UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

Form 10-Q

__________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended ~~July~~October 31, 2024

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-23248

SIGMATRON INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)


Delaware	36-3918470
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

2201 Landmeier Road
Elk Grove Village, Illinois	60007
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (847) 956-8000

Title of each class

Common Stock $0.01 par value per share

Trading Symbol

SGMA

Name of each exchange on which registered

The NASDAQ Capital Market

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 x No ¨

‎

SigmaTron International, Inc.

~~July~~October 31, 2024

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 x 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 ¨

Non-accelerated Filer x Smaller Reporting Company x

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 x

Indicate the number of shares outstanding of the registrant’s common stock, $0.01 par value, as of ~~September~~December 1317, 2024: 6,119,288

SigmaTron International, Inc.

Index

PART 1.	FINANCIAL INFORMATION:		Page No.
	Item 1.	Condensed Consolidated Financial Statements
		Condensed Consolidated Balance Sheets – July 31, 2024 (Unaudited) and April 30, 2024	4
		Condensed Consolidated Balance Sheets – October 31, 2024 (Unaudited) and April 30, 2024	4
		Condensed Consolidated Statements of Operations – (Unaudited)
		Three Months Ended July 31, 2024 and 2023	6
		Three and SixMonths Ended October 31, 2024 and 2023	6
		Condensed Consolidated Statements of Changes in Stockholders’
		Equity – (Unaudited) Three Months Ended July 31, 2024 and 2023	7
		Equity – (Unaudited) Three and Six Months Ended October 31, 2024 and 2023	7
		Condensed Consolidated Statements of Cash Flows – (Unaudited)
		Three Months Ended July 31, 2024 and 2023	8
		Six Months Ended October 31, 2024 and 2023	8
		Notes to Condensed Consolidated Financial Statements – (Unaudited)	10
	Item 2.	Management’s Discussion and Analysis of Financial Condition and
		Results of Operations	2831
	Item 3.	Quantitative and Qualitative Disclosures About Market Risks	3844
	Item 4.	Controls and Procedures
PART II	OTHER INFORMATION:
	Item 1.	Legal Proceedings	4045
	Item 1A.	Risk Factors	4045
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4146
	Item 3.	Defaults Upon Senior Securities	4146
	Item 4.	Mine Safety Disclosures	4146
	Item 5.	Other Information	4146
	Item 6.	Exhibits	4247
		Signatures	4348

SigmaTron International, Inc.
Condensed Consolidated Balance Sheets
		July 31,
		October 31,
		2024		April 30,
		(Unaudited)		2024
Current assets:
Cash and cash equivalents	$	53,~~303~~983,~~318~~483	$	2,417,360
Accounts receivable, less allowance for credit losses of $7,814
Accounts receivable, less allowance for credit losses of $18,615
and $59,466 at July 31, 2024 and April 30, 2024, respectively		35,724,814		32,043,985
and $59,466 at October 31, 2024 and April 30, 2024, respectively		30,476,541		32,043,985
Inventories, net		~~115~~116,~~687~~052,~~645~~575		128,850,901
Prepaid expenses and other assets		1,~~674~~057,~~022~~064		1,886,701
Refundable and prepaid income taxes		~~771~~1,~~535~~207,096		1,716,372
VAT receivables		65,~~211~~653,~~685~~099		6,569,984
Other receivables		2,~~521~~490,~~174~~377		2,417,316
Total current assets		~~167~~160,~~894~~920,~~193~~235		175,902,619
Property, machinery and equipment, net		3231,~~497~~626,~~960~~827		33,755,078
Intangible assets, net		~~897~~816,~~567~~538		979,188
Deferred income taxes		~~8,752,870~~-		4,432,210
Right-of-use assets		710,~~585~~090,~~366~~512		7,463,301
Other assets		1,~~213~~207,~~762~~854		1,261,579
Total other long-term assets		1812,~~449~~114,~~565~~904		14,136,278
Total assets	$	~~218~~204,~~841~~661,~~718~~966	$	223,793,975
Liabilities and stockholders' equity:
Current liabilities:
Trade accounts payable	$	4648,~~621~~103,~~825~~672	$	50,593,099
Customer deposits		98,~~182~~173,~~867~~213		10,738,596
Accrued wages		6,~~276~~020,~~555~~593		6,746,466
Accrued expenses		21,~~143~~952,~~130~~470		2,554,260
Income taxes payable		41,~~981~~232,~~747~~228		897,847
Deferred revenue		35,~~164~~144,~~998~~305		3,111,062
Current portion of long-term debt		67,785,664		66,244,227
Contingent warrants		2,889,000		-
Current portion of finance lease obligations		2,087,938		2,214,127
Current portion of long-term debt		59,867,827		66,244,227
Current portion of operating lease obligations		3,171,681		2,789,107
Current portion of finance lease obligations		2,043,612		2,214,127
Total current liabilities		145,416,405		145,888,791
Current portion of operating lease obligations		3,155,101		2,789,107
Long-term debt, less current portion		2,957,603		3,339,160
Total current liabilities		138,582,021		145,888,791
Income taxes payable		153,983		294,993
Long-term debt, less current portion		2,607,322		3,339,160
Finance lease obligations, less current portion		2,660,504		3,147,447
Income taxes payable		152,100		294,993
Operating lease obligations, less current portion		4,693,774		4,958,247
Deferred income taxes		353,942		-
Other long-term liabilities		105,182		93,084
Finance lease obligations, less current portion		2,180,940		3,147,447
Total long-term liabilities		10,571,046		11,832,931
Operating lease obligations, less current portion		7,257,123		4,958,247
Total liabilities		155,987,451		157,721,722
Other long-term liabilities		76,592		93,084
Total long-term liabilities		12,628,019		11,832,931
Total liabilities		151,210,040		157,721,722

SigmaTron International, Inc.
Condensed Consolidated Balance Sheets - Continued
		July 31,
		October 31,
		2024		April 30,
		(Unaudited)		2024
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value; 500,000 shares
authorized, none issued or outstanding		-		-
Common stock, $0.01 par value; 12,000,000 shares
authorized, 6,119,288 shares issued and outstanding
at July 31, 2024 and April 30, 2024		61,193		61,193
at October 31, 2024 and April 30, 2024		61,193		61,193
Capital in excess of par value		42,~~524~~588,~~568~~896		42,453,394
Retained earnings		2010,~~268~~801,~~506~~837		23,557,666
Total stockholders' equity		6253,~~854~~451,~~267~~926		66,072,253
Total liabilities and stockholders' equity	$	~~218~~204,~~841~~661,~~718~~966	$	223,793,975
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

‎

SigmaTron International, Inc.

Condensed Consolidated Statements of Operations

		Three Months		Three Months		Six Months		Six Months
		Ended		Ended		Ended		Ended
		July 31,		July 31,
		October 31,		October 31,		October 31,		October 31,
		2024		2023		2024		2023
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Net sales	$	8474,~~776~~719,~~978~~360	$	98,~~130~~691,~~356~~684	$	159,496,338	$	196,822,040
Cost of products sold		7867,~~371~~815,~~784~~156		8889,~~479~~003,~~136~~929		146,186,940		177,483,065
Gross profit		6,~~405~~904,~~194~~204		9,~~651~~687,~~220~~755		13,309,398		19,338,975
Selling and administrative expenses		6,~~623~~370,~~866~~511		6,~~842~~613,~~805~~634		12,994,377		13,456,439
Operating (loss) income		(218,672)		2,808,415
Operating income		533,693		3,074,121		315,021		5,882,536
Other income		-		186,~~627~~503		-		25,130
Interest expense, net		(2,268,275)		(2,719,078)
Change in fair value of warrants		(626,000)		-		(626,000)		-
(Loss) income before income tax expense		(2,486,947)		107,964
Interest expense, net		(4,701,108)		(2,708,696)		(6,969,383)		(5,427,774)
Income tax (expense) benefit		(802,213)		154,135
(Loss) income before income tax expense		(4,793,415)		371,928		(7,280,362)		479,892
Net (loss)/income	$	(3,289,160)	$	262,099
Income tax expense		(4,673,254)		(343,666)		(5,475,467)		(189,531)
(Loss) earnings per share - basic	$	(0.54)	$	0.04
Net (loss)/income	$	(9,466,669)	$	28,262	$	(12,755,829)	$	290,361
(Loss) earnings per share - diluted	$	(0.54)	$	0.04
(Loss) earnings per share - basic	$	(1.55)	$	-	$	(2.08)	$	0.05
Weighted average shares of common stock outstanding
(Loss) earnings per share - diluted	$	(1.55)	$	-	$	(2.08)	$	0.05
Basic		6,119,288		6,091,288
Weighted average shares of common stock outstanding
Weighted average shares of common stock outstanding
Basic		6,119,288		6,091,331		6,119,288		6,092,761
Diluted		6,119,288		6,100,284
Weighted average shares of common stock outstanding
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
Diluted		6,119,288		6,190,696		6,119,288		6,166,524
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

For the three months ended July 31, 2024 (Unaudited)
For the six months ended October 31, 2024 (Unaudited)
						Capital in				Total
		Preferred		Common		excess of par		Retained		stockholders’
		stock		stock		value		earnings		equity
Balance at May 1, 2024	$	-	$	61,193	$	42,453,394	$	23,557,666	$	66,072,253
Recognition of stock-based‎compensation		-		-		71,174		-		71,174
Net loss		-		-		-		(3,289,160)		(3,289,160)
Balance at July 31, 2024	$	-	$	61,193	$	42,524,568	$	20,268,506	$	62,854,267
Recognition of stock-based‎compensation		-		-		64,328		-		64,328
Net loss		-		-		-		(9,466,669)		(9,466,669)
Balance at October 31, 2024	$	-	$	61,193	$	42,588,896	$	10,801,837	$	53,451,926

For the three months ended July 31, 2023 (Unaudited)
For the six months ended October 31, 2023 (Unaudited)
						Capital in				Total
		Preferred		Common		excess of par		Retained		stockholders’
		stock		stock		value		earnings		equity
Balance at May 1, 2023	$	-	$	60,634	$	41,986,570	$	26,043,823	$	68,091,027
Recognition of stock-based‎compensation		-		-		184,817		-		184,817
Net income		-		-		-		262,099		262,099
Balance at July 31, 2023	$	-	$	60,634	$	42,171,387	$	26,305,922	$	68,537,943
Recognition of stock-based‎compensation		-		-		64,938		-		64,938
Exercise of stock options		-		30		9,570		-		9,600
Restricted stock awards		-		43		13,175		-		13,218
Net income		-		-		-		28,262		28,262
Balance at October 31, 2023	$	-	$	60,707	$	42,259,070	$	26,334,184	$	68,653,961

‎

SigmaTron International, Inc.

Condensed Consolidated Statements of Cash Flows

		Three		Three
		Six		Six
		Months Ended		Months Ended
		July 31,		July 31,
		October 31,		October 31,
		2024		2023
		(Unaudited)		(Unaudited)
Cash flows from operating activities
Net (loss)/income	$	(312,~~289~~755,~~160~~829)	$	~~262~~290,~~099~~361
Adjustments to reconcile net (loss) income to net cash provided by
operating activities
Depreciation and amortization of property, machinery and equipment		12,~~424~~829,~~092~~394		13,~~496~~000,~~034~~751
Stock-based compensation		71135,~~174~~502		~~184~~249,~~817~~755
Provision for credit losses		51,652		-
Restricted stock expense		-		13,218
Deferred income tax (benefit) expense		(4,320,660)		180,213
Provision for credit losses		40,851		71,508
Amortization of intangible assets		81,621		83,415
Fair value adjustment of contingent warrants		2,889,000		-
Amortization of financing fees		120,644		116,745
Deferred income tax expense (benefit)		4,786,152		(266,579)
Loss from disposal or sale of machinery and equipment		839		43,286
Amortization of intangible assets		162,650		166,224
Amortization of financing fees		2,411,956		350,295
Loss from disposal or sale of machinery and equipment		7,158		43,287
Changes in operating assets and liabilities
Accounts receivable		(31,~~732~~526,~~481)~~593		25,~~058~~244,~~165~~132
Inventories		1312,~~163~~798,~~256~~326		719,~~092~~214,~~926~~849
Prepaid expenses and other assets		~~632~~1,~~335~~774,858		(~~611~~1,~~805~~302,933)
Right-of-use assets		(~~122~~2,~~065~~627,211)		~~801~~1,~~201~~348,411
Refundable and prepaid income taxes		~~944~~509,~~837~~276		~~368~~10,~~218~~366
Income taxes payable		3191,~~942,890~~488		(1,161,108)
Trade accounts payable		(32,~~971~~489,~~274~~427)		(1013,~~241~~146,~~474~~965)
Customer deposits		(12,~~555~~565,~~729~~383)		98,~~717~~216,~~955~~454
Operating lease liabilities		~~118~~2,~~101~~664,870		(~~779~~1,~~898~~520,403)
Accrued expenses and wages		(~~986~~1,~~341~~391,827)		~~660~~(914,~~153~~063)
Deferred revenue		532,~~936~~033,243		(24,~~520~~140,~~928~~944)
Net cash provided by operating activities		212,~~627~~931,~~667~~640		715,~~750~~766,~~014~~616
Cash flows from investing activities
Purchases of machinery and equipment		(~~167~~708,~~813~~301)		(~~621~~405,~~929~~413)
Net cash used in investing activities		(~~167~~708,~~813~~301)		(~~621~~405,~~929~~413)

SigmaTron International, Inc.
Condensed Consolidated Statements of Cash Flows - Continued
		Three		Three
		Six		Six
		Months Ended		Months Ended
		July 31,		July 31,
		October 31,		October 31,
		2024		2023
		(Unaudited)		(Unaudited)
Cash flows from financing activities
Proceeds from the exercise of common stock options		-		9,600
Proceeds under equipment notes		-		783,461
Payments under finance lease agreements		(~~613~~1,~~132~~137,022)		(~~428~~955,~~105~~337)
Payments under equipment notes		(~~383~~775,~~600~~995)		(~~278~~552,~~250~~965)
Payments under building notes payable		(1326,~~103~~395)		(1224,~~372~~923)
Payments under term loan agreement		(250,000)		(250,000)
Proceeds under term loan agreement		1,241,940		-
Borrowings under revolving line of credit		87,317,346		103,905,204
Payments under term loan agreement		(500,000)		(500,000)
Payments under revolving line of credit		(85,631,407)		(109,632,319)
Borrowings under revolving line of credit		167,311,601		202,602,581
Payments of debt financing costs		-		(379,942)
Payments under revolving line of credit		(172,522,993)		(213,829,509)
Net cash provided by (used in) financing activities		426,104		(6,292,323)
Payments of debt financing costs		(4,248,352)		(463,214)
Change in cash and cash equivalents		2,885,958		835,762
Net cash used in financing activities		(10,657,216)		(12,930,306)
Change in cash and cash equivalents		1,566,123		2,430,897
Cash and cash equivalents at beginning of period		2,417,360		819,129
Cash and cash equivalents at end of period	$	53,~~303~~983,~~318~~483	$	13,~~654~~250,~~891~~026
Supplementary disclosures of cash flow information
Cash paid for interest	$	24,~~217~~628,~~494~~192	$	25,~~583~~132,~~509~~648
Cash paid for income taxes		~~383~~700,~~245~~666		~~434~~1,~~038~~600,055
Purchase of machinery and equipment financed
under finance leases		-		12,~~032~~567,~~351~~029
Right-of-use assets obtained in exchange for operating
lease liabilities		~~936~~4,~~399~~261,324		1,531
Financing of insurance policy		~~117~~47,~~398~~672		~~229~~73,~~520~~837
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

SigmaTron International, Inc.

~~July~~October 31, 2024

~~Note~~Notes Ato -Condensed ~~Description~~Consolidated ofFinancial ~~the Business~~Statements

~~SigmaTron International, Inc., its subsidiaries, foreign enterprises and international procurement office~~ (~~collectively, “SigmaTron” or the “Company”~~Unaudited) 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~~Note Company’s primary secured credit agreements, being the Amended and Restated Credit Agreement dated as of July 18, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “JPM Credit Agreement”) by and among the Company, the other loan party thereto and JPMorgan Chase Bank, N.A, as lender (“JPM”), and the Credit Agreement dated as of July 18, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “Term Loan Agreement” and together with the JPM Credit Agreement, the “Credit Agreements”) by and among the Company, the financial institutions identified therein (the “TCW Lenders”) and TCW Asset Management Company LLC, as administrative agent for the TCW Lenders (in such capacity, the “Agent,” and collectively with the TCW Lenders and JPM, the “Lender Parties”), contain financial covenants relating to (i) the Fixed Charge Coverage Ratio (as defined in the Credit Agreements), which is the ratio of the Company’s fixed payments on its indebtedness made during any fiscal period minus non-~~financed~~ ~~capital~~Description ~~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.~~Business

AsSigmaTron ~~of August 19~~International, ~~2024~~Inc., ~~the~~its ~~Company was not in compliance with the financial covenants under the Credit Agreements as follows: the Fixed Charge Coverage Ratio for each of the twelve month periods ending on April 30~~subsidiaries, ~~2024,~~foreign ~~May~~enterprises ~~31, 2024, June 30, 2024,~~ and ~~July~~international ~~31,~~procurement ~~2024~~office ~~was less than 1.10:1.00~~(collectively, ~~the~~“SigmaTron” ~~Total~~or ~~Debt to EBITDA Ratio for~~ the ~~twelve~~“Company”) ~~month~~operates ~~period~~in ~~ending~~one onreportable ~~April~~segment ~~30,~~as ~~2024~~an ~~was~~independent ~~greater~~provider ~~than~~of ~~4.50:1.00,~~electronic ~~and~~manufacturing ~~the~~services ~~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~~EMS”). EMS Inincludes ~~addition,~~printed ~~the~~circuit ~~Company~~board ~~received a delinquency notification letter from Nasdaq~~assemblies, ~~dated~~electro-mechanical ~~August~~subassemblies ~~16,~~and ~~2024,~~completely ~~indicating~~assembled ~~that~~(box-build) ~~the~~electronic ~~Company~~products. In ~~was~~connection ~~not in compliance~~ with the ~~continued~~production ~~listing requirements~~ of ~~Nasdaq~~assembled ~~for failing to timely file the Company’s Form 10- K annual report for the fiscal year ended April 30~~products, ~~2024.~~EMS ~~This notification~~ also ~~constituted~~provides aservices ~~default~~to ~~under~~its ~~the Credit Agreements (collectively with the 2024 Covenant Defaults~~customers, ~~the~~including ~~“2024 Defaults”~~(1)~~. The~~ ~~Company~~automatic ~~had~~and 60manual ~~days~~assembly ~~from~~and ~~the~~testing ~~date~~ of ~~the~~products; ~~Nasdaq~~(2) ~~delinquency~~material ~~notice,~~sourcing orand ~~until~~procurement; ~~October~~(3) ~~15,~~manufacturing ~~2024,~~and totest ~~file~~engineering asupport; ~~plan~~(4) ~~with~~design ~~Nasdaq~~services; to(5) ~~regain~~warehousing ~~compliance. On~~and ~~September~~distribution ~~10,~~services; ~~2024,~~(6) ~~the~~assistance ~~Company~~in ~~received~~obtaining aproduct ~~notification~~approval ~~letter~~ from ~~Nasdaq~~governmental ~~indicating~~and ~~that~~other ~~the~~regulatory ~~Company~~bodies ~~had~~and ~~regained~~(7) compliance ~~with the applicable continued listing requirements based on the filing of the Company’s Form 10-K annual report for the fiscal year ended April 30, 2024~~reporting.

~~Due~~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 ~~Covenant~~“JPM ~~Defaults~~Credit Agreement”) by and among the Company, the ~~facilities~~other ~~under~~loan party thereto and JPMorgan Chase Bank, N.A, as lender (“JPM”), and the Credit Agreement dated as of July 18, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “Term Loan Agreement” and together with the JPM Credit Agreement, the “Credit Agreements”) ~~were~~by ~~classified~~and among the Company, the financial institutions identified therein (the “TCW Lenders”) and TCW Asset Management Company LLC, as ~~current~~administrative ~~liabilities~~agent onfor the ~~Consolidated~~TCW ~~Balance~~Lenders ~~Sheet~~(in atsuch ~~July~~capacity, 31the “Agent,” ~~2024~~and collectively with the TCW Lenders and ~~April~~JPM, 30the “Lender Parties”), ~~2024~~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.

OnAs of August 19, 2024, (the ~~“Third~~Company ~~Amendment~~was ~~Effective~~not ~~Date”),~~in compliance with the ~~Lender~~financial ~~Parties~~covenants ~~waived~~under the Credit Agreements as follows: the Fixed Charge Coverage Ratio for multiple twelve month periods including those ending on April 30, 2024 ~~Defaults~~and ~~pursuant~~July 31, 2024 was less than 1.10:1.00, the Total Debt to ~~(i)~~EBITDA Ratio for the ~~Waiver~~twelve ~~and~~month ~~Amendment~~period Noending on April 30, 2024 was greater than 4.50:1.00, 3and the Total Debt to ~~Credit~~EBITDA ~~Agreement~~Ratio for the twelve month period ending on July 31, 2024 was greater than 4.25:1.00 (collectively, the “~~JPM~~2024 ~~Amendment~~Covenant Defaults”). ~~between~~In addition, the Company ~~and~~received ~~JPM~~a delinquency notification letter from Nasdaq, ~~and~~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 (~~ii)~~collectively with the ~~Waiver~~2024 ~~and~~Covenant ~~Amendment~~Defaults, Nothe “2024 Defaults”). The 3Company had 60 days from the date of the Nasdaq delinquency notice, or until October 15, 2024, to ~~Credit~~file a plan with Nasdaq to regain compliance. 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 the Company’s Form 10-K annual report for the fiscal year ended April 30, 2024.

10Due 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.~~10

~~July~~SigmaTron 31International, ~~2024~~Inc.

October 31, 2024

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note A - Description of the Business - Continued

~~Agreement~~covenant ~~(the~~compliance ~~“TCW~~failures ~~Amendment”~~based ~~and~~on ~~together~~current ~~with~~revenue ~~the~~levels ~~JPM~~(see ~~Amendment,~~Note ~~the~~B ~~“2024~~- ~~Amendments”)~~Basis ~~by and among the Company, the TCW Lenders, and the Agent. In consideration~~ of ~~the~~Presentation ~~TCW~~- ~~Amendment,~~Going ~~the~~Concern ~~Company~~for ~~and~~additional ~~the Agent also entered into the Third Amendment Fee Letter to the TCW Credit Agreement (the “Fee Letter”~~information) ~~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~~continues ~~pursue and close a Replacement Transaction (as defined in the Credit Agreements)~~ to ~~pay~~classify ~~the~~this ~~obligations under the Credit Agreements in full no later than September 30, 2025 unless the Company meets certain~~ debt ~~ratios~~as ~~for~~current ~~the~~liabilities ~~twelve~~as ~~month~~of ~~period~~October ~~ending on August~~ 31, ~~2025~~2024. ~~See Waivers and Amendments No. 3 within Note E – Long-term Debt for more information.~~

~~The~~On ~~Company~~August is19, ~~taking~~2024 ~~steps~~(the to“Third ~~reduce~~Amendment ~~its~~Effective ~~debt~~Date”), ~~and~~the ~~cost~~Lender ~~structure.~~Parties ~~Most~~waived ~~recently,~~the ~~since~~2024 Defaults pursuant to (i) the ~~beginning~~Waiver ofand ~~calendar~~Amendment ~~year~~No. ~~2024,~~3 ~~these~~to ~~actions~~Credit ~~include~~Agreement (the ~~sale~~“JPM ofAmendment”) ~~its~~between ~~Elgin,~~the ~~Illinois~~Company ~~property~~ and ~~consolidation~~JPM, ofand (ii) the ~~Elgin~~Waiver ~~operations~~and Amendment No. 3 to Credit Agreement (the ~~Elk~~“TCW ~~Grove~~Amendment” ~~Village,~~and ~~Illinois~~together ~~headquarters,~~with ~~reduction~~the ofJPM ~~headcounts~~Amendment, atthe ~~various~~“2024 ~~operations~~Amendments”) by and ~~corporate~~among the Company, the TCW Lenders, and ~~inventory~~the ~~reduction~~Agent. AtIn ~~this~~consideration ~~time~~of the TCW Amendment, itthe isCompany ~~expected~~and ~~that~~the ~~these~~Agent ~~results~~also ~~plus~~entered into the ~~amendments~~Third Amendment Fee Letter to the ~~financial~~TCW ~~covenants~~Credit ~~and~~Agreement ~~other~~(the ~~provisions~~“Fee ofLetter”) ~~the~~dated ~~Credit~~as ~~Agreements~~of ~~that~~the ~~are~~Third ~~included~~Amendment inEffective ~~the~~Date. The 2024 Amendments ~~should~~also ~~poise~~amended the ~~Company~~financial ~~for~~covenants ~~compliance.~~and Atcertain other terms of the ~~same~~Credit ~~time~~Agreements, including, among other things, that the Company ~~continues~~will topursue ~~explore~~and ~~other~~close ~~strategic~~a ~~initiatives~~Replacement toTransaction ~~further~~(as ~~reduce~~defined ~~its~~in ~~debt~~the Credit Agreements) to ~~enable~~pay itthe toobligations ~~continue~~under tothe ~~comply~~Credit ~~with~~Agreements ~~increasingly~~in ~~stringent~~full ~~financial~~no ~~covenants.~~later ~~Delays~~than orSeptember a30, ~~failure~~2025 tounless ~~effectively~~the ~~reduce~~Company meets certain debt, ~~including~~ratios ~~due~~for tothe ~~circumstances~~twelve ~~outside~~month ofperiod ~~our~~ending ~~control~~on August 31, ~~could~~2025. ~~have~~See anWaivers ~~adverse~~and ~~effect~~Amendments onNo. ~~our~~3 ~~financial~~within ~~position~~Note ~~and~~E ~~results~~– ofLong-term ~~operations~~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. Subsequent to October 31, 2024, 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 – Subsequent Event.

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.

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 the Company has been in violation of financial covenants in its Credit Agreements (further discussion in Note E – Long-term Debt). Pursuant to amendments to those Credit Agreements, the Company must satisfy revised terms to those 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.

~~July~~October 31, 2024

~~Note~~Notes Bto -Condensed ~~Basis~~Consolidated ofFinancial ~~Presentation~~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 execution of a sales-leaseback transaction as disclosed in Note K – Subsequent Event. However, management cannot provide any assurances that the Company will be successful in accomplishing its plans. The COVID-19 pandemic, 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. 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 six month periodperiods ended JulyOctober 31, 2024 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.

~~Reclassifications~~12

~~Certain~~SigmaTron ~~amounts~~International, ~~recorded in the prior-period consolidated financial statements have been reclassified to conform to the current-period financial statement presentation~~Inc. ~~These reclassifications had no effect on previously reported results of operations.~~

~~Note~~October ~~C - Inventories~~31, ~~net~~2024

~~The~~Notes ~~components~~to ofCondensed ~~inventory~~Consolidated ~~consist~~Financial ~~of the following:~~Statements

	July 31,		April 30,
	2024		2024
Finished products	$	18,882,906	$	18,457,912
Work-in-process		4,325,983		4,492,609
Raw materials		94,635,445		108,224,069
		117,844,334		131,174,590
Less obsolescence reserve (1)		2,156,689		2,323,689
	$	115,687,645	$	128,850,901

(Unaudited)

~~(1) The~~Note ~~obsolescence~~B ~~reserve~~- ~~primarily~~Basis ~~relates~~of toPresentation ~~raw~~– ~~materials.~~ Going Concern - Continued

12Reclassifications

~~SigmaTron~~Certain ~~International,~~amounts ~~Inc~~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.

~~July~~Note 31C - Inventories, ~~2024~~net

~~Note~~The Dcomponents -of ~~Earnings~~inventory ~~Per~~consist ~~Share~~of ~~and~~the ~~Stockholders’ Equity~~following:

The following table sets forth the computation of basic and diluted (loss) earnings per share:



	October 31,		April 30,
	2024		2024

Finished products	$	22,349,385	$	18,457,912
Work-in-process		4,134,565		4,492,609
Raw materials		91,725,314		108,224,069
		118,209,264		131,174,590
Less obsolescence reserve (1)		2,156,689		2,323,689
	$	116,052,575	$	128,850,901

	Three Months Ended
		July 31,		July 31,
	2024		2023
Net (loss)/income	$	(3,289,160)	$	262,099
Weighted-average shares
Basic		6,119,288		6,091,288
Effect of dilutive stock options		-		8,996
Diluted		6,119,288		6,100,284
Basic (loss)/earnings per share	$	(0.54)	$	0.04
Diluted (loss)/earnings per share	$	(0.54)	$	0.04

(1) The obsolescence reserve primarily relates to raw materials.

Options to purchase 691,331 and 602,081 shares of common stock were outstanding and exercisable at July 31, 2024 and 2023, respectively. There were no options granted during the three month period ended July 31, 2024 and 186,000 options granted for the three months ended July 31, 2023. There was $71,174 and $184,817 stock option expense recognized for the three month periods ended July 31, 2024 and 2023, respectively. The balance of unrecognized compensation expense related to the Company’s stock option plans at July 31, 2024 and 2023 was $248,321 and $530,502, respectively. There were 120,861 anti-dilutive common stock equivalents and 379,493 anti-dilutive common stock equivalents for the three month periods ended July 31, 2024 and 2023, respectively, which have been excluded from the calculation of diluted earnings per share.13

13SigmaTron International, Inc.

~~SigmaTron~~October ~~International~~31, ~~Inc.~~2024

~~July~~Notes ~~31,~~to ~~2024~~Condensed Consolidated Financial Statements

~~Note E - Long-term Debt~~(Unaudited)

~~Debt~~Note ~~and~~D ~~finance~~- ~~lease~~Earnings ~~obligations~~Per ~~consisted~~Share ~~of the following at July 31, 2024~~ and ~~April~~Stockholders’ ~~30, 2024:~~Equity

		July 31,		April 30,
		2024		2024
Debt:
Notes Payable - Banks	$	67,537,959	$	66,102,020
Notes Payable - Buildings		353,469		366,572
Notes Payable - Equipment		4,259,351		4,642,951
Unamortized deferred financing costs		(1,407,512)		(1,528,156)
Total debt		70,743,267		69,583,387
Less current maturities*		67,785,664		66,244,227
Long-term debt	$	2,957,603	$	3,339,160
Finance lease obligations	$	4,748,442	$	5,361,574
Less current maturities		2,087,938		2,214,127
Total finance lease obligations, less current portion	$	2,660,504	$	3,147,447

The following table sets forth the computation of basic and diluted (loss) earnings per share:

* Due to the 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.


	Three Months Ended				Six Months Ended
		October 31,		October 31,		October 31,		October 31,
	2024		2023		2024		2023

Net (loss)/income	$	(9,466,669)	$	28,262	$	(12,755,829)	$	290,361

Weighted-average shares
Basic		6,119,288		6,091,331		6,119,288		6,092,761
Effect of dilutive stock options		-		99,365		-		73,763

Diluted		6,119,288		6,190,696		6,119,288		6,166,524

Basic (loss)/earnings per share	$	(1.55)	$	0.00	$	(2.08)	$	0.05

Diluted (loss)/earnings per share	$	(1.55)	$	0.00	$	(2.08)	$	0.05

~~Notes~~Options ~~Payable~~to –purchase ~~Banks~~691,331 and 596,081 shares of common stock were outstanding and exercisable at October 31, 2024 and 2023, respectively. There were no options granted during the three month period ended October 31, 2024 and October 31, 2023, respectively. There were no options granted during the six month period ended October 31, 2024 and there were 177,000 options granted during the six month period ended October 31, 2023. There was $64,328 and $64,938 stock option expense recognized for the three month periods ended October 31, 2024 and 2023, respectively. There was $135,502 and $249,755 stock option expense recognized for the six month periods ended October 31, 2024 and 2023, respectively. The balance of unrecognized compensation expense related to the Company’s stock option plans at October 31, 2024 and 2023 was $168,414 and $487,120, respectively. There were 633,964 anti-dilutive common stock equivalents and 178,000 anti-dilutive common stock equivalents for the three month periods ended October 31, 2024 and 2023, respectively, which have been excluded from the calculation of diluted earnings per share. There were 291,288 anti-dilutive common stock equivalents and 260,886 anti-dilutive common stock equivalents for the six month periods ended October 31, 2024 and 2023, respectively, which have been excluded from the calculation of diluted earnings per share.

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, the other loan party thereto 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, 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. 14

~~The~~SigmaTron ~~Credit Agreements contain financial covenants relating to (i) the Fixed Charge Coverage Ratio (as defined in the Credit Agreements)~~International, 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 EBITDAInc.

14October 31, 2024

~~SigmaTron~~Notes ~~International,~~to ~~Inc.~~Condensed Consolidated Financial Statements

~~July 31, 2024~~(Unaudited)

Note E - Long-term Debt ~~- Continued~~

InDebt ~~addition,~~and ~~the~~finance ~~JPM~~lease ~~Credit~~obligations ~~Agreement~~consisted ~~imposes a cash dominion period if there is an event~~ of ~~default or if availability is less than 10% of~~ the ~~Revolving~~following ~~Commitment~~at ~~(as~~October ~~defined in the JPM Credit Agreement)~~31, ~~and~~2024 ~~such requirement continues until there is no event of default~~ and ~~availability~~April ~~is greater than 10% of the Revolving Commitment~~30, ~~in each case for 30 consecutive days.~~ 2024:

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.


		October 31,		April 30,
		2024		2024

Debt:
Notes Payable - Banks	$	61,632,568	$	66,102,020
Notes Payable - Buildings		340,177		366,572
Notes Payable - Equipment		3,866,956		4,642,951
Unamortized deferred financing costs		(3,364,552)		(1,528,156)
Total debt		62,475,149		69,583,387
Less current maturities*		59,867,827		66,244,227
Long-term debt	$	2,607,322	$	3,339,160

Finance lease obligations	$	4,224,552	$	5,361,574
Less current maturities		2,043,612		2,214,127
Total finance lease obligations, less current portion	$	2,180,940	$	3,147,447

~~The~~* Due ~~facility~~to ~~under~~ the ~~JPM~~2024 ~~Credit~~Covenant ~~Agreement~~Defaults, isthe ~~secured~~facilities ~~by:~~under ~~(a) a first priority security interest in SigmaTron’s (i) accounts receivable and inventory (excluding Term Priority Mexican Inventory (as defined in~~ the ~~ICA)~~Credit ~~and~~Agreements ~~certain~~were ~~inventory~~classified ~~in transit, (ii) deposit accounts, (iii) proceeds of business interruption insurance that constitute ABL BI Insurance Share (~~as ~~defined~~current inliabilities on the ~~ICA),~~Consolidated ~~(iv)~~Balance ~~certain~~Sheet ~~other~~at ~~property,~~July ~~including payment intangibles~~31, ~~instruments,~~2024 ~~equipment, software~~ and ~~hardware~~April ~~and similar systems~~30, ~~books~~2024. In ~~and records~~addition, todue ~~the extent related~~ to the ~~foregoing,~~lender ~~and~~demand ~~(v) all proceeds~~ of ~~the foregoing, in each case, now owned or hereafter acquired (collectively, the “ABL Priority Collateral”); and (b)~~ a ~~second~~Replacement ~~priority~~Transaction ~~security~~by ~~interest~~September in2025 ~~Term Priority Collateral (as defined below) other than (i) real estate~~ and ~~(ii)~~ the ~~equity~~risk ~~interests~~ of ~~SigmaTron’s~~additional ~~foreign~~covenant ~~subsidiaries~~compliance ~~(unless~~failures ~~such~~based aon ~~pledge~~current isrevenue ~~requested~~levels ~~by Lender). As of July 31, 2024, there was $30,284,657 outstanding and $16,087,627 of unused availability under~~ the ~~revolving~~Company ~~loan~~continues ~~facility compared~~ to anclassify ~~outstanding~~this ~~balance~~debt ofas ~~$28,598,719~~current ~~and~~liabilities ~~$13,443,766~~as of ~~unused~~October ~~availability at April 30, 2024. As of July~~ 31, 2024 ~~and April 30, 2024, the unamortized deferred financing amount offset against outstanding debt was $545,875 and $592,664, respectively~~.

~~The~~Notes ~~Term~~Payable ~~Loan~~– Agreement provides for a term loan from TCW 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 July 31, 2024, was $37,253,301 compared to an outstanding balance of $37,503,301 at April 30, 2024. As of July 31, 2024 and April 30, 2024, the unamortized deferred financing amount offset against outstanding debt was $861,637 and $935,492, respectively.Banks

The ~~TCW~~Company’s ~~Term~~primary ~~Loan is~~ secured ~~by:~~credit ~~(a)~~agreements ainclude ~~first~~the ~~priority~~Amended ~~security~~and ~~interest~~Restated inCredit ~~all~~Agreement ~~property~~dated as of ~~SigmaTron~~July ~~that~~18, ~~does~~2022 ~~not~~(as ~~constitute~~amended, ~~ABL~~restated, ~~Priority~~supplemented ~~Collateral,~~or ~~which~~otherwise ~~includes:~~modified ~~(i)~~from ~~SigmaTron’s~~time ~~Elk~~to ~~Grove~~time, ~~Village~~the ~~real~~“JPM ~~estate,~~Credit ~~(ii~~Agreement”) ~~SigmaTron’s~~by ~~machinery,~~and ~~equipment~~among ~~and~~the ~~fixtures~~Company, ~~(but~~the ~~excluding~~other ~~ABL~~loan ~~Priority~~party ~~Equipment~~thereto ~~(as~~and ~~defined~~JPMorgan inChase ~~the~~Bank, ~~ICA))~~N.A, as lender (~~iii~~“JPM”), ~~the~~which ~~Term~~provides ~~Priority~~for ~~Mexican~~a ~~Inventory~~secured ~~(as~~credit ~~defined~~facility inconsisting ~~the~~of ~~ICA),~~a ~~(iv)~~revolving ~~SigmaTron’s~~loan ~~stock~~facility inand, ~~its~~until ~~direct~~July ~~and~~2022, ~~indirect~~a ~~subsidiaries,~~term ~~(v)~~loan ~~SigmaTron’s~~facility, ~~general~~and ~~intangibles~~the ~~(excluding~~Credit ~~any~~Agreement ~~that~~dated ~~constitute~~as ~~ABL~~of ~~Priority~~July ~~Collateral)~~18, ~~goodwill~~2022 ~~and~~(as ~~intellectual~~amended, ~~property~~restated, ~~(vi)~~supplemented ~~the~~or ~~proceeds~~otherwise ofmodified ~~business~~from ~~interruption~~time ~~insurance~~to ~~that~~time, ~~constitute~~the “Term BI ~~Insurance~~Loan ~~Share~~Agreement” ~~(as~~and ~~defined~~together inwith the ~~ICA)~~JPM Credit Agreement, ~~(vii~~the “Credit Agreements”) ~~tax~~by ~~refunds~~and among the Company, ~~and~~the financial institutions identified therein (~~viii~~the “TCW Lenders”) ~~all~~and ~~proceeds~~TCW ~~thereof,~~Asset inManagement ~~each~~Company ~~case~~LLC, ~~now~~as ~~owned~~administrative oragent ~~hereafter~~for ~~acquired~~the TCW Lenders (~~collectively~~in such capacity, the “~~Term Priority Collateral~~Agent,”); and ~~(b)~~collectively awith ~~second~~the ~~priority~~TCW ~~security~~Lenders ~~interest~~and inJPM, ~~all~~the ~~collateral~~“Lender ~~that~~Parties”), ~~constitutes~~which ~~ABL~~provides ~~Priority~~for ~~Collateral~~a term loan facility. ~~Also~~The Facility, ~~SigmaTron’s~~as ~~three~~amended, ~~Mexican~~allowed ~~subsidiaries~~the ~~pledged~~Company ~~all~~to ofborrow ~~their~~on ~~assets~~a asrevolving ~~security~~basis ~~for~~up to the ~~TCW~~lesser ~~Term~~of ~~Loan. The~~(i) ~~net~~$70,000,000 ~~proceeds~~or ~~received~~(ii) byan ~~the~~amount ~~Company~~equal ~~from~~to a percentage of the ~~sale~~eligible receivable borrowing base plus a percentage of the ~~Elgin,~~inventory ~~Illinois,~~borrowing ~~property~~base inminus ~~February,~~any ~~2024,~~reserves ~~reduced~~established by Lender (the ~~TCW~~“Revolving ~~Term~~Commitment”). ~~Loan~~The maturity date of the Facility is July 18, 2027.

15The 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.~~15

~~July~~SigmaTron 31International, ~~2024~~Inc.

~~Note~~October E31, ~~- Long-term Debt - Continued~~2024

~~Waivers~~Notes ~~and~~to ~~Amendments~~Condensed ~~No.~~Consolidated 1Financial ~~& 2~~Statements

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 the deadline for potential corporate restructuring to July 31, 2023.(Unaudited)

~~Waivers~~Note ~~and~~E ~~Amendments~~- ~~No.~~Long-term 3Debt - Continued

AsIn ~~of August 19~~addition, ~~2024,~~ the ~~Company~~JPM ~~was~~Credit ~~not~~Agreement inimposes ~~compliance~~a ~~with~~cash ~~the~~dominion ~~financial~~period ~~covenants~~if ~~under~~there ~~the~~is ~~Credit~~an ~~Agreements~~event asof ~~follows:~~default ~~the~~or ~~Fixed~~if ~~Charge~~availability ~~Coverage~~is ~~Ratio~~less ~~for~~than ~~each~~10% of the ~~twelve~~Revolving ~~month~~Commitment ~~periods~~(as ~~ending~~defined onin ~~April~~the ~~30,~~JPM ~~2024,~~Credit ~~May 31~~Agreement), ~~2024, June 30, 2024,~~ and ~~July~~such ~~31,~~requirement ~~2024~~continues ~~was~~until ~~less~~there ~~than~~is ~~1.10:1.00,~~no ~~the~~event ~~Total~~of ~~Debt~~default toand ~~EBITDA~~availability ~~Ratio~~is ~~for the twelve month period ending on April 30, 2024 was~~ greater than ~~4.50:1.00,~~10% ~~and~~of the ~~Total~~Revolving ~~Debt~~Commitment, toin ~~EBITDA~~each ~~Ratio~~case for ~~the~~30 ~~twelve~~consecutive ~~month period ending on July 31, 2024 was greater than 4~~days.~~25:1.00 (collectively, the “2024 Covenant Defaults”).~~

~~Due~~In toconnection ~~the~~with ~~Covenant Defaults,~~ the ~~facilities~~entry ~~under~~into the JPM Credit ~~Agreements~~Agreement, ~~were~~Lender ~~classified~~and TCW, as ~~current~~administrative ~~liabilities~~agent onunder the ~~Consolidated~~Term ~~Balance~~Loan ~~Sheet~~Agreement, atentered into the Intercreditor Agreement, dated July 3118, ~~2024~~2022, and ~~April~~acknowledged 30by SigmaTron and Wagz (the “ICA”), ~~2024~~to set forth and govern the lenders’ respective lien priorities, rights and remedies under the JPM Credit Agreement and the Term Loan Agreement.

InThe ~~addition,~~facility under the ~~Company~~JPM ~~received~~Credit Agreement is secured by: (a) ~~delinquency~~a ~~notification~~first ~~letter~~priority ~~from~~security ~~Nasdaq,~~interest ~~dated~~in ~~August~~SigmaTron’s ~~16,~~(i) ~~2024,~~accounts ~~indicating~~receivable ~~that~~and inventory (excluding Term Priority Mexican Inventory (as defined in the ~~Company~~ICA) ~~was~~and ~~not~~certain inventory in ~~compliance~~transit, ~~with~~(ii) ~~the~~deposit ~~continued~~accounts, ~~listing~~(iii) ~~requirements~~proceeds of ~~Nasdaq~~business ~~for~~interruption ~~failing~~insurance tothat ~~timely~~constitute ~~file~~ABL BI Insurance Share (as defined in the ~~Company’s~~ICA), ~~Form~~(iv) ~~10-K~~certain ~~annual~~other ~~report~~property, ~~for~~including ~~the~~payment ~~fiscal~~intangibles, ~~year~~instruments, ~~ended~~equipment, ~~April~~software 30and hardware and similar systems, ~~2024.~~books ~~This~~and ~~notification~~records, ~~also~~to ~~constituted~~the aextent ~~default~~related ~~under~~to the ~~Credit~~foregoing, ~~Agreements~~and (~~collectively~~v) ~~with~~all proceeds of the ~~2024~~foregoing, ~~Covenant~~in ~~Defaults~~each case, now owned or hereafter acquired (collectively, the “~~2024~~ABL ~~Defaults~~Priority Collateral”)~~. The~~; ~~Company~~and ~~had~~(b) 60a ~~days~~second ~~from~~priority ~~the~~security ~~date~~interest ofin ~~the~~Term ~~Nasdaq~~Priority ~~delinquency~~Collateral ~~notice,~~(as ordefined ~~until~~below) ~~October~~other ~~15,~~than ~~2024,~~(i) toreal ~~file~~estate aand ~~plan~~(ii) ~~with~~the ~~Nasdaq~~equity tointerests ~~regain~~of ~~compliance~~SigmaTron’s foreign subsidiaries (unless such a pledge is requested by Lender). As Onof ~~September~~October 1031, 2024, ~~the~~there ~~Company~~was ~~received~~$23,387,327 aoutstanding ~~notification~~and ~~letter~~$15,168,702 ~~from~~of ~~Nasdaq~~unused ~~indicating~~availability ~~that~~under the ~~Company~~revolving ~~had~~loan ~~regained~~facility ~~compliance~~compared ~~with~~to ~~the~~an ~~applicable~~outstanding ~~continued~~balance ~~listing~~of ~~requirements~~$28,598,719 ~~based~~and on$13,443,766 ~~the filing~~ of ~~the~~unused ~~Company’s~~availability ~~Form~~at ~~10-K~~April ~~annual~~30, ~~report~~2024. As ~~for~~of ~~the~~October ~~fiscal~~31, ~~year~~2024 ~~ended~~and April 30, 2024, the unamortized deferred financing amount offset against outstanding debt was $371,735 and $592,664, respectively.

OnThe ~~August~~Term ~~19,~~Loan ~~2024~~Agreement ~~(the~~provides ~~“Third~~for ~~Amendment~~a ~~Effective~~term ~~Date”),~~loan ~~the~~from ~~Lender~~TCW ~~Parties~~to ~~waived~~ the ~~2024~~Company ~~Defaults~~in ~~pursuant to (i)~~ the ~~Waiver~~principal ~~and~~amount ~~Amendment~~of ~~No.~~$40,000,000 ~~3 to Credit Agreement~~ (the “~~JPM~~TCW ~~Amendment~~Term Loan”). The ~~between~~TCW ~~the~~Term ~~Company~~Loan ~~and~~bears ~~JPM,~~interest ~~and~~at ~~(ii)~~a ~~the~~rate ~~Waiver~~per ~~and~~annum ~~Amendment~~based ~~No.~~on 3SOFR, toplus ~~Credit Agreement (~~the ~~“TCW~~Applicable ~~Amendment”~~Margin ~~and~~of ~~together~~7.50% ~~with~~(each ~~the~~as ~~JPM~~defined ~~Amendment,~~in the ~~“2024~~Term ~~Amendments”~~Loan Agreement). The byTCW ~~and~~Term ~~among~~Loan ~~the~~has ~~Company,~~a ~~the~~SOFR ~~TCW~~floor ~~Lenders,~~of ~~and the Agent~~1.00%. The Inmaturity ~~consideration~~date of the TCW ~~Amendment,~~Term ~~the~~Loan ~~Company~~is ~~and~~July ~~the~~18, ~~Agent~~2027. The ~~also~~amount ~~entered~~outstanding ~~into the Third Amendment Fee Letter (the “Fee Letter”) dated~~ as of ~~the~~October ~~Third~~31, ~~Amendment Effective Date. The~~ 2024, ~~Amendments~~was ~~provided for~~$38,245,241 ~~among~~compared ~~other~~to ~~things,~~an aoutstanding ~~waiver~~balance of ~~the~~$37,503,301 ~~Company’s~~at ~~noncompliance~~April ~~with~~30, ~~the~~2024. As ~~financial~~of ~~covenants~~October ~~relating~~31, to2024 ~~(i)~~and ~~the~~April ~~Fixed~~30, ~~Charge Coverage Ratio (as defined in the Credit Agreements)~~2024, ~~and (ii)~~ the ~~Total~~unamortized ~~Debt~~deferred tofinancing ~~EBITDA~~amount ~~Ratio~~offset ~~(as~~against ~~defined~~outstanding indebt ~~the~~was ~~Credit Agreements)~~$2,992,817 inand ~~each~~$935,492, ~~case as of the Third Amendment Effective Date~~respectively.

16The 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 interest in its Elk Grove Village real estate, (ii) SigmaTron’s machinery, equipment and fixtures (but excluding ABL Priority Equipment (as defined in the ICA)), (iii) the Term Priority Mexican Inventory (as defined in the ICA), (iv) SigmaTron’s stock in its direct and indirect subsidiaries, (v) SigmaTron’s general intangibles (excluding any that constitute ABL Priority Collateral), goodwill and intellectual property, (vi) the proceeds of business interruption insurance that constitute Term BI Insurance Share (as defined in the ICA), (vii) tax refunds, and (viii) 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

~~SigmaTron International, Inc.~~16

~~July~~SigmaTron 31International, ~~2024~~Inc.

~~Note~~October E31, ~~- Long-term Debt - Continued~~2024

~~The~~Notes ~~2024 Amendments also amended other provisions of the Credit Agreements, including~~ to: ~~(i)~~Condensed ~~modify~~Consolidated ~~the~~Financial 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. Statements

~~In addition, pursuant to the JPM Amendment, the parties agreed to reduce the Revolving Commitment~~ (~~as defined in the JPM Credit Agreement~~Unaudited) 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.

InNote ~~addition,~~E 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 preLong-~~payment~~term ~~ratio~~Debt ~~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~~Continued ~~to attend regular meetings of the Company’s Board of Directors and any relevant committees.~~

~~Also~~by ~~on August 19, 2024, and in connection with~~ the ~~TCW Amendment, the~~ Company ~~entered~~from ~~into~~ the ~~Fee~~sale ~~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~~Elgin, ~~provided the Company does meet certain financial milestones by the applicable dates provided therein. In addition~~Illinois, ~~pursuant~~property ~~to the Fee Letter, 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~~February, 2024~~) to 17.5% (as of September 1~~, ~~2025).~~reduced ~~The exercise price for~~ the ~~Warrants~~TCW ~~will~~Term ~~be $0~~Loan.~~01 per share and the Warrants would vest immediately upon issuance.~~

~~All~~Waivers ~~other~~and ~~material~~Amendments ~~terms~~No. of1 ~~the~~& ~~Credit Agreements, as amended by the Amendments, remain unchanged.~~ 2

17In 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.

~~SigmaTron~~Waivers ~~International,~~and ~~Inc~~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 EB - ~~Long-term~~Basis ~~Debt~~of Presentation - ~~Continued~~Going Concern for additional information) the Company continues to classify this debt as current liabilities as of October 31, 2024.

~~China~~In ~~Construction~~addition, ~~Bank~~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. 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 the Company’s Form 10-K annual report for the fiscal year ended April 30, 2024.

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. On January 26, 2021, the agreement was amended and expired in accordance with its terms on January 6, 2022. On January 17, 2022, the agreement was renewed, and expired in accordance with its terms on December 23, 2022. On February 17, 2023, the agreement was renewed, and expired in accordance with its terms on February 7, 2024. On March 1, 2024, the agreement was renewed, and is scheduled to expire on February 1, 2025. Under the agreement Wujiang SigmaTron Electronic Technology Co., Ltd. can borrow up to 10,000,000 Renminbi, approximately $1,400,000 as of July 31, 2024, 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 July 31, 2024 and April 30, 2024, respectively.

~~Notes~~SigmaTron ~~Payable~~International, ~~– Buildings~~Inc.

~~The~~October 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 $353,469 and $366,572 at July 31, 2024 ~~and April 30, 2024, respectively.~~

Notes ~~Payable~~to –Condensed ~~Equipment~~Consolidated Financial Statements

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.(Unaudited)

~~The~~Note ~~Company~~E ~~routinely~~- ~~enters~~Long-term ~~into~~Debt ~~secured~~- ~~note~~Continued 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.

18On 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.

~~SigmaTron~~The ~~International~~2024 Amendments also amended other provisions of the Credit Agreements, ~~Inc~~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.

~~July~~In 31addition, ~~2024~~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.

~~NOTE~~In Eaddition, 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 ~~Long~~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-~~term~~payment ~~Debt~~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 ~~Continued~~observer to attend regular meetings of the Company’s Board of Directors and any relevant committees.

~~Annual maturities of the Company’s debt, net of deferred financing fees for the remaining periods, as of July 31, 2024, are as follows:~~18

		Bank		Building		Equipment		Total
For the remaining 9 months of the fiscal year ending April 30:	2025	$	66,130,447	$	40,454	$	1,204,413	$	67,375,314
For the fiscal years ending April 30:	2026		-		56,719		1,271,466		1,328,185
	2027		-		60,068		774,489		834,557
	2028		-		63,614		609,617		673,231
	2029		-		67,370		399,366		466,736
	2030		-		65,244		-		65,244
		$	66,130,447	$	353,469	$	4,259,351	$	70,743,267

SigmaTron International, Inc.

*October ~~Due to the 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.~~

~~Finance~~Notes ~~Lease~~to ~~Obligations~~Condensed Consolidated Financial Statements

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 $2,874 to $33,706 and a fixed interest rate ranging from 7.03% to 12.09% per annum. (Unaudited)

Note FE - ~~Income~~Long-term ~~Tax~~Debt - Continued

~~The~~Also ~~income~~on ~~tax~~August ~~expense~~19, ~~was $802~~2024,~~213~~ ~~for~~and in connection with the ~~three~~TCW ~~month~~Amendment, ~~period~~the ~~ended~~Company ~~July~~entered 31into the Fee Letter, ~~2024~~which ~~compared~~provides tofor ana ~~income~~payment ~~tax~~to ~~benefit~~the Agent of $~~154~~395,~~135~~000 ~~for~~added to the ~~same~~principal ~~period~~amount inowed under the ~~prior~~TCW ~~fiscal~~Term ~~year. The~~Loan ~~Company’s~~and ~~effective~~for ~~tax~~certain ~~rate~~monthly ~~was~~ticking ~~(32.26)%~~fees ~~and~~equal ~~(142.76)%~~to ~~for~~a range of percentages of the ~~three~~outstanding ~~month~~principal ~~periods~~amount ~~ended~~under ~~July~~the 31TCW Term Loan, ~~2024~~provided ~~and~~the ~~2023,~~Company ~~respectively~~does meet certain financial milestones by the applicable dates provided therein. ~~The~~ ~~increase~~In inaddition, ~~income~~pursuant ~~tax~~to ~~expense~~the ~~for~~Fee Letter, if the ~~three~~Company ~~month~~does ~~period~~not ~~ended~~meet ~~July~~certain ~~31,~~financial ~~2024~~metrics ~~compared~~from December 2024 to ~~the~~September ~~same~~2025 ~~period~~as defined in the ~~previous~~agreement, ~~year~~the isCompany ~~due~~has agreed to ~~variations~~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 ~~forecasted~~outstanding ~~tax~~common ~~rates~~stock ~~and~~of ~~income~~the ~~earned~~Company byon ~~jurisdiction~~a fully diluted basis ranging from 1. 25% (as of December 1, 2024) to 17.5% (as of September 1, 2025). The ~~increase~~exercise inprice ~~effective~~for ~~tax~~the ~~rate~~Warrants iswill ~~due~~be to$0.01 ~~variations~~per inshare ~~income~~and ~~earned~~the byWarrants ~~jurisdiction~~would vest immediately upon issuance.

The Company ~~recognizes~~evaluated athe ~~valuation~~accounting ~~allowance~~for ~~if,~~the ~~based~~warrants associated with the Fee Letter to determine whether the warrants should be classified as equity or as a derivative liability on the ~~weight~~consolidated ofbalance ~~available~~sheet. ~~evidence~~In accordance with ASC 815-40, itDerivatives isand ~~more~~Hedging ~~likely~~- ~~than~~Contracts ~~not~~in ~~that~~the ~~some~~Entity’s ~~portion,~~Own orEquity ~~all~~(ASC 815-40), ofthe aCompany ~~deferred~~classifies ~~tax~~a ~~asset~~warrant ~~will~~as ~~not~~equity beif ~~realized.~~it ~~SigmaTron~~is ~~expects~~indexed to ~~utilize~~the ~~its~~Company’s Uequity and several specific conditions for equity classification are met.S. ~~deferred~~A ~~tax~~warrant ~~assets~~is ~~with~~not ~~the~~considered ~~exception~~indexed ofto the ~~capital~~Company’s ~~loss~~equity onin ~~sale~~general ofwhen ~~Wagz~~it ~~and~~contains certain ~~foreign~~types ~~tax~~of ~~credits.~~exercise ~~The~~contingencies ~~Company~~or ~~previously~~adjustments ~~maintained~~to exercise price. If a ~~valuation~~warrant ~~allowance~~is onnot ~~certain~~indexed ~~foreign~~to ~~loss~~the ~~carryforwards,~~Company’s ~~however,~~equity ~~all~~or ~~foreign~~it ~~tax~~has ~~loss~~net ~~carryforwards~~cash ~~have~~settlement ~~been~~that ~~used~~results asin ofthe ~~April~~Warrants 30to be accounted for under ASC 480, ~~2024~~Distinguishing ~~and~~Liabilities nofrom ~~related~~Equity, ~~valuation~~or ~~allowance~~ASC ~~remains.~~815-40, ~~The~~it ~~Company~~is ~~has~~classified ~~established~~as a ~~valuation~~derivative ~~allowance~~liability ofwhich ~~$7,302,639~~is carried on ~~its~~the ~~U.S.~~consolidated ~~capital~~balance ~~loss~~sheet ~~and~~at ~~foreign~~fair ~~tax~~value ~~credit~~with ~~carryforwards~~any aschanges ofin ~~July~~its ~~31,~~fair ~~2024~~value recognized currently in the statement of operations. The Company ~~continues~~concluded tothat ~~monitor~~ the ~~need~~warrants ~~for~~shall be classified as a ~~valuation~~liability ~~allowance~~upon onentering ~~its~~into ~~deferred~~the ~~tax~~Fee ~~assets~~Letter ~~each~~and ~~quarter~~as a result recorded a liability of $2,263,000. IfIn ~~forecasted~~subsequent ~~earnings~~periods, these Warrants are ~~not~~subject ~~achieved~~to inremeasurement. As ~~future~~of ~~periods~~October it31, 2024, the warrants were valued at $2,889,000. The remeasurement of the warrants is ~~possible~~recorded awithin ~~valuation~~the ~~allowance~~change onin ~~certain~~fair orvalue ~~all~~of ~~deferred~~warrants ~~tax~~within ~~assets~~the ~~may~~Consolidated beStatements ~~required.~~of Operations.

~~The~~All ~~Company~~other ~~has~~material ~~not~~terms ~~changed its plans to indefinitely reinvest the earnings~~ of the ~~Company’s~~Credit ~~foreign subsidiaries. The cumulative amount of unremitted earnings for which U.S. income taxes have not been recorded is $14~~Agreements,~~036,000~~ as ofamended ~~July~~by 31the Amendments, ~~2024~~remain unchanged.

19China Construction Bank

On March 15, 2019, the Company’s wholly-owned foreign enterprise, Wujiang SigmaTron ~~International~~Electronic Technology Co., ~~Inc~~Ltd., entered into a credit facility with China Construction Bank. On January 26, 2021, the agreement was amended and expired in accordance with its terms on January 6, 2022. On January 17, 2022, the agreement was renewed, and expired in accordance with its terms on December 23, 2022. On February 17, 2023, the agreement was renewed, and expired in accordance with its terms on February 7, 2024. On March 1, 2024, the agreement was renewed, and is scheduled to expire on February 1, 2025. Under the agreement Wujiang SigmaTron Electronic Technology Co., Ltd. can borrow up to 10,000,000 Renminbi, approximately $1,400,000 as of October 31, 2024, 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 October 31, 2024 and April 30, 2024, respectively.

~~July 31, 2024~~19

~~Note~~SigmaTron GInternational, ~~- Commitments and Contingencies~~ Inc.

~~From~~October ~~time to time the Company is involved in legal proceedings~~31, 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.2024

~~Note~~Notes Hto -Condensed ~~Significant~~Consolidated ~~Accounting~~Financial ~~Policies~~ Statements

~~Management Estimates and Uncertainties - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America~~ (~~“GAAP”~~Unaudited) 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 and valuation of long-lived assets. Actual results could materially differ from these estimates.

~~The~~Note ~~potential~~E ~~impact~~- ofLong-term ~~continued~~Debt ~~economic~~- ~~uncertainty~~Continued due to persistent inflation and continuing global supply chain shortages and unpredictability may have a significant adverse impact on the timing of delivery of customer orders and the levels of future customer orders.

~~Accounts~~Notes ~~Receivable~~Payable -– Accounts receivable is presented net of allowance for credit losses of $7,814 and $59,466 as of July 31, 2024 and April 30, 2024, respectively. The Company believes that its allowance for credit losses is adequate and represents its best estimate as of July 31, 2024. The Company continues to closely monitor customer liquidity along with industry and economic conditions, which may result in changes to its estimate.Buildings

The ~~following~~Company ~~table~~entered ~~presents~~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 ~~accounts~~warehousing ~~receivable~~and ~~balance~~distribution atcenter in Del Rio, Texas. The note requires the ~~end~~Company to pay monthly installment payments in the amount of ~~each~~$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 ~~indicated:~~outstanding balance was $340,177 and $366,572 at October 31, 2024 and April 30, 2024, respectively.

	July 31,		April 30,
	2024		2024
Accounts receivable	$	35,732,628	$	32,103,451
Less allowance for credit losses		7,814		59,466
	$	35,724,814	$	32,043,985

Notes Payable – Equipment

20The 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.

~~SigmaTron~~The ~~International~~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, ~~Inc~~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.

~~July~~Annual maturities of the Company’s debt, net of deferred financing fees for the remaining periods, as of October 31, 2024, are as follows:

Note H - Significant Accounting Policies - Continued


		Bank		Building		Equipment		Total

For the remaining 6 months of the fiscal year ending April 30:	2025	$	58,268,016	$	27,162	$	812,018	$	59,107,196
For the fiscal years ending April 30:	2026		-		56,719		1,271,466		1,328,185
	2027		-		60,068		774,489		834,557
	2028		-		63,614		609,617		673,231
	2029		-		67,370		399,366		466,736
	2030		-		65,244		-		65,244
		$	58,268,016	$	340,177	$	3,866,956	$	62,475,149

~~Revenue~~*Due ~~Recognition~~to -the ~~The~~2024 ~~following~~Covenant ~~table~~Defaults, ~~presents~~the facilities under the ~~Company’s~~Credit ~~revenue~~Agreements ~~disaggregated~~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 ~~principal~~risk ~~end-user~~of ~~markets~~additional itcovenant ~~serves:~~compliance failures based on current revenue levels the Company continues to classify this debt as current liabilities as of October 31, 2024.

	Three Months Ended
		July 31,		July 31,
Net trade sales by end-market		2024		2023
Industrial Electronics	$	55,072,227	$	67,875,530
Consumer Electronics		24,243,948		22,657,886
Medical / Life Sciences		5,460,803		7,596,940
Total Net Trade Sales	$	84,776,978	$	98,130,356

Finance Lease Obligations

~~During~~The ~~the~~Company ~~three~~enters ~~month~~into ~~period~~various ~~ended~~finance ~~July~~lease 31, 2024, 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 July 31, 2024agreements. The ~~Company~~terms ~~is electing not to disclose the amount~~ of the ~~remaining~~outstanding ~~unsatisfied~~lease ~~performance~~agreements ~~obligations~~mature ~~with~~through aMarch ~~duration~~1, of2028, ~~one~~with ~~year~~monthly orinstallment ~~less. The~~payments ~~Company~~ranging ~~had~~from no$12,940 ~~material~~to ~~remaining~~$33,706 ~~unsatisfied~~and ~~performance~~a ~~obligations~~fixed asinterest ofrate ~~July~~ranging ~~31,~~from ~~2024,~~8.73% ~~with~~to an12.09% ~~expected~~per ~~duration of greater than one year~~annum.

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.20

	Three Months Ended
		July 31,		July 31,
		2024		2023
Contract liability (deferred revenue) beginning of period	$	3,111,062	$	8,063,197
Deferred revenue recognized in period		(2,612,539)		(4,996,715)
Revenue deferred in period		2,666,475		2,475,787
Deferred revenue end of period	$	3,164,998	$	5,542,269

SigmaTron International, Inc.

~~Income~~October ~~Tax - The Company’s income tax expense~~31, 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.2024

~~Deferred~~Notes 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 beCondensed inConsolidated ~~effect~~Financial ~~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~~ Statements

21(Unaudited)

~~SigmaTron~~Note ~~International,~~F ~~Inc.~~- Income Tax

~~July~~The income tax expense was $4,673,254 for the three month period ended October 31, 2024 compared to an income tax expense of $343,666 for the same period in the prior fiscal year. The Company’s effective tax rate was (61.46)% and 92.40% for the three month period ended October 31, 2024 and 2023, respectively. The increase in income tax expense for the three month period ended October 31, 2024 compared to the same period in the previous year is due primarily to an increase in the valuation allowance in the current period. The change in effective tax rate is due to variations in income earned by jurisdiction and the recording of valuation allowance.

~~Note~~The Hincome -tax ~~Significant~~expense ~~Accounting~~was ~~Policies~~$5,475,467 -for ~~Continued~~the six month period ended October 31, 2024 compared to an income tax expense of $189,531 for the same period in the prior fiscal year. The Company’s effective tax rate was (54.26)% and 39.49% for the six month period ended October 31, 2024 and 2023, respectively. The increase in income tax expense for the six month period ended October 31, 2024 compared to the same period in the previous year is primarily due to an increase in the valuation allowance in the current period. The change in effective tax rate is due to variations in income earned by jurisdiction and the recording of valuation allowance.

~~Company~~The considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company ~~begins~~recognizes ~~with~~a ~~historical~~valuation ~~results~~allowance ~~and changes in accounting policies~~if, ~~and~~based ~~incorporates~~on ~~assumptions including~~ the ~~amount~~weight of ~~future~~available ~~state~~evidence, ~~federal~~it ~~and~~is ~~foreign~~more ~~pre-tax~~likely ~~operating~~than ~~income,~~not ~~the~~that ~~reversal~~some ofportion, ~~temporary~~or ~~differences~~all, ~~and the implementation~~ of ~~feasible~~a ~~and~~deferred ~~prudent~~ tax ~~planning~~asset ~~strategies. These~~will ~~assumptions~~not ~~require~~be ~~significant~~realized. ~~judgment~~Given ~~and estimates by management about~~ the ~~forecasts~~Company’s ofrecent ~~future~~operating ~~taxable~~losses ~~income~~ and ~~are~~going ~~consistent~~concern ~~with~~uncertainty ~~the~~identified ~~plans~~in ~~and estimates~~ the ~~Company~~current ~~uses to manage the underlying businesses. In evaluating the objective evidence that historical results provide~~quarter, the Company ~~considers~~determined ~~three~~that ~~years~~it ofmay ~~cumulative~~not ~~operating~~reasonably ~~income~~rely ~~and/or~~on ~~loss. Valuation~~future ~~allowances~~forecasted ~~are established when necessary to reduce deferred~~ income ~~tax assets~~ to anbenefit ~~amount~~its ~~more~~deferred ~~likely than not to be realized~~assets. ~~The~~For ~~Company~~these ~~previously~~reasons ~~maintained~~the ~~a valuation allowance on certain foreign loss carryforwards; however, all foreign tax loss carryforwards have been used as of April 30, 2024 and no related valuation allowance remains. The~~ Company has established a full valuation allowance ~~of $7,302,639~~ on its ~~U.S.~~deferred ~~capital~~assets ~~loss and foreign tax credit carryforwards~~ as of ~~July~~the ~~31,~~end ~~2024. The~~of ~~Company continues to monitor~~ the ~~need~~current ~~for a valuation allowance on its deferred tax assets each~~ quarter. ~~If forecasted earnings are not achieved in future periods it is possible a valuation allowance on certain or all deferred tax assets may be required.~~

~~Impairment~~Note ofG ~~Long~~-~~Lived~~ ~~Assets~~Commitments - 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,~~Contingencies 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.

22From 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.~~21

~~July~~SigmaTron 31International, ~~2024~~Inc.

~~Note~~October H31, ~~- Significant Accounting Policies - Continued~~2024

~~New~~Notes ~~Accounting~~to ~~Standards:~~Condensed Consolidated Financial Statements

~~In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses~~ (~~Topic 326~~Unaudited): 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.

InNote ~~December~~H ~~2023, the FASB issued ASU 2023~~-~~09,~~ ~~“Income~~Significant ~~Taxes~~Accounting ~~(Topic~~Policies 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~~Management Estimates and ~~local~~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, ~~net~~valuation allowance for deferred taxes and valuation of ~~federal~~long-lived ~~income~~assets. Actual ~~tax~~results ~~effect~~could materially differ from these estimates.

~~Foreign~~The ~~tax~~potential ~~effects~~impact of continued economic uncertainty due to persistent inflation and continuing global supply chain shortages and unpredictability may have a significant adverse impact on the timing of delivery of customer orders and the levels of future customer orders.

~~Effect~~Accounts ofReceivable ~~cross~~-~~border~~ ~~tax~~Accounts ~~laws~~receivable is presented net of allowance for credit losses of $18,615 and $59,466 as of October 31, 2024 and April 30, 2024, respectively. The Company believes that its allowance for credit losses is adequate and represents its best estimate as of October 31, 2024. The Company continues to closely monitor customer liquidity along with industry and economic conditions, which may result in changes to its estimate.

~~Enactment~~The following table presents the Company’s accounts receivable balance at the end of ~~new~~each ~~tax~~period ~~laws~~indicated:

Nontaxable or nondeductible items


	October 31,		April 30,
	2024		2024

Accounts receivable	$	30,495,156	$	32,103,451
Less allowance for credit losses		18,615		59,466
	$	30,476,541	$	32,043,985

~~Tax~~Revenue ~~credits~~Recognition - The following table presents the Company’s revenue disaggregated by the principal end-user markets it serves:

Changes in valuation allowances


	Three Months Ended					Six Months Ended
		October 31,		October 31,		October 31,		October 31,
Net trade sales by end-market		2024		2023		2024		2023
Industrial Electronics	$	49,084,765	$	69,366,781	$	104,156,990	$	137,242,311
Consumer Electronics		21,241,302		22,090,863		45,485,251		44,748,749
Medical / Life Sciences		4,393,293		7,234,040		9,854,097		14,830,980
Total Net Trade Sales	$	74,719,360	$	98,691,684	$	159,496,338	$	196,822,040

~~Changes in unrecognized tax benefits~~22

~~This~~SigmaTron ~~ASU also requires entities to disclose the amount of income taxes paid~~International, ~~net of refunds received, disaggregated by federal, state and foreign jurisdictions~~Inc. ~~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.~~

23October 31, 2024

~~SigmaTron~~Notes ~~International,~~to ~~Inc.~~Condensed Consolidated Financial Statements

~~July 31, 2024~~(Unaudited)

Note IH –- ~~Leases~~Significant Accounting Policies - Continued

~~The~~During ~~Company~~the ~~leases~~three ~~office~~ and ~~storage~~six ~~space,~~month ~~vehicles~~periods ~~and~~ended ~~other~~October ~~equipment~~31, ~~under~~2024, ~~non-cancellable~~no ~~operating~~material ~~leases~~revenues ~~with~~were ~~initial~~recognized ~~terms typically ranging~~ from 1performance toobligations 5satisfied ~~years. At~~or ~~contract~~partially ~~inception,~~satisfied ~~the~~in ~~Company~~previous ~~reviews~~periods ~~the facts~~ and ~~circumstances~~no ofamounts ~~the~~were ~~arrangement~~allocated to ~~determine~~performance ifobligations ~~the~~that ~~contract~~remain isunsatisfied or ~~contains~~partially aunsatisfied ~~lease~~at October 31, 2024. The Company ~~follows~~is ~~the~~electing ~~guidance~~not ~~in Topic 842~~ to ~~evaluate~~disclose ~~whether~~ the ~~contract~~amount ~~has~~of ~~an identified asset; if~~ the ~~Company~~remaining ~~has~~unsatisfied ~~the~~performance ~~right~~obligations towith ~~obtain~~a ~~substantially~~duration ~~all economic benefits from the asset; and if the Company has the right to direct the use~~ of ~~the~~one ~~underlying~~year ~~asset. When~~or ~~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~~less. ~~When~~The ~~determining if the~~ Company ~~has~~had ~~the~~no ~~right~~material toremaining ~~direct~~unsatisfied ~~the~~performance ~~use~~obligations as of anOctober ~~underlying~~31, ~~asset~~2024, ~~the~~with ~~Company~~an ~~considers~~expected ifduration ~~it has the right to direct how and for what purpose the asset is used throughout the period~~ of ~~use~~greater ~~and~~than ifone ~~it controls the decision-making rights over the asset~~year.

~~The~~Contract ~~Company’s~~liabilities ~~lease~~consist ~~terms~~of ~~may~~payments ~~include~~received ~~options~~in toadvance ~~extend~~of orthe ~~terminate~~transfer of control to the ~~lease~~customer. ~~The~~ As products are delivered and control transfers, the Company ~~exercises~~recognizes ~~judgment~~the todeferred ~~determine~~revenue in net sales in the ~~term~~Consolidated Statements of ~~those~~Operations. ~~leases~~The ~~when~~following ~~extension~~table orsummarizes ~~termination~~the ~~options~~deferred ~~are~~revenue ~~present~~associated ~~and~~with ~~includes~~payments ~~such~~received ~~options~~ in advance of the ~~calculation~~transfer of control to the ~~lease~~customer ~~term~~reported ~~when~~as itdeferred isrevenue ~~reasonably~~in ~~certain~~the ~~that~~Consolidated itBalance ~~will~~Sheets ~~exercise~~and ~~those~~amounts ~~options.~~recognized through net sales for each period presented.

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 incurred. Variable payments made to third parties for these, or similar costs, such as utilities, are not included in the calculation of lease payments.


	Six Months Ended
		October 31,		October 31,
		2024		2023
Contract liability (deferred revenue) beginning of period	$	3,111,062	$	8,063,197
Deferred revenue recognized in period		(4,857,972)		(8,387,288)
Revenue deferred in period		6,891,215		4,246,344
Deferred revenue end of period	$	5,144,305	$	3,922,253

AtIncome ~~commencement,~~Tax ~~lease~~-~~related~~ ~~assets~~The ~~and~~Company’s ~~liabilities~~income ~~are~~tax ~~measured~~expense, atdeferred ~~the~~tax ~~present~~assets ~~value~~and ofliabilities ~~future~~and ~~lease~~reserves ~~payments~~for ~~over~~unrecognized ~~the~~tax ~~lease~~benefits ~~term.~~reflect Asmanagement’s ~~most~~best assessment of ~~the~~estimated ~~Company’s~~future ~~leases~~taxes doto ~~not~~be ~~provide~~paid. The anCompany ~~implicit~~is ~~rate,~~subject ~~the~~to ~~Company~~income ~~exercises~~taxes ~~judgment~~ in ~~determining~~both the ~~incremental~~U.S. ~~borrowing~~and ~~rate~~several ~~based~~foreign onjurisdictions. Significant ~~the~~judgments ~~information~~and ~~available~~estimates ~~when~~by ~~the~~management ~~lease~~are ~~commences~~required toin ~~measure~~determining the ~~present~~consolidated ~~value~~income oftax ~~future~~expense ~~payments~~assessment.

~~Operating~~Deferred ~~lease~~income ~~expense~~tax isassets ~~recognized~~and liabilities are determined based on adifferences ~~straight-line~~between financial reporting and tax basis ~~over~~of assets and liabilities, and are measured using the ~~lease~~enacted ~~term~~tax rates and laws that are expected to be in effect when the differences are expected to reverse. In ~~Finance~~evaluating ~~lease~~the ~~cost~~Company’s ~~includes~~ability ~~amortization,~~to recover its deferred tax assets within the jurisdiction from which isthey ~~recognized~~arise, onthe aCompany ~~straight-line~~considers ~~basis~~all ~~over~~available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the ~~expected~~Company ~~life~~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 ~~leased~~reversal ~~asset~~of temporary differences, and ~~interest~~the ~~expense~~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, ~~which~~the isCompany ~~recognized~~considers ~~following~~three years of cumulative operating income and/or loss. Valuation allowances are established when necessary to reduce deferred income tax assets to an ~~effective~~amount ~~interest~~more ~~rate~~likely ~~method~~than not to be realized. The Company previously maintained a valuation allowance on certain foreign loss carryforwards; however, all foreign tax loss

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.23

24SigmaTron International, Inc.

~~SigmaTron~~October ~~International~~31, ~~Inc.~~2024

~~July~~Notes ~~31,~~to ~~2024~~Condensed Consolidated Financial Statements

~~Note I – Leases – Continued~~(Unaudited)

~~The~~Note ~~following~~H ~~table~~- ~~presents~~Significant ~~lease~~Accounting ~~assets~~Policies ~~and~~- ~~liabilities and their balance sheet classification:~~Continued

			July 31,		April 30,
	Classification		2024		2024
Operating Leases:
Right-of-use Assets	Right-of-use assets	$	7,585,366	$	7,463,301
Operating lease current‎liabilities	Current portion of operating lease‎obligations		3,171,681		2,789,107
Operating lease noncurrent ‎liabilities	Operating lease obligations, less ‎current portion		4,693,774		4,958,247
Finance Leases:
Right-of-use Assets	Property, machinery and equipment		6,784,837		6,959,660
Finance lease current ‎liabilities	Current portion of finance lease‎obligations		2,087,938		2,214,127
Finance lease noncurrent ‎liabilities	Finance lease obligations, less‎current portion		2,660,504		3,147,447

carryforwards have been used as of April 30, 2024 and no related valuation allowance remains. Given the Company’s recent operating losses and going concern uncertainty identified in the current 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.

Impairment of Long-Lived Assets - The ~~components~~Company ofreviews ~~lease~~long-lived ~~expense~~assets, including amortizable intangible assets, for ~~the~~impairment ~~three~~in ~~month~~accordance ~~periods~~with ~~ended~~Financial ~~July~~Accounting 31Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360: Property, ~~2024~~Plant and ~~2023~~Equipment. Property, machinery and equipment and finite life intangible assets are asreviewed ~~follows:~~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.

		Three Months	Three Months
		Ended	Ended
	Expense	July 31,	July 31,
	Classification	2024	2023
Operating Leases:
Operating lease cost	Operating	928,834	895,469
Variable lease cost	Operating	51,112	56,900
Short term lease cost	Operating	2,850	2,250
Finance Leases:
Amortization of ‎right-of-use assets	Operating	682,905	640,847
Interest expense	Interest	131,878	119,686
Total		1,797,579	1,715,152

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:

25Level 1: Quoted prices in active markets for identical assets or liabilities.

~~SigmaTron~~Level ~~International,~~2: Quoted ~~Inc~~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.

~~July~~Level ~~31,~~3: Valuations ~~2024~~derived from valuation techniques in which one or more significant inputs are unobservable in active markets.

~~Note~~During Ithe –three ~~Leases~~month –period ~~Continued~~ended October 31, 2024, the Company valued its contingent warrants which are classified as liabilities under authoritative accounting standards. These common stock warrants are valued using a Monte Carlo model, with level 3 inputs such as expected volatility, risk-free interest rate, and expected number of warrants ultimately utilized and term that are not observable in active markets.

~~The weighted average lease term and discount rates for the quarters ended July 31, 2024 and 2023, are as follows:~~24

	July 31,	July 31,
	2024	2023
Operating Leases:
Weighted average remaining lease term (months)	38.59	34.57
Weighted average discount rate	5.5%	3.4%
Finance Leases:
Weighted average remaining lease term (months)	29.96	32.51
Weighted average discount rate	10.3%	9.8%

SigmaTron International, Inc.

~~Future~~October ~~payments~~31, ~~due under leases reconciled to lease liabilities are as follows:~~2024

		Operating Leases		Finance Leases
For the remaining 9 months of the fiscal year ending April 30:
2025	$	2,682,084	$	1,912,983
For the fiscal years ending April 30:
2026		3,090,111		1,989,209
2027		971,166		1,161,407
2028		715,105		362,983
2029		729,407		-
2030		443,414		-
Thereafter		-		-
Total undiscounted lease payments		8,631,287		5,426,582
Present value discount, less interest		765,832		678,140
Lease liability	$	7,865,455	$	4,748,442

Notes to Condensed Consolidated Financial Statements

26(Unaudited)

~~SigmaTron~~Note ~~International,~~H ~~Inc.~~- Significant Accounting Policies - Continued

~~July~~The below table provides a summary of the fair value of the Company’s warrant liability during the six months ended October 31, 2024.

Note I – Leases – Continued


		October 31,
		2024
Beginning balance	$	-
Issuance of warrants		2,263,000
Change in fair value of warrants		626,000
Ending balance	$	2,889,000

~~Supplemental~~New ~~disclosures~~Accounting ~~of cash flow information related to leases for the three months ended July 31, 2024 and 2023 are as follows~~Standards:

	Three Months Ended
	July 31,	July 31,
Other Information	2024	2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	131,878	119,686
Operating cash flows from operating leases	109,363	61,121
Financing cash flows from finance leases	613,132	428,105
Supplemental non-cash information on lease liabilities arising from ‎obtaining right-of-use assets:
Right-of-use assets obtained in exchange for ‎new finance lease liabilities	-	1,032,351
Right-of-use assets obtained in exchange for ‎operating lease liabilities	936,399	1,531

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.

~~Note~~In JNovember –2023, ~~Intangible~~the ~~Assets~~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.

~~Intangible assets subject to amortization are summarized as of July 31, 2024 as follows:~~ 25

	July 31,2024
	Gross
	Carrying		Accumulated		Net Intangible
	Amount		Amortization		Asset Balance
Spitfire:
Non-contractual customer relationship		4,690,000		3,792,433		897,567
Total	$	4,690,000	$	3,792,433	$	897,567

SigmaTron International, Inc.

27October 31, 2024

~~SigmaTron~~Notes ~~International,~~to ~~Inc.~~Condensed Consolidated Financial Statements

~~July 31, 2024~~(Unaudited)

Note JH –- ~~Intangible~~Significant ~~Assets~~Accounting Policies - Continued

~~Intangible~~In ~~assets~~December ~~subject~~2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to ~~amortization~~Income ~~are~~Tax ~~summarized~~Disclosures”, aswhich offocuses ~~April~~on 30income tax disclosures around effective tax rates and cash income taxes paid. This ASU requires public business entities to disclose, ~~2024~~on asan ~~follows:~~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:

	April 30, 2024
	Gross
	Carrying		Accumulated		Net Intangible
	Amount		Amortization		Asset Balance
Spitfire:
Non-contractual customer relationship		4,690,000		3,710,812		979,188
Total	$	4,690,000	$	3,710,812	$	979,188

State and local income tax, net of federal income tax effect

~~Estimated~~Foreign ~~aggregate~~tax ~~amortization expense for the Company’s intangible assets, which become fully amortized in 2028, for the remaining periods as of July 31, 2024, are as follows:~~effects

For the remaining 9 months of the fiscal year ending April 30:	2025	$	243,081
For the fiscal years ending April 30:	2026		317,728
	2027		310,900
	2028		25,858
		$	897,567

Effect of cross-border tax laws

~~Amortization~~Enactment ~~expense~~of ~~was~~new ~~$81,621~~tax ~~and $83,415 for the three month periods ended July 31, 2024 and July 31, 2023, respectively.~~laws

~~firs~~Nontaxable or nondeductible items

28Tax credits

~~SigmaTron~~Changes ~~International,~~in ~~Inc.~~valuation allowances

~~July~~Changes ~~31,~~in ~~2024~~unrecognized tax benefits

~~Item~~This ~~2.Management’s~~ASU ~~Discussion~~also ~~and~~requires ~~Analysis~~entities to disclose the amount of ~~Financial~~income ~~Condition~~taxes paid, net of refunds received, disaggregated by federal, state and ~~Results~~foreign jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 2024. The Company is currently evaluating the impact of ~~Operations~~this guidance on its consolidated financial statements.

InNote ~~addition~~I 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 to 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; changes in U.S., Mexican, Chinese, Vietnamese or Taiwanese regulations affecting the Company’s business; the turmoil in the global economy and financial markets; public health crises, such as pandemics; 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 Israel-Hamas conflict; 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.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.

29The 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.

~~SigmaTron~~The ~~International~~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, ~~Inc~~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

~~July 31, 2024~~26

~~Overview:~~SigmaTron International, Inc.

~~The~~October 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 assemblies31, ~~electro-mechanical subassemblies and completely assembled (box-build) electronic products.~~ 2024

~~The~~Notes 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~~Condensed ~~components~~Consolidated ~~from~~Financial 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.Statements

~~In connection with the production of assembled products, the Company provides services to its customers, including~~ (1Unaudited) 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~~Note ~~can~~I be– aLeases ~~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 month periods ended July 31, 2024 and July 31, 2023.Continued

~~The~~incurred. ~~Company’s~~Variable ~~international~~payments ~~footprint~~made ~~provides our customers with flexibility within the Company~~ to ~~manufacture~~third inparties ~~China,~~for ~~Mexico~~these, ~~Vietnam~~ or ~~the~~similar ~~U.S. We~~costs, ~~believe~~such ~~this~~as ~~strategy~~utilities, ~~will~~are ~~continue~~not toincluded ~~serve~~in the ~~Company~~calculation ~~well~~of aslease ~~its customers continuously evaluate their supply chain strategies~~payments.

~~Despite~~At ~~supply~~commencement, ~~chain~~lease-related ~~component~~assets ~~shortages~~and ~~improving~~liabilities inare ~~fiscal~~measured ~~2024,~~at the present value of future lease payments over the lease term. As most of the Company’s ~~business,~~leases ~~results~~do ofnot ~~operations,~~provide ~~and~~an ~~financial~~implicit ~~condition~~rate, ~~continue~~the toCompany beexercises ~~adversely~~judgment ~~affected~~in bydetermining ~~certain~~the ~~supply~~incremental ~~chain~~borrowing ~~issues~~rate ~~due~~based toon ~~world-wide~~the ~~component~~information ~~shortages.~~available ~~The~~when ~~Company~~the ~~anticipates~~lease ~~continuing~~commences ~~improvement~~to inmeasure ~~supply~~the ~~chain~~present ~~predictability~~value inof ~~fiscal~~future ~~2025~~payments.

30Operating 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.

~~SigmaTron~~Operating ~~International~~leases are included in other assets, ~~Inc~~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.

~~July~~The ~~31,~~following ~~2024~~table presents lease assets and liabilities and their balance sheet classification:

Results of Operations:


			October 31,		April 30,
	Classification		2024		2024
Operating Leases:
Right-of-use Assets	Right-of-use assets	$	10,090,512	$	7,463,301
Operating lease current ‎liabilities	Current portion of operating lease ‎obligations		3,155,101		2,789,107
Operating lease noncurrent ‎liabilities	Operating lease obligations, less ‎current portion		7,257,123		4,958,247
Finance Leases:
Right-of-use Assets	Property, machinery and equipment		6,531,668		6,959,660
Finance lease current ‎liabilities	Current portion of finance lease ‎obligations		2,043,612		2,214,127
Finance lease noncurrent ‎liabilities	Finance lease obligations, less ‎current portion		2,180,940		3,147,447

~~The following table sets forth the Company’s results of operations, including the percentage relationships of gross profit and expense items to net sales for the periods indicated:~~27

	Three Months Ended
	July 31,		July 31,
	2024		2023
Net sales	$	84,776,978	$	98,130,356
Cost of products sold		78,371,784		88,479,136
As a percent of net sales		92.4%		90.2%
Gross profit		6,405,194		9,651,220
As a percent of net sales		7.6%		9.8%
Selling and administrative expenses		6,623,866		6,842,805
As a percent of net sales		7.8%		7.0%
Operating (loss) income		(218,672)		2,808,415
Other income		-		18,627
Interest expense, net		(2,268,275)		(2,719,078)
(Loss) income before income taxes		(2,486,947)		107,964
Income tax (expense) benefit		(802,213)		154,135
Net (loss)/income	$	(3,289,160)	$	262,099

SigmaTron International, Inc.

~~Net~~October ~~sales~~31, 2024

~~Net~~Notes ~~sales decreased $13,353,378, or (13.6)%,~~ to ~~$84,776,978~~Condensed ~~for~~Consolidated ~~the~~Financial three month period ended July 31, 2024, compared to $98,130,356 for the same period in the prior fiscal year. The Company’s sales decreased for the three month period ended July 31, 2024, in the industrial electronics and medical/life science markets. The decrease in sales was partially offset with an increase in the consumer electronics market, compared to the same period in the prior fiscal year. 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.Statements

31(Unaudited)

~~SigmaTron~~Note ~~International,~~I ~~Inc.~~– Leases – Continued

~~July~~The components of lease expense for the three and six month periods ended October 31, 2024 and 2023, are as follows:

Costs of products sold


		Three Months	Three Months	Six Months	Six Months
		Ended	Ended	Ended	Ended
	Expense	October 31,	October 31,	October 31,	October 31,
	Classification	2024	2023	2024	2023
Operating Leases:
Operating lease cost	Operating	966,308	896,963	1,895,142	1,792,432
Variable lease cost	Operating	51,112	56,209	102,223	112,418
Short term lease cost	Operating	2,850	2,250	5,700	4,500
Finance Leases:
Amortization of ‎right-of-use assets	Operating	674,398	693,341	1,357,303	1,334,188
Interest expense	Interest	70,606	134,753	202,484	254,439
Total		1,765,274	1,783,516	3,562,852	3,497,978

Cost of products sold decreased $10,107,352, or (11.4)%, to $78,371,784 (92.4% of net sales) for the three month period ended July 31, 2024, compared to $88,479,136 (90.2% of net sales) for the same period in the prior fiscal year. The ~~increase~~weighted inaverage ~~cost~~lease ofterm ~~products sold as a percentage of sales is primarily due to lower sales volumes, higher labor costs~~ and ~~other~~discount ~~fixed~~rates ~~manufacturing costs~~ for the ~~three~~quarters ~~month period~~ ended ~~July~~October 31, 2024, ~~than~~and ~~in the same period in the prior fiscal year. The three month period ended July 31~~2023, ~~2024~~are ~~results~~as ~~include approximately $340,000 of severance related to staff reductions during the period.~~follows:

Gross profit margin



	October 31,	October 31,
	2024	2023
Operating Leases:
Weighted average remaining lease term (months)	64.59	32.00
Weighted average discount rate	6.8%	3.4%
Finance Leases:
Weighted average remaining lease term (months)	27.63	32.85
Weighted average discount rate	10.3%	9.8%

Gross profit margin was 7.6% of net sales, for the three month period ended July 31, 2024, compared to 9.8% 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 three month period ended July 31, 2024, compared to the same period in the prior fiscal year.28

~~Selling~~SigmaTron ~~and~~International, ~~administrative expenses~~ Inc.

~~Selling~~October ~~and administrative expenses decreased $218,939, or (3.2)% to $6,623,866 (7.8% of net sales) for the three month period ended July~~ 31, 2024, compared to $6,842,805 (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 accounting professional fees, legal professional fees and bonus expense.

~~Interest~~Notes ~~expense,~~to ~~net~~Condensed Consolidated Financial Statements

Interest expense, net, decreased to $2,268,275 for the three month period ended July 31, 2024, compared to $2,719,078 for the same period in the prior fiscal year. The decrease relates to a decrease in debt levels during the three month period ended July 31, 2024 as compared to the same period in the prior fiscal year.(Unaudited)

~~Income~~Note ~~tax~~I ~~expense/benefit~~– Leases – Continued

~~Income~~Future ~~tax~~payments expense increased $956,348 to $802,213 for the three month period ended July 31, 2024, compared to an income tax benefit of $154,135 for the same period in the prior fiscal year. The effective tax rate increased to (32.26)% for the three month period ended July 31, 2024, compared to (142.76)% for the same period in the prior fiscal year. The increase in income tax expense for the three month period ended July 31, 2024 compared to the same period in the previous year is due tounder ~~variations~~leases inreconciled ~~the forecasted tax rates and income earned by jurisdiction. The increase in effective tax rate is due~~ to ~~variations~~lease inliabilities ~~income~~are ~~earned~~as ~~by jurisdiction.~~ follows:

Net income/loss


		Operating Leases		Finance Leases
For the remaining 6 months of the fiscal year ending April 30:
2025	$	1,903,672	$	1,271,464
For the fiscal years ending April 30:
2026		3,534,597		1,990,280
2027		1,432,379		1,160,336
2028		1,192,461		362,983
2029		1,223,470		-
2030		954,769		-
Thereafter		2,640,549		-
Total undiscounted lease payments		12,881,897		4,785,063
Present value discount, less interest		2,469,673		560,511
Lease liability	$	10,412,224	$	4,224,552

~~Net~~Supplemental ~~income~~disclosures ~~decreased~~of ~~$3,551,259,~~cash toflow ainformation ~~net~~related ~~loss~~to ofleases ~~$3,289,160~~ for the ~~three~~six ~~month~~months ~~period~~ ended ~~July~~October 31, 2024, ~~compared to a net income of $262,099 for the same period in the prior fiscal year. The decreased net income primarily relates to lower sales volumes, higher labor~~ and ~~other~~2023 ~~fixed~~are ~~manufacturing~~as ~~costs, severance related costs and higher income taxes partially offset with lowering selling and administrative expenses and lower interest expense.~~ follows:



	Six Months Ended
	October 31,	October 31,
Other Information	2024	2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	70,606	134,753
Operating cash flows from operating leases	255,891	119,065
Financing cash flows from finance leases	1,137,022	955,337
Supplemental non-cash information on lease liabilities arising from ‎obtaining right-of-use assets:
Right-of-use assets obtained in exchange for ‎new finance lease liabilities	-	2,567,029
Right-of-use assets obtained in exchange for ‎operating lease liabilities	4,261,324	1,531

~~SigmaTron International, Inc.~~29

~~July~~SigmaTron 31International, ~~2024~~Inc.

~~Liquidity~~October ~~and~~31, ~~Capital Resources:~~ 2024

~~The~~Notes ~~Company’s liquidity requirements are primarily~~ to ~~fund~~Condensed ~~its~~Consolidated ~~business~~Financial operations, including capital expenditures and working capital requirements, as well as to fund debt service requirements. The Company’s primary sources of liquidity are cash flows from operations and borrowings under the revolving Facility credit agreement. At this time, the Company believes its liquidity position will be sufficient to fund its existing operations and current commitments for at least the next twelve months. In addition to its cash flows from operations and borrowings under the revolving facility credit agreement, the Company has taken steps to reduce its debt and cost structure to enhance its liquidity, including consolidating its Illinois operations into its Elk Grove Village, Illinois headquarters, and reduction of headcounts and inventory, and continues to explore other strategic initiatives to further reduce its debt. However, 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 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.Statements

~~Operating Activities.~~(Unaudited)

~~Cash~~Note ~~flow~~J ~~provided~~– byIntangible operating activities was $2,627,667 for the three month period ended July 31, 2024, compared to cash flow provided by operating activities of $7,750,014 for the same period in the prior fiscal year. Cash flow provided by operating activities was primarily the result of a decrease in inventory in the amount of $13,163,256. Cash flow from operating activities was offset by a decrease in accounts payable in the amount of $3,971,274, an increase in accounts receivable in the amount of $3,732,481 and a decrease in customer deposits in the amount of $1,555,729. The decrease in inventory is the result of improvement in the component marketplace which has allowed the Company to complete assemblies for shipping. The decrease in accounts payable is a result of lower accounts payable balances due to lower purchases of raw materials and the timing of payments. The increase in accounts receivable is due to the timing of customer payments.Assets

~~Cash~~Intangible ~~flow~~assets ~~provided~~subject byto ~~operating~~amortization ~~activities~~are ~~was~~summarized ~~$7,750,014~~as ~~for~~of ~~the~~October ~~three month period ended July~~ 31, ~~2023. Cash~~2024 ~~flow~~as ~~provided~~follows: by operating activities was primarily the result of a decrease in inventory in the amount of $7,092,926, a decrease in accounts receivable in the amount of $2,058,165 and an increase in customer deposits in the amount of $9,717,955. Cash flow from operating activities was offset by a decrease in accounts payable in the amount of $10,241,474 and deferred revenue in the amount of $2,520,928.

Investing Activities.


	October 31,2024
	Gross
	Carrying		Accumulated		Net Intangible
	Amount		Amortization		Asset Balance

Spitfire:
Non-contractual customer relationship		4,690,000		3,873,462		816,538
Total	$	4,690,000	$	3,873,462	$	816,538

~~Cash~~Intangible ~~used~~assets insubject ~~investing activities was $167,813 for the three month period ended July 31, 2024. During the first three months of fiscal year 2025, the Company purchased $167,813 in machinery and equipment~~ to beamortization ~~used~~are insummarized ~~the~~as ~~ordinary course~~ of ~~business. The~~April ~~Company anticipates future purchases of machinery and equipment will be funded by lease transactions. However~~30, ~~there~~2024 isas nofollows: ~~assurance that the Company will be able to obtain funding for leases at acceptable terms, if at all, in the future.~~


	April 30, 2024
	Gross
	Carrying		Accumulated		Net Intangible
	Amount		Amortization		Asset Balance

Spitfire:
Non-contractual customer relationship		4,690,000		3,710,812		979,188
Total	$	4,690,000	$	3,710,812	$	979,188

~~SigmaTron~~Estimated ~~International~~aggregate amortization expense for the Company’s intangible assets, ~~Inc.~~which become fully amortized in 2028, for the remaining periods as of October 31, 2024, are as follows:

July 31, 2024


For the remaining 6 months of the fiscal year ending April 30:	2025	$	162,054
For the fiscal years ending April 30:	2026		317,728
	2027		310,900
	2028		25,856
		$	816,538

~~Cash~~Amortization ~~used~~expense inwas ~~investing~~$81,028 ~~activities~~and ~~was~~ $~~621~~82,~~929~~809 for the three month ~~period~~periods ended ~~July~~October 31, ~~2023. During~~2024 ~~the~~and ~~first~~October ~~three~~31, ~~months~~2023, ofrespectively. Amortization ~~fiscal~~expense ~~year~~was ~~2024~~$162,650 ~~the~~and ~~Company purchased~~ $~~621~~166,~~929~~224 infor ~~machinery~~the ~~and~~six ~~equipment~~month ~~used~~periods inended ~~the~~October ~~ordinary~~31, ~~course~~2024 ofand ~~business~~October 31, 2023, respectively.

~~Financing~~Note ~~Activities.~~K – Subsequent Event

~~Cash~~During ~~provided~~December by2024, ~~financing~~the ~~activities~~Company ofexecuted ~~$426,104~~a sale/leaseback transaction for ~~the~~its ~~three~~principal ~~month~~facility ~~period~~in ~~ended~~Elk ~~July~~Grove 31Village, ~~2024,~~Illinois. The sale price was ~~primarily~~$9,500,000. The ~~the~~lease ~~result~~is offor ~~net~~a ~~borrowings~~three ~~under~~year ~~the~~term ~~line~~with oftwo, ~~credit~~one-year ~~and~~tenant ~~term~~(Company) ~~loan~~options. The ~~agreement~~proceeds are intended to reduce debt.

~~Cash used in financing activities of $6,292,323 for the three month period ended July 31, 2023, was primarily the result of net payments under the line of credit and term loan agreement.~~30

~~Financing~~SigmaTron ~~Summary~~International, Inc.

~~Notes~~October ~~Payable~~31, ~~– Banks~~2024

TheItem Company2.Management’s primaryDiscussion secured credit agreements include the Amended and RestatedAnalysis Credit Agreement dated as of JulyFinancial 18,Condition 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “JPM Credit Agreement”) by and amongResults the Company, the other loan party thereto 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 facilityOperations. The Facility, 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~~In ~~Credit~~addition ~~Agreements~~to ~~contain~~historical financial ~~covenants~~information, ~~relating~~this todiscussion of the business of SigmaTron International, Inc. (i“SigmaTron”), ~~the~~its ~~Fixed~~subsidiaries ~~Charge~~Standard ~~Coverage~~Components ~~Ratio~~de Mexico S.A., AbleMex, S.A. de C.V., Digital Appliance Controls de Mexico, S.A. de C.V., Spitfire Controls (asVietnam) ~~defined~~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 ~~Credit~~Company’s ~~Agreements)~~business or results of operations. Words such as “continue,” ~~which~~“anticipate,” is“will,” “expect,” “believe,” “plan,” and similar expressions identify forward-looking statements. These forward-looking statements are based on the ~~ratio~~current expectations of the Company. Because these forward-looking statements involve risks and uncertainties, the Company’s ~~fixed~~plans, ~~payments~~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 ~~indebtedness~~customers; ~~made~~pricing ~~during~~pressures ~~any~~from ~~fiscal~~the ~~period~~Company’s ~~minus~~customers, ~~non~~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-~~financed~~lived ~~capital~~assets ~~expenditures~~and goodwill impairment testing; the impact of material weaknesses in internal controls over financial reporting; the ability to ~~EBITDA~~achieve (the expected benefits of acquisitions as ~~defined~~well inas the ~~Credit~~expenses ~~Agreements)~~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 ~~(ii)~~cost of necessary components and materials; the ~~Total~~impact ~~Debt~~acts of war may have to ~~EBITDA~~the ~~Ratio~~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 ~~defined~~expected; changes in U.S., Mexican, Chinese, Vietnamese or Taiwanese regulations affecting the ~~Credit~~Company’s ~~Agreements)~~business; the turmoil in the global economy and financial markets; public health crises, such as pandemics; 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 Israel-Hamas conflict; currency exchange fluctuations; and the ability of the Company to manage its growth. These and other factors which ismay affect the ~~ratio~~Company’s future business and results of operations are identified throughout the Company’s ~~borrowed~~Annual ~~money~~Report oron ~~letters~~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 ~~credit~~the date of such filings, and the Company undertakes no obligation to ~~EBITDA~~update such statements in light of future events or otherwise unless otherwise required by law.

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.

~~The facility under the JPM Credit Agreement is secured by: (a) a first priority security interest in~~ SigmaTron’s ~~(i)~~International, ~~accounts receivable and inventory (excluding Term Priority Mexican Inventory (as~~ Inc.

34October 31, 2024

~~SigmaTron International, Inc.~~Overview:

~~July~~The 31Company 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, ~~2024~~electro-mechanical subassemblies and completely assembled (box-build) electronic products.

~~defined~~The inCompany ~~the~~relies ~~ICA)~~on ~~and~~numerous ~~certain~~third-party ~~inventory~~suppliers infor ~~transit,~~components ~~(ii)~~used ~~deposit accounts, (iii) proceeds of business interruption insurance that constitute ABL BI Insurance Share (as defined~~ in the ~~ICA),~~Company’s ~~(iv)~~production ~~certain~~process. ~~other~~Certain ~~property,~~of ~~including~~these ~~payment~~components ~~intangibles,~~are ~~instruments,~~available ~~equipment,~~only ~~software~~from ~~and~~single-sources ~~hardware~~or ~~and~~a ~~similar~~limited ~~systems,~~number ~~books and records, to the extent related to the foregoing, and (v) all proceeds~~ of ~~the~~suppliers. ~~foregoing,~~In ~~in each case~~addition, ~~now~~a ~~owned~~customer’s orspecifications ~~hereafter~~may ~~acquired~~require ~~(collectively,~~ the ~~“ABL~~Company ~~Priority~~to ~~Collateral”);~~obtain ~~and~~components ~~(b)~~from a ~~second~~single-source ~~priority~~or ~~security~~a ~~interest~~small innumber ~~Term~~of ~~Priority~~suppliers. ~~Collateral~~The ~~(as~~loss ~~defined~~of ~~below)~~any ~~other~~such ~~than~~suppliers ~~(i)~~could ~~real~~have ~~estate~~a ~~and~~material ~~(ii)~~impact on the ~~equity interests of SigmaTron~~Company’s ~~foreign~~results ~~subsidiaries~~of ~~(unless~~operations. ~~such~~Further, athe ~~pledge~~Company iscould ~~requested~~operate byat ~~Lender). As~~a ofcost ~~July~~disadvantage ~~31,~~compared ~~2024,~~to ~~there~~competitors ~~was~~who ~~$30,284,657~~have ~~outstanding~~greater ~~and~~direct ~~$16,087,627~~buying ofpower ~~unused~~from ~~availability~~suppliers. ~~under~~The ~~the~~Company ~~revolving~~does ~~loan~~not ~~facility~~enter ~~compared~~into tolong-term anpurchase ~~outstanding~~agreements ~~balance~~with ofmajor ~~$28,598,719~~or ~~and~~single-source ~~$13,443,766~~suppliers. ofThe ~~unused~~Company ~~availability~~believes atthat ~~April~~short-term ~~30,~~purchase ~~2024. As~~orders ofwith ~~July~~its ~~31,~~suppliers ~~2024~~provides ~~and April 30~~flexibility, ~~2024,~~given that the ~~unamortized~~Company’s ~~deferred~~orders ~~financing~~are ~~amount~~based ~~offset~~on ~~against~~the ~~outstanding~~changing ~~debt~~needs ~~was~~of ~~$545,875~~its ~~and $592,664, respectively~~customers.

~~The~~In ~~Term~~connection ~~Loan~~with ~~Agreement~~the ~~provides~~production ~~for~~of aassembled ~~term~~products, ~~loan from TCW to~~ the Company inprovides ~~the~~services ~~principal~~to ~~amount~~its ~~of $40~~customers,~~000,000~~ ~~(the~~including ~~“TCW Term Loan”~~(1)~~. The~~ ~~TCW~~automatic ~~Term~~and ~~Loan~~manual ~~bears~~assembly ~~interest~~and attesting aof ~~rate~~products; ~~per~~(2) ~~annum~~material ~~based~~sourcing onand ~~SOFR,~~procurement; ~~plus~~(3) ~~the~~manufacturing ~~Applicable~~and ~~Margin~~test ofengineering ~~7.50%~~support; (~~each~~4) asdesign ~~defined~~services; ~~in the Term Loan Agreement~~(5)~~. The~~ ~~TCW~~warehousing ~~Term~~and ~~Loan~~distribution ~~has~~services; a(6) ~~SOFR~~assistance ~~floor~~in ofobtaining ~~1.00%. The~~product ~~maturity~~approval ~~date~~from ofgovernmental ~~the~~and ~~TCW~~other ~~Term~~regulatory ~~Loan~~bodies isand ~~July~~(7) ~~18,~~compliance ~~2027~~reporting. The ~~amount~~Company ~~outstanding~~provides asthese ofmanufacturing ~~July~~services ~~31,~~through ~~2024, was $37,253,301 compared to~~ an ~~outstanding~~international ~~balance~~network of ~~$37,503,301~~facilities atlocated ~~April~~in ~~30,~~the ~~2024. As~~United ~~of July 31~~States, ~~2024 and April 30~~Mexico, ~~2024~~China, ~~the~~Vietnam ~~unamortized deferred financing amount offset against outstanding debt was $861,637~~ and ~~$935,492, respectively~~Taiwan.

~~The~~Sales ~~TCW~~can ~~Term~~be ~~Loan~~a ismisleading ~~secured~~indicator ~~by:~~of ~~(a)~~the aCompany’s ~~first~~financial ~~priority~~performance. Sales ~~security~~levels ~~interest~~can invary ~~all~~considerably ~~property~~among ofcustomers ~~SigmaTron~~and ~~that~~products ~~does~~depending ~~not~~on ~~constitute~~the ~~ABL~~type ~~Priority~~of ~~Collateral,~~services ~~which~~(turnkey ~~includes:~~versus (iconsignment) ~~SigmaTron’s~~rendered ~~Elk~~by ~~Grove~~the ~~Village~~Company ~~real~~and ~~estate,~~the ~~(ii)~~demand ~~SigmaTron’s~~by ~~machinery,~~customers. Consignment ~~equipment~~orders ~~and~~require ~~fixtures~~the ~~(but~~Company ~~excluding~~to ~~ABL~~perform ~~Priority~~manufacturing ~~Equipment~~services ~~(as~~on ~~defined~~components inand ~~the~~other ~~ICA)),~~materials ~~(iii)~~supplied ~~the~~by ~~Term~~a ~~Priority~~customer, ~~Mexican~~and ~~Inventory (as defined in~~ the ~~ICA),~~Company ~~(iv)~~charges ~~SigmaTron’s~~only ~~stock~~for in its ~~direct~~labor, overhead and ~~indirect~~manufacturing ~~subsidiaries~~costs, ~~(v)~~plus ~~SigmaTron’s~~a ~~general~~profit. In ~~intangibles~~the ~~(excluding~~case ~~any~~of ~~that~~turnkey ~~constitute~~orders, ~~ABL~~the ~~Priority~~Company ~~Collateral)~~provides, ~~goodwill~~in ~~and~~addition ~~intellectual~~to ~~property~~manufacturing services, ~~(vi)~~ the ~~proceeds~~components ofand ~~business~~other ~~interruption~~materials ~~insurance~~used ~~that~~in ~~constitute~~assembly. Turnkey ~~Term BI~~contracts, ~~Insurance Share (as defined~~ in ~~the ICA)~~general, ~~(vii)~~have ~~tax~~a ~~refunds,~~higher ~~and~~dollar ~~(viii)~~volume ~~all~~of ~~proceeds~~sales ~~thereof,~~for in each ~~case~~given assembly, ~~now~~owing ~~owned~~to orinclusion ~~hereafter~~of ~~acquired (collectively,~~ the ~~“Term~~cost ~~Priority~~of ~~Collateral”);~~components and ~~(b)~~other amaterials ~~second~~in ~~priority~~net ~~security~~sales ~~interest~~and incost ~~all~~of ~~collateral~~goods ~~that~~sold. Variations ~~constitutes~~in ~~ABL~~the ~~Priority~~number ~~Collateral. Also,~~of ~~SigmaTron’s~~turnkey ~~three~~orders ~~Mexican~~compared ~~subsidiaries~~to ~~pledged~~consignment ~~all~~orders ofcan ~~their~~lead ~~assets~~to assignificant ~~security~~fluctuations ~~for~~in the ~~TCW~~Company’s ~~Term~~revenue ~~Loan~~and gross margin levels. ~~The~~Consignment ~~net~~orders ~~proceeds~~accounted ~~received~~for byless than 1% of the Company’s ~~from~~revenues for the ~~sale~~three ofand ~~the~~six ~~Elgin,~~month ~~Illinois,~~periods ~~property~~ended inOctober ~~February~~31, 2024, ~~reduced~~and ~~the~~October ~~TCW~~31, ~~Term Loan~~2023.

~~Waivers~~The ~~and~~Company’s ~~Amendments~~international Nofootprint provides our customers with flexibility within the Company to manufacture in China, Mexico, Vietnam or the U.S. We 1believe &this 2strategy will continue to serve the Company well as its customers continuously evaluate their supply chain strategies.

InDespite ~~March~~supply ~~2023,~~chain ~~the~~component ~~Company~~shortages ~~received~~improving ~~default~~in 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~~2024, ~~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’s ~~entered into waivers with JPM and TCW~~business, ~~which~~results ~~waived certain events~~ of ~~default~~operations, and ~~amended~~financial ~~terms~~condition ofcontinue ~~the Credit Agreements. These amendments included requirements~~ to ~~maintain~~be aadversely ~~minimum~~affected ofby ~~$2.5~~certain ~~million~~supply inchain ~~revolver~~issues ~~availability,~~due ~~modifications~~ to ~~the~~world-wide ~~definition~~component ~~of EBITDA, and adjustments to the Total Debt to EBITDA Ratios~~shortages. OnThe ~~June 15, 2023, the~~ Company ~~executed~~anticipates ~~further~~continuing ~~amendments~~improvement toin ~~extend~~supply ~~the~~chain ~~deadline~~predictability ~~for~~in ~~potential~~fiscal ~~corporate restructuring to July 31, 2023~~2025.

3532

SigmaTron International, Inc.

~~July~~October 31, 2024

~~Waivers~~Results ~~and~~of ~~Amendments~~Operations: ~~No. 3~~

AsThe offollowing ~~August~~table ~~19,~~sets ~~2024,~~forth the Company’s ~~was~~consolidated ~~not~~results ~~in compliance with the financial covenants under the Credit Agreements as follows: the Fixed Charge Coverage Ratio for each~~ of ~~the twelve month periods ending on April 30~~operations, ~~2024,~~including ~~May 31, 2024, June 30, 2024, and July 31, 2024 was less than 1.10:1.00,~~ the ~~Total~~percentage ~~Debt~~relationships toof ~~EBITDA~~gross ~~Ratio~~profit ~~for the twelve month period ending on April 30, 2024 was greater than 4.50:1.00,~~ and ~~the~~expense ~~Total~~items ~~Debt~~ to ~~EBITDA~~net ~~Ratio~~sales for the ~~twelve~~periods ~~month period ending on July 31, 2024 was greater than 4.25~~indicated:~~1.00 (collectively, the “2024 Covenant Defaults”).~~

Due to the 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.


	Three Months Ended
	October 31,		October 31,
	2024		2023

Net sales	$	74,719,360	$	98,691,684
Cost of products sold		67,815,156		89,003,929
As a percent of net sales		90.8%		90.2%
Gross profit		6,904,204		9,687,755
As a percent of net sales		9.2%		9.8%
Selling and administrative expenses		6,370,511		6,613,634
As a percent of net sales		8.5%		6.7%
Operating income		533,693		3,074,121

Other income		-		6,503
Change in fair value of warrants		(626,000)		-
Interest expense, net		(4,701,108)		(2,708,696)
(Loss) income before income taxes		(4,793,415)		371,928
Income tax expense		(4,673,254)		(343,666)
Net (loss)/income	$	(9,466,669)	$	28,262

InNet ~~addition,~~Sales 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. 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 the Company’s Form 10-K annual report for the fiscal year ended April 30, 2024.

OnNet ~~August~~sales ~~19,~~decreased ~~2024 (the “Third Amendment Effective Date”)~~$23,972,324, ~~the~~or ~~Lender Parties waived the 2024 Defaults pursuant to (i) the Waiver and Amendment No~~-24. 3%, to ~~Credit Agreement (the “JPM Amendment”) between the Company and JPM~~$74,719,360 ~~and~~for ~~(ii)~~ the ~~Waiver~~three ~~and~~month ~~Amendment~~period ~~No.~~ended 3October ~~to Credit Agreement (the “TCW Amendment” and together with the JPM Amendment~~31, ~~the “~~2024 ~~Amendments”) by and among the Company~~, ~~the~~compared ~~TCW~~to ~~Lenders~~$98,691,684 ~~and~~for the ~~Agent.~~same Inperiod ~~consideration~~in of the ~~TCW~~prior ~~Amendment,~~fiscal ~~the~~year. The Company’s ~~and~~sales ~~the~~decreased ~~Agent~~for ~~also entered into~~ the ~~Third~~three ~~Amendment~~month ~~Fee~~period ~~Letter~~ended ~~(the~~October ~~“Fee~~31, ~~Letter”)~~2024, ~~dated~~in ~~as of~~ the ~~Third~~consumer ~~Amendment Effective Date. The 2024 Amendments provided for~~electronics, ~~among~~industrial ~~other~~electronics ~~things,~~and amedical/life ~~waiver~~science ofmarkets. The ~~the~~decrease ~~Company’s~~in ~~noncompliance~~sales ~~with~~is ~~the~~primarily ~~financial~~due ~~covenants relating~~ to ~~(i)~~customers ~~the~~that ~~Fixed~~have ~~Charge~~lowered ~~Coverage~~their ~~Ratio~~demand ~~(as defined~~ in the ~~Credit~~current ~~Agreements)~~quarter, ~~and~~compared ~~(ii) the Total Debt~~ to ~~EBITDA Ratio (as defined in~~ the ~~Credit~~same ~~Agreements),~~period in ~~each case as of~~ the ~~Third~~prior ~~Amendment~~fiscal ~~Effective Date~~year.

~~The~~Costs ~~2024 Amendments also amended other provisions~~ of ~~the~~products 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. sold

36Cost of products sold decreased $21,188,773, or -23.8%, to $67,815,156 (90.8% of net sales) for the three month period ended October 31, 2024, compared to $89,003,929 (90.2% 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, higher labor costs and other fixed manufacturing costs for the three month period ended October 31, 2024, than in the same period in the prior fiscal year. The three month period ended October 31, 2024 includes approximately $300,000 of severance related to staff reductions during the period.

~~SigmaTron~~Gross ~~International,~~profit ~~Inc.~~margin

~~July~~Gross profit margin was 9.2% of net sales, for the three month period ended October 31, 2024, compared to 9.8% 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 three month period ended October 31, 2024, compared to the same period in the prior fiscal year.

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. 33

InSigmaTron ~~addition~~International, 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 committeesInc.

~~Also~~October ~~on August 19~~31, 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 meet certain financial milestones by the applicable dates provided therein. In addition, pursuant to the Fee Letter, 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.

~~All~~Selling ~~other~~and ~~material~~administrative ~~terms~~expenses ~~of the Credit Agreements, as amended by the Amendments, remain unchanged.~~

~~China~~Selling ~~Construction~~and ~~Bank~~administrative expenses decreased $243,123, or -3.7% to $6,370,511 (8.5% of net sales) for the three month period ended October 31, 2024, compared to $6,613,634 (6.7% 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.

OnChange 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. On January 26, 2021, the agreement was amended and expired in ~~accordance~~fair ~~with~~value its terms on January 6, 2022. On January 17, 2022, the agreement was renewed, and expired in accordance with its terms on December 23, 2022. On February 17, 2023, the agreement was renewed, and expired in accordance with its terms on February 7, 2024. On March 1, 2024, the agreement was renewed, and is scheduled to expire on February 1, 2025. Under the agreement Wujiang SigmaTron Electronic Technology Co., Ltd. can borrow up to 10,000,000 Renminbi, approximately $1,400,000 as of July 31, 2024, 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 July 31, 2024 and April 30, 2024, respectively.warrants

37Warrants were issued at a valuation of $2,263,000 during the quarter using a Monte Carlo model with a subsequent change in the fair value of warrants increasing expense by $626,000 for a net value as of October 31, 2024 of $2,889,000 in connection with the TCW Amendment which included the obligation to issue warrants to purchase shares of the Company’s common stock. The valuation was based on the actual number of warrants that can be issued under this amendment using the Monte Carlo model subject to remeasurement until warrants are exercised or cancelled.

~~SigmaTron~~Interest ~~International~~expense, ~~Inc.~~net

~~July~~Interest expense, net, increased to $4,701,108 for the three month period ended October 31, 2024, compared to $2,708,696 for the same period in the prior fiscal year. The increase relates to an expense of deferred financing costs as required by the August debt modification.

~~Notes~~Income ~~Payable~~tax –expense ~~Buildings~~

~~The~~Income ~~Company~~tax ~~entered~~expense ~~into~~increased a$4,329,588 ~~mortgage~~to ~~agreement on March 3~~$4, ~~2020~~673,254 infor the ~~amount~~three ofmonth ~~$556,000,~~period ~~with~~ended ~~The~~October ~~Bank~~31, ~~and~~2024, ~~Trust~~compared ~~SSB~~ to ~~finance~~$343,666 for the ~~purchase~~same ofperiod in the ~~property~~prior ~~that~~fiscal ~~serves~~year. asThe ~~the~~ Company’s ~~warehousing~~effective ~~and~~tax ~~distribution~~rate ~~center~~was in(61.46)% ~~Del~~and ~~Rio, Texas~~92. ~~The~~40% ~~note~~for ~~requires~~ the ~~Company~~three tomonth ~~pay~~period ~~monthly~~ended ~~installment~~October ~~payments~~31, in2024 ~~the~~and ~~amount of $6~~2023,~~103~~ respectively. ~~Interest~~The ~~accrues~~increase atin aincome ~~fixed~~tax ~~rate~~expense offor ~~5.75%~~the ~~per~~three ~~year~~month ~~until~~period ~~March~~ended 3,October ~~2025~~31, ~~and~~2024 ~~adjusts~~compared ~~thereafter,~~to onthe ansame ~~annual~~period ~~basis,~~in ~~equal to 1.0% over~~ the ~~Prime~~previous ~~Rate~~year asis ~~published~~due byprimarily ~~The~~to ~~Wall~~an ~~Street~~increase ~~Journal. The~~in ~~note~~the isvaluation ~~payable~~allowance ~~over~~in athe ~~120~~current ~~month~~ period. The ~~outstanding~~change ~~balance~~in ~~was~~effective ~~$353,469~~tax ~~and~~rate ~~$366,572~~is atdue ~~July~~to ~~31,~~variations ~~2024~~in income earned by jurisdiction and ~~April~~the ~~30,~~recording ~~2024,~~of ~~respectively~~valuation allowance.

~~Notes~~Net ~~Payable – Equipment~~income/loss

~~The~~Net ~~Company~~income ~~routinely~~decreased ~~entered~~$9,494,931, ~~into~~to ~~secured~~a ~~note~~net ~~agreements~~loss ~~with~~of ~~Engencap~~$9,466,669 ~~Fin~~for ~~S.A.~~the DEthree ~~C.V.~~month period ended October 31, 2024, compared to ~~finance~~a ~~the~~net ~~purchase~~income of ~~equipment~~$28,262 for the same period in the prior fiscal year. The ~~terms~~decrease ofin ~~the~~net ~~outstanding~~income ~~secured~~primarily ~~note~~relates ~~agreement,~~to ~~which~~lower ~~had~~sales volumes, a ~~fixed~~warrant ~~interest~~remeasurement, ~~rate~~deferred offinancing ~~8.00%~~costs ~~per~~related ~~annum~~to debt modification, ~~matured~~higher onlabor ~~May~~and 1,other ~~2023,~~fixed manufacturing costs and ~~the~~severance ~~final~~related ~~quarterly~~costs ~~installment~~partially ~~payment~~offset ofwith ~~$9,310~~lower ~~was~~selling ~~paid~~and administrative expenses and lower interest expense.

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.34

~~Finance~~SigmaTron ~~Lease~~International, ~~Obligations~~Inc.

~~The~~October ~~Company enters into various finance lease agreements. The terms of the outstanding lease agreements mature through March 1~~31, ~~2028, with monthly installment payments ranging from $2,874 to $33,706 and a fixed interest rate ranging from 7.03% to 12.09% per annum.~~ 2024

~~Other~~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:

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 three month period ended July 31, 2024, resulted in net foreign currency transaction losses of $461,748 compared to net foreign currency losses of $275,970 for the same period in the prior year. During the three months of fiscal year 2025, the Company paid approximately $15,460,000 to its foreign subsidiaries for manufacturing services. All intercompany balances have been eliminated upon consolidation.


	Six Months Ended
		October 31,		October 31,
		2024		2023

Net sales	$	159,496,338	$	196,822,040
Cost of products sold		146,186,940		177,483,065
As a percent of net sales		91.7%		90.2%
Gross profit		13,309,398		19,338,975
As a percent of net sales		8.3%		9.8%
Selling and administrative expenses		12,994,377		13,456,439
As a percent of net sales		8.1%		6.8%
Operating income		315,021		5,882,536

Other income		-		25,130
Change in fair value of warrants		(626,000)		-
Interest expense, net		(6,969,383)		(5,427,774)
(Loss) income before income taxes		(7,280,362)		479,892
Income tax expense		(5,475,467)		(189,531)
Net (loss)/income	$	(12,755,829)	$	290,361

~~The~~Net Company has not changed its plans to indefinitely reinvest the earnings of the Company’s foreign subsidiaries. The cumulative amount of unremitted earnings for which U.S. income taxes have not been recorded is $14,036,000 as of July 31, 2024. Sales

~~Item~~Net 3sales decreased $37,325,702, or 19.~~Quantitative~~0%, to $159,496,338 for the six month period ended October 31, 2024, compared to $196,822,040 for the same period in the prior fiscal year. The Company’s sales decreased for the six month period ended October 31, 2024, in the industrial electronics and ~~Qualitative~~medical/life ~~Disclosures~~science ~~About~~markets. The ~~Market~~decrease ~~Risks~~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. The decrease in net sales was partially offset by an increase in the consumer electronics market.

AsCosts ~~a smaller reporting company, as defined in Item 10(f)(1)~~ of ~~Regulation~~products ~~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.~~sold

38Cost of products sold decreased $31,296,125, or 17.6%, to $146,186,940 (91.7% of net sales) for the six month period ended October 31, 2024, compared to $177,483,065 (90.2% 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, higher labor costs and other fixed manufacturing costs for the six month period ended October 31, 2024, than in the same period in the prior fiscal year. The six month period ended October 31, 2024 includes approximately $620,000 of severance related to staff reductions during the period.

~~SigmaTron~~Gross ~~International,~~profit ~~Inc.~~margin

~~July~~Gross profit margin was 8.3% of net sales, for the six month period ended October 31, 2024, compared to 9.8% 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 six month period ended October 31, 2024, compared to the same period in the prior fiscal year.

~~Item 4.Controls and Procedures.~~35

~~Evaluation~~SigmaTron ofInternational, ~~Disclosure Controls and Procedures:~~Inc.

~~Under~~October 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 July 31, 2024. 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~~Selling ~~on this evaluation, the Company’s principal executive officer~~ and ~~principal~~administrative ~~financial~~expenses 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 July 31, 2024. 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~~Selling ~~controls~~ and ~~procedures~~administrative ~~are~~expenses ~~designed~~decreased to$462,062, ~~ensure~~or ~~that~~-3.4% ~~information required~~ to be$12,994,377 ~~disclosed~~(8.1% byof ~~the~~net ~~Company~~sales) infor ~~its~~the ~~Exchange~~six ~~Act~~month ~~reports~~period isended ~~recorded,~~October ~~processed~~31, ~~summarized~~2024, ~~and~~compared ~~reported~~to ~~within~~$13,456,439 ~~the~~(6.8% ~~time~~of ~~periods~~net ~~specified~~sales) infor the ~~SEC’s~~same ~~rules~~period ~~and~~in ~~forms,~~the ~~and~~prior ~~that~~fiscal ~~such~~year. The ~~information~~decrease isin ~~accumulated~~selling and ~~communicated~~administrative toexpenses ~~its~~is ~~management,~~primarily ~~including~~due ~~its~~to ~~principal~~an ~~executive~~decrease ~~officer~~in ~~and~~bonus ~~principal~~expense ~~financial~~and ~~officer~~legal orprofessional ~~persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure~~fees.

~~Changes~~Change in ~~Internal~~fair ~~Controls~~value ~~Over~~of ~~Financial Reporting and Disclosure Controls~~ warrants

~~Management~~Warrants ~~remains~~were ~~committed~~issued toat ~~ongoing~~a ~~efforts~~valuation toof ~~address~~$2,263,000 during the ~~material~~six ~~weakness.~~month ~~Although~~period ~~the~~ended ~~Company~~October ~~will~~31, ~~continue~~2024 tousing ~~implement~~a ~~measures~~Monte toCarlo ~~remedy~~model ~~its~~with ~~internal~~a ~~control~~subsequent ~~deficiencies,~~change ~~there~~in ~~can~~the befair novalue ~~assurance~~of ~~that~~warrants ~~its~~increasing ~~efforts~~expense ~~will~~by be$626,000 ~~successful~~for ora ~~avoid~~net ~~potential~~value ~~future~~as ~~material~~of ~~weaknesses.~~October In31, ~~addition~~2024 of $2,889,000 ~~until~~in ~~remediation~~connection ~~steps~~with ~~have~~the ~~been~~TCW ~~completed~~Amendment ~~and~~which ~~operated~~included ~~for~~the aobligation ~~sufficient~~to ~~period~~issue warrants to purchase shares of ~~time,~~the ~~and~~Company’s ~~subsequent~~common ~~evaluation~~stock. The valuation was based on the actual number of ~~their~~warrants ~~effectiveness~~that iscan ~~completed,~~be ~~the~~issued ~~material~~under ~~weakness~~this ~~previously~~amendment ~~identified~~using ~~will~~the ~~continue~~Monte Carlo model subject to ~~exist.~~remeasurement until warrants are exercised or cancelled.

~~Other~~Interest ~~than the remediation efforts previously disclosed~~expense, there have been no changes in the Company’s internal controls over financial reporting for the quarter ended July 31, 2024, that have materially affected, or are reasonably likely to materially affect, its internal controls over financial reporting.net

39Interest expense, net, increased to $6,969,383 for the six month period ended October 31, 2024, compared to $5,427,774 for the same period in the prior fiscal year. The increase relates to an expense of deferred financing costs as required by the August debt modification.

~~SigmaTron~~Income ~~International,~~tax ~~Inc.~~expense

~~July~~Income tax expense increased $5,285,936 to $5,475,467 for the six month period ended October 31, 2024, compared to $189,531 for the same period in the prior fiscal year. The Company’s effective tax rate was (54.26)% and 39.49% for the six month period ended October 31, 2024 and 2023, respectively. The increase in income tax expense for the six month period ended October 31, 2024 compared to the same period in the previous year is primarily due to an increase in the valuation allowance in the current period. The change in effective tax rate is due to variations in income earned by jurisdiction and the recording of valuation allowance.

~~PART~~Net ~~II – OTHER INFORMATION~~income/loss

~~Item~~Net ~~1. Legal~~income ~~Proceedings~~decreased $13,046,190, to a net loss of $12,755,829 for the six month period ended October 31, 2024, compared to net income of $290,361 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 and severance related costs partially offset with lower selling and administrative expenses and lower interest expense.

~~From~~Liquidity ~~time~~and toCapital ~~time~~Resources: 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~~The 1ACompany’s financial statements are prepared using U. ~~Risk~~S. ~~Factors~~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). Pursuant to amendments to those credit agreements, the Company must satisfy revised terms to those agreements, including the requirement to pursue and close a Replacement Transaction to pay the Obligations (as defined in the

Other than the risk factor 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, 2024.36

WeSigmaTron ~~have identified material weaknesses in our internal control over financial reporting. If our remediation of the material weaknesses is not effective~~International, 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 operationsInc.

InOctober 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 July 31, 2024, 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.

~~The~~Credit ~~Company~~Agreements) isin ~~taking~~full ~~steps~~no tolater ~~remediate~~than ~~the~~September ~~material weakness by~~30, ~~among~~2025 ~~other~~unless ~~things,~~the ~~implementing~~Company ~~measures~~meets tocertain ~~improve~~debt ~~its~~ratios ~~internal~~for ~~control structure, specifically, strengthening~~ the ~~Company's~~twelve ~~review~~month ~~process~~period ~~related~~ending toon ~~revenue~~August ~~contracts~~31, ~~such as multiple levels of review and supporting evidence of such transactions~~2025. In ~~However~~addition, nothere ~~assurance~~is ~~can~~a berisk ~~given~~of ~~that~~additional ~~these~~covenant ~~measures~~failures ~~will~~based ~~remediate~~on ~~the~~current ~~material~~revenue ~~weakness or prevent additional material weaknesses in the future~~levels.

The ability of the Company ~~may~~to ~~discover~~continue ~~additional~~as ~~material~~a ~~weaknesses~~going inconcern is dependent on the Company having adequate capital to fund its ~~system~~operating plan and performance. Management’s plans to continue as a going concern may include raising additional capital through sales of ~~internal~~equity ~~financial~~securities and ~~accounting~~borrowing, ~~controls~~focusing the Company on its most profitable elements, and ~~procedures~~exploring alternative funding sources on an as needed basis. However, management cannot provide any assurances that ~~could~~the ~~result~~Company inwill ~~misstatements~~be ofsuccessful ~~its~~in ~~financial~~accomplishing ~~statements~~its plans. The COVID-19 pandemic, supply chain challenges, inflationary pressures and the broader business climate in its industry have negatively impacted the Company'’s ~~internal~~business ~~control~~operations ~~over~~and ~~financial~~is ~~reporting~~expected ~~will~~to ~~not~~continue ~~prevent~~to ordo ~~detect~~so ~~all~~and, ~~errors~~these ~~and~~impacts ~~all~~may ~~fraud~~include reduced access to capital. AThe ~~control~~ability ~~system,~~of nothe ~~matter~~Company ~~how~~to ~~well~~continue ~~designed~~as a going concern may be dependent upon its ability to successfully secure other sources of financing and ~~operated,~~sustain ~~can~~profitable ~~provide~~operations. ~~only~~The ~~reasonable,~~Company ~~not~~is ~~absolute,~~obligated ~~assurance~~by ~~that~~its ~~the~~lenders ~~control~~to ~~system’s~~execute ~~objectives~~a ~~will~~Replacement beTransaction ~~met~~by September 2025. Due ~~Because~~to this requirement, there is substantial doubt about the ability of the ~~inherent~~Company ~~limitations~~to incontinue ~~all~~as ~~control~~a ~~systems,~~going noconcern ~~evaluation~~for one year from the issuance of ~~controls~~the ~~can~~accompanying ~~provide~~consolidated ~~absolute~~financial ~~assurance~~statements. While ~~that~~the ~~misstatements~~Company ~~due~~expects to ~~error~~refinance orunder ~~fraud~~commercially ~~will~~reasonable terms there can be no guarantee of success. The accompanying consolidated financial statements do not ~~occur~~include orany adjustments that ~~all~~might ~~control~~be ~~issues~~necessary ~~and~~if ~~instances~~the ofCompany ~~fraud~~is ~~will~~unable beto ~~detected~~continue as a going concern.

40The 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. Subsequent to October 31, 2024, 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.

~~SigmaTron~~The ~~International~~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, ~~Inc~~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.

~~July~~In 31the event customers delay orders or future payments are not made timely, ~~2024~~economic conditions remain impacted for longer than the Company expects or deteriorate further, 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.

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.37

~~Item~~SigmaTron ~~2. Unregistered~~International, ~~Sales of Equity Securities and Use of Proceeds~~Inc.

~~None.~~October 31, 2024

~~Item~~Operating 3Activities. ~~Defaults Upon Senior Securities.~~

NoneCash beyondflow whatprovided by operating activities was previously$12,931,640 disclosedfor the six months ended October 31, 2024, compared to cash flow provided by operating activities of $15,766,616 for the same period in the prior fiscal year. Cash flow provided by operating activities was primarily the result of a decrease in inventory in the amount of $12,798,326, an increase in operating lease liabilities in the amount of $2,664,870, a decrease in prepaid expenses and other assets in the amount of $1,774,858 and a decrease in accounts receivable in the amount of $1,526,593. Cash flow from operating activities was offset by an increase in right-of-use assets in the amount of $2,627,211, a decrease in customer deposits in the amount of $2,565,383 and a decrease in accounts payable in the amount of $2,489,427. The decrease in inventory is the result of improvement in the component marketplace which has allowed the Company to complete assemblies for shipping. The decrease in accounts payable is a result of lower accounts payable balances due to lower purchases of raw materials and the timing of payments. The decrease in accounts receivable is a result of lower accounts receivable balances due to lower volumes during the six months ended October 31, 2024, as compared to the same period in the prior year.

~~Item~~Cash 4flow provided by operating activities was $15,766,616 for the six months ended October 31, 2023. ~~Mine~~ Cash ~~Safety~~flow ~~Disclosures~~provided by operating activities was primarily the result of a decrease in inventory in the amount of $19,214,849 and a decrease in accounts receivable in the amount of $5,244,132. Cash flow from operating activities was offset by a decrease in accounts payable in the amount of $13,146,965 and a decrease in deferred revenue in the amount of $4,140,944.

~~Not~~Investing ~~applicable~~Activities.

~~Item~~Cash 5used in investing activities was $708,301 for the six months ended October 31, 2024. ~~Other~~ During ~~Information~~the first six months of fiscal year 2025, the Company purchased $708,301 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.

~~None~~Cash used in investing activities was $405,413 for the six months ended October 31, 2023. During the first six months of fiscal year 2024, the Company purchased $405,413 in machinery and equipment used in the ordinary course of business.

‎Financing Activities.

41Cash used in financing activities of $10,657,216 for the six months ended October 31, 2024, was primarily the result of net payments under the line of credit and term loan agreement.

~~SigmaTron~~Cash ~~International~~used in financing activities of $12,930,306 ~~Inc~~for the six months ended October 31, 2023, was primarily the result of net payments under the line of credit and term loan agreement.

~~July~~Financing ~~31, 2024~~Summary.

~~Item~~Notes ~~6.Exhibits.~~Payable – Banks

31.1	Certification of Principal Executive Officer of the Company Pursuant to Rule 13a-14(a) under the Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
31.2	Certification of Principal Financial Officer of the Company Pursuant to Rule 13a-14(a) under the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
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).
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).
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‎38

42SigmaTron International, Inc.

~~SigmaTron~~October ~~International~~31, ~~Inc.~~2024

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 312022, ~~2024~~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, 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.

~~SIGNATURES:~~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.

~~Pursuant~~In toaddition, the ~~requirements~~JPM Credit Agreement imposes a cash dominion period if there is an event of ~~the~~default ~~Securities~~or ~~Exchange~~if ~~Act~~availability is less than 10% of ~~1934,~~the Revolving Commitment (as defined in the ~~registrant~~JPM ~~has~~Credit ~~duly~~Agreement), ~~caused~~and ~~this~~such ~~report~~requirement tocontinues beuntil ~~signed~~there onis ~~its~~no ~~behalf~~event byof default and availability is greater than 10% of the ~~undersigned~~Revolving ~~thereunto~~Commitment, ~~duly~~in ~~authorized~~each case for 30 consecutive days.

~~SIGMATRON~~In ~~INTERNATIONAL~~connection with the entry into the JPM Credit Agreement, ~~INC~~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.

/s/ Gary R. Fairhead		September 19, 2024
Gary R. Fairhead		Date
CEO (Principal Executive Officer)
/s/ James J. Reiman		September 19, 2024
James J. Reiman		Date
Chief Financial Officer, Secretary and Treasurer
(Principal Financial Officer and Principal
Accounting Officer)

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 October 31, 2024, there was $23,387,327 outstanding and $15,168,702 of unused availability under the revolving loan facility compared to an outstanding balance of $28,598,719 and $13,443,766 of unused availability at April 30, 2024. As of October 31, 2024 and April 30, 2024, the unamortized deferred financing amount offset against outstanding debt was $529,987 and $592,664, respectively.

43The Term Loan Agreement provides for a term loan from TCW 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 October 31, 2024, was $38,245,241 compared to an outstanding balance of $37,503,301 at April 30, 2024. As of October 31, 2024 and April 30, 2024,

SigmaTron International, Inc.

October 31, 2024

the unamortized deferred financing amount offset against outstanding debt was $2,992,817 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 interest in its Elk Grove Village real estate, (ii) SigmaTron’s machinery, equipment and fixtures (but excluding ABL Priority Equipment (as defined in the ICA)), (iii) the Term Priority Mexican Inventory (as defined in the ICA), (iv) SigmaTron’s stock in its direct and indirect subsidiaries, (v) SigmaTron’s general intangibles (excluding any that constitute ABL Priority Collateral), goodwill and intellectual property, (vi) the proceeds of business interruption insurance that constitute Term BI Insurance Share (as defined in the ICA), (vii) tax refunds, and (viii) 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

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 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 October 31, 2024.

In addition, the Company received a delinquency notification letter from Nasdaq,

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