UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
Form
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(Mark One)
EXCHANGE ACT OF 1934
For the quarterly period ended
OR
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
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(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
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Title of each class | Trading Symbol | Name of each exchange on which registered The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No ¨
SigmaTron International, Inc.
January 31, 2025
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files. Yes No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of a “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ¨ Accelerated Filer ¨
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ¨ No
Indicate the number of shares outstanding of the registrant’s common stock, $0.01 par value, as of March 11, 2025:
SigmaTron International, Inc.
Index
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PART 1. | FINANCIAL INFORMATION: |
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| Item 1. |
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| Condensed Consolidated Balance Sheets – January 31, 2025 (Unaudited) and April 30, 2024 |
| 4 | |
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| Condensed Consolidated Statements of Operations – (Unaudited) |
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| 6 | ||
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| Condensed Consolidated Statements of Changes in Stockholders’ |
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| Equity – (Unaudited) Three and Nine Months Ended January 31, 2025 and 2024 |
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| Condensed Consolidated Statements of Cash Flows – (Unaudited) |
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| Notes to Condensed Consolidated Financial Statements – (Unaudited) |
| 11 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and |
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| Item 3. |
| 47 | ||
| Item 4. |
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PART II | OTHER INFORMATION: |
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| Item 1. |
| 48 | ||
| Item 1A. |
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| Item 2. |
| 49 | ||
| Item 3. |
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| Item 4. |
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| Item 5. |
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| Item 6. |
| 50 | ||
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| 51 | ||
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SigmaTron International, Inc. | |||||
Condensed Consolidated Balance Sheets | |||||
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| January 31, |
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| 2025 |
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| April 30, |
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Current assets: |
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Cash and cash equivalents | $ | |
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Accounts receivable, less allowance for credit losses of $ |
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and $ |
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Inventories, net |
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Prepaid expenses and other assets |
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Refundable and prepaid income taxes |
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VAT receivables |
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Other receivables |
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Total current assets |
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Property, machinery and equipment, net |
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Intangible assets, net |
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Deferred income taxes |
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Right-of-use assets |
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Other assets |
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Total other long-term assets |
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Total assets | $ | |
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Liabilities and stockholders' equity: |
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Current liabilities: |
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Trade accounts payable | $ | |
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Customer deposits |
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Accrued wages |
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Accrued expenses |
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Income taxes payable |
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Deferred revenue |
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Contingent warrants |
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Current portion of long-term debt |
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Current portion of finance lease obligations |
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Current portion of operating lease obligations |
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Total current liabilities |
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Long-term debt, less current portion |
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Income taxes payable |
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Deferred income taxes |
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Finance lease obligations, less current portion |
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Operating lease obligations, less current portion |
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Other long-term liabilities |
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Total long-term liabilities |
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Total liabilities |
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SigmaTron International, Inc. | |||||
Condensed Consolidated Balance Sheets - Continued | |||||
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| January 31, |
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| 2025 |
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| April 30, |
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| 2024 |
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Commitments and contingencies |
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Stockholders' equity: |
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Preferred stock, $ |
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authorized, |
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Common stock, $ |
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authorized, |
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at January 31, 2025 and April 30, 2024 |
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Capital in excess of par value |
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Retained earnings |
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Total stockholders' equity |
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Total liabilities and stockholders' equity | $ | |
| $ | |
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The accompanying notes to the condensed consolidated financial statements are an integral part of these statements. |
SigmaTron International, Inc.
Condensed Consolidated Statements of Operations
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| Three Months |
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| Three Months |
| Nine Months |
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| January 31, |
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| January 31, |
| January 31, |
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Net sales | $ | |
| $ | | $ | |
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Cost of products sold |
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Gross profit |
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Selling and administrative expenses |
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Operating (loss) income |
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Other income |
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Change in fair value of warrants |
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| - |
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Interest expense, net |
| ( |
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Income (loss) before income tax expense |
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Income tax expense |
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Net income/(loss) | $ | |
| $ | | $ | ( |
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Earnings (loss) per share - basic | $ | |
| $ | | $ | ( |
| $ | |
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Earnings (loss) per share - diluted | $ | |
| $ | | $ | ( |
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Weighted average shares of common stock outstanding |
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Basic |
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Weighted average shares of common stock outstanding |
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Diluted |
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The accompanying notes to the condensed consolidated financial statements are an integral part of these statements. |
SigmaTron International, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
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For the nine months ended January 31, 2025 (Unaudited) | ||||||||||||||
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| Capital in |
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| Total |
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| Preferred |
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| Common |
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| excess of par |
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| Retained |
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| value |
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| earnings |
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| equity |
Balance at May 1, 2024 | $ |
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| $ | |
| $ | |
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Recognition of stock-based |
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Net loss |
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Balance at July 31, 2024 | $ |
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| $ | |
| $ | |
| $ | |
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Recognition of stock-based |
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Net loss |
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| - |
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Balance at October 31, 2024 | $ |
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| $ | |
| $ | |
| $ | |
| $ | |
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Recognition of stock-based |
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Issuance of warrants |
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| - |
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Net income |
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| - |
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Balance at January 31, 2025 | $ |
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| $ | |
| $ | |
| $ | |
| $ | |
SigmaTron International, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity - Continued
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For the nine months ended January 31, 2024 (Unaudited) | ||||||||||||||
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| Capital in |
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| Total |
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| Preferred |
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| excess of par |
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| Retained |
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| stockholders’ |
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| value |
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| earnings |
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| equity |
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Balance at May 1, 2023 | $ |
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| $ | |
| $ | |
| $ | |
| $ | |
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Recognition of stock-based |
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Net income |
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Balance at July 31, 2023 | $ |
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| $ | |
| $ | |
| $ | |
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Recognition of stock-based |
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Exercise of stock options |
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Restricted stock awards |
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Net income |
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Balance at October 31, 2023 | $ |
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Recognition of stock-based |
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Restricted stock awards |
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| - |
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Net income |
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Balance at January 31, 2024 | $ |
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| $ | |
| $ | |
| $ | |
| $ | |
SigmaTron International, Inc.
Condensed Consolidated Statements of Cash Flows
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| Nine |
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| Nine |
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| Months Ended |
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| Months Ended |
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| January 31, |
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| January 31, |
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| 2025 |
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| 2024 |
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Cash flows from operating activities |
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Net (loss)/income | $ | ( |
| $ | |
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Adjustments to reconcile net (loss) income to net cash provided by |
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operating activities |
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Depreciation and amortization of property, machinery and equipment |
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Stock-based compensation |
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Restricted stock expense |
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Provision for credit losses |
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Gain on the sale of building |
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Fair value adjustment of contingent warrants |
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Deferred income tax expense (benefit) |
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Amortization of intangible assets |
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Amortization of financing fees |
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Loss from disposal or sale of machinery and equipment |
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Changes in operating assets and liabilities |
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Accounts receivable |
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Inventories |
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Prepaid expenses and other assets |
| ( |
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| ( |
Right-of-use assets |
| ( |
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| ( |
Refundable and prepaid income taxes |
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| ( |
Income taxes payable |
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| ( |
Trade accounts payable |
| ( |
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| ( |
Customer deposits |
| ( |
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Operating lease liabilities |
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Accrued expenses and wages |
| ( |
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Deferred revenue |
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Net cash provided by operating activities |
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Cash flows from investing activities |
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Purchases of machinery and equipment |
| ( |
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Proceeds from sale of building |
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Net cash (provided by) used in investing activities |
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SigmaTron International, Inc. | |||||
Condensed Consolidated Statements of Cash Flows - Continued | |||||
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| Nine |
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| Nine |
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| Months Ended |
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| Months Ended |
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| January 31, |
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| January 31, |
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| 2025 |
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| 2024 |
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| (Unaudited) |
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Cash flows from financing activities |
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Proceeds from the exercise of common stock options |
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Proceeds under equipment notes |
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Payments under finance lease agreements |
| ( |
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| ( |
Payments under equipment notes |
| ( |
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| ( |
Payments under building notes payable |
| ( |
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| ( |
Proceeds under term loan agreement |
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Payments under term loan agreement |
| ( |
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| ( |
Debt reduction from building sale proceeds |
| ( |
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Borrowings under revolving line of credit |
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Payments under revolving line of credit |
| ( |
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| ( |
Payments of debt financing costs |
| ( |
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| ( |
Net cash used in financing activities |
| ( |
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| ( |
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Change in cash and cash equivalents |
| ( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period | $ | |
| $ | |
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Supplementary disclosures of cash flow information |
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Cash paid for interest | $ | |
| $ | |
Cash paid for income taxes |
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Purchase of machinery and equipment financed |
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under finance leases |
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Right-of-use assets obtained in exchange for operating |
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lease liabilities |
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Financing of insurance policy |
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Issuance of warrants |
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The accompanying notes to the condensed consolidated financial statements are an integral part of these statements. |
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
SigmaTron International, Inc., its subsidiaries, foreign enterprises and international procurement office (collectively, “SigmaTron” or the “Company”) operates in
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 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
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
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
covenant compliance failures based on current revenue levels (see Note B - Basis of Presentation - Going Concern for additional information) the Company continues to classify this debt as current liabilities as of January 31, 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 (as defined in the Credit Agreements) 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 E – Long-term Debt for more information.
The Company is 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 K – Sale/Leaseback.
The Company’s financial statements are prepared using U.S. GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Over the past two years, to address the Company’s violation of certain financial covenants in its Credit Agreements (further discussion in Note E – Long-term Debt), the Company’s secured lenders agreed to amend the Credit Agreements. The Company must satisfy the terms of those amended agreements, which include meeting certain revised financial covenant ratios as well as the requirement 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. If the Company continues to see softness in demand, the Company’s ability to meet covenants in the near term may be at risk. In the event of non-compliance with the Company’s debt covenants, the Company may not have the ability to satisfy its obligations as they become due.
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note B - Basis of Presentation – Going Concern - Continued
The ability of the Company to continue as a going concern is dependent on the Company having adequate capital to fund its operating plan and performance. Management’s plans to continue as a going concern may include raising additional capital through sales of equity securities and borrowing, focusing the Company on its most profitable elements, and exploring alternative funding sources on an as needed basis such as the sales-leaseback transaction as disclosed in Note K – Sale/Leaseback. However, management cannot provide any assurances that the Company will be successful in accomplishing its plans. The supply chain challenges, inflationary pressures and the broader business climate in its industry have negatively impacted the Company’s business operations and is expected to continue to do so and, these impacts may include reduced access to capital. Additionally, the impact of potential tariffs may have a negative on the Company’s business operations. The ability of the Company to continue as a going concern may be dependent upon its ability to successfully secure other sources of financing and sustain profitable operations. There is substantial doubt about the ability of the Company to continue as a going concern for one year from the issuance of the accompanying consolidated financial statements. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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. The Company is obligated to either meet certain debt ratios by August 31, 2025 or find a Replacement Transaction no later than September 30, 2025. While the Company expects to have sufficient financial resources available on acceptable terms, there can be no assurance this will occur, particularly in light of increasingly conservative financial markets.
The accompanying unaudited condensed consolidated financial statements of the Company, 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., its international procurement office, SigmaTron International Inc. Taiwan Branch, and Wagz, Inc. (majority of business sold, effective as of April 1, 2023), have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note B - Basis of Presentation – Going Concern - Continued
Reclassifications
Certain amounts recorded in the prior-period consolidated financial statements have been reclassified to conform to the current-period financial statement presentation. These reclassifications had no effect on previously reported results of operations.
The components of inventory consist of the following:
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| January 31, |
| April 30, | ||
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| 2024 | ||
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Finished products | $ | |
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Work-in-process |
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Raw materials |
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Less obsolescence reserve (1) |
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| $ | |
(1) The obsolescence reserve primarily relates to raw materials.
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table sets forth the computation of basic and diluted earnings/(loss) per share:
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| Three Months Ended |
| Nine Months Ended | ||||||||
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| January 31, |
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| January 31, |
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| January 31, |
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| January 31, |
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| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||
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Net income/(loss) |
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| $ | |
| $ | ( |
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Weighted-average shares |
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Basic |
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Effect of dilutive stock options |
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| - |
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Diluted |
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Basic earnings/(loss) per share* |
| $ | |
| $ | |
| $ | ( |
| $ | |
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Diluted earnings/(loss) per share* |
| $ | |
| $ | |
| $ | ( |
| $ | |
* In accordance with ASC 260, the Company has elected not to include the contingent warrants classified under current liabilities in the calculation of the weighted average number of shares for the purposes of calculating the basic and diluted earnings/(loss) per share.
Options to purchase
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Debt and finance lease obligations consisted of the following at January 31, 2025 and April 30, 2024:
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| January 31, |
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| April 30, |
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| 2025 |
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| 2024 |
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Debt: |
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Notes Payable - Banks | $ |
| $ | ||
Notes Payable - Buildings |
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Notes Payable - Equipment |
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Unamortized deferred financing costs |
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Total debt |
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Less current maturities* |
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Long-term debt | $ |
| $ | ||
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Finance lease obligations | $ |
| $ | ||
Less current maturities |
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Total finance lease obligations, less current portion | $ |
| $ |
* 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 January 31, 2025.
Notes Payable – Banks
The Company’s primary secured credit agreements include 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 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 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) $
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.
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note E - Long-term Debt - Continued
In addition, the JPM Credit Agreement imposes a cash dominion period if there is an event of default or if availability is less than
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 and Wagz (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 January 31, 2025, there was $
The Term Loan Agreement provides for a term loan from the TCW Lenders to the Company in the principal amount of $
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
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note E - Long-term Debt - Continued
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 No. 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 $
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
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 (see Note B - Basis of Presentation - Going Concern for additional information) the Company continues to classify this debt as current liabilities as of January 31, 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.
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note E - Long-term Debt - Continued
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
In addition, pursuant to the JPM Amendment, the parties agreed to reduce the Revolving Commitment (as defined in the JPM Credit Agreement) from $
In addition, pursuant to the TCW Amendment the parties agreed to (i) amend the principal payment schedule under the TCW Term Loan to $
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note E - Long-term Debt - Continued
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 $
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 $
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 $
All other material terms of the Credit Agreements, as amended by the foregoing Amendments, remain unchanged.
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. The agreement is scheduled to expire on February 1, 2025. 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
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note E - Long-term Debt - Continued
Notes Payable – Buildings
The Company entered into a mortgage agreement on March 3, 2020, in the amount of $
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
The Company routinely enters into secured note agreements with FGI Equipment Finance LLC to finance the purchase of equipment. The terms of the outstanding secured note agreements mature from through , with quarterly installment payments ranging from $
Annual maturities of the Company’s debt, net of deferred financing fees for the remaining periods, as of January 31, 2025, are as follows:
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For the remaining 3 months of the fiscal year ending April 30: | 2025 | $ | |
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For the fiscal years ending April 30: | 2026 |
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| 2027 |
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*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 January 31, 2025.
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note E - Long-term Debt - Continued
Finance Lease Obligations
The Company enters into various finance lease agreements. The terms of the outstanding lease agreements mature through
The income tax expense was $
The income tax expense was $
The Company recognizes a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. Given the Company’s recent operating losses and going concern uncertainty identified in the current fiscal year, the Company determined that it may not reasonably rely on future forecasted income to benefit its deferred assets. For these reasons the Company has established a full valuation allowance on its deferred assets as of the October 31, 2024 quarter.
The Company has not changed its plan 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 $
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 is 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, results of operations or cash flows.
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The potential impact of continued economic uncertainty due to persistent inflation, tariffs, 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.
The following table presents the Company’s accounts receivable balance at the end of each period indicated:
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| January 31, |
| April 30, | ||
| 2025 |
| 2024 | ||
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Accounts receivable | $ | |
| $ | |
Less allowance for credit losses |
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| Three Months Ended |
| Nine Months Ended | |||||||
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| January 31, |
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| January 31, |
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Net trade sales by end-market |
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| 2024 |
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| 2024 |
Industrial Electronics |
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| $ | | $ | |
| $ | |
Consumer Electronics |
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Medical / Life Sciences |
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Total Net Trade Sales |
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| $ | | $ | |
| $ | |
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note H - Significant Accounting Policies - Continued
During the three and nine month periods ended January 31, 2025,
Periodically, certain customers may request bill and hold transactions according to the terms in the contract. In these cases, customers request that we retain physical possession of the product until customer pickup or delivery at a later date. Under these arrangements, control is transferred to the customer when the product is ready for transfer to the customer which is typically upon shipment to third-party warehouses, the customer has taken legal title, and the Company has a present right to payment. Under the bill and hold arrangements, we recognize sales only when all of the following criteria are met: 1) the customer’s reason for the bill-and-hold arrangement is substantive, 2) the product is separately identified as belonging to the customer, 3) the product is ready for transfer to the customer and 4) we do not have the ability to use the product or direct it to another customer.
Contract liabilities consist of payments received in advance of the transfer of control to the customer. As products are delivered and control transfers, the Company recognizes the deferred revenue in net sales in the Consolidated Statements of Operations. The following table summarizes the deferred revenue associated with payments received in advance of the transfer of control to the customer reported as deferred revenue in the Consolidated Balance Sheets and amounts recognized through net sales for each period presented.
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| January 31, |
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Contract liability (deferred revenue) beginning of period |
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Deferred revenue recognized in period |
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Revenue deferred in period |
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Deferred revenue end of period |
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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
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note H - Significant Accounting Policies – Continued
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 and going concern uncertainty identified in the previous quarter, the Company determined that it may not reasonably rely on future forecasted income to benefit its deferred tax assets. For these reasons the Company has established a full valuation allowance on its deferred tax assets as of October 31, 2024, which remains effective as of January 31, 2025.
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 the three and nine month periods ended January 31, 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,
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note H - Significant Accounting Policies - Continued
risk-free interest rate, and expected number of warrants ultimately utilized and term that are not observable in active markets.
The below table provides a summary of the fair value of the Company’s warrant liability during the nine months ended January 31, 2025.
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| January 31, |
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| 2025 |
Beginning balance | $ |
|
Contingent warrants issuance |
| |
Issuance of warrants |
| ( |
Change in fair value of warrants |
| ( |
Ending balance | $ | |
In June 2016, the FASB issued Accounting Standard Update (ASU) No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13, as amended by ASU 2019-04 and ASU 2019-05, that introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. For smaller reporting companies, ASU 2016- 13 is effective for annual and interim reporting periods beginning after December 15, 2022, and the guidance is to be applied using the modified-retrospective approach. Earlier adoption is permitted. The Company adopted this ASU in the first quarter ended July 31, 2023 and it had no material impact on the consolidated financial statements.
In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The new standard is intended to improve annual and interim reportable segment disclosure requirements regardless of number of reporting units, primarily through enhanced disclosures of significant expenses. The amendment requires public entities to disclose significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit and loss. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years starting after December 15, 2024. This ASU must be applied retrospectively to all prior periods presented. Management is currently evaluating the impact of the changes required by the new standard on the Company’s consolidated financial statements and related disclosures.
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note H - Significant Accounting Policies - Continued
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which focuses on income tax disclosures around effective tax rates and cash income taxes paid. This ASU requires public business entities to disclose, on an annual basis, a rate reconciliation presented in both dollars and percentages. ASU 2023-09 also identifies specific categories that would require disclosure, including the following:
State and local income tax, net of federal income tax effect
Foreign tax effects
Effect of cross-border tax laws
Enactment of new tax laws
Nontaxable or nondeductible items
Tax credits
Changes in valuation allowances
Changes in unrecognized tax benefits
The Company leases office and storage space, vehicles and other equipment under non-cancellable operating leases with initial terms typically ranging from
The Company’s lease terms may include options to extend or terminate the lease. The Company exercises judgment to determine the term of those leases when extension or termination options are present and includes such options in the calculation of the lease term when it is reasonably certain that it will exercise those options.
The Company has elected to include both lease and non-lease components in the determination of lease payments. Payments made to a lessor for items such as taxes, insurance, common area maintenance, or other costs commonly referred to as executory costs, are also included in lease payments if they are fixed. The fixed portion of these payments are included in the calculation of the lease liability, while any variable portion would be recognized as variable lease expenses, when
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note I – Leases – Continued
incurred. Variable payments made to third parties for these, or similar costs, such as utilities, are not included in the calculation of lease payments.
At commencement, lease-related assets and liabilities are measured at the present value of future lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company exercises judgment in determining the incremental borrowing rate based on the information available when the lease commences to measure the present value of future payments.
Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease cost includes amortization, which is recognized on a straight-line basis over the expected life of the leased asset, and interest expense, which is recognized following an effective interest rate method.
Operating leases are included in other assets, current operating lease obligations, and operating lease obligations (less current portion) on the Company’s Consolidated Balance Sheet. Finance leases are included in property, plant and equipment and current and long-term portion of finance lease obligations on the Company’s Consolidated Balance Sheet. Short term leases with an initial term of 12 months or less are not presented on the balance sheet with expense recognized as incurred.
The following table presents lease assets and liabilities and their balance sheet classification:
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| January 31, |
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| April 30, |
| Classification |
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| 2025 |
|
| 2025 |
Operating Leases: |
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|
Right-of-use Assets | Right-of-use assets |
| $ | |
| $ | |
Operating lease current | Current portion of operating lease |
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| |
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| |
Operating lease noncurrent | Operating lease obligations, less |
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| |
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| |
Finance Leases: |
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|
|
Right-of-use Assets | Property, machinery and equipment |
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| |
|
| |
Finance lease current | Current portion of finance lease |
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| |
|
| |
Finance lease noncurrent | Finance lease obligations, less |
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| |
|
| |
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note I – Leases – Continued
The components of lease expense for the three and nine month periods ended January 31, 2025 and 2024, are as follows:
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| Three Months |
| Three Months |
| Nine Months |
| Nine Months |
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| Ended |
| Ended |
| Ended |
| Ended |
| Expense |
| January 31, |
| January 31, |
| January 31, |
| January 31, |
| Classification |
| 2025 |
| 2024 |
| 2025 |
| 2024 |
Operating Leases: |
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Operating lease cost | Operating |
| |
| |
| |
| |
Variable lease cost | Operating |
| |
| |
| |
| |
Short term lease cost | Operating |
| |
| |
| |
| |
Finance Leases: |
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Amortization of | Operating |
| |
| |
| |
| |
Interest expense | Interest |
| |
| |
| |
| |
Total |
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| |
| |
| |
| |
The weighted average lease term and discount rates for the quarters ended January 31, 2025 and 2024, are as follows:
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| ||
|
| January 31, |
| January 31, |
|
| 2025 |
| 2024 |
Operating Leases: |
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|
|
|
Weighted average remaining lease term (months) |
|
| ||
Weighted average discount rate |
|
| ||
Finance Leases: |
|
|
|
|
Weighted average remaining lease term (months) |
|
| ||
Weighted average discount rate |
|
|
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note I – Leases – Continued
Future payments due under leases reconciled to lease liabilities are as follows:
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|
|
|
|
|
|
|
| Operating Leases |
|
| Finance Leases |
For the remaining 3 months of the fiscal year ending April 30: |
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|
|
|
|
|
2025 |
| $ | |
| $ | |
For the fiscal years ending April 30: |
|
|
|
|
|
|
2026 |
|
| |
|
| |
2027 |
|
| |
|
| |
2028 |
|
| |
|
| |
2029 |
|
| |
|
|
|
2030 |
|
| |
|
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|
Thereafter |
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| |
|
|
|
Total undiscounted lease payments |
|
| |
|
| |
Present value discount, less interest |
|
| |
|
| |
Lease liability |
| $ | |
| $ | |
Supplemental disclosures of cash flow information related to leases for the nine months ended January 31, 2025 and 2024 are as follows:
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| Nine Months Ended | |
| January 31, | January 31, |
Other Information | 2025 | 2024 |
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
Operating cash flows from finance leases | | |
Operating cash flows from operating leases | | |
Financing cash flows from finance leases | | |
Supplemental non-cash information on lease liabilities arising from |
|
|
Right-of-use assets obtained in exchange for |
| |
Right-of-use assets obtained in exchange for | | |
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Intangible assets subject to amortization are summarized as of January 31, 2025 as follows:
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| January 31,2025 | |||||||
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| Gross |
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| ||
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| Carrying |
| Accumulated |
| Net Intangible | |||
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| Amount |
| Amortization |
| Asset Balance | |||
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Spitfire: |
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Non-contractual customer relationship |
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| |
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| |
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| |
Total |
| $ | |
| $ | |
| $ | |
Intangible assets subject to amortization are summarized as of April 30, 2024 as follows:
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| April 30, 2024 | |||||||
|
| Gross |
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| |
|
| Carrying |
| Accumulated |
| Net Intangible | |||
|
| Amount |
| Amortization |
| Asset Balance | |||
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Spitfire: |
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|
|
|
Non-contractual customer relationship |
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| |
|
| |
|
| |
Total |
| $ | |
| $ | |
| $ | |
Estimated aggregate amortization expense for the Company’s intangible assets, which become fully amortized in
|
|
|
|
|
For the remaining 3 months of the fiscal year ending April 30: | 2025 |
| $ | |
For the fiscal years ending April 30: | 2026 |
|
| |
| 2027 |
|
| |
| 2028 |
|
| |
|
|
| $ | |
SigmaTron International, Inc.
January 31, 2025
Notes to Condensed Consolidated Financial Statements
(Unaudited)
During December 2024, the Company executed a sale/leaseback transaction for its principal facility in Elk Grove Village, Illinois. The sale price was $
SigmaTron International, Inc.
January 31, 2025
|
|
|
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 Form 10-Q 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.
SigmaTron International, Inc.
January 31, 2025
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 accounted for less than 1% of the Company’s revenues for the three and nine month periods ended January 31, 2025 and January 31, 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.
Despite supply chain component shortages improving in fiscal 2024, the Company’s business, results of operations, and financial condition continue to be adversely affected by certain supply chain issues due to world-wide component shortages. The Company anticipates continuing improvement in supply chain predictability in fiscal 2025.
SigmaTron International, Inc.
January 31, 2025
Results of Operations:
The following table sets forth the Company’s consolidated results of operations, including the percentage relationships of gross profit and expense items to net sales for the periods indicated:
|
|
|
|
|
|
|
|
| Three Months Ended | ||||
|
| January 31, |
| January 31, | ||
|
| 2025 |
| 2024 | ||
|
|
|
|
|
|
|
Net sales |
| $ | 71,067,863 |
| $ | 95,919,888 |
Cost of products sold |
|
| 65,514,800 |
|
| 85,992,928 |
As a percent of net sales |
|
| 92.2% |
|
| 89.7% |
Gross profit |
|
| 5,553,063 |
|
| 9,926,960 |
As a percent of net sales |
|
| 7.8% |
|
| 10.3% |
Selling and administrative expenses |
|
| 6,378,141 |
|
| 6,683,488 |
As a percent of net sales |
|
| 9.0% |
|
| 7.0% |
Operating (loss)/income |
|
| (825,078) |
|
| 3,243,472 |
|
|
|
|
|
|
|
Other income |
|
| 7,175,191 |
|
| 2,094 |
Change in fair value of warrants |
|
| 1,524,985 |
|
| - |
Interest expense, net |
|
| (3,328,267) |
|
| (2,568,824) |
Income before income taxes |
|
| 4,546,831 |
|
| 676,742 |
Income tax expense |
|
| (663,220) |
|
| (77,736) |
Net income |
| $ | 3,883,611 |
| $ | 599,006 |
Net Sales
Net sales decreased $24,852,025, or 25.9%, to $71,067,863 for the three month period ended January 31, 2025, compared to $95,919,888 for the same period in the prior fiscal year. The Company’s sales decreased for the three month period ended January 31, 2025, in the consumer electronics, industrial electronics and medical/life science markets. The decrease in sales is primarily due to customers that have lowered their demand in the current quarter, compared to the same period in the prior fiscal year.
Costs of products sold
Cost of products sold decreased $20,478,128, or 23.8%, to $65,514,800 (92.2% of net sales) for the three month period ended January 31, 2025, compared to $85,992,928 (89.7% of net sales) for the same period in the prior fiscal year. The increase in cost of products sold as a percentage of sales is primarily due to lower sales volumes, inefficient labor costs due to lower sales volumes and other fixed manufacturing costs for the three month period ended January 31, 2025, than in the same period in the prior fiscal year. The three month period ended January 31, 2025 includes approximately $80,000 of severance related to staff reductions during the period.
Gross profit margin
Gross profit margin was 7.8% of net sales, for the three month period ended January 31, 2025, compared to 10.3% for the same period in the prior fiscal year. The decrease in gross margins as a percentage of sales is primarily due to lower sales volumes, higher labor and other fixed manufacturing costs during the three month period ended January 31, 2025, compared to the same period in the prior fiscal year.
SigmaTron International, Inc.
January 31, 2025
Selling and administrative expenses
Selling and administrative expenses decreased $305,347, or 4.6% to $6,378,141 (9.0% of net sales) for the three month period ended January 31, 2025, compared to $6,683,488 (7.0% of net sales) for the same period in the prior fiscal year. The decrease in selling and administrative expenses is primarily due to a decrease in bonus expense and miscellaneous general expenses.
Change in fair value of warrants
Contingent warrants were issued during fiscal 2025 using a Monte Carlo model. A change in the fair value of contingent warrants decreased expense by $1,524,985 for a net value as of January 31, 2025 of $1,188,546 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 contingent warrants are issued, exercised or cancelled.
Interest expense, net
Interest expense, net, increased to $3,328,267 for the three month period ended January 31, 2025, compared to $2,568,824 for the same period in the prior fiscal year. The increase relates to deferred financing costs required by the debt modification during the second quarter of fiscal 2025.
Income tax expense
Income tax expense increased $585,484 to $663,220 for the three month period ended January 31, 2025, compared to $77,736 for the same period in the prior fiscal year. The Company’s effective tax rate was 14.59% and 11.49% for the three month period ended January 31, 2025 and 2024, respectively. The increase in income tax expense for the three month period ended January 31, 2025 compared to the same period in the previous year is due to variations in income earned by jurisdiction. The increase in effective tax rate is due to variations in income earned by jurisdiction.
Net income/loss
Net income increased $3,284,605, to $3,883,611 for the three month period ended January 31, 2025, compared to a net income of $599,006 for the same period in the prior fiscal year. The increase in net income primarily relates to 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.
SigmaTron International, Inc.
January 31, 2025
The following table sets forth the Company’s consolidated results of operations, including the percentage relationships of gross profit and expense items to net sales for the periods indicated:
|
|
|
|
|
|
|
|
| Nine Months Ended | ||||
|
|
| January 31, |
|
| January 31, |
|
|
| 2025 |
|
| 2024 |
|
|
|
|
|
|
|
Net sales |
| $ | 230,564,201 |
| $ | 292,741,928 |
Cost of products sold |
|
| 211,701,740 |
|
| 263,475,993 |
As a percent of net sales |
|
| 91.8% |
|
| 90.0% |
Gross profit |
|
| 18,862,461 |
|
| 29,265,935 |
As a percent of net sales |
|
| 8.2% |
|
| 10.0% |
Selling and administrative expenses |
|
| 19,372,518 |
|
| 20,139,927 |
As a percent of net sales |
|
| 8.4% |
|
| 6.9% |
Operating (loss)/income |
|
| (510,057) |
|
| 9,126,008 |
|
|
|
|
|
|
|
Other income |
|
| 7,175,191 |
|
| 27,224 |
Change in fair value of warrants |
|
| 898,985 |
|
| - |
Interest expense, net |
|
| (10,297,650) |
|
| (7,996,598) |
(Loss) income before income taxes |
|
| (2,733,531) |
|
| 1,156,634 |
Income tax expense |
|
| (6,138,687) |
|
| (267,267) |
Net (loss)/income |
| $ | (8,872,218) |
| $ | 889,367 |
Net Sales
Net sales decreased $62,177,727, or 21.2%, to $230,564,201 for the nine month period ended January 31, 2025, compared to $292,741,928 for the same period in the prior fiscal year. The Company’s sales decreased for the nine month period ended January 31, 2025, in the industrial electronics and medical/life science markets. The decrease in sales is primarily due to customers that have lowered their demand during fiscal 2025, compared to the same period in the prior fiscal year. The decrease in net sales was partially offset by an increase in the consumer electronics market.
Costs of products sold
Cost of products sold decreased $51,774,253, or 19.7%, to $211,701,740 (91.8% of net sales) for the nine month period ended January 31, 2025, compared to $263,475,993 (90.0% of net sales) for the same period in the prior fiscal year. The increase in cost of products sold as a percentage of sales is primarily due to lower sales volumes, inefficient labor costs due to lower sales volumes and other fixed manufacturing costs for the nine month period ended January 31, 2025, than in the same period in the prior fiscal year. The nine month period ended January 31, 2025 includes approximately $697,000 of severance related to staff reductions during the period.
Gross profit margin
Gross profit margin was 8.2% of net sales, for the nine month period ended January 31, 2025, compared to 10.0% for the same period in the prior fiscal year. The decrease in gross margins as a percentage of sales is primarily due to lower sales volumes, higher labor and other fixed manufacturing costs, and severance related expenses during the nine month period ended January 31, 2025, compared to the same period in the prior fiscal year.
SigmaTron International, Inc.
January 31, 2025
Selling and administrative expenses
Selling and administrative expenses decreased $767,409, or 3.8% to $19,372,518 (8.4% of net sales) for the nine month period ended January 31, 2025, compared to $20,139,927 (6.9% of net sales) for the same period in the prior fiscal year. The decrease in selling and administrative expenses is primarily due to a decrease in bonus expense and miscellaneous general expenses. The decrease in selling and administrative expenses was partially offset by an increase in accounting professional fees.
Change in fair value of warrants
Contingent warrants were issued at a valuation of $2,263,000 during the nine month period ended January 31, 2025 using a Monte Carlo model with a subsequent change in the fair value of contingent warrants decreasing expense by $898,985 for a net value as of January 31, 2025 of $1,188,546 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 $10,297,650 for the nine month period ended January 31, 2025, compared to $7,996,598 for the same period in the prior fiscal year. The increase relates to deferred financing costs as required by the debt modification during the second quarter of fiscal 2025.
Income tax expense
Income tax expense increased $5,871,420 to $6,138,687 for the nine month period ended January 31, 2025, compared to $267,267 for the same period in the prior fiscal year. The Company’s effective tax rate was (224.57)% and 23.10% for the nine month period ended January 31, 2025 and 2024, respectively. The increase in income tax expense for the nine month period ended January 31, 2025 compared to the same period in the previous year is primarily due to an increase in the valuation allowance in the current period. 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 income decreased $9,761,585, to a net loss of $8,872,218 for the nine month period ended January 31, 2025, compared to net income of $889,367 for the same period in the prior fiscal year. The decrease in net income 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 decrease in net income 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:
The Company’s financial statements are prepared using U.S. GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Over the past two years the Company has been in violation of financial covenants in its credit agreements (further discussion in Note E – Long-term Debt), the Company’s secured lenders
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January 31, 2025
agreed to amend the credit agreements. The Company must satisfy the terms of those amended agreements, including the requirement 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. In addition, there is a risk of additional covenant failures based on current revenue levels.
The ability of the Company to continue as a going concern is dependent on the Company having adequate capital to fund its operating plan and performance. Management’s plans to continue as a going concern may include raising additional capital through sales of equity securities and borrowing, focusing the Company on its most profitable elements, and exploring alternative funding sources on an as needed basis. However, management cannot provide any assurances that the Company will be successful in accomplishing its plans. The supply chain challenges, inflationary pressures, tariff, and the broader business climate in its industry have negatively impacted the Company’s business operations and is expected to continue to do so and, these impacts may include reduced access to capital. Additionally, the impact of potential tariffs may have a negative on the Company’s business operations. The ability of the Company to continue as a going concern may be dependent upon its ability to successfully secure other sources of financing and sustain profitable operations. The Company is obligated by its lenders to execute a Replacement Transaction by September 2025. Due to this requirement, there is substantial doubt about the ability of the Company to continue as a going concern for one year from the issuance of the accompanying consolidated financial statements. While the Company expects to refinance under commercially reasonable terms, there can be no guarantee of success. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The Company has reduced its debt by selling assets, reducing workforce, and reducing its working capital requirements. The Company is exploring additional activities designed to further reduce its debt load and 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 further 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. The Company is obligated to either meet certain debt ratios by August 31, 2025 or find a Replacement Transaction no later than September 30, 2025. While the Company expects to have sufficient financial resources available on acceptable terms, there can be no assurance this will occur, particularly in light of increasingly conservative financial markets. The Company continues to explore other strategic initiatives 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.
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. 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.
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January 31, 2025
Operating Activities.
Cash flow provided by operating activities was $16,837,855 for the nine months ended January 31, 2024. Cash flow provided by operating activities was primarily the result of a decrease in inventory in the amount of $30,072,373 and an increase in customer deposits in the amount of $6,159,254. Cash flow from operating activities was offset by a decrease in accounts payable in the amount of $17,063,059 and a decrease in deferred revenue in the amount of $4,922,855.
Investing Activities.
Cash provided by investing activities was $7,359,036 for the nine months ended January 31, 2025. During the first nine months of fiscal year 2025, the Company purchased $933,062 in machinery and equipment to be used in the ordinary course of business. 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. During December 2024, the Company executed a sale/leaseback transaction for its principal facility in Elk Grove Village, Illinois. The sale price was $9,500,000. Net proceeds were $8,292,098 of which $7,266,912 was held in escrow at JPM as of January 31, 2025 for repayment of the Company’s debt in accordance with its credit agreements.
Cash used in investing activities was $1,672,441 for the nine months ended January 31, 2024. During the first nine months of fiscal year 2024, the Company purchased $1,672,441 in machinery and equipment used in the ordinary course of business.
Financing Activities.
Cash used in financing activities of $21,390,793 for the nine months ended January 31, 2025, was primarily the result of net payments under the line of credit and term loan agreement.
Cash used in financing activities of $12,267,545 for the nine months ended January 31, 2024, was primarily the result of net payments under the line of credit and term loan agreement.
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January 31, 2025
Financing Summary.
Notes Payable – Banks
The Company’s primary secured credit agreements include 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 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 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 and Wagz (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 January 31, 2025, there was $12,792,559 outstanding and $15,132,197 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. Included in the outstanding balance as of January 31, 2025 is the escrow amount of $7,266,912 representing proceeds of the sale/leaseback transaction with respect to its Elk Grove Village, Illinois headquarters. As of January
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January 31, 2025
31, 2025 and April 30, 2024, the unamortized deferred financing amount offset against outstanding debt was $400,613 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 January 31, 2025, was $38,407,418 compared to an outstanding balance of $37,503,301 at April 30, 2024. As of January 31, 2025 and April 30, 2024, the unamortized deferred financing amount offset against outstanding debt was $2,744,402 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 No. 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,
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January 31, 2025
due to the lender demand of a Replacement Transaction by September 2025 and the risk of additional covenant violations based on current revenue levels (see Note B - Basis of Presentation - Going Concern for additional information) the Company continues to classify this debt as current liabilities as of January 31, 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.
SigmaTron International, Inc.
January 31, 2025
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 $175,469 as of January 31, 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 January 31, 2025, the warrants were valued at $1,188,546. 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.
SigmaTron International, Inc.
January 31, 2025
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. The agreement is scheduled to expire on February 1, 2025. 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 January 31, 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 $326,693 and $366,572 at January 31, 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 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.
Finance Lease Obligations
The Company enters into various finance lease agreements. The terms of the outstanding lease agreements mature through March 1, 2028, with monthly installment payments ranging from $12,940 to $33,706 and a fixed interest rate ranging from 8.73% to 12.09% per annum.
Other
The Company provides funds for salaries, wages, overhead and capital expenditure items as necessary to operate its Mexican, Vietnamese and Chinese subsidiaries and the Taiwan IPO. 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 nine month period ended January 31, 2025, resulted in net foreign
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January 31, 2025
currency transaction losses of $981,372 compared to net foreign currency losses of $512,885 for the same period in the prior year. During the nine months of fiscal year 2025, the Company paid approximately $42,390,000 to its foreign subsidiaries for manufacturing services. All intercompany balances have been eliminated upon consolidation.
Item 3.Quantitative and Qualitative Disclosures About Market Risks.
As a smaller reporting company, as defined in Item 10(f)(1) of Regulation S-K under the Exchange Act, the Company is not required to provide the information required by this item pursuant to Item 305(e) of Regulation S-K.
Item 4.Controls and Procedures.
Evaluation of Disclosure Controls and Procedures:
Under the supervision and with the participation of the Company’s management, including its principal executive officer and principal financial and accounting officer, the Company conducted an evaluation of the effectiveness of its 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. In connection with this review and the audit of the Company’s consolidated financial statements for the year ended April 30, 2024, it identified a material weakness as reported previously, which continues to exist as of January 31, 2025. The Company did not properly design or maintain effective 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.
Based on this evaluation, the Company’s principal executive officer and principal financial and accounting officer have concluded that as a result of the material weakness and control deficiencies as reported in its Annual Report on Form 10-K for the year ended April 30, 2024, its disclosure controls and procedures were not effective as of January 31, 2025. Notwithstanding the weakness, the Company’s management has concluded that the financial statements included elsewhere in this report present fairly, and in all material respects, its financial position, results of operation and cash flow in conformity with GAAP.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in its Exchange Act reports is 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 its management, including its principal executive officer and principal financial and accounting officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
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January 31, 2025
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.
Other than the remediation efforts previously disclosed, there have been no changes in the Company’s internal controls over financial reporting for the quarter ended January 31, 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time the Company is involved in legal proceedings, claims, or investigations that are incidental to 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 the Company does not expect these legal proceedings or claims will have any material adverse impact on its future consolidated financial position, results of operations or cash flows.
Item 1A. Risk Factors.
Other than the risk factors disclosed in this Item 1A. below, there have been no material changes to the Company’s risk factors since the filing of the Company’s annual report on Form 10-K for the fiscal year ended April 30, 2024.
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 January 31, 2025, as further described in Item 4, 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.
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January 31, 2025
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.
Recently there have been changes in tariff positions between the United States and other nations.
There have been implementations of tariffs between the United States, Canada, Mexico and China during 2025. While many of these tariffs have been delayed and may or may not ultimately take effect, the related uncertainty and potential issues of dealing with tariffs represents a risk to our business, operations and financial performance.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None beyond what was previously disclosed.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
SigmaTron International, Inc.
January 31, 2025
Item 6.Exhibits.
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101.INS | Inline XBRL Instance Document (the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document) |
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101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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104 | Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101) |
SigmaTron International, Inc.
January 31, 2025
SIGNATURES:
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SIGMATRON INTERNATIONAL, INC.
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/s/ Gary R. Fairhead |
| March 14, 2025 |
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Gary R. Fairhead |
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CEO (Principal Executive Officer) |
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/s/ Frank Cesario |
| March 14, 2025 |
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Frank Cesario |
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Chief Financial Officer, Secretary and Treasurer |
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(Principal Financial Officer and Principal |
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Accounting Officer) |
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SigmaTron International, Inc.
January 31, 2025
EXHIBIT 31.1
Certification of Principal Executive Officer of
SigmaTron International, Inc.
Pursuant to Rule 13a-14(a) under the Exchange Act,
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Gary R. Fairhead, Chief Executive Officer of SigmaTron International, Inc., certify that:
1.I have reviewed the Quarterly Report on Form 10-Q of SigmaTron International, Inc. for the quarter ended January 31, 2025 (this “report”);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
SigmaTron International, Inc.
January 31, 2025
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 14, 2025 |
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/s/ Gary R. Fairhead |
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Gary R. Fairhead |
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Chief Executive Officer of |
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SigmaTron International, Inc. |
SigmaTron International, Inc.
January 31, 2025
EXHIBIT 31.2
Certification of Principal Financial Officer of
SigmaTron International, Inc.
Pursuant to Rule 13a-14(a) under the Exchange Act,
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Frank Cesario, Chief Financial Officer, Secretary and Treasurer of SigmaTron International, Inc., certify that:
1.I have reviewed the Quarterly Report on Form 10-Q of SigmaTron International, Inc. for the quarter ended January 31, 2025 (this “report”);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
SigmaTron International, Inc.
January 31, 2025
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 14, 2025 |
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/s/ Frank Cesario |
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Frank Cesario |
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Chief Financial Officer, Secretary and |
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Treasurer of SigmaTron International, Inc. |
SigmaTron International, Inc.
January 31, 2025
EXHIBIT 32.1
Certification by the Principal Executive Officer of
SigmaTron International, Inc.
Pursuant to Rule 13a-14(b) under the Exchange Act and
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
I, Gary R. Fairhead, am Chief Executive Officer of SigmaTron International, Inc. (the “Company”).
This certification is being furnished pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of the Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2025 (the “Report”).
I hereby certify that to the best of my knowledge:
(a)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act (15 U.S.C. 78 m(a) or 78o(d)); and
(b)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: March 14, 2025 |
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/s/ Gary R. Fairhead |
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Gary R. Fairhead |
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Chief Executive Officer of |
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SigmaTron International, Inc. |
SigmaTron International, Inc.
January 31, 2025
EXHIBIT 32.2
Certification by the Principal Financial Officer of
SigmaTron International, Inc.
Pursuant to Rule 13a-14(b) under the Exchange Act and
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
I, Frank Cesario, am Chief Financial Officer, Secretary and Treasurer of SigmaTron International, Inc. (the “Company”).
This certification is being furnished pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of the Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2025 (the “Report”).
I hereby certify that to the best of my knowledge:
(a)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act (15 U.S.C. 78 m(a) or 78o(d)); and
(b)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: March 14, 2025 |
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/s/ Frank Cesario |
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Frank Cesario |
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Chief Financial Officer, Secretary and |
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Treasurer of SigmaTron International, Inc. |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) |
Jan. 31, 2025 |
Apr. 30, 2024 |
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Condensed Consolidated Balance Sheets [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 28,191 | $ 59,466 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 12,000,000 | 12,000,000 |
Common stock, shares issued | 6,119,288 | 6,119,288 |
Common stock, shares outstanding | 6,119,288 | 6,119,288 |
Condensed Consolidated Statements Of Operations - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Jan. 31, 2025 |
Jan. 31, 2024 |
Jan. 31, 2025 |
Jan. 31, 2024 |
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Condensed Consolidated Statements Of Operations [Abstract] | ||||
Net sales | $ 71,067,863 | $ 95,919,888 | $ 230,564,201 | $ 292,741,928 |
Cost of products sold | 65,514,800 | 85,992,928 | 211,701,740 | 263,475,993 |
Gross profit | 5,553,063 | 9,926,960 | 18,862,461 | 29,265,935 |
Selling and administrative expenses | 6,378,141 | 6,683,488 | 19,372,518 | 20,139,927 |
Operating (loss) income | (825,078) | 3,243,472 | (510,057) | 9,126,008 |
Other income | 7,175,191 | 2,094 | 7,175,191 | 27,224 |
Change in fair value of warrants | 1,524,985 | 898,985 | ||
Interest expense, net | (3,328,267) | (2,568,824) | (10,297,650) | (7,996,598) |
Income (loss) before income tax expense | 4,546,831 | 676,742 | (2,733,531) | 1,156,634 |
Income tax expense | (663,220) | (77,736) | (6,138,687) | (267,267) |
Net income/(loss) | $ 3,883,611 | $ 599,006 | $ (8,872,218) | $ 889,367 |
Earnings (loss) per share - basic | $ 0.63 | $ 0.10 | $ (1.44) | $ 0.15 |
Earnings (loss) per share - diluted | $ 0.63 | $ 0.10 | $ (1.44) | $ 0.14 |
Weighted average shares of common stock outstanding | ||||
Basic | 6,205,704 | 6,094,288 | 6,148,093 | 6,093,270 |
Diluted | 6,205,704 | 6,120,317 | 6,148,093 | 6,152,073 |
Condensed Consolidated Statements Of Changes In Stockholders’ Equity - USD ($) |
Preferred Stock [Member] |
Common Stock [Member] |
Capital In Excess Of Par Value [Member] |
Retained Earnings [Member] |
Total |
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Balance at Apr. 30, 2023 | $ 60,634 | $ 41,986,570 | $ 26,043,823 | $ 68,091,027 | |
Recognition of stock-based compensation | 184,817 | 184,817 | |||
Net (loss)/income | 262,099 | 262,099 | |||
Balance at Jul. 31, 2023 | 60,634 | 42,171,387 | 26,305,922 | 68,537,943 | |
Balance at Apr. 30, 2023 | 60,634 | 41,986,570 | 26,043,823 | 68,091,027 | |
Net (loss)/income | 889,367 | ||||
Balance at Jan. 31, 2024 | 60,943 | 42,373,610 | 26,933,190 | 69,367,743 | |
Balance at Jul. 31, 2023 | 60,634 | 42,171,387 | 26,305,922 | 68,537,943 | |
Recognition of stock-based compensation | 64,938 | 64,938 | |||
Exercise of stock options | 30 | 9,570 | 9,600 | ||
Restricted stock awards | 43 | 13,175 | 13,218 | ||
Net (loss)/income | 28,262 | 28,262 | |||
Balance at Oct. 31, 2023 | 60,707 | 42,259,070 | 26,334,184 | 68,653,961 | |
Recognition of stock-based compensation | 75,549 | 75,549 | |||
Restricted stock awards | 236 | 38,991 | 39,227 | ||
Net (loss)/income | 599,006 | 599,006 | |||
Balance at Jan. 31, 2024 | 60,943 | 42,373,610 | 26,933,190 | 69,367,743 | |
Balance at Apr. 30, 2024 | 61,193 | 42,453,394 | 23,557,666 | 66,072,253 | |
Recognition of stock-based compensation | 71,174 | 71,174 | |||
Net (loss)/income | (3,289,160) | (3,289,160) | |||
Balance at Jul. 31, 2024 | 61,193 | 42,524,568 | 20,268,506 | 62,854,267 | |
Balance at Apr. 30, 2024 | 61,193 | 42,453,394 | 23,557,666 | 66,072,253 | |
Net (loss)/income | (8,872,218) | ||||
Balance at Jan. 31, 2025 | 61,193 | 42,806,878 | 14,685,448 | 57,553,519 | |
Balance at Jul. 31, 2024 | 61,193 | 42,524,568 | 20,268,506 | 62,854,267 | |
Recognition of stock-based compensation | 64,328 | 64,328 | |||
Net (loss)/income | (9,466,669) | (9,466,669) | |||
Balance at Oct. 31, 2024 | 61,193 | 42,588,896 | 10,801,837 | 53,451,926 | |
Recognition of stock-based compensation | 42,513 | 42,513 | |||
Issuance of warrants | 175,469 | 175,469 | |||
Net (loss)/income | 3,883,611 | 3,883,611 | |||
Balance at Jan. 31, 2025 | $ 61,193 | $ 42,806,878 | $ 14,685,448 | $ 57,553,519 |
Description Of The Business |
9 Months Ended |
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Jan. 31, 2025 | |
Description Of The Business [Abstract] | |
Description Of The Business | Note A - Description of the Business
SigmaTron International, Inc., its subsidiaries, foreign enterprises and international procurement office (collectively, “SigmaTron” or the “Company”) operates in one reportable segment as an independent provider of electronic manufacturing services (“EMS”). EMS includes printed circuit board assemblies, electro-mechanical subassemblies and completely assembled (box-build) electronic products. In connection with the production of assembled products, EMS also 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’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 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 by September 2025 and the risk of additional
Note A - Description of the Business - Continued
covenant compliance failures based on current revenue levels (see Note B - Basis of Presentation - Going Concern for additional information) the Company continues to classify this debt as current liabilities as of January 31, 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 (as defined in the Credit Agreements) 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 E – Long-term Debt for more information.
The Company is 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 K – Sale/Leaseback. 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. |
Basis Of Presentation – Going Concern |
9 Months Ended |
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Jan. 31, 2025 | |
Basis Of Presentation – Going Concern [Abstract] | |
Basis Of Presentation – Going Concern | Note B - Basis of Presentation – Going Concern
The Company’s financial statements are prepared using U.S. GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Over the past two years, to address the Company’s violation of certain financial covenants in its Credit Agreements (further discussion in Note E – Long-term Debt), the Company’s secured lenders agreed to amend the Credit Agreements. The Company must satisfy the terms of those amended agreements, which include meeting certain revised financial covenant ratios as well as the requirement 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. If the Company continues to see softness in demand, the Company’s ability to meet covenants in the near term may be at risk. In the event of non-compliance with the Company’s debt covenants, the Company may not have the ability to satisfy its obligations as they become due.
Note B - Basis of Presentation – Going Concern - Continued
The ability of the Company to continue as a going concern is dependent on the Company having adequate capital to fund its operating plan and performance. Management’s plans to continue as a going concern may include raising additional capital through sales of equity securities and borrowing, focusing the Company on its most profitable elements, and exploring alternative funding sources on an as needed basis such as the sales-leaseback transaction as disclosed in Note K – Sale/Leaseback. However, management cannot provide any assurances that the Company will be successful in accomplishing its plans. The supply chain challenges, inflationary pressures and the broader business climate in its industry have negatively impacted the Company’s business operations and is expected to continue to do so and, these impacts may include reduced access to capital. Additionally, the impact of potential tariffs may have a negative on the Company’s business operations. The ability of the Company to continue as a going concern may be dependent upon its ability to successfully secure other sources of financing and sustain profitable operations. There is substantial doubt about the ability of the Company to continue as a going concern for one year from the issuance of the accompanying consolidated financial statements. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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. The Company is obligated to either meet certain debt ratios by August 31, 2025 or find a Replacement Transaction no later than September 30, 2025. While the Company expects to have sufficient financial resources available on acceptable terms, there can be no assurance this will occur, particularly in light of increasingly conservative financial markets.
The accompanying unaudited condensed consolidated financial statements of the Company, 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., its international procurement office, SigmaTron International Inc. Taiwan Branch, and Wagz, Inc. (majority of business sold, effective as of April 1, 2023), have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. The accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended January 31, 2025 are not necessarily indicative of the results that may be expected for the year ending April 30, 2025. The condensed consolidated balance sheet at April 30, 2024, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. For further information, refer to the condensed consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2024.
Note B - Basis of Presentation – Going Concern - Continued
Reclassifications
Certain amounts recorded in the prior-period consolidated financial statements have been reclassified to conform to the current-period financial statement presentation. These reclassifications had no effect on previously reported results of operations. |
Inventories, Net |
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Inventories, Net | Note C - Inventories, net
The components of inventory consist of the following:
(1) The obsolescence reserve primarily relates to raw materials. |
Earnings Per Share And Stockholders' Equity |
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Earnings Per Share And Stockholders' Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share And Stockholders' Equity | Note D - Earnings Per Share and Stockholders’ Equity
The following table sets forth the computation of basic and diluted earnings/(loss) per share:
* In accordance with ASC 260, the Company has elected not to include the contingent warrants classified under current liabilities in the calculation of the weighted average number of shares for the purposes of calculating the basic and diluted earnings/(loss) per share.
Options to purchase 691,331 and 596,081 shares of common stock were outstanding and exercisable at January 31, 2025 and 2024, respectively. There were 30,000 options granted during the three month period ended January 31, 2025 and there were no options granted during the three month period ended January 31, 2024. There were 30,000 options granted during the nine month period ended January 31, 2025 and there were 177,000 options granted during the nine month period ended January 31, 2024. There was $42,513 and $75,549 stock option expense recognized for the three month periods ended January 31, 2025 and 2024, respectively. There was $178,015 and $325,304 stock option expense recognized for the nine month periods ended January 31, 2025 and 2024, respectively. The balance of unrecognized compensation expense related to the Company’s stock option plans at January 31, 2025 and 2024 was $136,654 and $411,572, respectively. There were 1,060,244 anti-dilutive common stock equivalents and 484,128 anti-dilutive common stock equivalents for the three month periods ended January 31, 2025 and 2024, respectively, which have been excluded from the calculation of diluted earnings per share. There were 420,173 anti-dilutive common stock equivalents and 320,044 anti-dilutive common stock equivalents for the nine month periods ended January 31, 2025 and 2024, respectively, which have been excluded from the calculation of diluted earnings per share.
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Long-Term Debt |
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Long-Term Debt [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Note E - Long-term Debt
Debt and finance lease obligations consisted of the following at January 31, 2025 and April 30, 2024:
* 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 January 31, 2025.
Notes Payable – Banks
The Company’s primary secured credit agreements include 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 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 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.
Note E - Long-term Debt - Continued
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 and Wagz (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 January 31, 2025, there was $12,792,559 outstanding and $15,132,197 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. Included in the outstanding balance as of January 31, 2025 is the escrow amount of $7,266,912 representing proceeds of the sale/leaseback transaction with respect to its Elk Grove Village, Illinois headquarters. As of January 31, 2025 and April 30, 2024, the unamortized deferred financing amount offset against outstanding debt was $400,613 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 January 31, 2025, was $38,407,418 compared to an outstanding balance of $37,503,301 at April 30, 2024. As of January 31, 2025 and April 30, 2024, the unamortized deferred financing amount offset against outstanding debt was $2,744,402 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
Note E - Long-term Debt - Continued
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 No. 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 (see Note B - Basis of Presentation - Going Concern for additional information) the Company continues to classify this debt as current liabilities as of January 31, 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.
Note E - Long-term Debt - Continued
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.
Note E - Long-term Debt - Continued
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 $175,469 as of January 31, 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 January 31, 2025, the warrants were valued at $1,188,546. 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.
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. The agreement is scheduled to expire on February 1, 2025. 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
Note E - Long-term Debt - Continued
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 January 31, 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 $326,693 and $366,572 at January 31, 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 with FGI Equipment Finance LLC to finance the purchase of equipment. The terms of the outstanding secured note agreements mature from through , 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.
Annual maturities of the Company’s debt, net of deferred financing fees for the remaining periods, as of January 31, 2025, are as follows:
*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 January 31, 2025.
Note E - Long-term Debt - Continued
Finance Lease Obligations
The Company enters into various finance lease agreements. The terms of the outstanding lease agreements mature through March 1, 2028, with monthly installment payments ranging from $12,940 to $33,706 and a fixed interest rate ranging from 8.73% to 12.09% per annum. |
Income Tax |
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Income Tax [Abstract] | |
Income Tax | Note F - Income Tax
The income tax expense was $663,220 for the three month period ended January 31, 2025 compared to an income tax expense of $77,736 for the same period in the prior fiscal year. The Company’s effective tax rate was 14.59% and 11.49% for the three month period ended January 31, 2025 and 2024, respectively. The increase in income tax expense for the three month period ended January 31, 2025 compared to the same period in the previous year is due to variations in income earned by jurisdiction. The increase in effective tax rate is due to variations in income earned by jurisdiction.
The income tax expense was $6,138,687 for the nine month period ended January 31, 2025 compared to an income tax expense of $267,267 for the same period in the prior fiscal year. The Company’s effective tax rate was (224.57)% and 23.10% for the nine month period ended January 31, 2025 and 2024, respectively. The increase in income tax expense for the nine month period ended January 31, 2025 compared to the same period in the previous year is primarily due to an increase in the valuation allowance in the current period. The decrease in effective tax rate is due to variations in income earned by jurisdiction and the recording of valuation allowance.
The Company recognizes a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. Given the Company’s recent operating losses and going concern uncertainty identified in the current fiscal year, the Company determined that it may not reasonably rely on future forecasted income to benefit its deferred assets. For these reasons the Company has established a full valuation allowance on its deferred assets as of the October 31, 2024 quarter.
The Company has not changed its plan 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 $16,545,000 as of January 31, 2025. |
Commitments And Contingencies |
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Commitments And Contingencies [Abstract] | |
Commitments And Contingencies | Note G - Commitments and Contingencies
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 is 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, results of operations or cash flows. |
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Significant Accounting Policies | Note H - Significant Accounting Policies
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 credit losses, excess and obsolete reserves for inventory, deferred income, deferred taxes, uncertain tax positions, valuation allowance for deferred taxes, valuation of long-lived assets and valuation of contingent warrant liability. Actual results could materially differ from these estimates.
The potential impact of continued economic uncertainty due to persistent inflation, tariffs, 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.
Accounts Receivable - Accounts receivable is presented net of allowance for credit losses of $28,191 and $59,466 as of January 31, 2025 and April 30, 2024, respectively. The Company believes that its allowance for credit losses is adequate and represents its best estimate as of January 31, 2025. The Company continues to closely monitor customer liquidity along with industry and economic conditions, which may result in changes to its estimate.
The following table presents the Company’s accounts receivable balance at the end of each period indicated:
Revenue Recognition - The following table presents the Company’s revenue disaggregated by the principal end-user markets it serves:
Note H - Significant Accounting Policies - Continued
During the three and nine month periods ended January 31, 2025, no material revenues were recognized from performance obligations satisfied or partially satisfied in previous periods and no amounts were allocated to performance obligations that remain unsatisfied or partially unsatisfied at January 31, 2025. The Company is electing not to disclose the amount of the remaining unsatisfied performance obligations with a duration of one year or less. The Company had no material remaining unsatisfied performance obligations as of January 31, 2025, with an expected duration of greater than one year.
Periodically, certain customers may request bill and hold transactions according to the terms in the contract. In these cases, customers request that we retain physical possession of the product until customer pickup or delivery at a later date. Under these arrangements, control is transferred to the customer when the product is ready for transfer to the customer which is typically upon shipment to third-party warehouses, the customer has taken legal title, and the Company has a present right to payment. Under the bill and hold arrangements, we recognize sales only when all of the following criteria are met: 1) the customer’s reason for the bill-and-hold arrangement is substantive, 2) the product is separately identified as belonging to the customer, 3) the product is ready for transfer to the customer and 4) we do not have the ability to use the product or direct it to another customer.
Contract liabilities consist of payments received in advance of the transfer of control to the customer. As products are delivered and control transfers, the Company recognizes the deferred revenue in net sales in the Consolidated Statements of Operations. The following table summarizes the deferred revenue associated with payments received in advance of the transfer of control to the customer reported as deferred revenue in the Consolidated Balance Sheets and amounts recognized through net sales for each period presented.
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
Note H - Significant Accounting Policies – Continued
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 and going concern uncertainty identified in the previous quarter, the Company determined that it may not reasonably rely on future forecasted income to benefit its deferred tax assets. For these reasons the Company has established a full valuation allowance on its deferred tax assets as of October 31, 2024, which remains effective as of January 31, 2025.
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 the three and nine month periods ended January 31, 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,
Note H - Significant Accounting Policies - Continued
risk-free interest rate, and expected number of warrants ultimately utilized and term that are not observable in active markets.
The below table provides a summary of the fair value of the Company’s warrant liability during the nine months ended January 31, 2025.
New Accounting Standards:
In June 2016, the FASB issued Accounting Standard Update (ASU) No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13, as amended by ASU 2019-04 and ASU 2019-05, that introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. For smaller reporting companies, ASU 2016- 13 is effective for annual and interim reporting periods beginning after December 15, 2022, and the guidance is to be applied using the modified-retrospective approach. Earlier adoption is permitted. The Company adopted this ASU in the first quarter ended July 31, 2023 and it had no material impact on the consolidated financial statements.
In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The new standard is intended to improve annual and interim reportable segment disclosure requirements regardless of number of reporting units, primarily through enhanced disclosures of significant expenses. The amendment requires public entities to disclose significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit and loss. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years starting after December 15, 2024. This ASU must be applied retrospectively to all prior periods presented. Management is currently evaluating the impact of the changes required by the new standard on the Company’s consolidated financial statements and related disclosures.
Note H - Significant Accounting Policies - Continued
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which focuses on income tax disclosures around effective tax rates and cash income taxes paid. This ASU requires public business entities to disclose, on an annual basis, a rate reconciliation presented in both dollars and percentages. ASU 2023-09 also identifies specific categories that would require disclosure, including the following:
State and local income tax, net of federal income tax effect Foreign tax effects Effect of cross-border tax laws Enactment of new tax laws Nontaxable or nondeductible items Tax credits Changes in valuation allowances Changes in unrecognized tax benefits This ASU also requires entities to disclose the amount of income taxes paid, net of refunds received, disaggregated by federal, state and foreign jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 2024. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. |
Leases |
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Leases | Note I – Leases
The Company leases office and storage space, vehicles and other equipment under non-cancellable operating leases with initial terms typically ranging from 1 to 5 years. At contract inception, the Company reviews the facts and circumstances of the arrangement to determine if the contract is or contains a lease. The Company follows the guidance in Topic 842 to evaluate whether the contract has an identified asset; if the Company has the right to obtain substantially all economic benefits from the asset; and if the Company has the right to direct the use of the underlying asset. When determining if a contract has an identified asset, the Company considers both explicit and implicit assets, and whether the supplier has the right to substitute the asset. When determining if the Company has the right to direct the use of an underlying asset, the Company considers if it has the right to direct how and for what purpose the asset is used throughout the period of use and if it controls the decision-making rights over the asset.
The Company’s lease terms may include options to extend or terminate the lease. The Company exercises judgment to determine the term of those leases when extension or termination options are present and includes such options in the calculation of the lease term when it is reasonably certain that it will exercise those options.
The Company has elected to include both lease and non-lease components in the determination of lease payments. Payments made to a lessor for items such as taxes, insurance, common area maintenance, or other costs commonly referred to as executory costs, are also included in lease payments if they are fixed. The fixed portion of these payments are included in the calculation of the lease liability, while any variable portion would be recognized as variable lease expenses, when
Note I – Leases – Continued
incurred. Variable payments made to third parties for these, or similar costs, such as utilities, are not included in the calculation of lease payments.
At commencement, lease-related assets and liabilities are measured at the present value of future lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company exercises judgment in determining the incremental borrowing rate based on the information available when the lease commences to measure the present value of future payments.
Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease cost includes amortization, which is recognized on a straight-line basis over the expected life of the leased asset, and interest expense, which is recognized following an effective interest rate method.
Operating leases are included in other assets, current operating lease obligations, and operating lease obligations (less current portion) on the Company’s Consolidated Balance Sheet. Finance leases are included in property, plant and equipment and current and long-term portion of finance lease obligations on the Company’s Consolidated Balance Sheet. Short term leases with an initial term of 12 months or less are not presented on the balance sheet with expense recognized as incurred.
The following table presents lease assets and liabilities and their balance sheet classification:
Note I – Leases – Continued
The components of lease expense for the three and nine month periods ended January 31, 2025 and 2024, are as follows:
The weighted average lease term and discount rates for the quarters ended January 31, 2025 and 2024, are as follows:
Note I – Leases – Continued
Future payments due under leases reconciled to lease liabilities are as follows:
Supplemental disclosures of cash flow information related to leases for the nine months ended January 31, 2025 and 2024 are as follows:
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Intangible Assets |
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Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Note J – Intangible Assets
Intangible assets subject to amortization are summarized as of January 31, 2025 as follows:
Intangible assets subject to amortization are summarized as of April 30, 2024 as follows:
Estimated aggregate amortization expense for the Company’s intangible assets, which become fully amortized in 2028, for the remaining periods as of January 31, 2025, are as follows:
Amortization expense was $81,028 and $82,809 for the three month periods ended January 31, 2025 and January 31, 2024, respectively. Amortization expense was $243,678 and $249,033 for the nine month periods ended January 31, 2025 and January 31, 2024, respectively. |
Sale/Leaseback |
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Jan. 31, 2025 | |
Sale/Leaseback [Abstract] | |
Sale/Leaseback | Note K – Sale/Leaseback
During December 2024, the Company executed a sale/leaseback transaction for its principal facility in Elk Grove Village, Illinois. The sale price was $9,500,000. Net proceeds were $8,292,098 of which $7,266,912 was held in escrow at JPM as of January 31, 2025 for repayment of the Company’s debt in accordance with its credit agreements. The Company recorded a pretax gain of $7,175,191 on the sale, which is reflected under Other income on the Condensed Consolidated Statements of Operations. In connection with this transaction, the Company entered into a lease for the building. The lease is for a three year term with two, -year tenant (Company) options. The lease is classified as operating and was recorded as a right-of-use asset with a balance of $2,623,848, a current operating lease obligation with a balance of $783,400 and a long-term operating lease obligation with a balance of $1,845,146 as of January 31, 2025. |
Significant Accounting Policies (Policy) |
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Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Management Estimates And Uncertainties | 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 credit losses, excess and obsolete reserves for inventory, deferred income, deferred taxes, uncertain tax positions, valuation allowance for deferred taxes, valuation of long-lived assets and valuation of contingent warrant liability. Actual results could materially differ from these estimates.
The potential impact of continued economic uncertainty due to persistent inflation, tariffs, 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. |
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Accounts Receivable | Accounts Receivable - Accounts receivable is presented net of allowance for credit losses of $28,191 and $59,466 as of January 31, 2025 and April 30, 2024, respectively. The Company believes that its allowance for credit losses is adequate and represents its best estimate as of January 31, 2025. The Company continues to closely monitor customer liquidity along with industry and economic conditions, which may result in changes to its estimate.
The following table presents the Company’s accounts receivable balance at the end of each period indicated:
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Revenue Recognition | Revenue Recognition - The following table presents the Company’s revenue disaggregated by the principal end-user markets it serves:
Note H - Significant Accounting Policies - Continued
During the three and nine month periods ended January 31, 2025, no material revenues were recognized from performance obligations satisfied or partially satisfied in previous periods and no amounts were allocated to performance obligations that remain unsatisfied or partially unsatisfied at January 31, 2025. The Company is electing not to disclose the amount of the remaining unsatisfied performance obligations with a duration of one year or less. The Company had no material remaining unsatisfied performance obligations as of January 31, 2025, with an expected duration of greater than one year.
Periodically, certain customers may request bill and hold transactions according to the terms in the contract. In these cases, customers request that we retain physical possession of the product until customer pickup or delivery at a later date. Under these arrangements, control is transferred to the customer when the product is ready for transfer to the customer which is typically upon shipment to third-party warehouses, the customer has taken legal title, and the Company has a present right to payment. Under the bill and hold arrangements, we recognize sales only when all of the following criteria are met: 1) the customer’s reason for the bill-and-hold arrangement is substantive, 2) the product is separately identified as belonging to the customer, 3) the product is ready for transfer to the customer and 4) we do not have the ability to use the product or direct it to another customer.
Contract liabilities consist of payments received in advance of the transfer of control to the customer. As products are delivered and control transfers, the Company recognizes the deferred revenue in net sales in the Consolidated Statements of Operations. The following table summarizes the deferred revenue associated with payments received in advance of the transfer of control to the customer reported as deferred revenue in the Consolidated Balance Sheets and amounts recognized through net sales for each period presented.
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Income Tax | 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
Note H - Significant Accounting Policies – Continued
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 and going concern uncertainty identified in the previous quarter, the Company determined that it may not reasonably rely on future forecasted income to benefit its deferred tax assets. For these reasons the Company has established a full valuation allowance on its deferred tax assets as of October 31, 2024, which remains effective as of January 31, 2025.
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Impairment Of Long-Lived Assets | 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 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 the three and nine month periods ended January 31, 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,
Note H - Significant Accounting Policies - Continued
risk-free interest rate, and expected number of warrants ultimately utilized and term that are not observable in active markets.
The below table provides a summary of the fair value of the Company’s warrant liability during the nine months ended January 31, 2025.
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New Accounting Standards | New Accounting Standards:
In June 2016, the FASB issued Accounting Standard Update (ASU) No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13, as amended by ASU 2019-04 and ASU 2019-05, that introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. For smaller reporting companies, ASU 2016- 13 is effective for annual and interim reporting periods beginning after December 15, 2022, and the guidance is to be applied using the modified-retrospective approach. Earlier adoption is permitted. The Company adopted this ASU in the first quarter ended July 31, 2023 and it had no material impact on the consolidated financial statements.
In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The new standard is intended to improve annual and interim reportable segment disclosure requirements regardless of number of reporting units, primarily through enhanced disclosures of significant expenses. The amendment requires public entities to disclose significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit and loss. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years starting after December 15, 2024. This ASU must be applied retrospectively to all prior periods presented. Management is currently evaluating the impact of the changes required by the new standard on the Company’s consolidated financial statements and related disclosures.
Note H - Significant Accounting Policies - Continued
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which focuses on income tax disclosures around effective tax rates and cash income taxes paid. This ASU requires public business entities to disclose, on an annual basis, a rate reconciliation presented in both dollars and percentages. ASU 2023-09 also identifies specific categories that would require disclosure, including the following:
State and local income tax, net of federal income tax effect Foreign tax effects Effect of cross-border tax laws Enactment of new tax laws Nontaxable or nondeductible items Tax credits Changes in valuation allowances Changes in unrecognized tax benefits This ASU also requires entities to disclose the amount of income taxes paid, net of refunds received, disaggregated by federal, state and foreign jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 2024. The Company is currently evaluating the impact of this guidance on its consolidated financial statements |
Inventories, Net (Tables) |
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Components Of Inventory |
(1) The obsolescence reserve primarily relates to raw materials. |
Earnings Per Share And Stockholders' Equity (Tables) |
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Computation Of Basic And Diluted Earnings Per Share |
* In accordance with ASC 260, the Company has elected not to include the contingent warrants classified under current liabilities in the calculation of the weighted average number of shares for the purposes of calculating the basic and diluted earnings/(loss) per share. |
Long-Term Debt (Tables) |
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Schedule Of Debt And Finance Lease Obligations |
* 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 January 31, 2025. |
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Aggregate Amount Of Debt, Net Deferred Financing Fees |
*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 January 31, 2025.
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Significant Accounting Policies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Accounts Receivable |
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Revenue Disaggregated By Principal End-User Markets |
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Summary Of Deferred Revenue |
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Summary Of Fair Value Of Warrant Liability |
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Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Assets And Liabilities Related To Balance Sheet Classification |
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Components Of Lease Expense |
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Weighted Average Lease Term And Discount Rate |
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Future Payments Due Under Operating And Finance Leases |
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Supplemental Cash Flow Information Related To Leases |
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Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Intangible Assets Subject To Amortization |
Intangible assets subject to amortization are summarized as of April 30, 2024 as follows:
|
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Estimated Aggregate Amortization Expense |
|
Description Of The Business (Narrative) (Details) |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Jan. 31, 2025
item
|
Jul. 31, 2024 |
Apr. 30, 2024 |
|
Schedule of Equity Method Investments [Line Items] | |||
Number of reportable segments | 1 | ||
Waiver And Amendment No. 3 [Member] | Minimum [Member] | JPMorgan Chase Bank [Member] | |||
Schedule of Equity Method Investments [Line Items] | |||
Fixed charge coverage ratio | 0.70 | ||
Total Debt to EBITDA Ratio | 4.25 | 4.50 | |
Waiver And Amendment No. 3 [Member] | Maximum [Member] | JPMorgan Chase Bank [Member] | |||
Schedule of Equity Method Investments [Line Items] | |||
Fixed charge coverage ratio | 1.10 | 1.10 | |
Total Debt to EBITDA Ratio | 6.50 |
Inventories, Net (Components Of Inventory) (Details) - USD ($) |
Jan. 31, 2025 |
Apr. 30, 2024 |
---|---|---|
Inventories, Net [Abstract] | ||
Finished products | $ 20,262,849 | $ 18,457,912 |
Work-in-process | 4,218,900 | 4,492,609 |
Raw materials | 84,651,174 | 108,224,069 |
Total inventory, gross | 109,132,923 | 131,174,590 |
Less obsolescence reserve | 2,156,689 | 2,323,689 |
Total inventory, net | $ 106,976,234 | $ 128,850,901 |
Earnings Per Share And Stockholders' Equity (Narrative) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2025 |
Jan. 31, 2024 |
Jan. 31, 2025 |
Jan. 31, 2024 |
|
Earnings Per Share And Stockholders' Equity [Abstract] | ||||
Options to purchase, common stock outstanding | 691,331 | 596,081 | 691,331 | 596,081 |
Options granted | 30,000 | 0 | 30,000 | 177,000 |
Stock option expense | $ 42,513 | $ 75,549 | $ 178,015 | $ 325,304 |
Unrecognized compensation expense | $ 136,654 | $ 411,572 | $ 136,654 | $ 411,572 |
Anti-dilutive common stock outstanding excluded from the calculation of diluted earnings per share | 1,060,244 | 484,128 | 420,173 | 320,044 |
Earnings Per Share And Stockholders' Equity (Computation Of Basic And Diluted Earnings Per Share) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jan. 31, 2025 |
Oct. 31, 2024 |
Jul. 31, 2024 |
Jan. 31, 2024 |
Oct. 31, 2023 |
Jul. 31, 2023 |
Jan. 31, 2025 |
Jan. 31, 2024 |
|
Earnings Per Share And Stockholders' Equity [Abstract] | ||||||||
Net (loss)/income | $ 3,883,611 | $ (9,466,669) | $ (3,289,160) | $ 599,006 | $ 28,262 | $ 262,099 | $ (8,872,218) | $ 889,367 |
Weighted-average shares - Basic | 6,205,704 | 6,094,288 | 6,148,093 | 6,093,270 | ||||
Weighted-average shares - Effect of dilutive stock options | 26,029 | 58,803 | ||||||
Diluted | 6,205,704 | 6,120,317 | 6,148,093 | 6,152,073 | ||||
Basic earnings/(loss) per share | $ 0.63 | $ 0.10 | $ (1.44) | $ 0.15 | ||||
Diluted earnings/(loss) per share | $ 0.63 | $ 0.10 | $ (1.44) | $ 0.14 |
Long-Term Debt (Narrative-Notes Payable - Buildings) (Details) - The Bank And Trust SSB [Member] - Warehousing And Distribution Center [Member] - Notes Payable - Buildings [Member] - USD ($) |
Mar. 03, 2020 |
Jan. 31, 2025 |
Apr. 30, 2024 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Mortgage agreement, amount | $ 556,000 | ||
Mortgage agreement, outstanding amount | $ 326,693 | $ 366,572 | |
Mortgage agreement, monthly principal payment | $ 6,103 | ||
Mortgage agreement, interest rate | 5.75% | ||
Variable interest rate | 1.00% | ||
Mortgage agreement, payable period | 120 months |
Long-Term Debt (Narrative-Notes Payable - Equipment) (Details) - Notes Payable - Equipment [Member] |
9 Months Ended |
---|---|
Jan. 31, 2025
USD ($)
| |
Engencap Fin S.A. DE C.V. [Member] | |
Debt Instrument [Line Items] | |
Maturity date | May 01, 2023 |
FGI Equipment Finance LLC [Member] | |
Debt Instrument [Line Items] | |
Maturity start date | Mar. 01, 2025 |
Maturity end date | Jan. 01, 2029 |
Minimum [Member] | FGI Equipment Finance LLC [Member] | |
Debt Instrument [Line Items] | |
Fixed interest rate | 8.25% |
Quarterly installment payments under secured note agreements | $ 10,723 |
Maximum [Member] | Engencap Fin S.A. DE C.V. [Member] | |
Debt Instrument [Line Items] | |
Fixed interest rate | 8.00% |
Quarterly installment payments under secured note agreements | $ 9,310 |
Maximum [Member] | FGI Equipment Finance LLC [Member] | |
Debt Instrument [Line Items] | |
Fixed interest rate | 12.00% |
Quarterly installment payments under secured note agreements | $ 69,439 |
Long-Term Debt (Narrative-Finance Lease Obligations) (Details) - Finance Lease Obligations [Member] |
9 Months Ended |
---|---|
Jan. 31, 2025
USD ($)
| |
Debt Instrument [Line Items] | |
Maturity date | Mar. 01, 2028 |
Minimum [Member] | |
Debt Instrument [Line Items] | |
Quarterly installment payments under secured note agreements | $ 12,940 |
Interest rate | 8.73% |
Maximum [Member] | |
Debt Instrument [Line Items] | |
Quarterly installment payments under secured note agreements | $ 33,706 |
Interest rate | 12.09% |
Long-Term Debt (Schedule Of Debt And Finance Lease Obligations) (Details) - USD ($) |
Jan. 31, 2025 |
Apr. 30, 2024 |
---|---|---|
Debt Instrument [Line Items] | ||
Unamortized deferred financing costs | $ (3,145,015) | $ (1,528,156) |
Total debt | 52,385,706 | 69,583,387 |
Less current maturities | 50,058,786 | 66,244,227 |
Long-term debt | 2,326,920 | 3,339,160 |
Finance lease obligations | 3,726,989 | 5,361,574 |
Less current maturities | 1,970,016 | 2,214,127 |
Total finance lease obligations, less current portion | 1,756,973 | 3,147,447 |
Notes Payable - Banks [Member] | ||
Debt Instrument [Line Items] | ||
Debt | 51,738,472 | 66,102,020 |
Total debt | 48,593,457 | |
Notes Payable - Buildings [Member] | ||
Debt Instrument [Line Items] | ||
Debt | 326,693 | 366,572 |
Total debt | 326,693 | |
Notes Payable - Equipment [Member] | ||
Debt Instrument [Line Items] | ||
Debt | 3,465,556 | $ 4,642,951 |
Total debt | $ 3,465,556 |
Income Tax (Narrative) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2025 |
Jan. 31, 2024 |
Jan. 31, 2025 |
Jan. 31, 2024 |
|
Income Tax [Abstract] | ||||
Undistributed earnings of foreign subsidiaries | $ 16,545,000 | $ 16,545,000 | ||
Effective tax rate | 14.59% | 11.49% | (224.57%) | 23.10% |
Income tax expense | $ 663,220 | $ 77,736 | $ 6,138,687 | $ 267,267 |
Significant Accounting Policies (Narrative) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Jan. 31, 2025 |
Jan. 31, 2025 |
Apr. 30, 2024 |
|
Significant Accounting Policies [Abstract] | |||
Revenue recognized from performance obligations satisfied | $ 0 | $ 0 | |
Amounts allocated to performance obligations remain unsatisfied or partially unsatisfied | 0 | 0 | |
Allowance for credit losses | $ 28,191 | $ 28,191 | $ 59,466 |
Significant Accounting Policies (Schedule of Accounts Receivable) (Details) - USD ($) |
Jan. 31, 2025 |
Apr. 30, 2024 |
---|---|---|
Significant Accounting Policies [Abstract] | ||
Accounts receivable | $ 28,640,107 | $ 32,103,451 |
Less allowance for credit losses | 28,191 | 59,466 |
Accounts receivable, Net | $ 28,611,916 | $ 32,043,985 |
Significant Accounting Policies (Revenue Disaggregated By Principal End-User Markets) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2025 |
Jan. 31, 2024 |
Jan. 31, 2025 |
Jan. 31, 2024 |
|
Disaggregation of Revenue [Line Items] | ||||
Total Net Trade Sales | $ 71,067,863 | $ 95,919,888 | $ 230,564,201 | $ 292,741,928 |
Industrial Electronics [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net Trade Sales | 48,995,013 | 71,890,794 | 153,152,005 | 209,133,106 |
Consumer Electronics [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net Trade Sales | 18,747,168 | 19,165,519 | 64,232,418 | 63,914,268 |
Medical / Life Sciences [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net Trade Sales | $ 3,325,682 | $ 4,863,575 | $ 13,179,778 | $ 19,694,554 |
Significant Accounting Policies (Summary Of Deferred Revenue) (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Jan. 31, 2025 |
Jan. 31, 2024 |
|
Significant Accounting Policies [Abstract] | ||
Contract liability (deferred revenue) beginning of period | $ 3,111,062 | $ 8,063,197 |
Deferred revenue recognized in period | (6,913,995) | (14,785,967) |
Revenue deferred in period | 8,970,300 | 9,863,112 |
Deferred revenue end of period | $ 5,167,367 | $ 3,140,342 |
Significant Accounting Policies (Schedule Of Fair Value Of Warrant Liability) (Details) - USD ($) |
3 Months Ended | 9 Months Ended |
---|---|---|
Jan. 31, 2025 |
Jan. 31, 2025 |
|
Significant Accounting Policies [Abstract] | ||
Beginning balance | ||
Contingent warrants issuance | 2,263,000 | |
Issuance of warrants | (175,469) | |
Change in fair value of warrants | $ (1,524,985) | (898,985) |
Ending balance | $ 1,188,546 | $ 1,188,546 |
Leases (Narratives) (Details) |
Jan. 31, 2025 |
---|---|
Minimum [Member] | |
Leases [Line Items] | |
Operating leases, term | 1 year |
Maximum [Member] | |
Leases [Line Items] | |
Operating leases, term | 5 years |
Leases (Lease Assets And Liabilities Related To Balance Sheet Classification) (Details) - USD ($) |
Jan. 31, 2025 |
Apr. 30, 2024 |
---|---|---|
Leases [Abstract] | ||
Operating Leases: Right-of-use Assets | $ 11,889,695 | $ 7,463,301 |
Operating lease current liabilities | 3,929,383 | 2,789,107 |
Operating lease noncurrent liabilities | 8,340,370 | 4,958,247 |
Finance Leases: Right-of-use Assets | 6,359,277 | 6,959,660 |
Finance lease current liabilities | 1,970,016 | 2,214,127 |
Finance lease noncurrent liabilities | $ 1,756,973 | $ 3,147,447 |
Leases (Components Of Lease Expense) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2025 |
Jan. 31, 2024 |
Jan. 31, 2025 |
Jan. 31, 2024 |
|
Leases [Abstract] | ||||
Operating lease cost | $ 1,125,313 | $ 900,315 | $ 3,020,455 | $ 2,698,737 |
Variable lease cost | 51,876 | 50,224 | 154,099 | 162,643 |
Short term lease cost | 2,850 | 2,250 | 8,550 | 6,750 |
Amortization of right-of-use assets | 651,274 | 738,325 | 2,008,577 | 2,072,513 |
Interest expense | 121,373 | 141,787 | 371,274 | 396,226 |
Total | $ 1,952,686 | $ 1,832,901 | $ 5,562,955 | $ 5,336,869 |
Leases (Weighted Average Lease Term And Discount Rate) (Details) |
Jan. 31, 2025 |
Jan. 31, 2024 |
---|---|---|
Leases [Abstract] | ||
Operating Leases: Weighted average remaining lease term (months) | 58 months 22 days | 44 months 15 days |
Operating Leases: Weighted average discount rate | 7.50% | 4.70% |
Finance Leases: Weighted average remaining lease term (months) | 25 months 4 days | 32 months 4 days |
Finance Leases: Weighted average discount rate | 10.40% | 9.80% |
Leases (Supplemental Cash Flow Information Related To Leases) (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Jan. 31, 2025 |
Jan. 31, 2024 |
|
Leases [Abstract] | ||
Operating cash flows from finance leases | $ 121,373 | $ 141,787 |
Operating cash flows from operating leases | 452,847 | 181,263 |
Financing cash flows from finance leases | 1,634,585 | 1,463,488 |
Right-of-use assets obtained in exchange for new finance lease liabilities | 2,747,984 | |
Right-of-use assets obtained in exchange for operating lease liabilities | $ 6,988,864 | $ 3,123,409 |
Intangible Assets (Narrative) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2025 |
Jan. 31, 2024 |
Jan. 31, 2025 |
Jan. 31, 2024 |
|
Intangible Assets [Abstract] | ||||
Amortization expense | $ 81,028 | $ 82,809 | $ 243,678 | $ 249,033 |
Fully amortized year | 2028 |
Intangible Assets (Summary Of Intangible Assets Subject To Amortization) (Details) - USD ($) |
Jan. 31, 2025 |
Apr. 30, 2024 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 4,690,000 | $ 4,690,000 |
Accumulated Amortization | 3,954,490 | 3,710,812 |
Net Intangible Asset Balance | 735,510 | 979,188 |
Spitfire [Member] | Non-Contractual Customer Relationship [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 4,690,000 | 4,690,000 |
Accumulated Amortization | 3,954,490 | 3,710,812 |
Net Intangible Asset Balance | $ 735,510 | $ 979,188 |
Intangible Assets (Estimated Aggregate Amortization Expense) (Details) - USD ($) |
Jan. 31, 2025 |
Apr. 30, 2024 |
---|---|---|
Intangible Assets [Abstract] | ||
For the remaining 3 months of the fiscal year ending April 30 2025: | $ 81,027 | |
For the fiscal years ending April 30, 2026 | 317,728 | |
For the fiscal years ending April 30, 2027 | 310,900 | |
For the fiscal years ending April 30, 2028 | 25,855 | |
Net Intangible Asset Balance | $ 735,510 | $ 979,188 |
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