adversely impact our business, financial condition and results of operations.
Changes in securities laws and regulations may increase the Company’s compliance efforts and costs.
The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and listing requirements subsequently adopted by Nasdaq in response to Sarbanes-Oxley, have required changes in corporate governance practices, internal control policies and securities disclosure and compliance practices of public companies. More recently the Dodd-Frank Act has required changes to our corporate governance, compliance practices and securities disclosures, increasing the Company’s disclosure requirements. Regulations adopted (and in certain cases subsequently stayed due to ongoing legal challenges) by the SEC mandating new disclosures of environmental, social and governance information, including climate-related risks, targets and goals and their financial impact, could become effective in the future. Compliance with these rules has increased our legal, financial and accounting costs, and those costs will increase if additional requirements are imposed. These legal developments may result in the Company having difficulty in attracting and retaining qualified directors or officers. The Company’s failure to comply with present or future regulations could result in the SEC or Nasdaq levying sanctions against the Company or even moving to delist its stock. Such consequences, as well as compliance costs, could have a material impact on the Company’s business, financial condition and results of operations. On July 28, 2025, the Company closed on the merger transaction with Parent to “go private.” As a result of this event, the Company has withdrawn from Nasdaq and intends to file that it will cease filing reports with the SEC in the future.
Conflict Minerals regulations may cause the Company to incur additional expenses and could increase the cost of components contained in its products and adversely affect its inventory supply chain.
The Dodd-Frank Act, and the rules promulgated by the SEC thereunder, require the Company to attempt to determine and report annually whether any Conflict Minerals contained in our products originated from the DRC or an adjoining country. The Dodd-Frank Act and these rules could affect our ability to source components that contain Conflict Minerals at acceptable prices and could impact the availability of Conflict Minerals, since there may be only a limited number of suppliers of conflict-free Conflict Minerals. Our customers may require that our products contain only conflict-free Conflict Minerals, and our revenues and margins may be negatively impacted if we are unable to meet this requirement at a reasonable price or are unable to pass through any increased costs associated with meeting this requirement. Additionally, the Company may suffer reputational harm with our customers and other stakeholders if our products are not conflict-free. The Company could incur significant costs in the event we are unable to manufacture products that contain only conflict-free Conflict Minerals or to the extent that we are required to make changes to products, processes, or sources of supply due to the foregoing requirements or pressures. See above regarding the impact of the Company’s July 28, 2025 merger.
The Company’s operations are subject to numerous other regulations and failure to comply with all applicable regulations could subject the Company to liability.
The Company is subject to a variety of regulations, including environmental regulation of the use, storage, discharge and disposal of hazardous chemicals used during its manufacturing process; disclosures relating to cancer-causing substances in drinking water as required under California Proposition 65; and compliance with the European Union’s requirements relating to certain chemical and hazardous substances including under the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) Act and the Restriction of Hazardous Substances (RoHS-2) Directive. To date, the cost to the Company of such compliance has not had a material impact on the Company’s business, financial condition or results of operations. However, federal, state and local legislation and regulation are constantly evolving. Further, increased public awareness and concern regarding environmental risks, including global climate change, may result in more international, federal, state or local requirements or industry standards to reduce or mitigate climate change and other environmental risks. The Company cannot predict the nature, scope or effect of regulatory legislation or requirements that could be imposed or how existing or future laws or regulations will be administered or interpreted. Any failure by the Company to comply with present or future regulations, whether as a result of human error, equipment failure or other causes, could subject it to future liabilities to customers or governmental agencies, the suspension of production, increased costs or reputational harm with our customers and other stakeholders. Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of regulatory agencies, could require substantial expenditures by the Company and could have a material impact on the Company’s business, financial condition and results of operations.
Any litigation, even where a claim is without merit, could result in substantial costs and diversion of resources.
In the past, the Company has been notified of claims relating to various matters including contractual matters, product liability, labor issues or other matters arising in the ordinary course of business. In the event of any such claim, the Company may be required to spend a significant amount of money and resources, even where the claim is without merit or covered by insurance. Accordingly, the resolution of such disputes, even those encountered in the ordinary course of business, could have a material adverse effect on the Company’s business, consolidated financial conditions and results of operations.
Failure to protect our intellectual property could undermine our competitive position.
Competing effectively depends, to a significant extent, on maintaining the proprietary nature of our intellectual property. We attempt to protect our intellectual property rights worldwide through a combination of keeping our proprietary information secret and utilizing trademark, copyright, and trade secret laws. Because of the differences in foreign laws concerning proprietary rights, our intellectual property rights do not generally receive the same degree of protection in foreign countries as they do in the United States, and therefore, in some parts of the world, we have limited protections, if any, for our intellectual property. If we are unable to adequately protect our intellectual property embodied in our solutions, designs, processes and manufacturing, the competitive advantages of our proprietary technology could be reduced or eliminated, which would harm our business and could have a material adverse effect on our results of operations and financial position.
Technology Risks
It is increasingly difficult to protect the Company’s Information Technology (“IT”) systems.
With the increased use of technologies to conduct business, a company is susceptible to operational, information security and related risks. In general, cyber incidents can result from deliberate attacks or unintentional events. Cyberattacks include gaining unauthorized access to digital systems (e.g., through “hacking” or malicious software coding) for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption (e.g., ransomware attacks). Cyberattacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites (i.e., efforts to make network services unavailable to intended users). Cyber incidents affecting the Company or its service providers have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Company’s ability to conduct business in the ordinary course, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, additional compliance costs and, in extreme cases, have caused companies to cease doing business. Cyber events also can affect counterparties or entities with which the
Company does business, governmental and other regulatory authorities, banks, insurance companies and other financial institutions, among others. In addition, substantial costs may be incurred in order to prevent any cyber incidents in the future. While the Company has established risk management systems designed to prevent such cyber incidents, there are inherent limitations in such systems including the possibility that the Company has not prepared for certain risks that have not been or are not possible to have been identified. Further, the Company may have limited ability to influence, and cannot control, the cyber security plans and systems put in place by its service providers or any other third parties whose operations may affect the Company. The Company could be negatively impacted as a result.
If the security of the Company’s IT systems is breached or otherwise subjected to unauthorized access, the Company’s reputation may be severely harmed and it may be exposed to liability.
The Company’s IT systems store confidential information which includes its financial information, its customers’ proprietary information, product information, supplier information, and other critical data. Any accidental or willful security breach or other unauthorized access could expose the Company to liability for the loss of such information, adverse regulatory action by federal, state and local governments, time-consuming and expensive litigation and other possible liabilities as well as negative publicity, which could severely damage the Company’s reputation. If security measures are breached because of third-party action, employee action or error, malfeasance or otherwise, or if design flaws in its software are exposed and exploited, and, as a result, a third party obtains unauthorized access to any of the Company’s customer data, its relationships with its customers may be severely damaged, and the Company could incur significant liability. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until they are launched against a target, the Company and its third-party hosting facilities may be unable to anticipate these techniques or to implement adequate preventive measures. In addition, many states have enacted laws requiring companies to notify customers of data security breaches involving their data. These mandatory disclosures regarding a security breach often lead to widespread negative publicity, which may cause the Company’s customers to lose confidence in the effectiveness of its data security measures. Any security breach whether actual or perceived, could harm the Company’s reputation, could cause it to lose customers and may negatively impact its ability to acquire new customers.
The Company and its customers may be unable to keep current with the industry’s technological changes.
The market for the Company’s manufacturing services is characterized by rapidly changing technology and continuing product development. The future success of the Company’s business will depend in large part upon our customers’ ability to maintain and enhance their technological capabilities, and our ability to develop and market manufacturing services which meet changing customer needs and successfully anticipate or respond to technological changes in manufacturing processes on a cost-effective and timely basis.
Human Capital Risks
The Company depends on management and skilled personnel.
The Company depends significantly on its Chief Executive Officer and Chairman of the Board, President and other executive officers. The Company’s employees generally are not bound by employment agreements and the Company cannot assure that it will retain its executive officers or skilled personnel. The loss of the services of any of these key employees could have a material impact on the Company’s business and results of operations. In addition, due to significant competition in the labor market, continued growth and expansion of the Company’s EMS business will require that the Company attract, motivate and retain additional skilled and experienced personnel. The Company’s future growth depends on the contributions and abilities of key executives and skilled, experienced employees. The Company’s future growth also depends on its ability to recruit and retain high-quality employees. A failure to obtain or retain the number of skilled employees necessary to support the Company’s efforts, a loss of key employees or a significant shortage of skilled, experienced employees could jeopardize its ability to meet its growth targets.
Favorable labor relations are important to the Company, and failures to comply with domestic or international employment laws could result in significant damages.
The Company currently has labor union contracts with its employees constituting approximately 45% and 46% of its workforce for fiscal years 2025 and 2024, respectively. Although the Company believes its labor relations are good, any labor disruptions, whether union-related or otherwise, could significantly impair the Company’s business, substantially increase the Company’s costs or otherwise have a material impact on the Company’s results of operations. The Company is also subject to a variety of domestic and foreign employment laws, including those related to safety, wages, discrimination, harassment, organizing, employee privacy and severance. Allegations of violations of these laws could result in defense costs, damages, settlements and fines, which could have a material impact on the Company’s results of operations.
Accounting Risks
The Company has intangible assets, and future impairment of these assets could have a material adverse impact on the Company's financial results.
The Company has recorded identifiable intangible assets on its balance sheet as a result of operations and acquisitions. A number of factors may result in impairments to intangible assets, including significant negative industry or economic trends, disruptions to our business, increased competition and significant changes in the use of the assets. Any impairment charges could adversely affect the Company's financial condition or results of operations in the periods recognized.
Disclosure and internal controls may not detect all errors or fraud.
The Company’s disclosure controls and internal controls can provide only reasonable assurance that the procedures will meet the control objectives. Controls are limited in their effectiveness by human error, including faulty judgments in decision-making. Further, controls can be circumvented by collusion of two or more people or by management override of controls. Therefore, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, cannot conclude with certainty that the Company’s disclosure controls and internal controls will prevent all errors and all fraud.
We have identified material weaknesses in our internal control over financial reporting. If our remediation of the material weaknesses is not effective, or if we experience additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls in the future, we may not be able to accurately or timely report our financial condition or results of operations.
In connection with the Company’s management evaluation of the effectiveness of the design and operation of its disclosure controls and procedures, the Company's management has identified a material weakness in internal control over financial reporting. As a result of the material weakness, the Company's management has concluded that the Company's disclosure controls and procedures were not effective as of April 30, 2025, as further described in “Controls and Procedures.” A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. The Company's material weakness in internal controls was related to the application of appropriate accounting principles over non-standard revenue transactions. Specifically, controls to ensure that revenue recognition criteria were met prior to recognizing sales transactions were not operating effectively.
The Company is taking steps to remediate the material weakness by, among other things, implementing measures to improve its internal control structure, specifically, strengthening the Company's review process related to revenue contracts, such as multiple levels of review and supporting evidence of such transactions. However, no assurance can be given that these measures will remediate the material weakness or prevent additional material weaknesses in the future.
The Company may discover additional material weaknesses in its system of internal financial and accounting controls and procedures that could result in misstatements of its financial statements. The Company's internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.
If the Company is unable to remediate the material weakness in a timely manner or if it identifies additional material weaknesses in the future, the Company may be unable to provide required financial information in a timely and reliable manner and the Company may incorrectly report financial information. Likewise, if the Company's financial statements are not filed on a timely basis, the Company could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities. Further, the existence of a material weakness in internal control over financial reporting could adversely affect the Company's reputation or investor perceptions of the Company, which could have a negative effect on the trading price of the Company's common stock.
Changes in financial accounting standards may affect our reported financial condition or results of operations as well as increase costs related to implementation of new standards and modifications to internal controls.
Our consolidated financial statements are prepared in conformity with accounting standards generally accepted in the United States, or U.S. GAAP. These principles are subject to amendments made primarily by the Financial Accounting Standards Board (FASB) and the SEC. A change in those policies can have a significant effect on our reported results and may affect our reporting of transactions which are completed before a change is announced. Changes to accounting rules or challenges to our interpretation or application of the rules by regulators may have a material adverse effect on our reported financial results or on the way we conduct business.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
The Company’s EMS business is operated through its manufacturing facilities located in Elk Grove Village, Illinois U.S., Union City, California U.S.; Acuna, Coahuila, Mexico, Chihuahua, Chihuahua, Mexico and Tijuana, Baja California, Mexico; Bien Hoa City, Dong Nai Province, Vietnam and Suzhou, Jiangsu Province, China. In addition, the Company maintains an IPO in Taipei, Taiwan. The Company provides design services in Elk Grove Village, Illinois, U.S. The Company has an information technology office in Taichung, Taiwan.
Certain information about the Company’s manufacturing, warehouse, purchasing and design facilities is set forth below:
Location
Square Feet
Services Offered
Owned/Leased
Suzhou, China
216,950
Electronic and electromechanical manufacturing solutions
*
‎***
Acuna, Mexico
128,440
Electronic and electromechanical manufacturing solutions
Owned
‎**
Elk Grove Village, IL
124,300
Corporate headquarters, electronic and electromechanical manufacturing solutions and warehousing
Leased
Chihuahua, Mexico
121,000
Electronic and electromechanical manufacturing solutions
Leased
Union City, CA
117,000
Electronic and electromechanical manufacturing solutions
Leased
Tijuana, Mexico
112,100
Electronic and electromechanical manufacturing solutions
Leased
San Diego, CA
30,240
Warehousing and distribution
Leased
Del Rio, TX
30,000
Warehousing and distribution
Leased
Del Rio, TX
28,000
Warehousing and distribution
Owned
Bien Hoa City, Vietnam
24,475
Electronic and electromechanical manufacturing solutions
Leased
El Paso, TX
18,200
Warehousing and distribution
Leased
Del Rio, TX
16,000
Warehousing and distribution
Leased
Taipei, Taiwan
4,685
International procurement office
Leased
Taichung, Taiwan
1,650
Information technology office
Leased
*The Company’s Suzhou, China buildings are owned by the Company and the land is leased from the Chinese government for a 50 year term ending on July 15, 2053.
**A portion of the facility is leased and the Company has an option to purchase it.
***Total square footage includes 70,000 square feet of dormitories.
The Union City and San Diego, California, U.S., Tijuana, Baja California and Chihuahua, Chihuahua Mexico, Bien Hoa City, Dong Nai Province, Vietnam, Del Rio and El Paso, Texas, U.S., and Elk Grove Village, Illinois, U.S. properties are occupied pursuant to leases of the premises. The lease agreement for the El Paso, Texas, U.S. property expires January 2030. The lease agreement for the Del Rio, Texas, U.S. property expires November 2025. The lease agreement for the San Diego, California, U.S. property expires December 2034. The lease agreement for the Union City, California, U.S. property expires June 2026. The lease agreement for the Elk Grove Village, Illinois, U.S. property expires December 2027. The Chihuahua, Mexico lease expires April 2026. The Tijuana, Baja California, Mexico lease expires November 2029. The lease agreement for the Bien Hoa City, Dong Nai Province, Vietnam property expires July 2028. The Company’s manufacturing facility located in Acuna, Coahuila, Mexico, is owned by the Company, except for a portion of the facility that is leased. The Company has an option to buy the leased portion of the facility in Acuna, Coahuila, Mexico. The property in Del Rio, Texas, U.S. is financed under a separate mortgage loan agreement. The Company leases the IPO office in Taipei, Taiwan to coordinate southeast Asia purchasing and logistics activities. The Company leases the information technology office in Taichung, Taiwan. The Company believes its current facilities are adequate to meet its current needs. In addition, the Company believes it can find alternative facilities to meet its needs in the future, if required.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
From time to time the Company is involved in legal proceedings, claims or investigations that are incidental to the conduct of the Company’s business. In future periods, the Company could be subjected to cash cost or non-cash charges to earnings if any of these matters are resolved on unfavorable terms. However, although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including management’s assessment of the merits of any particular claim, the Company does not expect that these legal proceedings or claims will have any material adverse impact on its future consolidated financial position or results of operations. See Note P - Litigation, for more information.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
The Company’s common stock was traded on the Nasdaq Capital Market under the symbol SGMA until market close on July 28, 2025, at which time its trading was halted in connection with the Merger. Upon consummation of the Merger, the Company’s common stock was delisted from the Nasdaq Capital Market.
Holders and Dividends
As of July 28, 2025, there was one holder of record of the Company’s common stock. The Company has not paid a cash dividend and does not anticipate paying dividends in the foreseeable future.
Equity Compensation Plan Information
The information required by this item concerning securities authorized for issuance under equity compensation plans is incorporated by reference to Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Share Owner Matters of Part III.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. RESERVED

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
In addition to historical financial information, this discussion of the business of the Company and other Items in this Annual Report on Form 10-K contain forward-looking statements concerning the Company’s business or results of operations. See the section titled “Cautionary Note Regarding Forward-Looking Statements” for a discussion of these forward-looking statements and the associated risks and uncertainties.
Overview
The Company currently operates in one reportable segment as an independent provider of electronic manufacturing services (“EMS”) and provides manufacturing and assembly services ranging from the assembly of individual components to the assembly and testing of box-build electronic products. The Company has the ability to produce assemblies requiring mechanical as well as electronic capabilities. This includes printed circuit board assemblies, electro-mechanical subassemblies and completely assembled (box-build) electronic products.
The Company relies on numerous third-party suppliers for components used in the Company’s production process. Certain of these components are available only from single-sources or a limited number of suppliers. In addition, a customer’s specifications may require the Company to obtain components from a single-source or a small number of suppliers. The loss of any such suppliers could have a material impact on the Company’s results of operations. Further, the Company could operate at a cost disadvantage compared to competitors who have greater direct buying power from suppliers. The Company does not enter into long-term purchase agreements with major or single-source suppliers. The Company believes that short-term purchase orders with its suppliers provides flexibility, given that the Company’s orders are based on the changing needs of its customers.
In connection with the production of assembled products, the Company provides services to its customers, including (1) automatic and manual assembly and testing of products; (2) material sourcing and procurement; (3) manufacturing and test engineering support; (4) design services; (5) warehousing and distribution services; (6) assistance in obtaining product approval from governmental and other regulatory bodies and (7) compliance reporting. The Company provides these manufacturing services through an international network of facilities located in the United States, Mexico, China, Vietnam and Taiwan.
Sales can be a misleading indicator of the Company’s financial performance. Sales levels can vary considerably among customers and products depending on the type of services (turnkey versus consignment) rendered by the Company and the demand by customers. Consignment orders require the Company to perform manufacturing services on components and other materials supplied by a customer, and the Company charges only for its labor, overhead and manufacturing costs, plus a profit. In the case of turnkey orders, the Company provides, in addition to manufacturing services, the components and other materials used in assembly. Turnkey contracts, in general, have a higher dollar volume of sales for each given assembly, owing to inclusion of the cost of components and other materials in net sales and cost of goods sold. Variations in the number of turnkey orders compared to consignment orders can lead to significant fluctuations in the Company’s revenue and gross margin levels. Consignment orders which require the Company to perform manufacturing services on components and other materials supplied by a customer accounted for less than 1% of the Company’s revenues for each of the fiscal years ended April 30, 2025 and April 30, 2024.
The Company’s international footprint provides our customers with flexibility within the Company to manufacture in China, Mexico, Vietnam or the U.S. We believe this strategy will continue to serve the Company well as its customers continuously evaluate their supply chain strategies.
Factors Affecting Results
Supply Chain Component Shortages and Tariffs. Supply chain component shortages improved significantly during fiscal 2025. The Company believes this led customers to reduce their inventory stocking levels during
fiscal 2025, resulting in lower revenue for the Company. The Company’s business, results of operations, and financial condition continue to be impacted by any supply chain issues due to world-wide component shortages. In addition, changes to tariff policies in the United States have been frequent and dramatic during the end of fiscal 2025 and into fiscal 2026. These fluctuations may slow customer investment, negatively impacting the Company’s business, results of operations, and financial condition.
Recent Developments
The Company’s primary secured credit agreements, being the Amended and Restated Credit Agreement dated as of July 18, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “JPM Credit Agreement”) by and among the Company, the other loan party thereto and JPMorgan Chase Bank, N.A, as lender (“JPM”), and the Credit Agreement dated as of July 18, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “Term Loan Agreement” and together with the JPM Credit Agreement, the “Credit Agreements”) by and among the Company, the financial institutions identified therein (the “TCW Lenders”) and TCW Asset Management Company LLC, as administrative agent for the TCW Lenders (in such capacity, the “Agent,” and collectively with the TCW Lenders and JPM, the “Lender Parties”), contain financial covenants relating to (i) the Fixed Charge Coverage Ratio (as defined in the Credit Agreements), which is the ratio of the Company’s fixed payments on its indebtedness made during any fiscal period minus non-financed capital expenditures to EBITDA (as defined in the Credit Agreements) and (ii) the Total Debt to EBITDA Ratio (as defined in the Credit Agreements), which is the ratio of the Company’s borrowed money or letters of credit to EBITDA.
As of August 19, 2024, the Company was not in compliance with the financial covenants under the Credit Agreements as follows: the Fixed Charge Coverage Ratio for multiple twelve month periods including those ending on April 30, 2024 and July 31, 2024 was less than 1.10:1.00, the Total Debt to EBITDA Ratio for the twelve month period ending on April 30, 2024 was greater than 4.50:1.00, and the Total Debt to EBITDA Ratio for the twelve month period ending on July 31, 2024 was greater than 4.25:1.00 (collectively, the “2024 Covenant Defaults”). In addition, the Company received a delinquency notification letter from Nasdaq, dated August 16, 2024, indicating that the Company was not in compliance with the continued listing requirements of Nasdaq for failing to timely file the Company’s Form 10-K annual report for the fiscal year ended April 30, 2024. This notification also constituted a default under the Credit Agreements (collectively with the 2024 Covenant Defaults, the “2024 Defaults”). The Company had 60 days from the date of the Nasdaq delinquency notice, or until October 15, 2024, to file a plan with Nasdaq to regain compliance. The Company filed its annual report for the fiscal year ended April 30, 2024 on September 3, 2024, and on September 10, 2024, the Company received a notification letter from Nasdaq indicating that the Company had regained compliance with the applicable continued listing requirements based on the filing of its Form 10-K.
Due to the 2024 Covenant Defaults, the facilities under the Credit Agreements were classified as current liabilities on the Consolidated Balance Sheet at July 31, 2024 and April 30, 2024. In addition, due to the lender demand of a Replacement Transaction (as defined in the Credit Agreements) by September 2025 and the risk of additional covenant compliance failures based on current revenue levels the Company continues to classify this debt as current liabilities as of April 30, 2025.
On August 19, 2024 (the “Third Amendment Effective Date”), the Lender Parties waived the 2024 Defaults pursuant to (i) the Waiver and Amendment No. 3 to Credit Agreement (the “JPM Amendment”) between the Company and JPM, and (ii) the Waiver and Amendment No. 3 to Credit Agreement (the “TCW Amendment” and together with the JPM Amendment, the “2024 Amendments”) by and among the Company, the TCW Lenders, and the Agent. In consideration of the TCW Amendment, the Company and the Agent also entered into the Third Amendment Fee Letter to the TCW Credit Agreement (the “Fee Letter”) dated as of the Third Amendment Effective Date. The 2024 Amendments also amended the financial covenants and certain other terms of the Credit Agreements, including, among other things, that the Company will pursue and close a Replacement Transaction to pay the obligations under the Credit Agreements in full no later than September 30, 2025 unless the Company meets certain debt ratios for the twelve month period ending on August 31, 2025. See Waivers and Amendments No. 3 within Note H - Long-term Debt for more information. During March 2025, the Company and its lenders agreed to additional modifications designed to facilitate a Replacement Transaction. See Waivers and Amendments No. 4 within Note H - Long-term Debt for more information.
The Company has been taking steps to reduce its debt and cost structure. Most recently, since the beginning of calendar year 2024, these actions include the sale of its Elgin, Illinois property and consolidation of the Elgin operations to the Elk Grove Village, Illinois headquarters, reduction of headcounts at various operations and corporate, and inventory reduction. During December 2024, the Company executed a sale/leaseback transaction with respect to its Elk Grove Village, Illinois headquarters, using the proceeds to further reduce its debt position. For further discussion of the transaction, see Note J - Sale/Leaseback.
On the Closing Date, Transom completed the previously announced acquisition of the Company pursuant to the Merger Agreement, whereby the Company became a wholly owned subsidiary of Parent in the Merger. On the Closing Date, each issued and outstanding share of Common Stock was converted into the right to receive $3.02 in cash, less applicable taxes and withholdings. Also on the Closing Date, the Company’s obligations under the Credit Agreements were repaid in full.
The Company continues to explore other strategic initiatives and refinancing options to further reduce its debt to enable it to comply with increasingly stringent financial covenants. Delays or a failure to effectively reduce debt, including due to circumstances outside of our control, could have an adverse effect on our financial position and results of operations.
Critical Accounting Estimates:
Management Estimates and Uncertainties - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made in preparing the consolidated financial statements include depreciation and amortization periods, the allowance for doubtful accounts, excess and obsolete reserves for inventory, deferred income, deferred taxes, uncertain tax positions, valuation allowance for deferred taxes and valuation of goodwill and long-lived assets. Actual results could materially differ from these estimates.
The potential impact of continued economic uncertainty due to persistent inflation and continuing global supply chain shortages and unpredictability may have a significant adverse impact on the timing of delivery of customer orders and the levels of future customer orders.
Inventories - Inventories are valued at cost. Cost is determined by an average cost method and the Company allocates labor and overhead to work-in-process and finished goods. In the event of an inventory write-down, the Company records expense to state the inventory at lower of cost or net realizable value. The Company establishes inventory reserves for valuation and excess and obsolete inventory for which the customer is not obligated. The Company records provisions for inventory shrinkage based on historical experience to account for unmeasured usage or loss. Of the Company’s raw materials inventory, a substantial portion has been purchased to fulfill committed future orders or for which the Company is contractually entitled to recover its costs from its customers. For the remaining raw materials inventory, a provision for excess and obsolete inventories is recorded for the difference between the cost of inventory and its estimated realizable value based on assumptions about future product demand and market conditions. Upon a subsequent sale or disposal of the impaired inventory, the corresponding reserve is relieved to ensure the cost basis of the inventory reflects any reductions. Actual results differing from these estimates could significantly affect the Company’s inventories and cost of products sold as the inventory is sold or otherwise relieved.
Impairment of Long-Lived Assets - The Company reviews long-lived assets, including amortizable intangible assets, for impairment in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360: Property, Plant and Equipment. Property, machinery and equipment and finite life intangible assets are reviewed whenever events or changes in circumstances occur that indicate possible impairment. If events or changes in circumstances occur that indicate possible impairment, the Company first performs an impairment review based on an undiscounted cash flow analysis at the lowest level at which cash flows of the long-lived assets are largely independent of other groups of its assets and liabilities. This analysis requires management judgment with respect to changes in technology, the continued
success of product lines, and future volume, revenue and expense growth rates. If the carrying value exceeds the undiscounted cash flows, the Company records an impairment, if any, for the difference between the estimated fair value of the asset group and its carrying value. The Company further conducts annual reviews of its long-lived asset groups for possible impairment.
Fair Value Measurements Warrants - Fair value measurements are market-based measurements, not entity-specific measurements. Therefore, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. The Company follows a three-level hierarchy to prioritize the inputs used in valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable in active markets.
During third and fourth quarters of fiscal 2025, the Company valued its contingent warrants which are classified as liabilities under authoritative accounting standards. These common stock warrants are valued using a Monte Carlo model, with level 3 inputs such as expected volatility, risk-free interest rate, and expected number of warrants ultimately utilized and term that are not observable in active markets.
The fair value of the Company’s warrant liability for fiscal 2025 is as follows:
April 30,
Beginning balance
$
-
Contingent warrants issuance
2,263,000
Issuance of warrants
(770,250)
Change in fair value of warrants
(544,945)
Ending balance
$
947,805
Income Tax - The Company’s income tax expense, deferred tax assets and liabilities and reserves for unrecognized tax benefits reflect management’s best assessment of estimated future taxes to be paid. The Company is subject to income taxes in both the U.S. and several foreign jurisdictions. Significant judgments and estimates by management are required in determining the consolidated income tax expense assessment.
Deferred income tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. In evaluating the Company’s ability to recover its deferred tax assets within the jurisdiction from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company begins with historical results and changes in accounting policies, and incorporates assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment and estimates by management about the forecasts of future taxable income and are consistent with the plans and estimates the Company uses to manage the underlying businesses. In evaluating the objective evidence that historical results provide, the Company considers three years of cumulative operating income and/or loss. Valuation allowances are established when necessary to reduce deferred income tax assets to an amount more likely than not to be realized. Given the Company’s recent operating losses, the Company determined that it may not reasonably rely on future forecasted income to benefit its deferred tax assets. For these reasons the Company established a full valuation allowance on its deferred tax assets as of October 31, 2024, which remains effective as of April 30, 2025.
New Accounting Standards:
See Note B - Summary of Significant Accounting Policies of Item 15(a) Exhibits and Financial Statement Schedules.
Results of Operations:
FISCAL YEAR ENDED APRIL 30, 2025 COMPARED
TO FISCAL YEAR ENDED APRIL 30, 2024
The following table sets forth the percentage relationships of gross profit and expense items to net sales for the years indicated:
Fiscal Years Ended
April 30,
Net sales
$
304,716,119
$
373,883,821
Costs of products sold
277,410,159
340,357,503
As a percent of net sales
91.0%
91.0%
Gross profit
27,305,960
33,526,318
As a percent of net sales
9.0%
9.0%
Selling and administrative expenses
25,534,298
26,392,403
As a percent of net sales
8.4%
7.1%
Operating income
1,771,662
7,133,915
Other income
7,582,017
466,704
Change in fair value of warrants
544,945
-
Interest expense, net
(13,841,606)
(10,362,038)
Loss before income taxes
(3,942,982)
(2,761,419)
Income tax (expense) benefit
(6,311,926)
275,262
Net loss
$
(10,254,908)
$
(2,486,157)
Net sales
Net sales decreased $69,167,702, or 18.5%, to $304,716,119 in fiscal 2025, compared to $373,883,821 in fiscal 2024. The decline was primarily attributable to a broad decline in customer demand in the consumer electronics, industrial electronics and medical/life science markets as compared to fiscal 2024 which we believe was driven by the return of a normalized supply chain.
Costs of products sold
Cost of products sold decreased $62,947,344, or 18.5%, to $277,410,159 (91.0% of net sales) for fiscal 2025, compared to $340,357,503 (91.0% of net sales) for the prior fiscal year. In fiscal 2025, the cost of products sold as a percentage of sales has remained consistent, compared to the prior fiscal year.
Gross profit margin
Gross profit margin was 9.0% of net sales, in fiscal year 2025 compared to 9.0% of net sales in fiscal 2024. In fiscal 2025, the gross margins as a percentage of sales has remained consistent, compared to the prior fiscal year.
Selling and administrative expenses
Selling and administrative expenses decreased $858,105, or 3.3%, to $25,534,298 (8.4% of net sales) in fiscal 2025, compared to $26,392,403 (7.1% of net sales) for the same period in the last fiscal year. The decrease in selling and administrative expenses is primarily due to a decrease in bonus expense and miscellaneous general and administrative expenses. Additional cost reductions were largely offset by increased professional services charges and the recording of warrant expense. Additional cost reductions were largely offset by increased professional services charges and the recording of warrant expense.
Other Income
Other income increased to $7,582,017 in fiscal 2025, compared to $466,704 in fiscal 2024. The increase in other income was primarily driven by the December 2024 sale/leaseback transaction for the facility located in Elk Grove Village, IL.
Change in fair value of warrants
Contingent warrants were issued at a valuation of $2,263,000 during fiscal 2025 using a Monte Carlo model with a subsequent change in the fair value of contingent warrants decreasing expense by $544,945, as well as the issuance of warrants in the amount of $770,250 for a net value as of April 30, 2025 of $947,805 in connection with the TCW Amendment which included the obligation to issue contingent warrants to purchase shares of the Company’s common stock. The valuation was based on the actual number of contingent warrants that can be issued under the TCW Amendment using the Monte Carlo model subject to remeasurement until warrants are issued, exercised or cancelled.
Interest expense, net
Interest expense, net, increased to $13,841,606 in fiscal 2025, compared to $10,362,038 for the prior fiscal year. The increase relates to additional interest for amendment fees for TCW and deferred financing costs as required by the debt modification during the second quarter of fiscal 2025.
Income tax expense
Income tax expense increased $6,587,188 to an income tax expense of $6,311,926 for fiscal 2025, compared to an income tax benefit of $275,262 for the prior fiscal year. The effective tax rate decreased to -160.1% for fiscal 2025, compared to 10% for fiscal 2024. The increase in income tax expense for fiscal 2025 compared to fiscal 2024 is primarily due to an increase in the valuation allowance recorded during fiscal 2025. The decrease in effective tax rate is due to variations in income earned by jurisdiction and the recording of valuation allowance.
Net income/loss
Net loss increased $7,768,751, to a net loss of $10,254,908 for fiscal 2025, compared to net loss of $2,486,157 for the prior fiscal year. The increase in net loss primarily relates to lower sales volumes, a warrant remeasurement, deferred financing costs related to debt modification, higher labor and other fixed manufacturing costs, severance related costs and a full valuation allowance on deferred tax assets. The increase in net loss is partially offset with the gain related to the December 2024 sale/leaseback transaction for the facility located in Elk Grove Village, IL in the amount of $7,175,191.
Liquidity and Capital Resources:
Over the past two years the Company has been in non-compliance with certain financial covenants in its credit agreements (further discussion in Note H - Long-term Debt. Accordingly, beginning in August 2024 and continuing through July 28, 2025, the Company negotiated with its secured lenders to amend the applicable credit agreements. Under the terms of those amended agreements, the Company was required to pursue and close a Replacement Transaction to pay the Obligations (as defined in the Credit Agreements) in full no later than September 30, 2025 unless the Company meets certain debt ratios for the twelve month period ending on August 31, 2025. Furthermore, as of April 30, 2025, there remained a risk of additional covenant failures based on the Company’s revenue levels. On the Closing Date, in connection with the Merger, the Company’s obligations under the credit agreements were repaid in full.
The Company has reduced its debt by selling assets, reducing workforce, and reducing its capital requirements to improve operating performance. During December 2024, the Company executed a sale/leaseback transaction with respect to its Elk Grove Village, Illinois headquarters, using the proceeds to reduce its debt position.
The Company’s primary sources of liquidity have traditionally been comprised of cash and cash equivalents as well as availability under credit agreements in place at the time.
In the event customers delay orders or future payments are not made timely, economic conditions remain impacted for longer than the Company expects or deteriorate further, the tariff issues persist or worsen, the Company experiences continued supply chain disruptions on certain raw materials, the Company desires to expand its operations, its business grows more rapidly than expected, the Company fails to effectively reduce debt, any new public health crises arise, or geopolitical risks continue or worsen, the Company’s liquidity position could be severely impacted and additional financing resources may be necessary. There is no assurance that the Company will be able to obtain equity or debt financing at acceptable terms, or at all, in the future.
Operating Activities
Cash flow provided by operating activities was $18,530,322 for the fiscal year ended April 30, 2025, compared to cash flow provided by operating activities of $27,760,048 for the prior fiscal year. The decrease in cash flow provided by operating activities was primarily the result of a decrease in inventory in the amount of $20,554,334, an increase in operating lease liabilities in the amount of $3,524,612 and a decrease in prepaid expenses and other assets in the amount of $2,443,120 partially offset by a decrease in customer deposits in the amount of $4,116,762.
Investing Activities
Cash provided by investing activities was $7,100,406 for fiscal 2025, compared to cash provided by investing activities of $117,112 for fiscal 2024. The increase was primarily the result of the Company’s purchases of $1,191,692 in machinery and equipment to be used in the ordinary course of business and the sale/leaseback pf the Company’s principal manufacturing facility in Elk Grove Village, Illinois in December 2024, which provided net proceeds of $8,292,098. The Company anticipates future purchases of machinery and equipment will be funded by lease transactions. However, there is no assurance that the Company will be able to obtain funding for leases at acceptable terms, if at all, in the future.
Financing Activities
Cash used in financing activities was $25,015,838 for the fiscal year ended April 30, 2025, compared to cash used in financing activities of $26,278,929 for fiscal 2024. The decrease in cash used in financing activities was primarily the result of payments under the line of credit and term loan agreements.
Financing Summary
Debt and finance lease obligations consisted of the following at April 30, 2025 and April 30, 2024:
Debt:
Notes Payable - Banks
$
52,915,560
$
66,102,020
Notes Payable - Buildings
313,015
366,572
Notes Payable - Equipment
3,054,939
4,642,951
Unamortized deferred financing costs
(3,646,628)
(1,528,156)
Total debt
52,636,886
69,583,387
Less current maturities*
50,597,117
66,244,227
Long-term debt
$
2,039,769
$
3,339,160
Finance lease obligations
$
3,147,447
$
5,361,574
Less current maturities
1,742,412
2,214,127
Total finance lease obligations, less current portion
$
1,405,035
$
3,147,447
* Due to the 2024 Covenant Defaults, the facilities under the Credit Agreements were classified as current liabilities on the Consolidated Balance Sheet at July 31, 2024 and April 30, 2024. In addition, due to the lender demand of a Replacement Transaction by September 2025 and the risk of additional covenant compliance failures based on current revenue levels the Company continues to classify this debt as current liabilities as of April 30, 2025.
Notes Payable - Banks
As of April 30, 2025, the Company’s primary secured credit agreements included (i) the Amended and Restated Credit Agreement dated as of July 18, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “JPM Credit Agreement”) by and between the Company and JPMorgan Chase Bank, N.A, as lender (“JPM”), which provides for a secured credit facility consisting of a revolving loan facility and, until July 2022, a term loan facility, and (ii) the Credit Agreement dated as of July 18, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “Term Loan Agreement” and together with the JPM Credit Agreement, the “Credit Agreements”) by and among the Company, the financial institutions identified therein (the “TCW Lenders”) and TCW Asset Management Company LLC, as administrative agent for the TCW Lenders (in such capacity, the “Agent,” and collectively with the TCW Lenders and JPM, the “Lender Parties”), which provides for a term loan facility. The facility under the JPM Credit Agreement, as amended, allowed the Company to borrow on a revolving basis up to the lesser of (i) $70,000,000 or (ii) an amount equal to a percentage of the eligible receivable borrowing base plus a percentage of the inventory borrowing base minus any reserves established by Lender (the “Revolving Commitment”). The maturity date of the facility is July 18, 2027.
The Credit Agreements contain financial covenants relating to (i) the Fixed Charge Coverage Ratio (as defined in the Credit Agreements), which is the ratio of the Company’s fixed payments on its indebtedness made during any fiscal period minus non-financed capital expenditures to EBITDA (as defined in the Credit Agreements) and (ii) the Total Debt to EBITDA Ratio (as defined in the Credit Agreements), which is the ratio of the Company’s borrowed money or letters of credit to EBITDA.
In addition, the JPM Credit Agreement imposes a cash dominion period if there is an event of default or if availability is less than 10% of the Revolving Commitment (as defined in the JPM Credit Agreement), and such requirement continues until there is no event of default and availability is greater than 10% of the Revolving Commitment, in each case for 30 consecutive days.
In connection with the entry into the JPM Credit Agreement, Lender and TCW, as administrative agent under the Term Loan Agreement, entered into the Intercreditor Agreement, dated July 18, 2022, and acknowledged by SigmaTron (the “ICA”), to set forth and govern the lenders’ respective lien priorities, rights and remedies under the JPM Credit Agreement and the Term Loan Agreement.
The facility under the JPM Credit Agreement is secured by: (a) a first priority security interest in SigmaTron’s (i) accounts receivable and inventory (excluding Term Priority Mexican Inventory (as defined in the ICA) and certain inventory in transit, (ii) deposit accounts, (iii) proceeds of business interruption insurance that constitute ABL BI Insurance Share (as defined in the ICA), (iv) certain other property, including payment intangibles, instruments, equipment, software and hardware and similar systems, books and records, to the extent related to the foregoing, and (v) all proceeds of the foregoing, in each case, now owned or hereafter acquired (collectively, the “ABL Priority Collateral”); and (b) a second priority security interest in Term Priority Collateral (as defined below) other than (i) real estate and (ii) the equity interests of SigmaTron’s foreign subsidiaries (unless such a pledge is requested by Lender). As of April 30, 2025, there was $12,909,002 outstanding and $14,180,691 of unused availability under the revolving loan facility compared to an outstanding balance of $28,598,719 and $13,443,766 of unused availability at April 30, 2024. As of April 30, 2025 and April 30, 2024, the unamortized deferred financing amount offset against outstanding debt was $786,882 and $592,664, respectively.
The Term Loan Agreement provides for a term loan from the TCW Lenders to the Company in the principal amount of $40,000,000 (the “TCW Term Loan”). The TCW Term Loan bears interest at a rate per annum based on SOFR, plus the Applicable Margin of 7.50% (each as defined in the Term Loan Agreement). The TCW Term Loan has a SOFR floor of 1.00%. The maturity date of the TCW Term Loan is July 18, 2027. The amount outstanding as of April 30, 2025, was $40,006,558 compared to an outstanding balance of $37,503,301 at April 30, 2024. As of April 30, 2025 and April 30, 2024, the unamortized deferred financing amount offset against outstanding debt was $2,859,746 and $935,492, respectively.
The TCW Term Loan is secured by: (a) a first priority security interest in all property of SigmaTron that does not constitute ABL Priority Collateral, which includes: (i) SigmaTron’s machinery, equipment and fixtures (but excluding ABL Priority Equipment (as defined in the ICA)), (ii) the Term Priority Mexican Inventory (as defined in the ICA), (iii) SigmaTron’s stock in its direct and indirect subsidiaries, (iv) SigmaTron’s general intangibles (excluding any that constitute ABL Priority Collateral), goodwill and intellectual property, (v) the proceeds of business interruption insurance that constitute Term BI Insurance Share (as defined in the ICA), (vi) tax refunds, and (vii) all proceeds thereof, in each case, now owned or hereafter acquired (collectively, the “Term Priority Collateral”); and (b) a second priority security interest in all collateral that constitutes ABL Priority Collateral. Also, SigmaTron’s three Mexican subsidiaries pledged all of their assets as security for the TCW Term Loan. The net proceeds received by the Company from the sale of the Elgin, Illinois, property in February, 2024, reduced the TCW Term Loan.
Waivers and Amendments Nos. 1 & 2
In March 2023, the Company received default notices from JPM and TCW due to non-compliance with certain financial covenants under their respective Credit Agreements, including the Fixed Charge Coverage Ratio and Total Debt to EBITDA Ratio. Additionally, the Company received a delinquency notification from Nasdaq for failing to timely file its Form 10-Q for the fiscal quarter ended January 31, 2023, which also constituted a default under the Credit Agreements. Consequently, the total debt balances were classified as current liabilities. On April 28, 2023, the Company entered into waivers with JPM and TCW, which waived certain events of default and amended terms of the Credit Agreements. These amendments included requirements to maintain a minimum of $2.5 million in revolver availability, modifications to the definition of EBITDA, and adjustments to the Total Debt to EBITDA Ratios. On June 15, 2023, the Company executed further amendments to extend TCW’s ability to trigger a potential corporate restructuring to occur no earlier than August 1, 2023.
Waivers and Amendments No. 3
As of August 19, 2024, the Company was not in compliance with the financial covenants under the Credit Agreements as follows: the Fixed Charge Coverage Ratio for multiple twelve month periods including those ending on April 30, 2024 and July 31, 2024 was less than 1.10:1.00, the Total Debt to EBITDA Ratio for the twelve month period ending on April 30, 2024 was greater than 4.50:1.00, and the Total Debt to EBITDA Ratio for the twelve month period ending on July 31, 2024 was greater than 4.25:1.00 (collectively, the “2024 Covenant Defaults”).
Due to the 2024 Covenant Defaults, the facilities under the Credit Agreements were classified as current liabilities on the Consolidated Balance Sheet at July 31, 2024 and April 30, 2024. In addition, due to the lender demand of a Replacement Transaction by September 2025 and the risk of additional covenant compliance failures based on current revenue levels the Company continues to classify this debt as current liabilities as of April 30, 2025.
In addition, the Company received a delinquency notification letter from Nasdaq, dated August 16, 2024, indicating that the Company was not in compliance with the continued listing requirements of Nasdaq for failing to timely file the Company’s Form 10-K annual report for the fiscal year ended April 30, 2024. This notification also constituted a default under the Credit Agreements (collectively with the 2024 Covenant Defaults, the “2024 Defaults”). The Company had 60 days from the date of the Nasdaq delinquency notice, or until October 15, 2024, to file a plan with Nasdaq to regain compliance. The Company filed its annual report for the fiscal year ended April 30, 2024 on September 3, 2024, and on September 10, 2024, the Company received a notification letter from Nasdaq indicating that the Company had regained compliance with the applicable continued listing requirements based on the filing of its Form 10-K.
On August 19, 2024 (the “Third Amendment Effective Date”), the Lender Parties waived the 2024 Defaults pursuant to (i) the Waiver and Amendment No. 3 to Credit Agreement (the “JPM Amendment”) between the Company and JPM, and (ii) the Waiver and Amendment No. 3 to Credit Agreement (the “TCW Amendment” and together with the JPM Amendment, the “2024 Amendments”) by and among the Company, the TCW Lenders, and the Agent. In consideration of the TCW Amendment, the Company and the Agent also entered into the Third Amendment Fee Letter (the “Fee Letter”) dated as of the Third Amendment Effective Date. The 2024 Amendments provided for, among other things, a waiver of the Company’s noncompliance with the financial covenants relating to (i) the Fixed Charge Coverage Ratio (as defined in the Credit Agreements), and (ii) the Total Debt to EBITDA Ratio (as defined in the Credit Agreements), in each case as of the Third Amendment Effective Date.
The 2024 Amendments also amended other provisions of the Credit Agreements, including to: (i) modify the minimum ratios under the Fixed Charge Coverage Ratio to range from 0.70:1.0 for the twelve months ending as of July 31, 2024, to 1.00:1.0 for the twelve months ending as of September 30, 2025 and thereafter, measured monthly; (ii) adjust the maximum ratios under the Total Debt to EBITDA Ratio to range from 6.50:1.0 for the twelve months ending as of July 31, 2024, to 3.50:1.0 for the twelve months ending as of April 30, 2027, measured quarterly; (iii) modify the definition of EBITDA to allow for additional adjustments for certain transactions and charges; (iv) provide for the reimbursement of certain fees by the Company in connection with the Amendments or the transactions contemplated thereby; (v) increase the minimum required Availability (as defined in the JPM Credit Agreement) to $3.5 million starting on the Third Amendment Effective Date; (vi) provide that the Company must pursue and close a Replacement Transaction to pay the Obligations (as defined in the Credit Agreements) in full no later than September 30, 2025 unless the Company meets certain debt ratios for the twelve month period ending on August 31, 2025; and (vii) require the Company to engage a financial advisor if requested by the Agent after November 1, 2024.
In addition, pursuant to the JPM Amendment, the parties agreed to reduce the Revolving Commitment (as defined in the JPM Credit Agreement) from $70 million to $55 million as of the Third Amendment Effective Date and pay to JPM certain amendment fees and certain additional fees if the Company does not meet certain financial milestones by the applicable measurement periods specified in the JPM Amendment.
In addition, pursuant to the TCW Amendment the parties agreed to (i) amend the principal payment schedule under the TCW Term Loan to $250,000 per quarter; (ii) extend the PIK Period (as defined in the Term Loan Agreement) for three additional quarters beyond October 31, 2024 if the Total Debt to EBITDA Ratio exceeds a certain threshold as of certain dates; (iii) permit the Company to elect to pay on a quarterly basis in-kind a portion of the Baseline Applicable Margin (as defined in the Term Loan Agreement) per annum provided no default or event of default under the Term Loan Agreement has occurred; (iv) increase a portion of the Term Loan Borrowing Base (as defined in the Term Loan Agreement) based on the value of the Company’s real estate; (v) reduce the asset coverage pre-payment ratio under the TCW Term Loan to 90% of the outstanding principal balance; and (vi) provide the Agent with the right to appoint a non-voting observer to attend regular meetings of the Company’s Board of Directors and any relevant committees.
Also on August 19, 2024, and in connection with the TCW Amendment, the Company entered into the Fee Letter, which provides for a payment to the Agent of $395,000 added to the principal amount owed under the TCW Term Loan and for certain monthly ticking fees equal to a range of percentages of the outstanding principal amount under the TCW Term Loan, provided the Company does not meet certain financial milestones by the applicable dates provided therein. In addition, pursuant to the Fee Letter, if the Company does not meet certain financial metrics from December 2024 to September 2025 as defined in the agreement, the Company has agreed to deliver to the Agent warrants to purchase shares of the Company’s common stock (the “Warrants”) in an amount equal to a percentage of the outstanding common stock of the Company on a fully diluted basis ranging from 1.25% (as of December 1, 2024) to 17.5% (as of September 1, 2025). The exercise price for the Warrants will be $0.01 per share and the Warrants would vest immediately upon issuance. The value of Warrants issued was $770,253 as of April 30, 2025.
The Company evaluated the accounting for the warrants associated with the Fee Letter to determine whether the warrants should be classified as equity or as a derivative liability on the consolidated balance sheet. In accordance with ASC 815-40, Derivatives and Hedging - Contracts in the Entity’s Own Equity (ASC 815-40), the Company classifies a warrant as equity if it is indexed to the Company’s equity and several specific conditions for equity classification are met. A warrant is not considered indexed to the Company’s equity in general when it contains certain types of exercise contingencies or adjustments to exercise price. If a warrant is not indexed to the Company’s equity or it has net cash settlement that results in the warrants to be accounted for under ASC 480, Distinguishing Liabilities from Equity, or ASC 815-40, it is classified as a derivative liability which is carried on the consolidated balance sheet at fair value with any changes in its fair value recognized currently in the statement of operations. The Company concluded that the warrants shall be classified as a liability upon entering into the Fee Letter and as a result recorded a liability of $2,263,000. In subsequent periods, these warrants are subject to remeasurement. As of April 30, 2025, the warrants were valued at $947,805. The remeasurement of the warrants is recorded within the change in fair value of warrants within the Consolidated Statements of Operations.
January 2025 Amendment
On January 10, 2025, the Company and JPM entered into Amendment No. 4 to the JPM Credit Agreement to increase the maximum letter of credit exposure permitted thereunder from $1,000,000 to $2,500,000.
All other material terms of the Credit Agreements, as amended by the foregoing Amendments, remain unchanged.
Waivers and Amendments No. 4
On March 28, 2025 (the “March 2025 Amendment Effective Date”), the Company entered into (i) the Waiver and Amendment No. 5 to Credit Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “March 2025 JPM Amendment”) between the Company and JPMorgan Chase Bank, N.A., as lender (“JPM”), to that certain Amended and Restated Credit Agreement between the Company and JPM dated as of July 18, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “JPM Credit Agreement”); and (ii) the Waiver and Amendment No. 4 to Credit Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “March 2025 TCW Amendment;” together with the March 2025 JPM Amendment, the “March 2025 Amendments”) by and among the Company, the lenders identified therein (the “Lenders”) and TCW Asset Management Company LLC, as administrative agent for the Lenders (in such capacity, the “Agent;” collectively the Agent and the Lenders, the “TCW Lenders;” and collectively, JPM and the TCW Lenders, the “Lender Parties”), to that certain Credit Agreement dated as of July 18, 2022 among the Company, the Lenders and the Agent (as amended, restated, supplemented or otherwise modified from time to time, the “TCW Credit Agreement;” together with the JPM Credit Agreement, the “Credit Agreements”).
The March 2025 Amendments amended the Credit Agreements to: (A) suspend the Fixed Charge Coverage Ratio and the Total Debt to EBITDA Ratio covenants (each as defined in the Credit Agreements) until the first quarter of FY2026; (B) require that Trailing Three Month EBITDA (as defined in the March 2025 Amendments) as of each month-end be not less than $250,000; (C) replace the conditional obligation of the Company to close a Replacement Transaction to pay the Obligations (each as defined in the Credit Agreements) in full no later than September 30, 2025 with requirements that the Company deliver at least one indication of
interest for a Replacement Transaction, which has been accomplished, and a signed exclusivity agreement which includes a letter of intent with terms for a Replacement Transaction by April 3, 2025, and further that it commence a tender offer for the Replacement Transaction by May 15, 2025, and close it within 45 days thereafter, with an extension of up to 30 days if the tender offer is extended under the agreement for the Replacement Transaction; (D) modify the definition of EBITDA to allow for additional adjustments for certain financial advisor and legal fees; (E) reduce the minimum required Availability (as defined in the JPM Credit Agreement) to $3.0 million; (F) apply the net proceeds of the sale and leaseback of the Company’s Elk Grove Village, Illinois, headquarters to reduce principal of the revolving line of credit under the JPM Credit Agreement; and (G) waive any noncompliance with certain covenants as of the March 2025 Amendment Effective Date.
In addition, pursuant to the March 2025 JPM Amendment, the parties agreed to (i) reduce the Revolving Commitment (as defined in the JPM Credit Agreement) to $35 million; (ii) establish a $3.7 million reserve block against Availability; and (iii) pay JPM a $25,000 amendment fee and, if a Replacement Transaction is not consummated as specified in the March 2025 JPM Amendment, an additional amendment fee.
In addition, pursuant to the March 2025 TCW Amendment, the parties agreed to (i) remove the asset coverage pre-payment ratio covenant under the TCW Term Loan; and (ii) provide the Agent with the right to require the Company to enlarge the financial advisor’s scope of services after an event of default after the March 2025 Amendment Effective Date.
All other material terms of the Credit Agreements, as amended by the March 2025 Amendments, remain unchanged. Descriptions of the material terms and conditions of the Credit Agreements were previously disclosed by the Company in its Annual Report on Form 10-K for the fiscal year ended April 30, 2022, filed on July 27, 2022, in its Form 8-K filed on May 4, 2023, in its Form 8-K filed on June 23, 2023, in its Form 8-K filed on August 22, 2024, and in subsequent Quarterly Reports on Form 10-Q, and are incorporated herein by reference.
On the Closing Date, in connection with the Merger, the Company’s obligations under the credit agreements were repaid in full.
China Construction Bank
On March 15, 2019, the Company’s wholly-owned foreign enterprise, Wujiang SigmaTron Electronic Technology Co., Ltd., entered into a credit facility with China Construction Bank. The agreement has been renewed each time it expired in accordance with its terms on January 26, 2021, January 17, 2022, February 17, 2023, and March 1, 2024. On January 22, 2025, the agreement was renewed, and is scheduled to expire on January 19, 2026. Under the agreement Wujiang SigmaTron Electronic Technology Co., Ltd. can borrow up to 10,000,000 Renminbi, approximately $1,400,000 as of January 31, 2025, and the facility is collateralized by Wujiang SigmaTron Electronics Co., Ltd.’s manufacturing building. Interest is payable monthly and the facility bears a fixed interest rate of 3.15% per annum. There was no outstanding balance under the facility at April 30, 2025 and April 30, 2024, respectively.
Notes Payable - Buildings
The Company entered into a mortgage agreement on March 3, 2020, in the amount of $556,000, with The Bank and Trust SSB to finance the purchase of the property that serves as the Company’s warehousing and distribution center in Del Rio, Texas. The note requires the Company to pay monthly installment payments in the amount of $6,103. Interest accrues at a fixed rate of 5.75% per year until March 3, 2025, and adjusts thereafter, on an annual basis, equal to 1.0% over the Prime Rate as published by The Wall Street Journal. The note is payable over a 120 month period. The outstanding balance was $313,015 and $366,572 at April 30, 2025 and April 30, 2024, respectively.
Notes Payable - Equipment
The Company routinely entered into secured note agreements with Engencap Fin S.A. DE C.V. to finance the purchase of equipment. The terms of the outstanding secured note agreement, which had a fixed interest rate of 8.00% per annum, matured on May 1, 2023, and the final quarterly installment payment of $9,310 was paid.
The Company routinely enters into secured note agreements including with FGI Equipment Finance LLC to finance the purchase of equipment. The terms of the outstanding secured note agreements mature from March 2025 through January 2029, with quarterly installment payments ranging from $10,723 to $69,439 and a fixed interest rate ranging from 8.25% to 12.00% per annum.
Other
The Company provides funds for administration and manufacturing services such as salaries, wages, overhead and capital expenditure items as necessary to operate its Mexican, Vietnamese and Chinese subsidiaries and the international procurement office in Taiwan. The Company provides funding in U.S. Dollars, which are exchanged for Pesos, Dong, Renminbi, and New Taiwan dollars. The fluctuation of currencies from time to time, without an equal or greater increase in inflation, could have a material impact on the financial results of the Company. The impact of currency fluctuations for the fiscal year ended April 30, 2025, resulted in net foreign currency transaction losses of $981,838 compared to net foreign currency losses of $796,315 in the prior year. In fiscal year 2025, the Company paid approximately $52,550,000 to its foreign subsidiaries for manufacturing services. All intercompany balances have been eliminated upon consolidation.
The Company has not changed its plans to indefinitely reinvest the earnings of the Company’s foreign subsidiaries. The cumulative amount of unremitted earnings for which U.S. income taxes have not been recorded is $17,820,000 as of April 30, 2025.
The Company anticipates that its credit facilities, expected future cash flow from operations and leasing resources are adequate to meet its working capital requirements and fund capital expenditures for the next 12 months. However, in the event customers delay orders or future payments are not made timely, the Company desires to expand its operations, its business grows more rapidly than expected, or the current economic climate deteriorates, additional financing resources may be necessary. There is no assurance that the Company will be able to obtain equity or debt financing at acceptable terms, or at all, in the future. There is no assurance that the Company will be able to retain or renew its credit agreements in the future, or that any retention or renewal will be on the same terms as currently exist.
The impact of inflation and the continuing global supply chain disruptions in the electronic component marketplace have been challenging. The supply chain disruptions have improved during fiscal 2025. The Company anticipates the supply chain disruptions will continue to improve during fiscal 2026.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
As a smaller reporting company, as defined in Rule 10(f)(1) of Regulation S-K under the Exchange Act, the Company is not required to provide the information required by this item.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is included in Item 15(a) of this Report.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures:
Our management, including our principal executive officer and principal financial and accounting officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed in this report has been appropriately recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and principal financial officer, to allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive officer and principal financial and accounting officer concluded that, due to the material weakness described below, our disclosure controls and procedures were not effective at the reasonable assurance level as of April 30, 2025.
Notwithstanding the foregoing conclusion, and notwithstanding the material weakness in our internal control over financial reporting described below, management, including our Chief Executive Officer and Chief Financial Officer, believes the consolidated financial statements included in this report fairly represent in all material respects our financial condition, results of operations and cash flows as of and for the periods presented in accordance with GAAP.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal controls over financial reporting is a process designed under the supervision of our principal executive officer and principal financial and accounting officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not detect or prevent misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As of April 30, 2025, management assessed the effectiveness of our internal controls over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control - Integrated Framework”, issued by the Committee of Sponsoring Organizations ("COSO") of the Treadway Commission in 2013.
Based on this assessment, our management concluded that our internal control over financial reporting was not effective as of April 30, 2025, due to a material weakness in our internal controls related to the application of appropriate accounting principles over non-standard revenue transactions. Specifically, controls to ensure that revenue recognition criteria were met prior to recognizing sales transactions were not operating effectively.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Remediation Activities
In response to this material weakness, with oversight from the Audit Committee of the Board of Directors, we have implemented measures to improve our internal control structure. Specifically, we have taken steps to remediate the material weakness mentioned above, including strengthening our review process related to revenue contracts, such as multiple levels of review and supporting evidence of such transactions.
We are committed to ensuring that our internal controls over financial reporting are designed and operating effectively. We believe the efforts taken to date and certain measures that are in progress will improve the effectiveness of our internal controls over financial reporting and mitigate risks of material misstatement. We are still in the process of implementing these steps and cannot assure investors that these measures will significantly improve or remediate the material weakness described above. Additionally, while we believe these efforts will improve our internal control environment, our remediation is still in progress and subject to ongoing
testing of the design and operating effectiveness over a sufficient period of time in order to effectively remediate this material weakness.
Changes in Internal Controls Over Financial Reporting and Disclosure Controls
Management remains committed to ongoing efforts to address the material weakness. Although the Company will continue to implement measures to remedy its internal control deficiencies, there can be no assurance that its efforts will be successful or avoid potential future material weaknesses. In addition, until remediation steps have been completed and operated for a sufficient period of time, and subsequent evaluation of their effectiveness is completed, the material weakness previously identified will continue to exist.
Except with respect to the changes in connection with the implementation of the steps to remediate the material weakness described above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended April 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Report of Independent Registered Public Accounting Firm
This report does not include an attestation report on internal control over financial reporting by the Company’s independent registered public accounting firm because the Company is a smaller reporting company under the rules of the SEC.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
Trading Arrangements
During the quarter ended April 30, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Item 1.01.Entry into a Material Definitive Agreement.
On March 28, 2025 (the “March 2025 Amendment Effective Date”), the Company entered into (i) the Waiver and Amendment No. 5 to Credit Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “March 2025 JPM Amendment”) between the Company and JPMorgan Chase Bank, N.A., as lender (“JPM”), to that certain Amended and Restated Credit Agreement between the Company and JPM dated as of July 18, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “JPM Credit Agreement”); and (ii) the Waiver and Amendment No. 4 to Credit Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “March 2025 TCW Amendment;” together with the March 2025 JPM Amendment, the “March 2025 Amendments”) by and among the Company, the lenders identified therein (the “Lenders”) and TCW Asset Management Company LLC, as administrative agent for the Lenders (in such capacity, the “Agent;” collectively the Agent and the Lenders, the “TCW Lenders;” and collectively, JPM and the TCW Lenders, the “Lender Parties”), to that certain Credit Agreement dated as of July 18, 2022 among the Company, the Lenders and the Agent (as amended, restated, supplemented or otherwise modified from time to time, the “TCW Credit Agreement;” together with the JPM Credit Agreement, the “Credit Agreements”).
The March 2025 Amendments amended the Credit Agreements to: (A) suspend the Fixed Charge Coverage Ratio and the Total Debt to EBITDA Ratio covenants (each as defined in the Credit Agreements) until the first quarter of FY2026; (B) require that Trailing Three Month EBITDA (as defined in the March 2025 Amendments) as of each month-end be not less than $250,000; (C) replace the conditional obligation of the Company to close a Replacement Transaction to pay the Obligations (each as defined in the Credit Agreements) in full no later than September 30, 2025 with requirements that the Company deliver at least one indication of interest for a Replacement Transaction, which has been accomplished, and a signed exclusivity agreement which includes a letter of intent with terms for a Replacement Transaction by April 3, 2025, and further that it commence a tender offer for the Replacement Transaction by May 15, 2025, and close it within 45 days
thereafter, with an extension of up to 30 days if the tender offer is extended under the agreement for the Replacement Transaction; (D) modify the definition of EBITDA to allow for additional adjustments for certain financial advisor and legal fees; (E) reduce the minimum required Availability (as defined in the JPM Credit Agreement) to $3.0 million; (F) apply the net proceeds of the sale and leaseback of the Company’s Elk Grove Village, Illinois, headquarters to reduce principal of the revolving line of credit under the JPM Credit Agreement; and (G) waive any noncompliance with certain covenants as of the March 2025 Amendment Effective Date.
In addition, pursuant to the March 2025 JPM Amendment, the parties agreed to (i) reduce the Revolving Commitment (as defined in the JPM Credit Agreement) to $35 million; (ii) establish a $3.7 million reserve block against Availability; and (iii) pay JPM a $25,000 amendment fee and, if a Replacement Transaction is not consummated as specified in the March 2025 JPM Amendment, an additional amendment fee.
In addition, pursuant to the March 2025 TCW Amendment, the parties agreed to (i) remove the asset coverage pre-payment ratio covenant under the TCW Term Loan; and (ii) provide the Agent with the right to require the Company to enlarge the financial advisor’s scope of services after an event of default after the March 2025 Amendment Effective Date.
All other material terms of the Credit Agreements, as amended by the March 2025 Amendments, remain unchanged. Descriptions of the material terms and conditions of the Credit Agreements were previously disclosed by the Company in its Annual Report on Form 10-K for the fiscal year ended April 30, 2022, filed on July 27, 2022, in its Form 8-K filed on May 4, 2023, in its Form 8-K filed on June 23, 2023, in its Form 8-K filed on August 22, 2024, and in subsequent Quarterly Reports on Form 10-Q, and are incorporated herein by reference.
Item 2.03.Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 is incorporated by reference herein.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information about our Executive Officers
The information relating to the Company’s Executive Officers appears in Part I of this Annual Report on Form 10-K under the heading “Information about our Executive Officers” and is incorporated herein by reference.
Name
Gary R. Fairhead
Age: 73
Director Since: 1993
Gary R. Fairhead has served as the Chief Executive Officer and a Director of the Company since its formation in November 1993, as President from November 1993 to October, 2021 and then from August 2022 until January 2023, and Chairman of the Board of Directors of the Company since August 2011. He stepped down from the position of President effective October 13, 2021. He remains Chairman of the Board and Chief Executive Officer of the Company. He is a stockholder of the Company. Mr. Fairhead also currently serves as a Trustee of Central States Joint Board Health and Welfare Trust Fund. Mr. Fairhead holds a Bachelor’s of Science degree from Purdue University and Master’s degree in Industrial Administration from the Krannert School of Business, Purdue University. The Board of Directors believes Mr. Fairhead’s extensive business, management, and financial background, in addition to his lengthy tenure as Chief Executive Officer and a Director of the Company, make him well qualified to serve as a Director.
Dilip S. Vyas
Lead Independent Director
Age: 77
Director Since: 1993
Dilip S. Vyas has served as a Director of the Company since the formation of the Company in November 1993. He is a stockholder of the Company. He has served on the Audit Committee, is currently the Company’s Lead Independent Director and has served as Chairman of the Nominating Committee and member of the Compensation Committee since August 2011. Mr. Vyas was a Director of and the Vice President, Business Development, and Chief Financial Officer of Circuit Systems, Inc., a printed circuit board manufacturer, from 1981 to 2001. Mr. Vyas managed virtually all aspects of accounting and finance and many of the operations of this publicly traded company, including bank relations, purchasing, production plans, and scheduling and design and maintenance of information systems, human resource management, and stockholder relations. Mr. Vyas also served as a member of the Board of Directors of Circuit Systems India, a printed circuit board manufacturer, listed on the India stock exchange, from November 2007 to January 2012. Mr. Vyas holds a Bachelor of Engineering degree from the University of Gujarat in India and a Master of Business Administration degree from the University of Illinois at Chicago. The Board of Directors believes Mr. Vyas is well qualified to serve as a Director because of his long tenure as a Director of the Company, the customer relationships he maintains within the electronic manufacturing service industry, and his business, management, and financial background.
Thomas W. Rieck
Independent Director
Age: 80
Director Since: 1993
Thomas W. Rieck has served as a Director of the Company since its formation in November 1993. At that time, he was a Director and Secretary of Circuit Systems, Inc., a circuit board maker located in Elk Grove Village, Illinois, which acted as a supplier to the Company. He has served on the Nominating Committee and is presently Chairman of the Audit Committee and the Company’s Audit Committee financial expert. Prior to the time of the Company’s initial public offering and since such offering to 2014, he was President of Rieck and Crotty P.C., a Chicago law firm. He concentrated his practice in the representation of private and public corporations in all aspects of corporate law, including, but not limited to, securities, tax, and transactional matters. He has served on the Board of Directors of numerous public and private companies. He holds a Bachelor’s degree in accounting from the University of Notre Dame, a Certified Public Accounting degree from the University of Illinois, and a law degree from Northwestern University. He is a stockholder of the Company. The Board of Directors believes Mr. Rieck’s extensive legal, business, and financial background, including his status as an audit committee financial expert, make him well-qualified to serve as a Director.
Paul J. Plante
Independent Director
Age: 67
Director Since: 2011
Other Public Board(s):
Richardson Electronics
Paul J. Plante has served as a Director of the Company since August 2011. Mr. Plante has been a member of the Audit and Compensation Committees since August 2011. He is a stockholder of the Company. From December 2008 to March of 2020 Mr. Plante was the President and owner of Florida Fresh Vending, LLC., a privately held company, with vending machines throughout Florida. The business was sold to Cardinal Vending and Markets in March 2020. In October 2011, Mr. Plante began serving as a member of the Board of Directors of Richardson Electronics Ltd., a publicly traded company. Richardson Electronics provides engineered solutions, power grid and microwave tubes and related consumables and customized display solutions. Mr. Plante served from February 2007 to May 2008, as Vice President - Medical Industry Solutions of Kimball Electronics Group, an electronic manufacturing services company that serves, among others, the medical industry. From September 1986 through February 2007, Mr. Plante served in various capacities for Reptron Electronics, Inc., a publicly traded electronic manufacturing and distribution services company located in Tampa, Florida, until its acquisition by Kimball Electronics Group. He holds a Bachelor’s Degree in Accounting from Michigan State University and a Master’s of Business Administration from the University of South Florida. The Board of Directors believes Mr. Plante’s extensive history of management and business experience, particularly in the customized electronics and manufacturing industry, coupled with his financial background, make him well-qualified to serve as a Director.
Bruce J. Mantia
Independent Director
Age: 78
Director Since: 2011
Bruce J. Mantia has served as a Director of the Company since August 2011. He is a stockholder of the Company. Mr. Mantia has been the Chairman of the Compensation Committee since August 2011 and a member of the Audit Committee since September 2022. Mr. Mantia worked for the accounting firm, Ernst & Young, starting in 1973, serving in various capacities until his retirement in June 2005. Mr. Mantia provided audit services primarily to publicly held companies. Mr. Mantia served in various roles in Ernst & Young’s national office, including as a member of the Operating Committee, as National Director of Total Quality Management, and National Director and Vice-Chair of Human Resources. He served as Office Managing Partner of the Stamford, Connecticut office from February 1997 to June 2005. From July 2005 through October 2007, Mr. Mantia served as a consultant to Ernst & Young. Mr. Mantia was a member of the Chicago 2016 Olympic Committee management team from November 2006 to July 2007, serving as its acting Chief Financial Officer during that period. Mr. Mantia holds a Bachelor of Science degree in Accounting from the University of Illinois at Chicago. The Board of Directors believes Mr. Mantia’s extensive business and financial background, local and national management experience, and his experience with the auditing of public companies make him well-qualified to serve as a Director.
John P. Sheehan
Age: 64
Director Since: 2024
John P. Sheehan has been employed by SigmaTron International, Inc. since its formation. Initially serving in the capacity of corporate controller, for many years Mr. Sheehan served as the Company’s Vice President of Supply Chain with responsibility for material quotations, procurement, inventory management systems, and related logistics for all 7 of the Company’s operations. The Company’s Taiwan International Procurement Office and Compliance Center were also part of his responsibilities. Managing supply chain issues led to Mr. Sheehan working closely with many of the Company’s largest customers navigating challenges and building cooperative and mutually beneficial business relationships. In January of 2023, Mr. Sheehan was promoted to President of the Company. In his role as President, Mr. Sheehan has focused on revenue growth and profitability, cost management and productivity, and the complimentary sharing of resources between operations. Mr. Sheehan holds a Bachelor of Science degree in Accounting from Northern Illinois University and is a non-practicing CPA. Mr. Sheehan is a stockholder of the Company. The Board of Directors believes Mr. Sheehan’s extensive business, operations management, and financial background, in addition to his lengthy tenure as an executive of the Company, make him well qualified to serve as a Director.
CORPORATE GOVERNANCE
Board Committees
The Board of Directors has established an Audit Committee, a Compensation Committee, and a Nominating Committee. Each Committee operates pursuant to a written charter adopted by the Board of Directors. The Audit Committee Charter, Compensation Committee Charter and the Nominating Committee Charter are available on the Company’s website at www.sigmatronintl.com by clicking on “Investors”. The Company believes that the composition of these committees meets the criteria for independence under, and the functioning of these committees complies with, the applicable requirements of the current listing standards of Nasdaq and the applicable SEC rules and regulations.
Audit Committee
The functions of the Audit Committee are to: (1) select and evaluate the performance of the independent accountants; (2) review the audits of the financial statements of the Company and the scope of the audit; (3) review with the independent accountants the corporate accounting and financial reporting practices and policies and recommend to whom reports should be submitted within the Company; (4) review with the independent accountants their final report; (5) review with the internal and independent accountants overall accounting and financial controls; (6) be available to the independent accountants and management for consultation purposes; and (7) oversee the Company’s compliance with the Foreign Corrupt Practices Act. The Audit Committee also reviews and evaluates the Company’s cybersecurity and other information technology controls and procedures, including the Company’s plans to mitigate cybersecurity risks and to respond to threats.
Messrs. Rieck (Chairman), Mantia and Plante are members of the Audit Committee. The Board of Directors has determined that each of the members of the Audit Committee is independent under the rules of the SEC and the listing standards of Nasdaq and that Mr. Rieck qualifies as an “audit committee financial expert” as defined in Item 407 of Regulation S-K promulgated under the Exchange Act.
Compensation Committee
The functions of the Compensation Committee are to: (1) review and recommend to the Board of Directors annual salaries and bonuses for all Executive Officers of the Company; (2) review and recommend to the Board of Directors compensation for the Directors; (3) review and recommend to the Board of Directors the terms and conditions of compensation policies, plans and benefit programs or changes thereto that relate to Executive Officers and Directors, excluding such plans that are available generally to all salaried employees; and (4) oversee the design and administration of the Company's equity compensation and incentive plans. While the Chief Executive Officer of the Company may make recommendations regarding the salaries, compensation and terms and conditions of employment of Executive Officers, the Compensation Committee reviews any such recommendations independently and is responsible for making final recommendations to the full Board of Directors.
Messrs. Mantia (Chairman), Plante, and Vyas are members of the Compensation Committee. The Board of Directors has determined that each of the members of the Compensation Committee is independent under the listing standards of Nasdaq. The Compensation Committee has authority to select and hire outside consultants and shall have full access to the Human Resources Department or other Company employees to assist in the evaluation of Executive Officer compensation and may approve the fees and other retention terms of any consultants hired by the Compensation Committee. The Compensation Committee may also obtain advice and assistance from legal, accounting or other advisors selected by the Compensation Committee.
Nominating Committee
The functions of the Nominating Committee are to: (1) review and recommend to the Board of Directors the composition of the Board of Directors and a slate of nominees for each election of members to the Board of Directors; (2) review and recommend changes to the number, classification and term of Directors; (3) identify and recommend to the Board of Directors candidates to fill appointments to Board committees; (4) develop, assess and make recommendations to the Board of Directors concerning appropriate corporate governance policies; (5) identify and recommend to the Board of Directors candidates to fill a vacancy in the offices of Chief Executive Officer or President; (6) review nominations by stockholders in accordance with the nomination process and to establish the procedures by which stockholder candidates will be considered; and (7) oversee the conduct of annual reviews of Directors. The members of the Nominating Committee are Messrs. Vyas (Chairman), Mantia and Rieck. The Board of Directors has determined that each of the members of the Nominating Committee is independent under Nasdaq listing standards.
The Nominating Committee begins the process of identifying Director candidates by evaluating the current composition of the Board, the Company’s operating requirements, and the long-term interests of the Company’s stockholders. To fill a vacancy, the Nominating Committee would use its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating Committee conducts all appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. In the case of incumbent Directors whose terms of office are set to expire, the Nominating Committee reviews such Directors’ overall service during their term, including the number of meetings attended, level of participation, quality of performance, and any other relationships, transactions or circumstances that might impair such Directors’ independence or future service. The Nominating Committee meets to discuss and consider each candidate’s qualifications and then selects those it considers to be appropriate nominees by majority vote for recommendation to the Board. To date, the Nominating Committee has not paid a fee to any third party to assist in the process of identifying or evaluating Director candidates.
In evaluating and determining whether to recommend a person as a candidate for election as a Director, the Nominating Committee’s criteria reflects the requirements of the Nasdaq rules with respect to independence as well as the following factors: the needs of the Company with respect to the particular talents and experience of its Directors; personal and professional integrity of the candidate; the level of education and/or business
experience of the candidate; broad-based business acumen of the candidate; the candidate’s level of understanding of the Company’s business and the electronic manufacturing services industry; the candidate’s abilities for strategic thinking and willingness to share ideas; and the Board of Directors’ need for diversity of experiences, expertise and background. The Nominating Committee will use these criteria to evaluate all potential nominees.
The Company does not have a diversity policy with respect to its Directors. However, in considering whether to recommend any Director nominee, including candidates recommended by stockholders, the Nominating Committee will consider the factors above, including the candidate’s diversity of experiences, expertise, ethnicity, gender, and background. The Nominating Committee does not assign specific weights to particular criteria, and no particular criterion is necessarily applicable to all prospective nominees. The Company believes that the backgrounds and qualifications of the Directors, considered as a group, should provide a significant mix of experience, knowledge and abilities that will allow the Board of Directors to fulfill its responsibilities.
The Company’s by-laws describe the notice requirements for any nomination made by a stockholder for a seat on the Board of Directors. The Nominating Committee will consider proposed nominees whose names are submitted to it by stockholders including if the nominations comply with the notice provisions of the Company’s by-laws. The Nominating Committee has not adopted a formal process to review candidates whose nominations comply with the by-laws because it believes that the Nominating Committee’s process for considering director nominees has been and remains adequate. The Nominating Committee intends to review periodically whether a formal process should be adopted.
Insider Trading, Hedging and Pledging
The Company’s Insider Trading Policy prohibits all directors, officers and employees from engaging in transactions in our common stock while in possession of material non-public information and restricts directors, officers and other designated insiders from engaging in most transactions involving the Company’s common stock during certain periods for which the Company has determined those individuals are most likely to be aware of material, non-public information. The Company’s Insider Trading Policy also requires pre-clearance from its compliance officer prior to any transactions in the Company’s securities. A copy of the Company’s Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K.
CODE OF ETHICS
The Company has adopted a Code of Ethics for Senior Financial Management (the “Code”). The Code applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, and other employees of the Company performing similar senior financial management functions. The Code is available on the “Investors” page on the Company’s website at www.sigmatronintl.com. The Company intends to post any amendments to or waivers under the Code to its website. Upon written request, the Company will provide a copy of the Code free of charge. Requests should be directed to the Company at 2201 Landmeier Road, Elk Grove Village, Illinois 60007, Attention: Frank J. Cesario, Secretary.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities to file with the Commission initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than ten percent beneficial stockholders are required by Commission regulations to furnish us with copies of all Section 16(a) forms they file. To the best of the Company’s knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments thereof) received by us during or with respect to the year ended April 30, 2025 and written representations that no other reports were required, there were no late Section 16 filings during the year ended April 30, 2025.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The individuals listed in the following table are referred to as our “Named Executive Officers” throughout this Amendment No. 1. The following table sets forth a summary of all compensation paid by the Company for its fiscal years ended April 30, 2025, and 2024 to the Company’s Named Executive Officers:
Option
Awards
___($)___
All Other
Compensation
($)
Total
($)
Name and Principal Position
Salary
($)
Bonus
($)
Gary R. Fairhead
‎ Chief Executive Officer
2025 2024
360,000 (1)
350,000 (1)
-
-
-
-
1,800 (3)
6,486 (3)
361,800
356,486
John P. Sheehan
President
2025 2024
348,000
340,472
-
-
-
67,800 (2)
2,000 (3)
2,000 (3)
350,000
410,272
Rajesh B. Upadhyaya
‎Executive Vice President,
‎West Coast Operations (4)
2025 2024
228,476
319,837
-
-
-
67,800 (2)
1,786 (3)
12,552 (3)
230,262
400,189
(1)Although Gary R. Fairhead served as a Director in fiscal years 2025 and 2024, he did not receive any compensation for serving in such capacity as it is Company policy to compensate only non-employee Directors.
(2) Represents the grant date fair value of stock options granted during fiscal year 2024 computed in accordance with FASB ASC Topic 718. For additional detail on the valuation assumptions regarding these option awards, see Note O to the Company’s financial statements for fiscal year 2024, which are included in the Original Form 10-K for fiscal year 2024 filed with the SEC.
(3)Includes match and contributions to the Company’s 401(k) plan made by the Company and compensation for unused vacation.
(4)Resigned from the Company effective April 30, 2025.
The Employee Bonus Plan
On November 16, 2023, the Board of Directors adopted the SigmaTron International, Inc. Employee Bonus Plan for Fiscal Year 2024 (“Employee Plan”) applicable to all U.S. payroll non-union employees of the Company (“Employee Participants”), all full-time employees of the Company with a corporate position of vice president or higher (“Officers”) and all employees designated by the Company as an executive officer pursuant to the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (“Executive Officers”).
The stated purpose of the Employee Plan is to align stockholder, employee, and officer objectives, to motivate employees of the Company and to increase stockholder value. The Employee Plan is administered and interpreted by the Board and, in its entirety, is subject to amendment, suspension or termination by the Board.
The Employee Plan provided for a Bonus Pool that would be calculated as a percentage of Pre-Tax Income (as defined in the Employee Plan) pursuant to the scale set forth in the Employee Plan. Pursuant to the Employee Plan, the Company’s Chief Executive Officer would submit to the Compensation Committee a recommendation (i) of target objectives for each Executive Officer and (ii) for a specified percentage or dollar allocation of the Bonus Pool for each Executive Officer and Officer, individually, and all of the Employee Participants, in the aggregate. The Compensation Committee would then review such submissions for recommendation to the Board. Awards to Executive Officers under the Employee Plan would be based, in part, on the Executive Officer achieving the Executive Officer’s specified target objectives and, in any event, would be subject to the sole discretion of the Board and contingent upon the Company’s compliance with its covenants under its credit facilities. However, because the Company had a pre-tax loss for fiscal years 2025 and 2024, no bonuses were earned by the Executive Officers under the Employee Plan for fiscal years 2025 and 2024.
Termination of Employment and Change in Control Plan
The Company adopted an Amended and Restated Change in Control Severance Payment Plan in March 2014 (as amended, the “CIC Plan”), which covers Named Executive Officers and certain other Officers of the Company (each a “CIC Participant”). Under the terms of the CIC Plan, each CIC Participant is entitled to the payment of severance pay in the event such CIC Participant’s employment with the Company is involuntarily terminated within twenty-four months of a “change in control” of the Company, as defined in the CIC Plan. The amount of severance pay to which a CIC Participant may be entitled under the CIC Plan is a function of the CIC Participant’s average W-2 income (excluding taxable earnings attributable to the exercise of stock options) paid by the Company to such CIC Participant for five calendar years ending immediately prior to the change in control.
In general, for purposes of the CIC Plan, a change in control will be deemed to have occurred when (a) the acquisition by an entity, person or group of beneficial ownership, as that term is defined in Rule 13d-3 under the Securities Exchange Act of 1934, of more than 20% in the aggregate of the outstanding capital stock of the Company entitled to vote for the election of directors, (b) as a result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, the persons who are directors of the Company before the transaction shall cease to constitute a majority of the board or the board of directors of any successor to the Company, (c) the Company becomes a party to a merger, consolidation or share exchange in which either (i) the Company will not be the surviving company or (ii) the Company will be the surviving company and any outstanding shares of common stock of the Company will be converted into shares of any other company (other than a reincorporation or the establishment of a holding company involving no change of ownership of the Company) or other securities or cash or other property (excluding payments made solely for fractional shares), (d) more than 50% of the assets and business of the Company are sold, transferred or assigned to, or otherwise acquired by, any other unrelated entity or entities, or (e) all or substantially all of the assets and business of a CIC Participant’s operation are sold, transferred or assigned to, or otherwise acquired by, any other unrelated entity or entities (“Change in Control”). In general, a CIC Participant’s employment will be deemed to have been involuntarily terminated under the CIC Plan in the event of such employee’s termination by the Company for a reason other than (w) for cause (as defined in the Plan), (x) death, (y) disability, or (z) that employee’s voluntary retirement or resignation except on account of the reasons set forth in the CIC Plan (which in general would result in a constructive discharge).
The CIC Plan provides for automatic reduction of the amounts to be paid out under the CIC Plan in the event such amounts would constitute “parachute payments” under the Internal Revenue Code. Disputes concerning the CIC Plan and benefits under the CIC Plan are subject to arbitration.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END TABLE
The following table sets forth certain information with respect to each Named Executive Officer of the Company concerning any unexercised options held as of the end of fiscal year 2025.
Name
Number of Securities Underlying Unexercised Options
(#)
Exercisable
Number of Securities Underlying Unexercised Options
(#)
Unexercisable
Option
Exercise
Price
($)
Option
Expiration
Date
Gary R. Fairhead
30,000
-
6.45
07/31/25(1)
17,914
-
3.20
12/10/28(2)
4,000
-
4.28
11/19/29(3)
15,000
-
4.83
07/15/31(4)
40,000
-
6.66
04/28/32(5)
John P. Sheehan
20,000
-
$6.45
07/31/25 (1)
8,000
-
$3.20
12/10/28 (2)
4,000
-
$4.28
11/19/29 (3)
8,000
-
$4.83
07/15/31 (4)
15,000
-
$6.66
04/28/32 (5)
20,100
9,900
$3.42
07/17/33 (6)
Rajesh B. Upadhyaya
10,500
-
4.83
07/15/31(4)
20,000
-
6.66
04/28/32(5)
30,000
-
3.42
07/17/33(6) (7)
(1)Vesting date was August 1, 2015
(2)Vesting date was December 11, 2018
(3)Vesting date was November 20, 2019
(4)Vesting date was July 16, 2021
(5)Vesting schedule: 25% on April 29, 2022, and 25% per year for the next three years.
(6) Vesting schedule: 33% on July 18, 2023, and 33% per year for the next two years.
(7)The final vesting was changed by the Compensation Committee from July 18, 2025 to May 22, 2025, pursuant to Mr. Upadhyaya’s resignation effective April 30, 2025.
EQUITY AWARDS GRANTED IN FISCAL YEAR 2024
Number of
Option Awards
Grant Date
Fair Value of
Option Awards $
John Sheehan
30,000
07/18/2023
67,800
Rajesh B. Upadhyaya
30,000
07/18/2023
67,800
No awards were granted to the named executive officers during fiscal 2025.
DEFINED CONTRIBUTION PLAN
The Company has established a tax-qualified defined contribution 401(k) retirement plan for U.S. employees, which includes our Named Executive Officers. The 401(k) Plan provides for Company matching up to 25% of 5% of the employees’ wages and is limited to $2,000 per year.
EQUITY COMPENSATION PLANS
The following table summarizes information with respect to the Company’s compensation plans under which the Company’s equity securities are authorized for issuance as of April 30, 2025:
Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)
Weighted-average exercise price of outstanding options warrants and rights ($)
Number of securtiies remaining available for future issuance (excluding securities in column (a))
Equity Compensation Plans Approved by Stockholders:
Employee plans:
125,000
6.45
-
129,914
4.83
12,813
19,400
3.20
11,650
136,767
4.56
-
384,500
5.04
15,500
Total
795,331
39,963
DEFINED CONTRIBUTION PLAN
The Company has established a tax-qualified defined contribution 401(k) retirement plan for U.S. employees, which includes our Named Executive Officers. The 401(k) Plan provides for Company matching up to 25% of 5% of the employees’ wages and is limited to $2,000 per year.
COMPENSATION OF DIRECTORS
Pursuant to the Company’s non-employee director compensation program, the Company paid non-employee Directors $5,250 per month from May 2023 through September 2023. On September 1, 2023, the Compensation Committee recommended, and the Board of Directors approved, an increase of the monthly retainer amount paid to non-employee directors to $5,500 per month, effective October 2023. In addition, pursuant to the non-employee director compensation program, the Chairmen of the Audit and Compensation Committees are entitled to be paid an additional $450 and $175 per month, respectively, for such services. The Lead Independent Director is also entitled to an additional $180 per month for such services. In accordance with Company policy, directors who are also employees of the Company do not receive the remuneration described in this paragraph. In addition, non-employee Directors are awarded restricted stock pursuant to the 2021 Non-Employee Director Restricted Stock Plan (the “Director Plan”).
DIRECTOR COMPENSATION TABLE
The following table summarizes the annual compensation for our non-employee directors during our fiscal year ended April 30, 2025, pursuant to our non-employee director compensation policy.
Name
Fees Earned or Paid in Cash
($)
Stock
Awards
($)
Total
($)
Bruce J. Mantia
68,100
-
68,100
Paul J. Plante
66,000
-
66,000
Thomas W. Rieck
71,400
-
71,400
Dilip S. Vyas
68,160
-
68,160
Linda K. Frauendorfer………………………………………………….
44,000 (1)
-
44,000
(1)Ms. Frauendorfer resigned from the Board of Directors during December 2024

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding beneficial ownership of common stock as of July 10, 2025 by (i) each Director of the Company, (ii) each Named Executive Officer of the Company, (iii) each person (including any "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) who is known by the Company to own beneficially more than 5% of the outstanding common stock, and (iv) all Directors and Executive Officers as a group. The address of Directors and Named Executive Officers is c/o SigmaTron International, Inc., 2201 Landmeier Road, Elk Grove Village, Illinois 60007.
Beneficial Ownership
Name
Number of Shares (1)
Percent
Beneficial Owners of more than 5% of the outstanding Capital Stock
Peter J. Abrahamson (2)
570,403
9.3%
Cyrus Tang Foundation (3)
246,537
4.0%
Tang Foundation for the Research of Traditional Chinese Medicine (3)
113,527
1.9%
Beryl Capital Management (4)
590,881
[ ]%
The TCW Group, Inc., on behalf of the TCW Business Unit (5)
770,250
[ ]%
Directors, Nominees and Named Executive Officers
Gary R. Fairhead (6)
200,217
3.2%
John P. Sheehan (6)
101,666
1.7%
Rajesh B. Upadhyaya (6)
60,500
*
Thomas W. Rieck (7)
42,000
*
Bruce J. Mantia
36,500
*
Dilip S. Vyas
32,000
*
Paul J. Plante
32,000
*
All Directors and Executive Officers as a group (8 persons) (8)
[559,883]
[8.7]%
* Less than 1 percent.
(1)Unless otherwise indicated in the footnotes to this table, the Company believes the persons named in this table have sole voting and investment power with respect to all shares of common stock reflected in this table. As of July 10, 2025, 6,119,288 shares were outstanding, not including certain options held by various Directors and Officers as noted in subsequent footnotes. This table is based on information supplied by the Company’s Executive Officers, Directors, and principal stockholders and by Schedules 13D, 13G and Section 16 filings made with the SEC.
(2)Number of shares owned by Peter J. Abrahamson is based on the number reported in Amendment No. 6 to Schedule 13G filed with the SEC on January 24, 2025. The principal business address for Peter J. Abrahamson is 24156 North Coventry Lane, Lake Barrington, IL 60010.
(3)The Cyrus Tang Foundation and Tang Foundation for the Research of Traditional Chinese Medicine are not-for-profit foundations. The entities’ combined ownership represents approximately 5.9% of the outstanding common stock. Based upon a Schedule 13D/A filed with the SEC on October 11, 2012, each respective entity holds sole voting power and sole investment power with respect to all the shares such entity indicated it owned. The principal business address for Cyrus Tang Foundation and Tang Foundation for the Research of Traditional Chinese Medicine is 8960 Spanish Ridge Avenue, Las Vegas NV 89148.
(4)Based on a Schedule 13G filed with the SEC on May 29, 2025 by Beryl Capital Management LLC, Beryl Capital Management LP, Beryl Capital Partners II LP, and David A Witkin. According to the filing, Beryl Capital Management LLC is the investment adviser to Beryl Capital Partners II LP and other accounts; Beryl Capital Management LLC is the general partner of Beryl Capital Management LP, which is the general partner of Beryl Capital Partners II LP and other private investment funds; and Mr. Witkin is the control person of Beryl Capital Management LLC. According to the filing, total holdings represent 590,881 shares of common stock, as to which each filer disclaims beneficial ownership except to the extent of its pecuniary interest therein with Beryl Capital Management LLC and Beryl Capital Management LP each reporting shared voting and dispositive power with respect to 590,881 shares of common stock; Beryl Capital Partners reporting shared voting and dispositive power with respect to 476,138 shares of common stock; and David A. Witkin reporting shared voting and dispositive power with respect to 590,881 shares of common stock. The principal business address for Beryl Capital Management is 225 Avenue I, Suite 205, Redondo Beach, California 90277.
(5)Based on a Schedule 13G filed with the SEC on May 1, 2025 by The TCW Group, Inc. (“TCW”), on behalf of itself and its direct and indirect subsidiaries, which collectively constitute The TCW Group, Inc. business unit (the “TCW Business Unit”). TCW has shared voting and dispositive power with respect to all of the shares. The TCW Business Unit is primarily engaged in the provision of investment management services. The TCW Business Unit is managed separately and operated independently. Investment funds affiliated with The Carlyle Group, L.P. (“The Carlyle Group”) hold a minority indirect ownership interest in TCW that technically constitutes an indirect controlling interest in TCW. The principal business of The Carlyle Group is acting as a private investment firm with affiliated entities that include certain distinct specialized business units that are independently operated including the TCW Business Unit. Entities affiliated with The Carlyle Group may be deemed to share beneficial ownership of the securities reported in the filing. Information barriers are in place between the TCW Business Unit and The Carlyle Group. Therefore, in accordance with Rule 13d-4 under the Exchange Act, The Carlyle Group disclaims beneficial ownership of the shares beneficially owned by the TCW Business Unit and reported in the filing. The mailing address of TCW is 515 South Flower Street, Los Angeles, CA 90071.
(6)The number included shares issuable upon the exercise of currently exercisable stock options granted to Gary R. Fairhead 106,914; John P. Sheehan 75,100; and Rajesh B. Upadhyaya 60,500.
(7)In addition to the number of shares set forth on the Beneficial Ownership table, Mr. Rieck is a member of a family investment company, which owns 10,500 shares of the Company's common stock as of July 10, 2025. Mr. Rieck abstains from all or has no voting and investment decisions with respect to, such shares.
(8)Includes 307,414 shares issuable upon exercise of currently exercisable stock options.
EQUITY COMPENSATION PLANS
The following table summarizes information with respect to the Company’s compensation plans under which the Company’s equity securities are authorized for issuance as of April 30, 2025:
Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)
Weighted-average exercise price of outstanding options warrants and rights ($)
Number of securtiies remaining available for future issuance (excluding securities in column (a))
Equity Compensation Plans Approved by Stockholders:
Employee plans:
125,000
6.45
-
129,914
4.83
12,813
19,400
3.20
11,650
136,767
4.56
-
384,500
5.04
15,500
Total
795,331
39,963

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
There have not been any reportable related party transactions during the applicable period.
The Company's Board of Directors has determined that each of Messrs. Mantia, Plante, Rieck and Vyas are independent under the rules of Nasdaq. Accordingly, the Board of Directors currently has a majority of independent Directors under the rules of Nasdaq. The Board of Directors has determined that its independent Directors shall have regularly scheduled meetings at which only the independent Directors are present. Generally, the independent Directors meet separately at each regularly scheduled Board meeting.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
During fiscal years 2025 and 2024, the Company retained BDO USA, P.C.; Chicago, Illinois; PCAOB ID#243 as its auditor to provide services as defined below. The following amounts were charged by BDO USA, P.C.; Chicago, Illinois; PCAOB ID#243 for services provided in fiscal years 2025 and 2024.
Audit Fees (1)
$817,908
$637,825
(1) Fees for audit services billed in 2025 and 2024 consisted of the audit of the Company’s annual financial statements and reviews of quarterly financial statements.
There were no other fees charged by BDO USA, P.C.; Chicago, Illinois; PCAOB ID#243 in fiscal years 2025 and 2024.
As described in the Audit Committee Charter, it is the Audit Committee’s policy and procedure to review, consider, and ultimately pre-approve, where appropriate, all audit and non-audit engagement services to be performed by the registered public accountants. The Audit Committee pre-approved all of the services associated with the fees described above.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1)
The financial statements are listed in the Index to Financial Statements filed as part of this Annual Report on Form 10-K beginning on Page.
(a)(2)
Financial statement schedules are omitted because they are not applicable or required.
(a)(3) and (b)
The exhibits required by Item 601 of Regulations S-K are listed in the Index to Exhibits filed as part of this Annual Report on Form 10-K beginning on Page 56.