PART I [ITEM 1. BUSINESS](index=4&type=section&id=Item%201.%20Business) The Company, an EMS provider, reported a $3.9 million pre-tax loss on $304.7 million sales in FY2025, and was acquired by Transom Axis AcquireCo, LLC - The Company operates as an independent provider of electronic manufacturing services (EMS), including printed circuit board assemblies, electro-mechanical subassemblies, and box-build electronic products[12](index=12&type=chunk) - On July 28, 2025, Transom Axis AcquireCo, LLC completed the acquisition of the Company, making it a wholly-owned subsidiary. Prior to the merger, the Company's common stock traded on the Nasdaq Capital Market under 'SGMA'[12](index=12&type=chunk)[50](index=50&type=chunk) | Metric | FY2025 (Approx.) | Change YoY | | :----------- | :--------------- | :--------- | | Pre-tax Loss | $3,900,000 | N/A | | Sales | $304,700,000 | -19% | - The decrease in sales is primarily attributed to customers lowering demand in response to the easing of supply chain limitations and related stocking demands experienced in prior years[16](index=16&type=chunk) [ITEM 1A. RISK FACTORS](index=11&type=section&id=Item%201A.%20Risk%20Factors) The Company faces significant operational, market, international, financing, regulatory, technology, and human capital risks, including raw material price volatility and customer concentration - Raw material price increases and supply shortages, exacerbated by inflation and geopolitical conflicts, could adversely affect the Company's results and operating margins, as passing these costs to customers is difficult[52](index=52&type=chunk)[53](index=53&type=chunk) - The Company's operating results are volatile due to factors like customer production schedules, component availability, market demand, and pricing pressures, making forecasting and efficiency challenging[54](index=54&type=chunk)[55](index=55&type=chunk) | Customer Concentration | FY2025 | FY2024 | | :--------------------- | :----- | :----- | | Top 5 Customers (% Net Sales) | 57.3% | 49.2% | | Largest Customer (% Net Sales) | 16.8% | 13.1% | | Largest Customer (% Accounts Receivable) | 8.0% | 4.6% | - Significant foreign operations (42% of total assets in FY2025) expose the Company to political, economic, and currency fluctuation risks, with net foreign currency transaction losses of **$981,838** in FY2025[73](index=73&type=chunk)[74](index=74&type=chunk) - The Company has identified a material weakness in internal control over financial reporting related to revenue recognition criteria for non-standard transactions, leading to a conclusion that disclosure controls were not effective as of April 30, 2025[102](index=102&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=22&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC - The Company has no unresolved staff comments[108](index=108&type=chunk) [ITEM 1C. CYBERSECURITY](index=22&type=section&id=Item%201C.%20Cybersecurity) The Company maintains a robust cybersecurity program overseen by the Board, with no material incidents reported as of the report date - The Company's cybersecurity program is based on the National Institute Standards and Technology (NIST) framework and International Organization for Standardization (ISO) standards, including a formal Risk Management Strategy within its ISMS and an Incident Response Plan[109](index=109&type=chunk)[110](index=110&type=chunk) - The Board of Directors, directly and through the Audit Committee, actively reviews cybersecurity risks, including malicious activity, vulnerabilities, and results of disaster recovery exercises and penetration testing[115](index=115&type=chunk) - The IT team, led by the Vice President, Information Technology and Operating Initiatives (with a Master of Science in Information Systems) and the Director of IT Infrastructure and Security (with a Master of Science in Information Management), is responsible for managing systems and addressing cybersecurity events[117](index=117&type=chunk) - As of the report date, the Company is not aware of any material risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect its business strategy, results of operations, or financial condition[114](index=114&type=chunk) [ITEM 2. PROPERTIES](index=24&type=section&id=Item%202.%20Properties) The Company operates EMS facilities across the U.S., Mexico, China, and Vietnam, with most properties leased and deemed adequate - The Company's EMS business operates through manufacturing facilities in the U.S., Mexico, China, and Vietnam, with an IPO in Taiwan and an IT office in Taichung, Taiwan[118](index=118&type=chunk) | Location | Square Feet | Services Offered | Ownership Status | | :----------------------- | :---------- | :------------------------------------------------- | :---------------------- | | Suzhou, China | 216,950 | Electronic and electromechanical manufacturing solutions | Owned (land leased) | | Acuna, Mexico | 128,440 | Electronic and electromechanical manufacturing solutions | Owned (partially leased) | | Elk Grove Village, IL | 124,300 | Corporate headquarters, manufacturing, warehousing | Leased | | Chihuahua, Mexico | 121,000 | Electronic and electromechanical manufacturing solutions | Leased | | Union City, CA | 117,000 | Electronic and electromechanical manufacturing solutions | Leased | | Tijuana, Mexico | 112,100 | Electronic and electromechanical manufacturing solutions | Leased | | San Diego, CA | 30,240 | Warehousing and distribution | Leased | | Del Rio, TX | 30,000 | Warehousing and distribution | Leased | | Del Rio, TX | 28,000 | Warehousing and distribution | Owned | | Bien Hoa City, Vietnam | 24,475 | Electronic and electromechanical manufacturing solutions | Leased | | El Paso, TX | 18,200 | Warehousing and distribution | Leased | | Del Rio, TX | 16,000 | Warehousing and distribution | Leased | | Taipei, Taiwan | 4,685 | International procurement office | Leased | | Taichung, Taiwan | 1,650 | Information technology office | Leased | - The Company believes its current facilities are adequate for its needs and that alternative facilities could be found if required in the future[121](index=121&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=25&type=section&id=Item%203.%20Legal%20Proceedings) The Company is involved in ordinary course legal proceedings, not expected to materially impact its financial position or operations - The Company is involved in legal proceedings, claims, or investigations incidental to its business[122](index=122&type=chunk) - Management does not expect these legal matters to have a material adverse impact on the Company's future consolidated financial position or results of operations[122](index=122&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[123](index=123&type=chunk) PART II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=25&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The Company's common stock was delisted post-merger on July 28, 2025, with no anticipated future cash dividends - The Company's common stock was delisted from the Nasdaq Capital Market on July 28, 2025, due to the merger[125](index=125&type=chunk) - As of July 28, 2025, there was one holder of record for the Company's common stock[126](index=126&type=chunk) - The Company has not paid cash dividends and does not anticipate paying them in the foreseeable future[126](index=126&type=chunk) [ITEM 6. RESERVED](index=26&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information - Item 6 is reserved[129](index=129&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=26&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net sales decreased by 18.5% to $304.7 million in FY2025, resulting in a $10.25 million net loss, with debt obligations repaid post-merger - Net sales decreased by **$69.17 million**, or **18.5%**, to **$304.72 million** in fiscal 2025, primarily due to a broad decline in customer demand across industrial, consumer, and medical/life science markets, driven by a normalized supply chain[156](index=156&type=chunk) | Financial Metric (FY2025 vs FY2024) | FY2025 ($) | FY2024 ($) | Change ($) | Change (%) | | :---------------------------------- | :------------ | :------------ | :------------ | :--------- | | Net sales | 304,716,119 | 373,883,821 | (69,167,702) | -18.5% | | Cost of products sold | 277,410,159 | 340,357,503 | (62,947,344) | -18.5% | | Gross profit | 27,305,960 | 33,526,318 | (6,220,358) | -18.6% | | Gross profit margin | 9.0% | 9.0% | 0.0% | 0.0% | | Selling and administrative expenses | 25,534,298 | 26,392,403 | (858,105) | -3.3% | | Operating income | 1,771,662 | 7,133,915 | (5,362,253) | -75.2% | | Other income | 7,582,017 | 466,704 | 7,115,313 | 1524.6% | | Change in fair value of warrants | 544,945 | 0 | 544,945 | N/A | | Interest expense, net | (13,841,606) | (10,362,038) | (3,479,568) | 33.6% | | Loss before income taxes | (3,942,982) | (2,761,419) | (1,181,563) | 42.8% | | Income tax (expense) benefit | (6,311,926) | 275,262 | (6,587,188) | -2393.0% | | Net loss | (10,254,908) | (2,486,157) | (7,768,751) | 312.5% | | Basic Loss per common share | (1.63) | (0.41) | (1.22) | 297.6% | | Diluted Loss per common share | (1.63) | (0.41) | (1.22) | 297.6% | - The Company experienced a significant increase in net loss, primarily due to lower sales volumes, warrant remeasurement, deferred financing costs, higher fixed manufacturing costs, and a full valuation allowance on deferred tax assets, partially offset by a **$7.18 million** gain from a sale/leaseback transaction[164](index=164&type=chunk) - The Company was in non-compliance with financial covenants in its credit agreements in FY2024 and FY2025, leading to debt reclassification as current liabilities and requiring multiple waivers and amendments. All obligations under the credit agreements were repaid in full on July 28, 2025, due to the merger[137](index=137&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[143](index=143&type=chunk)[166](index=166&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS](index=38&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risks) As a smaller reporting company, the Company is not required to provide market risk disclosures - As a smaller reporting company, the Company is not required to provide quantitative and qualitative disclosures about market risks[211](index=211&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=38&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Financial statements and supplementary data are included in Item 15(a) of this report - The financial statements and supplementary data are included in Item 15(a) of this Report[212](index=212&type=chunk) [ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=38&type=section&id=Item%209.%20Changes%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There are no changes or disagreements with accountants on accounting and financial disclosure - There are no changes in or disagreements with accountants on accounting and financial disclosure[213](index=213&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=38&type=section&id=Item%209A.%20Controls%20and%20Procedures) Disclosure controls were ineffective as of April 30, 2025, due to a material weakness in revenue recognition for non-standard transactions - As of April 30, 2025, the Company's disclosure controls and procedures were not effective at the reasonable assurance level due to a material weakness in internal control over financial reporting[215](index=215&type=chunk) - The material weakness is related to the application of appropriate accounting principles over non-standard revenue transactions, specifically, controls to ensure revenue recognition criteria were met were not operating effectively[220](index=220&type=chunk) - Management believes the consolidated financial statements fairly represent the Company's financial condition, results of operations, and cash flows, despite the identified material weakness[216](index=216&type=chunk) - Remediation activities include strengthening the review process for revenue contracts, such as implementing multiple levels of review and supporting evidence for such transactions[222](index=222&type=chunk) [ITEM 9B. OTHER INFORMATION](index=40&type=section&id=Item%209B.%20Other%20Information) No Rule 10b5-1 trading arrangements were adopted, and credit agreements were amended to suspend covenants and facilitate a Replacement Transaction - No director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the quarter ended April 30, 2025[228](index=228&type=chunk) - On March 28, 2025, the Company entered into the March 2025 Amendments to its Credit Agreements, which suspended Fixed Charge Coverage Ratio and Total Debt to EBITDA Ratio covenants until Q1 FY2026[230](index=230&type=chunk) - The March 2025 Amendments required the Company to pursue a Replacement Transaction to repay obligations by September 30, 2025, including delivering an indication of interest, a signed exclusivity agreement, and commencing a tender offer by May 15, 2025[230](index=230&type=chunk) - The JPM Credit Agreement was amended to reduce the Revolving Commitment to **$35 million** and establish a **$3.7 million** reserve block against Availability[232](index=232&type=chunk) [ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION](index=41&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspection) This item is not applicable to the Company - Disclosure regarding foreign jurisdictions that prevent inspection is not applicable to the Company[236](index=236&type=chunk) PART III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=42&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section outlines executive officers, independent board committees, corporate governance policies, and compliance with insider trading rules - Key executive officers include Gary R. Fairhead (CEO and Chairman), John P. Sheehan (President), and Frank Cesario (CFO)[49](index=49&type=chunk) - The Board of Directors has established independent Audit, Compensation, and Nominating Committees, with members meeting Nasdaq independence criteria[249](index=249&type=chunk)[251](index=251&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk) - The Audit Committee oversees financial reporting, independent accountants, and the Company's cybersecurity controls and procedures[250](index=250&type=chunk) - The Company's Insider Trading Policy prohibits transactions with material non-public information and requires pre-clearance for securities transactions[261](index=261&type=chunk) - There were no late Section 16(a) filings during the year ended April 30, 2025[264](index=264&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=48&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation, including salaries and equity awards, is detailed, with no bonuses earned due to pre-tax losses | Name (Position) | Fiscal Year | Salary ($) | Bonus ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | | :-------------------------- | :---------- | :--------- | :-------- | :---------------- | :------------------------- | :-------- | | Gary R. Fairhead (CEO) | 2025 | 360,000 | - | - | 1,800 | 361,800 | | | 2024 | 350,000 | - | - | 6,486 | 356,486 | | John P. Sheehan (President) | 2025 | 348,000 | - | - | 2,000 | 350,000 | | | 2024 | 340,472 | - | 67,800 | 2,000 | 410,272 | | Rajesh B. Upadhyaya (EVP) | 2025 | 228,476 | - | - | 1,786 | 230,262 | | | 2024 | 319,837 | - | 67,800 | 12,552 | 400,189 | - No bonuses were earned by Executive Officers under the Employee Bonus Plan for fiscal years 2025 and 2024 due to the Company's pre-tax losses[272](index=272&type=chunk) - The Company has a Change in Control Severance Payment Plan (CIC Plan) entitling participants to severance pay upon involuntary termination within 24 months of a change in control[273](index=273&type=chunk) | Equity Compensation Plan | Number of Securities to be Issued upon Exercise | Weighted-Average Exercise Price ($) | Number of Securities Remaining Available for Future Issuance | | :----------------------- | :---------------------------------------------- | :---------------------------------- | :----------------------------------------------------------- | | 1993 | 125,000 | 6.45 | — | | 2004 | 129,914 | 4.83 | 12,813 | | 2011 | 19,400 | 3.20 | 11,650 | | 2019 | 136,767 | 4.56 | — | | 2021 | 384,500 | 5.04 | 15,500 | | **Total** | **795,331** | | **39,963** | - The Company sponsors a 401(k) retirement plan for U.S. employees, with Company matching contributions up to **25% of 5% of wages**, limited to **$2,000** per year for non-union participants and **$300** for union participants[282](index=282&type=chunk)[286](index=286&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=52&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Beneficial ownership of common stock and equity compensation plan details are provided, including major shareholders and executive holdings | Name | Number of Shares (1) | Percent | | :-------------------------------------------- | :------------------- | :------ | | Peter J. Abrahamson | 570,403 | 9.3% | | Cyrus Tang Foundation | 246,537 | 4.0% | | Tang Foundation for the Research of Traditional Chinese Medicine | 113,527 | 1.9% | | Beryl Capital Management | 590,881 | [ ]% | | The TCW Group, Inc. | 770,250 | [ ]% | | Gary R. Fairhead (CEO) | 200,217 | 3.2% | | John P. Sheehan (President) | 101,666 | 1.7% | | Rajesh B. Upadhyaya | 60,500 | * | | Thomas W. Rieck | 42,000 | * | | Bruce J. Mantia | 36,500 | * | | Dilip S. Vyas | 32,000 | * | | Paul J. Plante | 32,000 | * | - As of July 10, 2025, there were **6,119,288** shares of common stock outstanding[294](index=294&type=chunk) | Equity Compensation Plans | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options warrants and rights ($) | Number of securities remaining available for future issuance (excluding securities in column (a)) | | :------------------------ | :------------------------------------------------------------------------------------------ | :--------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------ | | Employee plans: | | | | | 1993 | 125,000 | 6.45 | — | | 2004 | 129,914 | 4.83 | 12,813 | | 2011 | 19,400 | 3.20 | 11,650 | | 2019 | 136,767 | 4.56 | — | | 2021 | 384,500 | 5.04 | 15,500 | | **Total** | **795,331** | | **39,963** | - Non-employee directors received monthly retainers (**$5,250-$5,500**) and additional fees for committee chairmanships or lead independent director roles. No stock awards were granted to non-employee directors in FY2025[288](index=288&type=chunk)[291](index=291&type=chunk) [ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE](index=54&type=section&id=Item%2013.%20Certain%20Relationships%2C%20Related%20Transactions%20and%20Director%20Independence) No reportable related party transactions occurred, and a majority of the Board is independent under Nasdaq rules - There have not been any reportable related party transactions during the applicable period[296](index=296&type=chunk) - The Board of Directors has determined that Messrs. Mantia, Plante, Rieck, and Vyas are independent under Nasdaq rules, ensuring a majority of independent Directors[297](index=297&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES](index=54&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) BDO USA, P.C. served as auditor for FY2025 and FY2024, with all audit and non-audit services pre-approved by the Audit Committee - BDO USA, P.C. served as the Company's auditor for fiscal years 2025 and 2024[298](index=298&type=chunk) | Service | 2025 ($) | 2024 ($) | | :--------- | :---------- | :---------- | | Audit Fees | 817,908 | 637,825 | - All audit and non-audit engagement services performed by the registered public accountants were pre-approved by the Audit Committee[301](index=301&type=chunk) PART IV [ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES](index=56&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists required financial statements, schedules, and exhibits for the Annual Report on Form 10-K - The financial statements are listed in the Index to Financial Statements filed as part of this Annual Report on Form 10-K beginning on Page F-1[303](index=303&type=chunk) - Financial statement schedules are omitted because they are not applicable or required[303](index=303&type=chunk) - Exhibits required by Item 601 of Regulations S-K are listed in the Index to Exhibits starting on Page 56[304](index=304&type=chunk) [ITEM 16. FORM 10-K SUMMARY](index=56&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary is provided - No Form 10-K Summary is provided[305](index=305&type=chunk) [SIGNATURES](index=61&type=section&id=Signatures) The report is signed by the CEO and CFO, along with other directors, on August 27, 2025 - The report is signed by Gary R. Fairhead (CEO, Principal Executive Officer, and Director) and Frank J. Cesario (CFO, Principal Financial and Accounting Officer) on August 27, 2025[318](index=318&type=chunk)[320](index=320&type=chunk) [INDEX TO FINANCIAL STATEMENTS](index=62&type=section&id=Index%20to%20Financial%20Statements) [REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM](index=63&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) BDO USA, P.C. issued an unqualified opinion on the financial statements, emphasizing the acquisition and inventory valuation as a critical audit matter - BDO USA, P.C. issued an unqualified opinion on the Company's consolidated financial statements for fiscal years ended April 30, 2025 and 2024[323](index=323&type=chunk) - The acquisition of the Company on July 28, 2025, is highlighted as an emphasis of matter[327](index=327&type=chunk) - The valuation of the inventory obsolescence reserve for 'value over stock raw material inventory' was identified as a critical audit matter, requiring challenging auditor judgment due to assumptions about future product demand and market conditions[329](index=329&type=chunk)[330](index=330&type=chunk)[331](index=331&type=chunk) [CONSOLIDATED FINANCIAL STATEMENTS](index=65&type=section&id=Consolidated%20Financial%20Statements) [CONSOLIDATED BALANCE SHEETS](index=65&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to $194.60 million in FY2025, driven by reduced inventories and property, with liabilities and equity also declining | Asset/Liability/Equity | April 30, 2025 ($) | April 30, 2024 ($) | | :-------------------------------- | :----------------- | :----------------- | | Total Current Assets | 154,055,930 | 175,902,619 | | Property, Machinery and Equipment, Net | 27,708,226 | 33,755,078 | | Total Assets | 194,599,039 | 223,793,975 | | Total Current Liabilities | 126,440,531 | 145,888,791 | | Total Long-Term Liabilities | 11,334,781 | 11,832,931 | | Total Liabilities | 137,775,312 | 157,721,722 | | Total Stockholders' Equity | 56,823,727 | 66,072,253 | - Inventories, net, decreased from **$128.85 million** in FY2024 to **$107.67 million** in FY2025[333](index=333&type=chunk) - Current portion of long-term debt decreased from **$66.24 million** in FY2024 to **$50.60 million** in FY2025, reflecting debt reduction efforts and reclassification due to covenant defaults[335](index=335&type=chunk) [CONSOLIDATED STATEMENTS OF OPERATIONS](index=67&type=section&id=Consolidated%20Statements%20of%20Operations) Net loss increased to $10.25 million in FY2025 due to an 18.5% sales decrease, higher interest expense, and income tax expense | Metric | FY2025 ($) | FY2024 ($) | | :------------------------ | :------------ | :------------ | | Net sales | 304,716,119 | 373,883,821 | | Gross profit | 27,305,960 | 33,526,318 | | Gross profit margin | 9.0% | 9.0% | | Operating income | 1,771,662 | 7,133,915 | | Other income | 7,582,017 | 466,704 | | Interest expense | (13,841,606) | (10,362,038) | | Loss before income taxes | (3,942,982) | (2,761,419) | | Income tax (expense) benefit | (6,311,926) | 275,262 | | Net loss | (10,254,908) | (2,486,157) | | Basic Loss per common share | (1.63) | (0.41) | | Diluted Loss per common share | (1.63) | (0.41) | - Net sales decreased by **18.5%** in FY2025 compared to FY2024[336](index=336&type=chunk) - Net loss increased significantly from **$2.49 million** in FY2024 to **$10.25 million** in FY2025[336](index=336&type=chunk) [CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY](index=68&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Total stockholders' equity decreased to $56.82 million in FY2025, primarily due to a $10.25 million net loss | Equity Component | April 30, 2023 ($) | Stock-based Compensation ($) | Exercise of Options ($) | Restricted Stock Awards ($) | Net Loss ($) | April 30, 2024 ($) | | :------------------------ | :----------------- | :--------------------------- | :------------------ | :-------------------------- | :------------ | :----------------- | | Common stock | 60,634 | - | 30 | 529 | - | 61,193 | | Capital in excess of par value | 41,986,570 | 381,034 | 9,570 | 76,220 | - | 42,453,394 | | Retained earnings | 26,043,823 | - | - | - | (2,486,157) | 23,557,666 | | Total stockholders' equity | 68,091,027 | 381,034 | 9,600 | 76,749 | (2,486,157) | 66,072,253 | | Equity Component | April 30, 2024 ($) | Stock-based Compensation ($) | Issuance of Warrants ($) | Net Loss ($) | April 30, 2025 ($) | | :------------------------ | :----------------- | :--------------------------- | :----------------------- | :------------- | :----------------- | | Common stock | 61,193 | - | - | - | 61,193 | | Capital in excess of par value | 42,453,394 | 236,129 | 770,253 | - | 43,459,776 | | Retained earnings | 23,557,666 | - | - | (10,254,908) | 13,302,758 | | Total stockholders' equity | 66,072,253 | 236,129 | 770,253 | (10,254,908) | 56,823,727 | - Total stockholders' equity decreased by **$9.25 million** from April 30, 2024, to April 30, 2025, primarily due to the net loss incurred[338](index=338&type=chunk) [CONSOLIDATED STATEMENTS OF CASH FLOWS](index=69&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased to $18.53 million in FY2025, while investing cash flow significantly increased due to a sale/leaseback transaction | Cash Flow Activity | FY2025 ($) | FY2024 ($) | | :-------------------------------- | :------------ | :------------ | | Net cash provided by operating activities | 18,530,322 | 27,760,048 | | Net cash provided by investing activities | 7,100,406 | 117,112 | | Net cash used in financing activities | (25,015,838) | (26,278,929) | | Change in cash and cash equivalents | 614,890 | 1,598,231 | | Cash and cash equivalents at end of year | 3,032,250 | 2,417,360 | - The decrease in operating cash flow was primarily due to a **$20.55 million** decrease in inventory and a **$3.52 million** increase in operating lease liabilities, partially offset by a **$4.12 million** decrease in customer deposits[169](index=169&type=chunk) - Investing cash flow significantly increased due to **$8.29 million** in net proceeds from the sale/leaseback of the Elk Grove Village facility[170](index=170&type=chunk) - Cash paid for interest increased to **$11.50 million** in FY2025 from **$10.17 million** in FY2024[341](index=341&type=chunk) [NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](index=71&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail business operations, accounting policies, merger impact, debt compliance issues, critical accounting estimates, and various financial disclosures - The Company operates in one reportable segment as an independent provider of electronic manufacturing services (EMS) through an international network of facilities[343](index=343&type=chunk) - The Company was acquired on July 28, 2025, by Transom Axis AcquireCo, LLC, becoming a wholly-owned subsidiary[350](index=350&type=chunk) - Due to 2024 covenant defaults and lender demand for a Replacement Transaction by September 2025, the Company's credit agreement facilities were classified as current liabilities as of April 30, 2025[347](index=347&type=chunk) - A full valuation allowance was established on deferred tax assets as of October 31, 2024, and remains effective as of April 30, 2025, due to recent operating losses[364](index=364&type=chunk) - The Company executed a sale/leaseback transaction for its Elk Grove Village, Illinois headquarters in December 2024, generating **$8.29 million** in net proceeds and a pretax gain of **$7.18 million**[349](index=349&type=chunk)[443](index=443&type=chunk)

Core Insights - Transom Capital Group has successfully acquired SigmaTron International, marking the end of SigmaTron's public trading status [1][2] - The acquisition is expected to enhance SigmaTron's operational capabilities and drive growth through strategic mergers and acquisitions [2] Transaction Details - Transom's tender offer for SigmaTron's shares was completed at a price of $3.02 per share, with 4,401,189 shares (71.9% of outstanding shares) validly tendered [3][4] Company Overview - SigmaTron is an independent provider of electronic manufacturing services (EMS), with operations in multiple countries including the US, Mexico, China, and Vietnam [6] - The company specializes in printed circuit board assemblies, electro-mechanical subassemblies, and fully assembled electronic products [6] Transom Capital Overview - Transom Capital is a private equity firm focused on middle-market investments, established in 2008, with a strategy that emphasizes operational improvements and value creation [7][8] - The firm has a strong track record in navigating complex investment situations and provides both capital and operational support to its portfolio companies [8]

Core Viewpoint - Transom Capital Group has successfully completed a tender offer to acquire SigmaTron International, with 71.9% of shares validly tendered at a price of $3.02 per share, and the acquisition is expected to be finalized on July 28, 2025 [1][2][3] Group 1: Acquisition Details - The tender offer for SigmaTron shares expired on July 24, 2025, with a purchase price of $3.02 per share [1] - A total of 4,401,189 shares were validly tendered, representing 71.9% of the outstanding shares [2] - All conditions for the tender offer have been satisfied, and Transom will accept and pay for the validly tendered shares [2] Group 2: Company Background - Transom Capital Group is a private equity firm founded in 2008, specializing in operationally-focused investments in the middle market [5] - The firm has a strong track record in various economic cycles, focusing on corporate carve-outs and undervalued public companies [5][6] - SigmaTron operates as an independent provider of electronic manufacturing services, with facilities in the U.S., Mexico, China, and Vietnam [7] Group 3: Advisory Roles - Kirkland & Ellis LLP is serving as the legal advisor for Transom [4] - Lincoln International is the exclusive financial advisor for SigmaTron, with additional legal support from Greenberg Traurig, LLP and Howard & Howard Attorneys PLLC [4]

Core Viewpoint - Transom Capital Group has initiated a cash tender offer to acquire all outstanding shares of SigmaTron International at a price of $3.02 per share, as part of a previously announced merger agreement [1][2]. Group 1: Tender Offer Details - The tender offer is set to expire on July 24, 2025, unless extended, and is subject to customary terms, including the tender of a majority of SigmaTron's voting shares [6]. - Transom has filed a tender offer statement with the SEC, and SigmaTron has filed a recommendation statement urging stockholders to accept the offer [5][7]. Group 2: Board of Directors' Recommendation - The SigmaTron Board unanimously recommends that stockholders tender their shares, having conducted a thorough review of financial and strategic alternatives [3]. - The Board considered SigmaTron's significant indebtedness and the certainty of value provided by the cash offer in their decision [4]. Group 3: Strategic Intent - Transom aims to provide immediate liquidity and value certainty to SigmaTron stockholders while committing to the company's long-term growth [2]. - The acquisition is positioned as a means to build on SigmaTron's legacy and drive future growth [2]. Group 4: Company Background - Transom Capital Group is an operationally focused private equity firm established in 2008, specializing in middle-market investments and complex situations [11][12]. - The firm employs a strategy that combines capital investment with operational expertise to unlock value and accelerate performance [12].

Group 1 - Monteverde & Associates PC has recovered millions for shareholders and is recognized as a Top 50 Firm in the 2024 ISS Securities Class Action Services Report [1] - The firm is investigating SigmaTron International, Inc. regarding its proposed merger with Transom Capital Group, LLC, where Transom will offer $3.02 per share in cash for all outstanding shares of SigmaTron [1] Group 2 - Monteverde & Associates PC is a national class action securities firm with a successful track record in trial and appellate courts, including the U.S. Supreme Court [2] - The firm operates from the Empire State Building in New York City [2]

Core Viewpoint - Transom Capital Group has entered into a merger agreement to acquire SigmaTron International, with a total enterprise value of approximately $83 million, representing a significant premium over the company's recent stock prices [2][3]. Transaction Details - The merger agreement has been unanimously approved by SigmaTron's Board of Directors, and the tender offer will be for $3.02 per share in cash, which is about 134% higher than the closing market price on May 20, 2025 [2]. - The transaction is expected to close in the third quarter of 2025, pending the successful completion of the tender offer and other customary closing conditions [3]. - The acquisition will result in SigmaTron being wholly owned by Transom, and its shares will no longer be listed on Nasdaq [3]. Company Background - SigmaTron International is an electronic manufacturing services company, providing services such as printed circuit board assemblies and electro-mechanical subassemblies, with manufacturing facilities in the U.S., Mexico, China, and Vietnam [9]. - Transom Capital Group is a private equity firm focused on middle-market investments, known for its operationally intensive strategy and expertise in various complex situations [7][8].

Core Viewpoint - SigmaTron International, Inc. has experienced a significant increase in share price following its earnings report, despite a decline in revenue and ongoing market challenges [1][2]. Financial Performance - For the fiscal third quarter ended January 31, 2025, SigmaTron's earnings per share (EPS) rose to 63 cents from 10 cents a year earlier [2]. - The company reported revenues of $71.1 million, a decline of 26% from $95.9 million in the same period a year ago [2]. - Net income improved significantly to $3.9 million from $0.6 million in the prior-year quarter, aided by a one-time gain of approximately $7.2 million from a sale-leaseback transaction [3][10]. Cost Structure and Operational Adjustments - Gross profit for the quarter fell to $5.6 million from $9.9 million in the prior-year period [4]. - Selling and administrative expenses slightly decreased to $6.4 million from $6.7 million, reflecting the company's focus on expense management [4]. - The company incurred an operating loss of $0.8 million, a reversal from an operating income of $3.2 million in the same period last year [4]. Management Insights - CEO Gary Fairhead noted that while revenue levels remain depressed, cost-cutting initiatives have begun to yield benefits, with an operating profit recorded in January 2025 [5]. - Management expressed confidence in navigating the downturn and capitalizing on potential recovery opportunities [5]. Market Conditions and Demand Trends - SigmaTron acknowledged a normalization in the electronic component marketplace, with shorter lead times and more stable pricing [6]. - There have been modest demand increases from several customers, although management remains cautious about declaring a full recovery [6]. - The company believes that excess customer inventory has been significantly reduced, which could stabilize revenue volatility in the coming quarters [6]. Future Outlook - SigmaTron expects fiscal fourth-quarter revenues to be higher than the fiscal third quarter based on its current backlog [7]. - The company continues to reduce inventory, contributing to its financial stability [7]. External Challenges - SigmaTron remains exposed to geopolitical risks, trade policies, and tariff uncertainties, which could impact operations [8]. - Ongoing trade issues and potential new tariff policies are highlighted as sources of volatility [8]. Strategic Initiatives - The company is exploring strategic opportunities with Lincoln International to enhance long-term shareholder value [9].

Financial Performance - Net sales decreased by $24,852,025, or 25.9%, to $71,067,863 for the three months ended January 31, 2025, compared to $95,919,888 for the same period in the prior fiscal year [142]. - For the nine months ended January 31, 2025, net sales decreased by $62,177,727, or 21.2%, to $230,564,201 compared to $292,741,928 for the same period in the prior fiscal year [153]. - Gross profit margin was 7.8% of net sales for the three months ended January 31, 2025, down from 10.3% for the same period in the prior fiscal year [144]. - Gross profit margin decreased to 8.2% of net sales for the nine months ended January 31, 2025, down from 10.0% in the prior fiscal year [155]. - Net income increased by $3,284,605 to $3,883,611 for the three months ended January 31, 2025, primarily due to a gain from a sale/leaseback transaction [150]. - Net loss increased to $8,872,218 for the nine months ended January 31, 2025, compared to net income of $889,367 for the same period in the prior fiscal year, a decrease of $9,761,585 [162]. Cost and Expenses - Cost of products sold decreased by $20,478,128, or 23.8%, to $65,514,800, representing 92.2% of net sales for the three months ended January 31, 2025 [143]. - Cost of products sold for the nine months ended January 31, 2025, decreased by $51,774,253, or 19.7%, to $211,701,740, which is 91.8% of net sales [154]. - Selling and administrative expenses decreased by $305,347, or 4.6%, to $6,378,141, which is 9.0% of net sales for the three months ended January 31, 2025 [146]. - Selling and administrative expenses decreased by $767,409, or 3.8%, to $19,372,518, representing 8.4% of net sales for the nine months ended January 31, 2025 [158]. Debt and Financing - As of January 31, 2025, the outstanding balance under the revolving loan facility was $12,792,559, down from $28,598,719 at April 30, 2024 [180]. - The TCW Term Loan outstanding amount was $38,407,418 as of January 31, 2025, compared to $37,503,301 at April 30, 2024 [183]. - Interest expense, net, increased to $3,328,267 for the three months ended January 31, 2025, compared to $2,568,824 for the same period in the prior fiscal year [148]. - Interest expense, net, rose to $10,297,650 for the nine months ended January 31, 2025, compared to $7,996,598 in the prior fiscal year [160]. - Cash used in financing activities was $21,390,793 for the nine months ended January 31, 2025, compared to $12,267,545 in the prior fiscal year [175]. Compliance and Regulatory Issues - The Company received default notices from JPM and TCW due to non-compliance with financial covenants, including a Fixed Charge Coverage Ratio of less than 1.10:1.00 and a Total Debt to EBITDA Ratio greater than 4.50:1.00 [185]. - As of January 31, 2025, the Company classified total debt as current liabilities due to ongoing covenant violations and lender demands for a Replacement Transaction by September 2025 [189]. - The Company received a delinquency notification from Nasdaq for failing to timely file its Form 10-K for the fiscal year ended April 30, 2024, which constituted a default under the Credit Agreements [190]. Transactions and Agreements - The company executed a sale/leaseback transaction for its Elk Grove Village, Illinois headquarters, with a sale price of $9,500,000 and net proceeds of $8,292,098 [173]. - The Company entered into amendments to its Credit Agreements, adjusting the Fixed Charge Coverage Ratio minimums from 0.70:1.0 to 1.00:1.0 and the Total Debt to EBITDA Ratio maximums from 6.50:1.0 to 3.50:1.0 by April 30, 2027 [192]. - The TCW Term Loan principal payment schedule was amended to $250,000 per quarter, with a potential extension of the PIK Period for three additional quarters if certain conditions are met [195]. - The Company recorded a liability of $2,263,000 for warrants issued as part of the Fee Letter, with a fair value of $1,188,546 as of January 31, 2025 [197]. Foreign Operations - The Company reported net foreign currency transaction losses of $981,372 for the nine-month period ended January 31, 2025, compared to losses of $512,885 for the same period in the prior year [208]. - The Company paid approximately $42,390,000 to its foreign subsidiaries for manufacturing services during the nine months of fiscal year 2025 [208]. - The Company has a credit facility with China Construction Bank allowing borrowing up to 10,000,000 Renminbi (approximately $1,400,000) with no outstanding balance as of January 31, 2025 [201]. - The Company entered into a mortgage agreement for $556,000 to finance its warehousing and distribution center, with an outstanding balance of $326,693 as of January 31, 2025 [202]. Future Outlook - The company anticipates continuing improvement in supply chain predictability in fiscal 2025 [139]. - The Company must pursue and close a Replacement Transaction to pay obligations in full no later than September 30, 2025 [165]. - Cash flow provided by operating activities was $13,714,684 for the nine months ended January 31, 2025, down from $16,837,855 in the prior fiscal year [171].

Financial Performance - Revenues for the third quarter of fiscal 2025 decreased by $24.8 million, or 26%, to $71.1 million compared to $95.9 million in the same quarter of the prior year[2] - Net income for the third quarter was $3.9 million, a significant increase from $0.6 million in the same period last year, aided by a $7.2 million gain from a sale/leaseback transaction[2] - For the nine-month period ended January 31, 2025, revenues decreased by $62.1 million, or 21%, to $230.6 million compared to $292.7 million for the same period in the prior year[3] - The company reported a net loss of $8.9 million for the nine-month period, compared to a net income of $0.9 million in the prior year[3] - Basic and diluted income per share for the third quarter was $0.63, compared to $0.10 for the same period in the prior year[2] Market Conditions - The company is seeing signs of normalization in the electronic component marketplace, with shorter lead times and stable pricing, and expects fourth-quarter revenue to be higher than the third quarter[5] Cost Management - The company has been actively reducing its cost structure, which contributed to an operating profit in January 2025[5] Asset and Liability Management - Current assets decreased to $150.3 million as of January 31, 2025, down from $175.9 million in April 2024[12] - Total liabilities decreased to $135.4 million as of January 31, 2025, compared to $157.7 million in April 2024[12] Strategic Initiatives - The company continues to work on strategic initiatives with Lincoln International and is focused on resolving supply chain issues amid existing trade challenges[6]

Core Insights - SigmaTron International, Inc. reported a significant revenue decline of 26% year-over-year for the fiscal quarter ended January 31, 2025, with revenues at $71.1 million compared to $95.9 million in the same quarter of the previous year [2] - Despite the revenue drop, the company achieved a net income of $3.9 million for the quarter, a notable increase from $0.6 million in the prior year, largely due to a gain from a sale/leaseback transaction [2][4] - For the nine-month period ending January 31, 2025, revenues decreased by 21% to $230.6 million, with a net loss of $8.9 million compared to a net income of $0.9 million in the same period last year [3] Financial Performance - The company’s net sales for the three months ended January 31, 2025, were $71.1 million, down from $95.9 million in the same period of 2024, while for the nine months, sales were $230.6 million compared to $292.7 million [10] - Gross profit for the three months was $5.6 million, down from $9.9 million year-over-year, and for the nine months, gross profit was $18.9 million compared to $29.3 million [11] - The basic and diluted income per share for the quarter was $0.63, up from $0.10 in the prior year, while for the nine months, the loss per share was $1.44 compared to a profit of $0.15 [11] Operational Insights - The CEO noted that the third quarter typically experiences lower revenue due to the holiday period, and the company is seeing signs of a potential recovery in the electronic component marketplace [4][5] - The company has been actively reducing its cost structure, which has contributed to an operating profit in January 2025, and anticipates higher revenue in the fourth quarter based on current backlog [5] - The company is addressing trade issues and potential tariff changes that could impact operations, while also working on strategic initiatives with Lincoln International [6] Company Overview - SigmaTron operates as an independent provider of electronic manufacturing services, with facilities in the U.S., Mexico, China, and Vietnam, focusing on printed circuit board assemblies and fully assembled electronic products [7][8] - The company maintains an International Procurement Office and a Sustainability Center in Taipei, Taiwan, and provides design services in Elk Grove Village, Illinois [8]