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 ~~October~~January 31, ~~2024~~2025

¨ 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.

~~October~~January 31, ~~2024~~2025

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files. Yes 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 ~~December~~March 1711, ~~2024~~2025: 6,119,288

SigmaTron International, Inc.

Index

PART 1.	FINANCIAL INFORMATION:		Page No.
	Item 1.	Condensed Consolidated Financial Statements
		Condensed Consolidated Balance Sheets – October 31, 2024 (Unaudited) and April 30, 2024	4
		Condensed Consolidated Balance Sheets – January 31, 2025 (Unaudited) and April 30, 2024	4
		Condensed Consolidated Statements of Operations – (Unaudited)
		Three and SixMonths Ended October 31, 2024 and 2023	6
		Three and Nine Months Ended January 31, 2025 and 2024	6
		Condensed Consolidated Statements of Changes in Stockholders’
		Equity – (Unaudited) Three and Six Months Ended October 31, 2024 and 2023	7
		Equity – (Unaudited) Three and Nine Months Ended January 31, 2025 and 2024	7
		Condensed Consolidated Statements of Cash Flows – (Unaudited)
		Six Months Ended October 31, 2024 and 2023	8
		Nine Months Ended January 31, 2025 and 2024	9
		Notes to Condensed Consolidated Financial Statements – (Unaudited)	1011
	Item 2.	Management’s Discussion and Analysis of Financial Condition and
		Results of Operations	3134
	Item 3.	Quantitative and Qualitative Disclosures About Market Risks	4447
	Item 4.	Controls and Procedures
PART II	OTHER INFORMATION:
	Item 1.	Legal Proceedings	4548
	Item 1A.	Risk Factors	4548
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4649
	Item 3.	Defaults Upon Senior Securities	4649
	Item 4.	Mine Safety Disclosures	4649
	Item 5.	Other Information	4649
	Item 6.	Exhibits	4750
		Signatures	4851

SigmaTron International, Inc.
Condensed Consolidated Balance Sheets
		October 31,
		January 31,
		2024		April 30,
		2025		April 30,
		(Unaudited)		2024
Current assets:
Cash and cash equivalents	$	32,~~983~~100,~~483~~287	$	2,417,360
Accounts receivable, less allowance for credit losses of $18,615
Accounts receivable, less allowance for credit losses of $28,191
and $59,466 at October 31, 2024 and April 30, 2024, respectively		30,476,541		32,043,985
and $59,466 at January 31, 2025 and April 30, 2024, respectively		28,611,916		32,043,985
Inventories, net		~~116~~106,~~052~~976,~~575~~234		128,850,901
Prepaid expenses and other assets		1,~~057~~768,~~064~~640		1,886,701
Refundable and prepaid income taxes		1,~~207~~199,~~096~~597		1,716,372
VAT receivables		56,~~653~~497,~~099~~573		6,569,984
Other receivables		23,~~490~~134,~~377~~391		2,417,316
Total current assets		~~160~~150,~~920~~288,~~235~~638		175,902,619
Property, machinery and equipment, net		3128,~~626~~799,~~827~~735		33,755,078
Intangible assets, net		~~816~~735,~~538~~510		979,188
Deferred income taxes		-		4,432,210
Right-of-use assets		1011,~~090~~889,~~512~~695		7,463,301
Other assets		1,~~207~~273,~~854~~536		1,261,579
Total other long-term assets		1213,~~114~~898,~~904~~741		14,136,278
Total assets	$	~~204~~192,~~661~~987,~~966~~114	$	223,793,975
Liabilities and stockholders' equity:
Current liabilities:
Trade accounts payable	$	4844,~~103~~958,~~672~~674	$	50,593,099
Customer deposits		87,~~173~~064,~~213~~597		10,738,596
Accrued wages		64,~~020~~397,~~593~~140		6,746,466
Accrued expenses		12,~~952~~219,~~470~~160		2,554,260
Income taxes payable		1,~~232~~493,~~228~~083		897,847
Deferred revenue		5,~~144~~167,~~305~~367		3,111,062
Contingent warrants		21,~~889~~188,~~000~~546		-
Current portion of long-term debt		5950,~~867~~058,~~827~~786		66,244,227
Current portion of finance lease obligations		21,~~043~~970,~~612~~016		2,214,127
Current portion of operating lease obligations		3,~~155~~929,~~101~~383		2,789,107
Total current liabilities		~~138~~122,~~582~~446,~~021~~752		145,888,791
Long-term debt, less current portion		2,~~607~~326,~~322~~920		3,339,160
Income taxes payable		~~152~~155,~~100~~061		294,993
Deferred income taxes		~~353~~332,~~942~~479		-
Finance lease obligations, less current portion		21,~~180~~756,~~940~~973		3,147,447
Operating lease obligations, less current portion		78,~~257~~340,~~123~~370		4,958,247
Other long-term liabilities		7675,~~592~~040		93,084
Total long-term liabilities		12,~~628~~986,~~019~~843		11,832,931
Total liabilities		~~151~~135,~~210~~433,~~040~~595		157,721,722

SigmaTron International, Inc.
Condensed Consolidated Balance Sheets - Continued
		October 31,
		January 31,
		2024		April 30,
		2025		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 October 31, 2024 and April 30, 2024		61,193		61,193
at January 31, 2025 and April 30, 2024		61,193		61,193
Capital in excess of par value		42,~~588~~806,~~896~~878		42,453,394
Retained earnings		1014,~~801~~685,~~837~~448		23,557,666
Total stockholders' equity		5357,~~451~~553,~~926~~519		66,072,253
Total liabilities and stockholders' equity	$	~~204~~192,~~661~~987,~~966~~114	$	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~~Nine Months		~~Six~~Nine Months
		Ended		Ended		Ended		Ended
		October 31,		October 31,		October 31,		October 31,
		January 31,		January 31,		January 31,		January 31,
		2024		2023		2024		2023
		2025		2024		2025		2024
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Net sales	$	7471,~~719~~067,~~360~~863	$	9895,~~691~~919,~~684~~888	$	~~159~~230,~~496~~564,~~338~~201	$	~~196~~292,~~822~~741,~~040~~928
Cost of products sold		6765,~~815~~514,~~156~~800		8985,~~003~~992,~~929~~928		~~146~~211,~~186~~701,~~940~~740		~~177~~263,~~483~~475,~~065~~993
Gross profit		65,~~904~~553,~~204~~063		9,~~687~~926,~~755~~960		1318,~~309~~862,~~398~~461		1929,~~338~~265,~~975~~935
Selling and administrative expenses		6,~~370~~378,~~511~~141		6,~~613~~683,~~634~~488		1219,~~994~~372,~~377~~518		1320,~~456~~139,~~439~~927
Operating income		533,693		3,074,121		315,021		5,882,536
Operating (loss) income		(825,078)		3,243,472		(510,057)		9,126,008
Other income		-7,175,191		62,~~503~~094		-7,175,191		2527,~~130~~224
Change in fair value of warrants		~~(626~~1,~~000)~~524,985		-		~~(626~~898,~~000)~~985		-
Interest expense, net		(43,~~701~~328,~~108~~267)		(2,~~708~~568,~~696~~824)		(610,~~969~~297,~~383~~650)		(57,~~427~~996,~~774~~598)
(Loss) income before income tax expense		(4,793,415)		371,928		(7,280,362)		479,892
Income (loss) before income tax expense		4,546,831		676,742		(2,733,531)		1,156,634
Income tax expense		(4663,~~673,254~~220)		(~~343~~77,~~666~~736)		(56,~~475~~138,~~467~~687)		(~~189~~267,~~531~~267)
Net (loss)/income	$	(9,466,669)	$	28,262	$	(12,755,829)	$	290,361
Net income/(loss)	$	3,883,611	$	599,006	$	(8,872,218)	$	889,367
(Loss) earnings per share - basic	$	(1.55)	$	-	$	(2.08)	$	0.05
Earnings (loss) per share - basic	$	0.63	$	0.10	$	(1.44)	$	0.15
(Loss) earnings per share - diluted	$	(1.55)	$	-	$	(2.08)	$	0.05
Earnings (loss) per share - diluted	$	0.63	$	0.10	$	(1.44)	$	0.14
Weighted average shares of common stock outstanding
Basic		6,~~119~~205,~~288~~704		6,~~091~~094,~~331~~288		6,~~119~~148,~~288~~093		6,~~092~~093,~~761~~270
Weighted average shares of common stock outstanding
Diluted		6,~~119~~205,~~288~~704		6,~~190~~120,~~696~~317		6,~~119~~148,~~288~~093		6,~~166~~152,~~524~~073
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 six months ended October 31, 2024 (Unaudited)
For the nine months ended January 31, 2025 (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
Recognition of stock-based‎compensation		-		-		42,513		-		42,513
Issuance of warrants		-		-		175,469		-		175,469
Net income		-		-		-		3,883,611		3,883,611
Balance at January 31, 2025	$	-	$	61,193	$	42,806,878	$	14,685,448	$	57,553,519

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~~Changes ~~Flows~~in Stockholders’ Equity - Continued

		Six		Six
For the nine months ended January 31, 2024 (Unaudited)
		Months Ended		Months Ended
						Capital in				Total
		October 31,		October 31,
		Preferred		Common		excess of par		Retained		stockholders’
		2024		2023
		stock		stock		value		earnings		equity
		(Unaudited)		(Unaudited)
Balance at May 1, 2023	$	-	$	60,634	$	41,986,570	$	26,043,823	$	68,091,027
Cash flows from operating activities
Recognition of stock-based‎compensation		-		-		184,817		-		184,817
Net (loss)/income	$	(12,755,829)	$	290,361
Net income		-		-		-		262,099		262,099
Adjustments to reconcile net (loss) income to net cash provided by
Balance at July 31, 2023	$	-	$	60,634	$	42,171,387	$	26,305,922	$	68,537,943
operating activities
Recognition of stock-based‎compensation		-		-		64,938		-		64,938
Depreciation and amortization of property, machinery and equipment		2,829,394		3,000,751
Exercise of stock options		-		30		9,570		-		9,600
Stock-based compensation		135,502		249,755
Restricted stock awards		-		43		13,175		-		13,218
Restricted stock expense		-		13,218
Net income		-		-		-		28,262		28,262
Provision for credit losses		40,851		71,508
Balance at October 31, 2023	$	-	$	60,707	$	42,259,070	$	26,334,184	$	68,653,961
Fair value adjustment of contingent warrants		2,889,000		-
Recognition of stock-based‎compensation		-		-		75,549		-		75,549
Deferred income tax expense (benefit)		4,786,152		(266,579)
Restricted stock awards		-		236		38,991		-		39,227
Amortization of intangible assets		162,650		166,224
Net income		-		-		-		599,006		599,006
Amortization of financing fees		2,411,956		350,295
Balance at January 31, 2024	$	-	$	60,943	$	42,373,610	$	26,933,190	$	69,367,743
Loss from disposal or sale of machinery and equipment		7,158		43,287
Changes in operating assets and liabilities
Accounts receivable		1,526,593		5,244,132
Inventories		12,798,326		19,214,849
Prepaid expenses and other assets		1,774,858		(1,302,933)
Right-of-use assets		(2,627,211)		1,348,411
Refundable and prepaid income taxes		509,276		10,366
Income taxes payable		191,488		(1,161,108)
Trade accounts payable		(2,489,427)		(13,146,965)
Customer deposits		(2,565,383)		8,216,454
Operating lease liabilities		2,664,870		(1,520,403)
Accrued expenses and wages		(1,391,827)		(914,063)
Deferred revenue		2,033,243		(4,140,944)
Net cash provided by operating activities		12,931,640		15,766,616
Cash flows from investing activities
Purchases of machinery and equipment		(708,301)		(405,413)
Net cash used in investing activities		(708,301)		(405,413)

‎

SigmaTron International, Inc.
Condensed Consolidated Statements of Cash Flows - Continued
		Six		Six
		Months Ended		Months Ended
		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		(1,137,022)		(955,337)
Payments under equipment notes		(775,995)		(552,965)
Payments under building notes payable		(26,395)		(24,923)
Proceeds under term loan agreement		1,241,940		-
Payments under term loan agreement		(500,000)		(500,000)
Borrowings under revolving line of credit		167,311,601		202,602,581
Payments under revolving line of credit		(172,522,993)		(213,829,509)
Payments of debt financing costs		(4,248,352)		(463,214)
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	$	3,983,483	$	3,250,026
Supplementary disclosures of cash flow information
Cash paid for interest	$	4,628,192	$	5,132,648
Cash paid for income taxes		700,666		1,600,055
Purchase of machinery and equipment financed
under finance leases		-		2,567,029
Right-of-use assets obtained in exchange for operating
lease liabilities		4,261,324		1,531
Financing of insurance policy		47,672		73,837
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

SigmaTron International, Inc.

Condensed Consolidated Statements of Cash Flows



		Nine		Nine
		Months Ended		Months Ended
		January 31,		January 31,
		2025		2024
		(Unaudited)		(Unaudited)

Cash flows from operating activities
Net (loss)/income	$	(8,872,218)	$	889,367

Adjustments to reconcile net (loss) income to net cash provided by
operating activities
Depreciation and amortization of property, machinery and equipment		4,291,162		4,485,512
Stock-based compensation		178,015		325,304
Restricted stock expense		-		52,445
Provision for credit losses		31,275		56,887
Gain on the sale of building		(7,175,191)		-
Fair value adjustment of contingent warrants		1,188,546		-
Deferred income tax expense (benefit)		4,764,689		(408,532)
Amortization of intangible assets		243,678		249,033
Amortization of financing fees		2,733,996		468,759
Loss from disposal or sale of machinery and equipment		13,243		44,269
Changes in operating assets and liabilities
Accounts receivable		3,400,794		3,799,187
Inventories		21,874,667		30,072,373
Prepaid expenses and other assets		(40,411)		(4,147,560)
Right-of-use assets		(4,426,394)		(919,371)
Refundable and prepaid income taxes		516,775		(388,488)
Income taxes payable		455,304		(927,133)
Trade accounts payable		(5,167,332)		(17,063,059)
Customer deposits		(3,673,999)		6,159,254
Operating lease liabilities		4,522,399		839,002
Accrued expenses and wages		(3,200,619)		(1,826,539)
Deferred revenue		2,056,305		(4,922,855)
Net cash provided by operating activities		13,714,684		16,837,855

Cash flows from investing activities
Purchases of machinery and equipment		(933,062)		(1,672,441)
Proceeds from sale of building		8,292,098		-
Net cash (provided by) used in investing activities		7,359,036		(1,672,441)


SigmaTron International, Inc.
Condensed Consolidated Statements of Cash Flows - Continued

		Nine		Nine
		Months Ended		Months Ended
		January 31,		January 31,
		2025		2024
		(Unaudited)		(Unaudited)

Cash flows from financing activities
Proceeds from the exercise of common stock options		-		9,600
Proceeds under equipment notes		-		2,356,575
Payments under finance lease agreements		(1,634,585)		(1,463,488)
Payments under equipment notes		(1,177,395)		(862,734)
Payments under building notes payable		(39,879)		(37,656)
Proceeds under term loan agreement		2,192,613		-
Payments under term loan agreement		(750,000)		(750,000)
Debt reduction from building sale proceeds		(7,266,912)		-
Borrowings under revolving line of credit		247,539,398		297,652,589
Payments under revolving line of credit		(256,078,645)		(308,663,430)
Payments of debt financing costs		(4,175,388)		(509,001)
Net cash used in financing activities		(21,390,793)		(12,267,545)

Change in cash and cash equivalents		(317,073)		2,897,869
Cash and cash equivalents at beginning of period		2,417,360		819,129

Cash and cash equivalents at end of period	$	2,100,287	$	3,716,998

Supplementary disclosures of cash flow information
Cash paid for interest	$	7,634,420	$	7,583,009
Cash paid for income taxes		1,158,994		1,934,697
Purchase of machinery and equipment financed
under finance leases		-		2,747,984
Right-of-use assets obtained in exchange for operating
lease liabilities		6,988,864		3,123,409
Financing of insurance policy		498,149		619,901
Issuance of warrants		175,469		-
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

SigmaTron International, Inc.

~~October~~January 31, ~~2024~~2025

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note A - Description of the Business

SigmaTron International, Inc., its subsidiaries, foreign enterprises and international procurement office (collectively, “SigmaTron” or the “Company”) operates in one reportable segment as an independent provider of electronic manufacturing services (“EMS”). EMS includes printed circuit board assemblies, electro-mechanical subassemblies and completely assembled (box-build) electronic products. In connection with the production of assembled products, EMS also provides services to its customers, including (1) automatic and manual assembly and testing of products; (2) material sourcing and procurement; (3) manufacturing and test engineering support; (4) design services; (5) warehousing and distribution services; (6) assistance in obtaining product approval from governmental and other regulatory bodies and (7) compliance reporting.

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

As of August 19, 2024, the Company was not in compliance with the financial covenants under the Credit Agreements as follows: the Fixed Charge Coverage Ratio for multiple twelve month periods including those ending on April 30, 2024 and July 31, 2024 was less than 1.10:1.00, the Total Debt to EBITDA Ratio for the twelve month period ending on April 30, 2024 was greater than 4.50:1.00, and the Total Debt to EBITDA Ratio for the twelve month period ending on July 31, 2024 was greater than 4.25:1.00 (collectively, the “2024 Covenant Defaults”). In addition, the Company received a delinquency notification letter from Nasdaq, dated August 16, 2024, indicating that the Company was not in compliance with the continued listing requirements of Nasdaq for failing to timely file the Company’s Form 10-K annual report for the fiscal year ended April 30, 2024. This notification also constituted a default under the Credit Agreements (collectively with the 2024 Covenant Defaults, the “2024 Defaults”). The Company had 60 days from the date of the Nasdaq delinquency notice, or until October 15, 2024, to file a plan with Nasdaq to regain compliance. OnThe Company filed its annual report for the fiscal year ended April 30, 2024 on September 3, 2024, and on September 10, 2024, the Company received a notification letter from Nasdaq indicating that the Company had regained compliance with the applicable continued listing requirements based on the filing of ~~the~~its ~~Company’s~~ Form 10-K ~~annual report for the fiscal year ended April 30, 2024~~.

Due to the 2024 Covenant Defaults, the facilities under the Credit Agreements were classified as current liabilities on the Consolidated Balance Sheet at July 31, 2024 and April 30, 2024. In addition, due to the lender demand of a Replacement Transaction by September 2025 and the risk of additional

1011

SigmaTron International, Inc.

~~October~~January 31, ~~2024~~2025

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note A - Description of the Business - Continued

covenant compliance failures based on current revenue levels (see Note B - Basis of Presentation - Going Concern for additional information) the Company continues to classify this debt as current liabilities as of ~~October~~January 31, ~~2024~~2025.

On August 19, 2024 (the “Third Amendment Effective Date”), the Lender Parties waived the 2024 Defaults pursuant to (i) the Waiver and Amendment No. 3 to Credit Agreement (the “JPM Amendment”) between the Company and JPM, and (ii) the Waiver and Amendment No. 3 to Credit Agreement (the “TCW Amendment” and together with the JPM Amendment, the “2024 Amendments”) by and among the Company, the TCW Lenders, and the Agent. In consideration of the TCW Amendment, the Company and the Agent also entered into the Third Amendment Fee Letter to the TCW Credit Agreement (the “Fee Letter”) dated as of the Third Amendment Effective Date. The 2024 Amendments also amended the financial covenants and certain other terms of the Credit Agreements, including, among other things, that the Company will pursue and close a Replacement Transaction (as defined in the Credit Agreements) to pay the obligations under the Credit Agreements in full no later than September 30, 2025 unless the Company meets certain debt ratios for the twelve month period ending on August 31, 2025. See Waivers and Amendments No. 3 within Note E – Long-term Debt for more information.

The Company is taking steps to reduce its debt and cost structure. Most recently, since the beginning of calendar year 2024, these actions include the sale of its Elgin, Illinois property and consolidation of the Elgin operations to the Elk Grove Village, Illinois headquarters, reduction of headcounts at various operations and corporate, and inventory reduction. ~~Subsequent~~During ~~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~~Sale/Leaseback.

The Company continues to explore other strategic initiatives and refinancing options to further reduce its debt to enable it to comply with increasingly stringent financial covenants. Delays or a failure to effectively reduce debt, including due to circumstances outside of our control, could have an adverse effect on our financial position and results of operations.

Note B - Basis of Presentation – Going Concern

The Company’s financial statements are prepared using U.S. GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Over the past two years, to address the Company’s ~~has been in~~ violation of certain financial covenants in its Credit Agreements (further discussion in Note E – Long-term Debt)~~. Pursuant~~, tothe ~~amendments~~Company’s secured lenders agreed to ~~those~~amend the Credit Agreements,. The ~~the~~ Company must satisfy ~~revised~~the terms toof those amended agreements, which include meeting certain revised financial covenant ratios as well as the requirement to pursue and close a Replacement Transaction to pay the Obligations (as defined in the Credit Agreements) in full no later than September 30, 2025 unless the Company meets certain debt ratios for the twelve month period ending on August 31, 2025. If the Company continues to see softness in demand, the Company’s ability to meet covenants in the near term may be at risk. In the event of non-compliance with the Company’s debt covenants, the Company may not have the ability to satisfy its obligations as they become due.

1112

SigmaTron International, Inc.

~~October~~January 31, ~~2024~~2025

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note B - Basis of Presentation – Going Concern - Continued

The ability of the Company to continue as a going concern is dependent on the Company having adequate capital to fund its operating plan and performance. Management’s plans to continue as a going concern may include raising additional capital through sales of equity securities and borrowing, focusing the Company on its most profitable elements, and exploring alternative funding sources on an as needed basis such as ~~execution~~the ~~of a~~ sales-leaseback transaction as disclosed in Note K – ~~Subsequent Event~~Sale/Leaseback. 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. Additionally, the impact of potential tariffs may have a negative on the Company’s business operations. The ability of the Company to continue as a going concern may be dependent upon its ability to successfully secure other sources of financing and sustain profitable operations. There is substantial doubt about the ability of the Company to continue as a going concern for one year from the issuance of the accompanying consolidated financial statements. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company’s primary sources of liquidity have traditionally been comprised of cash and cash equivalents as well as availability under credit agreements in place at the time. The Company is obligated to either meet certain debt ratios by August 31, 2025 or find a Replacement Transaction no later than September 30, 2025. While the Company expects to have sufficient financial resources available on acceptable terms, there can be no assurance this will occur, particularly in light of increasingly conservative financial markets.

The accompanying unaudited condensed consolidated financial statements of the Company, its subsidiaries, Standard Components de Mexico, S.A., AbleMex S.A. de C.V., Digital Appliance Controls de Mexico, S.A. de C.V., Spitfire Controls (Vietnam) Co. Ltd., and Spitfire Controls (Cayman) Co. Ltd., wholly-owned foreign enterprises Wujiang SigmaTron Electronics Co. Ltd., and Wujiang SigmaTron Electronic Technology Co., Ltd., its international procurement office, SigmaTron International Inc. Taiwan Branch, and Wagz, Inc. (majority of business sold, effective as of April 1, 2023), have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.

The accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and sixnine month periods ended OctoberJanuary 31, 20242025 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.

1213

SigmaTron International, Inc.

~~October~~January 31, ~~2024~~2025

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note B - Basis of Presentation – Going Concern - Continued

Reclassifications

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

Note C - Inventories, net

The components of inventory consist of the following:

	October 31,		April 30,
	January 31,		April 30,
	2024		2024
	2025		2024
Finished products	$	2220,~~349~~262,~~385~~849	$	18,457,912
Work-in-process		4,~~134~~218,~~565~~900		4,492,609
Raw materials		9184,~~725~~651,~~314~~174		108,224,069
		118,209,264		131,174,590
		109,132,923		131,174,590
Less obsolescence reserve (1)		2,156,689		2,323,689
	$	~~116~~106,~~052~~976,~~575~~234	$	128,850,901

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

1314

SigmaTron International, Inc.

~~October~~January 31, ~~2024~~2025

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note D - Earnings Per Share and Stockholders’ Equity

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

	Three Months Ended				~~Six~~Nine Months Ended
		October 31,		October 31,		October 31,		October 31,
		January 31,		January 31,		January 31,		January 31,
	2024		2023		2024		2023
	2025		2024		2025		2024
Net (loss)/income	$	(9,466,669)	$	28,262	$	(12,755,829)	$	290,361
Net income/(loss)	$	3,883,611	$	599,006	$	(8,872,218)	$	889,367
Weighted-average shares
Basic		6,~~119~~205,~~288~~704		6,~~091~~094,~~331~~288		6,~~119~~148,~~288~~093		6,~~092~~093,~~761~~270
Effect of dilutive stock options		-		9926,~~365~~029		-		7358,~~763~~803
Diluted		6,~~119~~205,~~288~~704		6,~~190~~120,~~696~~317		6,~~119~~148,~~288~~093		6,~~166~~152,~~524~~073
Basic (loss)/earnings per share	$	(1.55)	$	0.00	$	(2.08)	$	0.05
Basic earnings/(loss) per share*	$	0.63	$	0.10	$	(1.44)	$	0.15
Diluted (loss)/earnings per share	$	(1.55)	$	0.00	$	(2.08)	$	0.05
Diluted earnings/(loss) per share*	$	0.63	$	0.10	$	(1.44)	$	0.14

~~Options to purchase 691,331 and 596,081 shares of common stock were outstanding and exercisable at October 31, 2024 and 2023, respectively.~~* ~~There~~In ~~were~~accordance nowith ~~options~~ASC ~~granted during the three month period ended October 31~~260, ~~2024 and October 31, 2023, respectively. There were no options granted during~~ the ~~six~~Company ~~month~~has ~~period~~elected ~~ended~~not ~~October~~to ~~31,~~include ~~2024 and there were 177,000 options granted during~~ the ~~six~~contingent ~~month~~warrants ~~period~~classified ~~ended~~under ~~October~~current ~~31,~~liabilities ~~2023. There~~in ~~was $64,328 and $64,938 stock option expense recognized for~~ the ~~three~~calculation ~~month~~of ~~periods ended October 31, 2024 and 2023, respectively. There was $135,502 and $249,755 stock option expense recognized for~~ the ~~six~~weighted ~~month~~average ~~periods~~number ~~ended October 31, 2024 and 2023, respectively. The balance~~ of ~~unrecognized~~shares 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~~purposes ~~month periods ended October 31, 2024 and 2023, respectively, which have been excluded from the calculation~~ of ~~diluted~~calculating ~~earnings per share. There were 291,288 anti-dilutive common stock equivalents and 260,886 anti-dilutive common stock equivalents for~~ the ~~six~~basic ~~month periods ended October 31, 2024~~ and ~~2023, respectively, which have been excluded from the calculation of~~ diluted earnings/(loss) per share.

14Options to purchase 691,331 and 596,081 shares of common stock were outstanding and exercisable at January 31, 2025 and 2024, respectively. There were 30,000 options granted during the three month period ended January 31, 2025 and there were no options granted during the three month period ended January 31, 2024. There were 30,000 options granted during the nine month period ended January 31, 2025 and there were 177,000 options granted during the nine month period ended January 31, 2024. There was $42,513 and $75,549 stock option expense recognized for the three month periods ended January 31, 2025 and 2024, respectively. There was $178,015 and $325,304 stock option expense recognized for the nine month periods ended January 31, 2025 and 2024, respectively. The balance of unrecognized compensation expense related to the Company’s stock option plans at January 31, 2025 and 2024 was $136,654 and $411,572, respectively. There were 1,060,244 anti-dilutive common stock equivalents and 484,128 anti-dilutive common stock equivalents for the three month periods ended January 31, 2025 and 2024, respectively, which have been excluded from the calculation of diluted earnings per share. There were 420,173 anti-dilutive common stock equivalents and 320,044 anti-dilutive common stock equivalents for the nine month periods ended January 31, 2025 and 2024, respectively, which have been excluded from the calculation of diluted earnings per share.

~~SigmaTron International, Inc.~~15

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

~~Notes~~January to31, ~~Condensed Consolidated Financial Statements~~2025

~~(Unaudited)~~Notes to Condensed Consolidated Financial Statements

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

~~Debt~~Note ~~and~~E ~~finance~~- ~~lease~~Long-term ~~obligations consisted of the following at October 31, 2024 and April 30, 2024:~~Debt

		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

Debt and finance lease obligations consisted of the following at January 31, 2025 and April 30, 2024:

* Due to the 2024 Covenant Defaults, the facilities under the Credit Agreements were classified as current liabilities on the Consolidated Balance Sheet at July 31, 2024 and April 30, 2024. In addition, due to the lender demand of a Replacement Transaction by September 2025 and the risk of additional covenant compliance failures based on current revenue levels the Company continues to classify this debt as current liabilities as of October 31, 2024.


		January 31,		April 30,
		2025		2024

Debt:
Notes Payable - Banks	$	51,738,472	$	66,102,020
Notes Payable - Buildings		326,693		366,572
Notes Payable - Equipment		3,465,556		4,642,951
Unamortized deferred financing costs		(3,145,015)		(1,528,156)
Total debt		52,385,706		69,583,387
Less current maturities*		50,058,786		66,244,227
Long-term debt	$	2,326,920	$	3,339,160

Finance lease obligations	$	3,726,989	$	5,361,574
Less current maturities		1,970,016		2,214,127
Total finance lease obligations, less current portion	$	1,756,973	$	3,147,447

~~Notes~~* Due ~~Payable~~to –the ~~Banks~~2024 Covenant Defaults, the facilities under the Credit Agreements were classified as current liabilities on the Consolidated Balance Sheet at July 31, 2024 and April 30, 2024. In addition, due to the lender demand of a Replacement Transaction by September 2025 and the risk of additional covenant compliance failures based on current revenue levels the Company continues to classify this debt as current liabilities as of January 31, 2025.

~~The~~Notes ~~Company’s~~Payable ~~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. Banks

The ~~Credit~~Company’s ~~Agreements~~primary ~~contain~~secured ~~financial~~credit ~~covenants~~agreements ~~relating~~include tothe ~~(i)~~Amended ~~the~~and ~~Fixed~~Restated ~~Charge~~Credit ~~Coverage~~Agreement ~~Ratio~~dated as of July 18, 2022 (as ~~defined~~amended, inrestated, supplemented or otherwise modified from time to time, the “JPM Credit ~~Agreements~~Agreement”) by and among the Company and JPMorgan Chase Bank, N.A, as lender (“JPM”), which isprovides ~~the~~for ~~ratio~~a secured credit facility consisting of ~~the~~a ~~Company’s~~revolving ~~fixed~~loan ~~payments~~facility onand, ~~its~~until ~~indebtedness~~July ~~made~~2022, ~~during~~a ~~any~~term ~~fiscal~~loan ~~period~~facility, ~~minus~~and ~~non-financed~~the ~~capital~~Credit ~~expenditures~~Agreement todated ~~EBITDA~~as of July 18, 2022 (as ~~defined~~amended, inrestated, supplemented or otherwise modified from time to time, the “Term Loan Agreement” and together with the JPM Credit Agreement, the “Credit Agreements”) by and ~~(ii)~~among the ~~Total~~Company, ~~Debt~~the tofinancial ~~EBITDA~~institutions ~~Ratio~~identified therein (the “TCW Lenders”) and TCW Asset Management Company LLC, as ~~defined~~administrative agent for the TCW Lenders (in such capacity, the ~~Credit~~“Agent,” ~~Agreements~~and collectively with the TCW Lenders and JPM, the “Lender Parties”), which isprovides for a term loan facility. The facility under the ~~ratio~~JPM ofCredit Agreement, as amended, allowed the Company’s ~~borrowed~~to ~~money~~borrow oron ~~letters~~a revolving basis up to the lesser of ~~credit~~(i) $70,000,000 or (ii) an amount equal to ~~EBITDA~~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.

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.~~16

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

~~Notes~~January to31, ~~Condensed Consolidated Financial Statements~~2025

~~(Unaudited)~~Notes to Condensed Consolidated Financial Statements

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

InNote ~~addition,~~E ~~the~~- ~~JPM~~Long-term ~~Credit~~Debt ~~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. Continued

In ~~connection~~addition, ~~with~~ the ~~entry into the~~ JPM Credit Agreement, ~~Lender~~imposes ~~and~~a ~~TCW,~~cash asdominion ~~administrative~~period ~~agent~~if ~~under~~there ~~the~~is ~~Term~~an ~~Loan~~event ~~Agreement,~~of ~~entered~~default ~~into~~or ~~the~~if ~~Intercreditor~~availability ~~Agreement,~~is ~~dated~~less ~~July~~than ~~18,~~10% ~~2022,~~of ~~and~~the ~~acknowledged~~Revolving byCommitment ~~SigmaTron~~(as ~~and~~defined ~~Wagz~~in (the ~~“ICA”~~JPM Credit Agreement), toand ~~set~~such ~~forth~~requirement ~~and~~continues ~~govern~~until ~~the~~there ~~lenders’~~is ~~respective~~no ~~lien~~event ~~priorities,~~of ~~rights~~default and ~~remedies~~availability ~~under~~is greater than 10% of the ~~JPM~~Revolving ~~Credit~~Commitment, ~~Agreement~~in ~~and~~each ~~the~~case ~~Term~~for ~~Loan~~30 ~~Agreement~~consecutive days.

~~The~~In ~~facility~~connection ~~under~~with the entry into the JPM Credit Agreement, isLender ~~secured by: (a) a first priority security interest in SigmaTron’s (i) accounts receivable~~ and ~~inventory~~TCW, ~~(excluding Term Priority Mexican Inventory (~~as ~~defined~~administrative inagent under the ~~ICA)~~Term ~~and~~Loan ~~certain inventory in transit~~Agreement, ~~(ii)~~entered ~~deposit~~into ~~accounts, (iii) proceeds of business interruption insurance that constitute ABL BI Insurance Share (as defined in~~ the ~~ICA),~~Intercreditor ~~(iv) certain other property~~Agreement, ~~including~~dated ~~payment~~July ~~intangibles~~18, ~~instruments~~2022, ~~equipment, software~~ and ~~hardware~~acknowledged ~~and~~by ~~similar~~SigmaTron ~~systems, books~~ and ~~records,~~Wagz ~~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~~ICA”);, ~~and~~to ~~(b)~~set aforth ~~second priority security interest in Term Priority Collateral (as defined below) other than (i) real estate~~ and ~~(ii)~~govern the ~~equity interests of SigmaTron~~lenders’s ~~foreign~~respective ~~subsidiaries~~lien ~~(unless such a pledge is requested by Lender). As of October 31~~priorities, ~~2024,~~rights ~~there was $23,387,327 outstanding~~ and ~~$15,168,702~~remedies ~~of unused availability~~ under the ~~revolving~~JPM ~~loan~~Credit ~~facility~~Agreement ~~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~~Term ~~deferred~~Loan ~~financing amount offset against outstanding debt was $371,735 and $592,664, respectively~~Agreement.

The ~~Term~~facility ~~Loan~~under the JPM Credit Agreement ~~provides~~is ~~for~~secured by: (a) ~~term~~a ~~loan~~first ~~from~~priority ~~TCW~~security tointerest ~~the~~in ~~Company~~SigmaTron’s (i) accounts receivable and inventory (excluding Term Priority Mexican Inventory (as defined in the ~~principal~~ICA) ~~amount~~and ofcertain ~~$40~~inventory in transit,~~000~~ (ii) deposit accounts,~~000~~ (~~the~~iii) ~~“TCW~~proceeds ~~Term~~of ~~Loan”~~business interruption insurance that constitute ABL BI Insurance Share (as defined in the ICA)~~. The~~, ~~TCW~~(iv) ~~Term~~certain ~~Loan~~other ~~bears~~property, ~~interest~~including atpayment aintangibles, ~~rate~~instruments, ~~per~~equipment, ~~annum~~software ~~based~~and onhardware ~~SOFR~~and similar systems, ~~plus~~books and records, to the ~~Applicable~~extent ~~Margin~~related ofto ~~7.50%~~the foregoing, and (~~each~~v) asall ~~defined~~proceeds of the foregoing, in each case, now owned or hereafter acquired (collectively, the ~~Term~~“ABL ~~Loan~~Priority ~~Agreement~~Collateral”)~~. The~~; ~~TCW~~and (b) a second priority security interest in Term ~~Loan~~Priority ~~has~~Collateral a(as ~~SOFR~~defined ~~floor~~below) ofother ~~1.00%. The~~than ~~maturity~~(i) ~~date~~real ofestate and (ii) the ~~TCW~~equity ~~Term~~interests ~~Loan~~of isSigmaTron’s ~~July~~foreign ~~18,~~subsidiaries ~~2027. The~~(unless ~~amount~~such ~~outstanding~~a aspledge is requested by Lender). As of ~~October~~January 31, ~~2024~~2025, there was $3812,~~245~~792,~~241~~559 outstanding and $15,132,197 of unused availability under the revolving loan facility compared to an outstanding balance of $3728,~~503~~598,~~301~~719 and $13,443,766 of unused availability at April 30, 2024. Included in the outstanding balance as of January 31, 2025 is the escrow amount of $7,266,912 representing proceeds of the sale/leaseback transaction with respect to its Elk Grove Village, Illinois headquarters. As of ~~October~~January 31, ~~2024~~2025 and April 30, 2024, the unamortized deferred financing amount offset against outstanding debt was $2400,~~992,817~~613 and $~~935~~592,~~492~~664, respectively.

The ~~TCW~~ Term Loan isAgreement ~~secured~~provides ~~by:~~for (a) aterm ~~first~~loan ~~priority~~from ~~security~~the ~~interest~~TCW inLenders ~~all~~to ~~property~~the ofCompany ~~SigmaTron~~in ~~that~~the ~~does~~principal ~~not~~amount ~~constitute~~of ~~ABL Priority Collateral~~$40,000,000 ~~which includes:~~ (i)the ~~SigmaTron’s~~“TCW ~~interest~~Term ~~in its Elk Grove Village real estate, (ii~~Loan”). The ~~SigmaTron’s~~TCW ~~machinery,~~Term ~~equipment~~Loan ~~and~~bears ~~fixtures~~interest ~~(but~~at ~~excluding~~a ~~ABL~~rate ~~Priority~~per ~~Equipment~~annum ~~(as~~based ~~defined~~on ~~in the ICA))~~SOFR, ~~(iii)~~plus the ~~Term~~Applicable ~~Priority~~Margin ~~Mexican~~of ~~Inventory~~7.50% (each as defined in the ~~ICA),~~Term ~~(iv~~Loan Agreement). The ~~SigmaTron’s~~TCW ~~stock~~Term inLoan ~~its~~has ~~direct~~a ~~and~~SOFR ~~indirect~~floor ~~subsidiaries,~~of ~~(v)~~1.00%. The ~~SigmaTron’s~~maturity ~~general~~date ~~intangibles~~of ~~(excluding~~the ~~any~~TCW ~~that~~Term ~~constitute~~Loan ~~ABL~~is ~~Priority~~July ~~Collateral)~~18, ~~goodwill~~2027. The ~~and~~amount ~~intellectual~~outstanding ~~property,~~as ~~(vi) the proceeds~~ of ~~business~~January ~~interruption~~31, ~~insurance~~2025, ~~that~~was ~~constitute~~$38,407,418 ~~Term BI~~compared ~~Insurance~~to ~~Share~~an ~~(as~~outstanding ~~defined~~balance inof ~~the ICA)~~$37,503,301 ~~(vii)~~at ~~tax~~April ~~refunds~~30, ~~and~~2024. As ~~(viii)~~of ~~all~~January ~~proceeds thereof~~31, in2025 ~~each~~and ~~case~~April 30, ~~now owned or hereafter acquired (collectively~~2024, the ~~“Term~~unamortized ~~Priority~~deferred ~~Collateral”);~~financing ~~and~~amount ~~(b)~~offset aagainst ~~second~~outstanding ~~priority~~debt ~~security~~was ~~interest~~$2,744,402 inand ~~all collateral that constitutes ABL Priority Collateral. Also~~$935,492, ~~SigmaTron’s three Mexican subsidiaries pledged all of their assets as security for the TCW Term Loan~~respectively. ~~The net proceeds received~~

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 machinery, equipment and fixtures (but excluding ABL Priority Equipment (as defined in the ICA)), (ii) the Term Priority Mexican Inventory (as defined in the ICA), (iii) SigmaTron’s stock in its direct and indirect subsidiaries, (iv) SigmaTron’s general intangibles (excluding any that constitute ABL Priority Collateral), goodwill and intellectual property, (v) the proceeds of business interruption insurance that constitute Term BI Insurance Share (as defined in the ICA), (vi) tax refunds, and (vii) all proceeds thereof, in each case, now owned or hereafter acquired (collectively, the “Term Priority Collateral”); and (b) a second priority security

~~SigmaTron International, Inc.~~17

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

~~Notes~~January to31, ~~Condensed Consolidated Financial Statements~~2025

~~(Unaudited)~~Notes to Condensed Consolidated Financial Statements

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

byNote ~~the~~E ~~Company~~- ~~from~~Long-term ~~the~~Debt ~~sale~~- ofContinued ~~the Elgin, Illinois, property in February, 2024, reduced the TCW Term Loan.~~

~~Waivers~~interest ~~and~~in ~~Amendments~~all Nocollateral that constitutes ABL Priority Collateral. Also, 1SigmaTron’s &three 2Mexican 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.

InWaivers ~~March 2023, the Company received default notices from JPM~~ and ~~TCW~~Amendments ~~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~~No. ~~Additionally,~~1 ~~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~~In March 2023, the Company received default notices from JPM and ~~Amendments~~TCW Nodue to non-compliance with certain financial covenants under their respective Credit Agreements, including the Fixed Charge Coverage Ratio and Total Debt to EBITDA Ratio. 3Additionally, 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.

AsWaivers 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~~Amendments ~~31, 2024 was less than 1~~No.~~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”). 3

~~Due~~As toof ~~the~~August 19, 2024, ~~Covenant~~the ~~Defaults,~~Company was not in compliance with the ~~facilities~~financial covenants under the Credit Agreements ~~were~~as ~~classified~~follows: asthe ~~current~~Fixed ~~liabilities~~Charge onCoverage ~~the~~Ratio ~~Consolidated~~for ~~Balance~~multiple ~~Sheet~~twelve atmonth ~~July~~periods ~~31,~~including ~~2024~~those ~~and~~ending on April 30, 2024~~. In~~ ~~addition,~~and ~~due~~July to31, ~~the~~2024 ~~lender~~was ~~demand~~less ofthan a1.10:1.00, ~~Replacement~~the ~~Transaction~~Total byDebt ~~September~~to ~~2025~~EBITDA ~~and~~Ratio for the ~~risk~~twelve ofmonth ~~additional~~period ~~covenant~~ending ~~compliance failures based~~ on ~~current~~April ~~revenue~~30, ~~levels~~2024 ~~(see~~was ~~Note~~greater Bthan -4.50:1.00, ~~Basis~~and ofthe ~~Presentation~~Total -Debt ~~Going~~to ~~Concern~~EBITDA Ratio for ~~additional information)~~ the ~~Company~~twelve ~~continues~~month toperiod ~~classify~~ending ~~this~~on ~~debt~~July as31, ~~current~~2024 ~~liabilities~~was asgreater ofthan ~~October~~4.25:1.00 31(collectively, the “2024 Covenant Defaults”).

InDue ~~addition,~~to the ~~Company~~2024 ~~received~~Covenant ~~a delinquency notification letter from Nasdaq~~Defaults, ~~dated August 16, 2024, indicating that~~ the ~~Company~~facilities ~~was~~under ~~not in compliance with~~ the ~~continued~~Credit ~~listing~~Agreements ~~requirements~~were ofclassified ~~Nasdaq~~as ~~for~~current ~~failing~~liabilities toon ~~timely file~~ the ~~Company’s~~Consolidated ~~Form~~Balance ~~10-K~~Sheet ~~annual~~at ~~report~~July ~~for~~31, ~~the~~2024 ~~fiscal~~and ~~year ended~~ April 30, 2024. In ~~This notification also constituted a default under the Credit Agreements (collectively with the 2024 Covenant Defaults~~addition, ~~the~~due ~~“2024~~to ~~Defaults”). The Company had 60 days from~~ the ~~date~~lender demand of ~~the Nasdaq delinquency notice, or until October 15, 2024, to file~~ a ~~plan~~Replacement ~~with~~Transaction ~~Nasdaq~~by ~~to regain compliance. On~~ September ~~10,~~2025 ~~2024,~~and the ~~Company~~risk ~~received~~of aadditional ~~notification~~covenant ~~letter~~compliance ~~from~~failures ~~Nasdaq~~based ~~indicating~~on ~~that~~current ~~the~~revenue ~~Company~~levels ~~had~~(see ~~regained~~Note ~~compliance~~B ~~with~~- ~~the~~Basis ~~applicable~~of ~~continued~~Presentation ~~listing~~- ~~requirements~~Going ~~based~~Concern onfor ~~the~~additional ~~filing~~information) of the Company’s ~~Form~~continues ~~10-K~~to ~~annual~~classify ~~report~~this ~~for~~debt ~~the~~as ~~fiscal~~current ~~year~~liabilities ~~ended~~as ~~April~~of 30January 31, ~~2024~~2025.

17In addition, the Company received a delinquency notification letter from Nasdaq, dated August 16, 2024, indicating that the Company was not in compliance with the continued listing requirements of Nasdaq for failing to timely file the Company’s Form 10-K annual report for the fiscal year ended April 30, 2024. This notification also constituted a default under the Credit Agreements (collectively with the 2024 Covenant Defaults, the “2024 Defaults”). The Company had 60 days from the date of the Nasdaq delinquency notice, or until October 15, 2024, to file a plan with Nasdaq to regain compliance. The Company filed its annual report for the fiscal year ended April 30, 2024 on September 3, 2024, and on September 10, 2024, the Company received a notification letter from Nasdaq indicating that the Company had regained compliance with the applicable continued listing requirements based on the filing of its Form 10-K.

~~SigmaTron International, Inc.~~18

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

~~Notes~~January to31, ~~Condensed Consolidated Financial Statements~~2025

~~(Unaudited)~~Notes to Condensed Consolidated Financial Statements

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

OnNote ~~August~~E ~~19,~~- ~~2024~~Long-term (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~~Continued ~~Ratio (as defined in the Credit Agreements), in each case as of the Third Amendment Effective Date.~~

~~The~~On ~~2024~~August ~~Amendments~~19, ~~also~~2024 ~~amended other provisions of~~ (the ~~Credit~~“Third ~~Agreements,~~Amendment ~~including~~Effective ~~to: (i~~Date”), ~~modify~~ the ~~minimum~~Lender ~~ratios~~Parties ~~under~~waived the ~~Fixed~~2024 ~~Charge~~Defaults ~~Coverage~~pursuant ~~Ratio~~ to ~~range~~(i) ~~from 0.70:1.0 for~~ the ~~twelve~~Waiver ~~months~~and ~~ending~~Amendment asNo. of3 ~~July 31, 2024,~~ to ~~1.00:1.0~~Credit ~~for~~Agreement (the ~~twelve~~“JPM ~~months~~Amendment”) ~~ending~~between asthe ofCompany ~~September~~and 30JPM, ~~2025~~ and ~~thereafter, measured monthly;~~ (ii) ~~adjust~~ the ~~maximum~~ ~~ratios~~Waiver ~~under~~and ~~the~~Amendment ~~Total~~No. ~~Debt~~3 to ~~EBITDA~~Credit ~~Ratio~~Agreement ~~to range from 6.50:1.0 for~~ (the ~~twelve~~“TCW ~~months~~Amendment” ~~ending~~and astogether ofwith ~~July~~the ~~31,~~JPM ~~2024~~Amendment, ~~to 3.50:1.0 for~~ the ~~twelve~~“2024 ~~months~~Amendments”) ~~ending~~by asand ofamong ~~April~~the 30Company, ~~2027, measured quarterly; (iii) modify~~ the ~~definition~~TCW ofLenders, ~~EBITDA to allow for additional adjustments for certain transactions~~ and ~~charges;~~the ~~(iv)~~Agent. ~~provide~~In ~~for~~consideration ~~the reimbursement~~ of ~~certain~~the ~~fees~~TCW byAmendment, the Company inand ~~connection~~the ~~with~~Agent ~~the~~also ~~Amendments~~entered orinto the ~~transactions~~Third ~~contemplated~~Amendment ~~thereby;~~Fee ~~(v)~~Letter ~~increase~~ (the ~~minimum~~“Fee ~~required~~Letter”) ~~Availability~~dated (as ~~defined~~of in the ~~JPM~~Third ~~Credit~~Amendment ~~Agreement)~~Effective ~~to $3~~Date.5 ~~million~~The ~~starting~~2024 onAmendments ~~the~~provided ~~Third~~for, ~~Amendment~~among ~~Effective~~other ~~Date;~~things, ~~(vi)~~a ~~provide~~waiver ~~that~~of the Company’s ~~must~~noncompliance ~~pursue~~with ~~and~~the ~~close~~financial acovenants ~~Replacement~~relating ~~Transaction~~ to ~~pay~~(i) the ~~Obligations~~Fixed Charge Coverage Ratio (as defined in the Credit Agreements) ~~in full no later than September 30~~, ~~2025~~and ~~unless~~(ii) the ~~Company~~Total ~~meets~~Debt ~~certain~~to ~~debt~~EBITDA ~~ratios~~Ratio ~~for~~(as ~~the~~defined ~~twelve~~in ~~month~~the ~~period~~Credit ~~ending on August 31~~Agreements), ~~2025;~~in ~~and~~each ~~(vii)~~case ~~require~~as ~~the~~of ~~Company to engage a financial advisor if requested by~~ the ~~Agent~~Third ~~after~~Amendment ~~November~~Effective ~~1, 2024~~Date.

InThe ~~addition~~2024 Amendments also amended other provisions of the Credit Agreements, ~~pursuant~~including to: (i) modify the ~~JPM~~minimum ~~Amendment~~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 ~~parties~~twelve ~~agreed~~months ending as of September 30, 2025 and thereafter, measured monthly; (ii) adjust the maximum ratios under the Total Debt to ~~reduce~~EBITDA Ratio to range from 6.50:1.0 for the ~~Revolving~~twelve ~~Commitment~~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) ~~from $70 million~~ to $553.5 million asstarting ofon the Third Amendment Effective Date; (vi) provide that the Company must pursue and ~~pay~~close a Replacement Transaction to ~~JPM~~pay ~~certain~~the ~~amendment~~Obligations ~~fees~~(as ~~and~~defined ~~certain~~in ~~additional~~the ~~fees~~Credit ifAgreements) in full no later than September 30, 2025 unless the Company ~~does~~meets ~~not~~certain ~~meet~~debt ~~certain~~ratios ~~financial~~for ~~milestones~~the bytwelve month period ending on August 31, 2025; and (vii) require the ~~applicable~~Company ~~measurement~~to ~~periods~~engage ~~specified~~a infinancial advisor if requested by the ~~JPM~~Agent ~~Amendment~~after November 1, 2024.

In addition, pursuant to the ~~TCW~~JPM Amendment, the parties agreed to ~~(i)~~reduce ~~amend~~ the ~~principal~~Revolving ~~payment~~Commitment ~~schedule under the TCW Term Loan to $250,000 per quarter;~~ (~~ii) extend the PIK Period (~~as defined in the ~~Term~~JPM ~~Loan~~Credit Agreement) ~~for~~from ~~three~~$70 ~~additional~~million ~~quarters beyond October 31, 2024 if the Total Debt~~ to ~~EBITDA~~$55 ~~Ratio~~million ~~exceeds a certain threshold~~ as of ~~certain~~the ~~dates;~~Third ~~(iii)~~Amendment ~~permit~~Effective ~~the~~Date ~~Company~~and topay ~~elect~~ to ~~pay~~JPM oncertain aamendment ~~quarterly~~fees ~~basis~~and ~~in-kind~~certain aadditional ~~portion~~fees ofif the ~~Baseline~~Company ~~Applicable~~does ~~Margin~~not ~~(as~~meet ~~defined~~certain infinancial ~~the~~milestones ~~Term~~by ~~Loan Agreement) per annum provided no default or event of default under~~ the ~~Term~~applicable ~~Loan~~measurement ~~Agreement~~periods ~~has~~specified ~~occurred; (iv) increase a portion of the Term Loan Borrowing Base (as defined~~ in the ~~Term~~JPM 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 committeesAmendment.

18In addition, pursuant to the TCW Amendment the parties agreed to (i) amend the principal payment schedule under the TCW Term Loan to $250,000 per quarter; (ii) extend the PIK Period (as defined in the Term Loan Agreement) for three additional quarters beyond October 31, 2024 if the Total Debt to EBITDA Ratio exceeds a certain threshold as of certain dates; (iii) permit the Company to elect to pay on a quarterly basis in-kind a portion of the Baseline Applicable Margin (as defined in the Term Loan Agreement) per annum provided no default or event of default under the Term Loan Agreement has occurred; (iv) increase a portion of the Term Loan Borrowing Base (as defined in the Term Loan Agreement) based on the value of the Company’s real estate; (v) reduce the asset coverage pre-payment ratio under the TCW Term Loan to 90% of the outstanding principal balance; and (vi) provide the Agent with the right to appoint a non-voting observer to attend regular meetings of the Company’s Board of Directors and any relevant committees.

~~SigmaTron International, Inc.~~19

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

~~Notes~~January to31, ~~Condensed Consolidated Financial Statements~~2025

~~(Unaudited)~~Notes to Condensed Consolidated Financial Statements

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

~~Also~~Note onE ~~August~~- ~~19,~~Long-term ~~2024,~~Debt ~~and~~- inContinued 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, if the Company does not meet certain financial metrics from December 2024 to September 2025 as defined in the agreement, the Company has agreed to deliver to the Agent warrants to purchase shares of the Company’s common stock (the “Warrants”) in an amount equal to a percentage of the outstanding common stock of the Company on a fully diluted basis ranging from 1.25% (as of December 1, 2024) to 17.5% (as of September 1, 2025). The exercise price for the Warrants will be $0.01 per share and the Warrants would vest immediately upon issuance.

~~The~~Also ~~Company~~on ~~evaluated~~August ~~the~~19, ~~accounting~~2024, ~~for~~and ~~the~~in ~~warrants~~connection ~~associated~~ with the ~~Fee~~TCW ~~Letter~~Amendment, ~~to determine whether~~ the ~~warrants~~Company ~~should~~entered beinto ~~classified~~the asFee ~~equity~~Letter, orwhich asprovides for a ~~derivative~~payment ~~liability~~to on the ~~consolidated~~Agent ~~balance~~of ~~sheet. In accordance with ASC 815-40~~$395,000 ~~Derivatives~~added ~~and~~to ~~Hedging - Contracts in~~ the ~~Entity’s~~principal ~~Own~~amount ~~Equity~~owed ~~(ASC~~under ~~815-40),~~ the ~~Company~~TCW ~~classifies~~Term aLoan ~~warrant~~and asfor ~~equity~~certain ifmonthly itticking isfees ~~indexed~~equal to ~~the~~a ~~Company’s~~range ~~equity~~of ~~and~~percentages ~~several~~of ~~specific~~the ~~conditions~~outstanding ~~for~~principal ~~equity~~amount ~~classification~~under ~~are~~the ~~met.~~TCW ATerm ~~warrant~~Loan, isprovided ~~not considered indexed to~~ the Company’s ~~equity~~does innot ~~general~~meet ~~when it contains~~ certain ~~types~~financial ofmilestones ~~exercise~~by ~~contingencies~~the orapplicable ~~adjustments~~dates toprovided ~~exercise price~~therein. IfIn aaddition, ~~warrant~~pursuant ~~is not indexed~~ to the ~~Company’s~~Fee ~~equity~~Letter, orif itthe ~~has~~Company ~~net~~does ~~cash~~not ~~settlement~~meet ~~that~~certain ~~results~~financial inmetrics ~~the~~from ~~Warrants~~December 2024 to beSeptember ~~accounted~~2025 ~~for~~as ~~under~~defined ~~ASC~~in ~~480,~~the ~~Distinguishing Liabilities from Equity~~agreement, orthe ~~ASC~~Company ~~815-40,~~has itagreed isto ~~classified~~deliver asto athe ~~derivative~~Agent ~~liability~~warrants ~~which~~to ispurchase ~~carried~~shares onof the ~~consolidated~~Company’s ~~balance~~common ~~sheet~~stock at(the ~~fair~~“Warrants”) ~~value~~in ~~with~~an ~~any~~amount ~~changes~~equal into ~~its~~a ~~fair~~percentage ~~value~~of ~~recognized~~the ~~currently~~outstanding incommon ~~the~~stock ~~statement~~ of ~~operations. The~~the Company ~~concluded~~on ~~that~~a ~~the~~fully ~~warrants~~diluted ~~shall~~basis beranging ~~classified~~from 1.25% (as aof ~~liability~~December ~~upon~~1, ~~entering~~2024) ~~into~~to ~~the~~17.5% ~~Fee Letter and~~ (as ~~a result recorded a liability~~ of ~~$2,263,000. In~~September ~~subsequent periods~~1, ~~these Warrants are subject to remeasurement~~2025). As ofThe ~~October~~exercise ~~31,~~price ~~2024,~~for the ~~warrants~~Warrants ~~were~~will ~~valued~~be at $~~2,889,000~~0. ~~The~~01 ~~remeasurement~~per ofshare and the ~~warrants~~Warrants iswould ~~recorded~~vest ~~within~~immediately ~~the~~upon ~~change~~issuance. The ~~in fair~~ value of ~~warrants~~Warrants ~~within~~issued ~~the~~was ~~Consolidated~~$175,469 ~~Statements~~as of ~~Operations~~January 31, 2025.

~~All~~The ~~other~~Company ~~material~~evaluated ~~terms~~the accounting for the warrants associated with the Fee Letter to determine whether the warrants should be classified as equity or as a derivative liability on the consolidated balance sheet. In accordance with ASC 815-40, Derivatives and Hedging - Contracts in the Entity’s Own Equity (ASC 815-40), the Company classifies a warrant as equity if it is indexed to the Company’s equity and several specific conditions for equity classification are met. A warrant is not considered indexed to the Company’s equity in general when it contains certain types of exercise contingencies or adjustments to exercise price. If a warrant is not indexed to the ~~Credit~~Company’s ~~Agreements~~equity or it has net cash settlement that results in the warrants to be accounted for under ASC 480, Distinguishing Liabilities from Equity, or ASC 815-40, it is classified as ~~amended~~a byderivative liability which is carried on the ~~Amendments~~consolidated balance sheet at fair value with any changes in its fair value recognized currently in the statement of operations. The Company concluded that the warrants shall be classified as a liability upon entering into the Fee Letter and as a result recorded a liability of $2,263,000. In ~~remain~~subsequent ~~unchanged~~periods, these warrants are subject to remeasurement. As of January 31, 2025, the warrants were valued at $1,188,546. The remeasurement of the warrants is recorded within the change in fair value of warrants within the Consolidated Statements of Operations.

~~China~~January ~~Construction~~2025 ~~Bank~~Amendment

On ~~March~~January 1510, ~~2019~~2025, the Company’s ~~wholly-owned~~and ~~foreign~~JPM ~~enterprise, Wujiang SigmaTron Electronic Technology Co., Ltd.,~~ entered into aAmendment ~~credit facility with China Construction Bank~~No. On ~~January~~4 ~~26,~~to ~~2021,~~ the ~~agreement~~JPM ~~was~~Credit ~~amended~~Agreement ~~and~~to ~~expired~~increase ~~in accordance with its terms on January 6, 2022. On January 17, 2022,~~ the ~~agreement~~maximum ~~was~~letter ~~renewed,~~of ~~and~~credit ~~expired~~exposure inpermitted ~~accordance~~thereunder ~~with~~from ~~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,~~to ~~approximately~~ $12,~~400~~500,000 ~~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.

19All other material terms of the Credit Agreements, as amended by the foregoing Amendments, remain unchanged.

~~SigmaTron~~China ~~International,~~Construction ~~Inc.~~Bank

~~October~~On 31March 15, 2019, the Company’s wholly-owned foreign enterprise, Wujiang SigmaTron Electronic Technology Co., Ltd., entered into a credit facility with China Construction Bank. The agreement has been renewed each time it expired in accordance with its terms on January 26, 2021, January 17, 2022, February 17, 2023, and March 1, 2024. The agreement is scheduled to expire on February 1, 2025. On January 22, 2025, the agreement was renewed, and is scheduled to expire on January 19, 2026. Under the agreement Wujiang SigmaTron Electronic Technology Co., Ltd. can borrow up to

~~Notes to Condensed Consolidated Financial Statements~~20

~~(Unaudited)~~SigmaTron International, Inc.

~~Note~~January E31, ~~- Long-term Debt - Continued~~ 2025

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

The Company entered into a mortgage agreement on March 3, 2020, in the amount of $556,000, with The Bank and Trust SSB to finance the purchase of the property that serves as the Company’s warehousing and distribution center in Del Rio, Texas. The note requires the Company to pay monthly installment payments in the amount of $6,103. Interest accrues at a fixed rate of 5.75% per year until March 3, 2025, and adjusts thereafter, on an annual basis, equal to 1.0% over the Prime Rate as published by The Wall Street Journal. The note is payable over a 120 month period. The outstanding balance was $340,177 and $366,572 at October 31, 2024 and April 30, 2024, respectively. (Unaudited)

~~Notes~~Note ~~Payable~~E –- ~~Equipment~~Long-term Debt - Continued

~~The~~10,000,000 ~~Company~~Renminbi, ~~routinely~~approximately ~~entered~~$1,400,000 ~~into~~as ~~secured~~of ~~note~~January ~~agreements~~31, ~~with~~2025, ~~Engencap~~and ~~Fin~~the ~~S.A.~~facility DEis ~~C.V.~~collateralized toby ~~finance~~Wujiang ~~the~~SigmaTron ~~purchase~~Electronics ofCo., ~~equipment~~Ltd.’s ~~The~~manufacturing ~~terms~~building. Interest ofis ~~the~~payable ~~outstanding~~monthly ~~secured~~and ~~note~~the ~~agreement,~~facility ~~which~~bears ~~had~~ a fixed interest rate of 83.0015% per annum,. There ~~matured~~was onno ~~May~~outstanding 1,balance ~~2023,~~under ~~and~~ the ~~final~~facility ~~quarterly~~at ~~installment~~January ~~payment~~31, of2025 $9and April 30,~~310~~ ~~was~~2024, ~~paid~~respectively.

~~The~~Notes ~~Company~~Payable ~~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.Buildings

~~Annual~~The ~~maturities~~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 ~~debt~~warehousing and distribution center in Del Rio, ~~net~~Texas. The ofnote ~~deferred~~requires ~~financing~~the ~~fees~~Company ~~for~~to pay monthly installment payments in the ~~remaining~~amount ~~periods~~of $6,103. Interest asaccrues at a fixed rate of ~~October~~5.75% 31per year until March 3, ~~2024~~2025, ~~are~~and adjusts thereafter, on an annual basis, equal to 1.0% over the Prime Rate as ~~follows:~~published by The Wall Street Journal. The note is payable over a 120 month period. The outstanding balance was $326,693 and $366,572 at January 31, 2025 and April 30, 2024, respectively.

		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

Notes Payable – Equipment

*DueThe toCompany ~~the~~routinely ~~2024~~entered ~~Covenant~~into ~~Defaults,~~secured ~~the~~note ~~facilities~~agreements ~~under~~with ~~the~~Engencap ~~Credit~~Fin ~~Agreements~~S.A. ~~were~~DE ~~classified~~C.V. asto ~~current~~finance ~~liabilities on~~ the ~~Consolidated~~purchase ~~Balance~~of ~~Sheet~~equipment. atThe ~~July~~terms ~~31,~~of ~~2024~~the ~~and~~outstanding ~~April~~secured ~~30,~~note ~~2024. In addition~~agreement, ~~due~~which tohad ~~the lender demand of~~ a ~~Replacement~~fixed ~~Transaction~~interest byrate ~~September 2025 and the risk~~ of ~~additional~~8.00% ~~covenant~~per ~~compliance~~annum, ~~failures~~matured ~~based~~ on ~~current~~May ~~revenue~~1, ~~levels~~2023, and the ~~Company~~final ~~continues~~quarterly toinstallment ~~classify~~payment ~~this debt as current liabilities as~~ of ~~October 31~~$9,310 ~~2024~~was paid.

The Company routinely enters into secured note agreements with FGI Equipment Finance ~~Lease~~LLC ~~Obligations~~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.

~~The~~Annual ~~Company~~maturities ~~enters~~of ~~into~~the ~~various~~Company’s ~~finance~~debt, ~~lease~~net ~~agreements. The terms~~ of ~~the~~deferred ~~outstanding~~financing ~~lease~~fees ~~agreements~~for ~~mature~~the ~~through~~remaining ~~March 1~~periods, ~~2028,~~as ~~with~~of ~~monthly~~January ~~installment payments ranging from $12~~31,~~940~~ ~~to $33~~2025,~~706~~ ~~and~~are aas ~~fixed interest rate ranging from 8.73% to 12.09% per annum.~~ follows:


		Banks*		Building		Equipment		Total

For the remaining 3 months of the fiscal year ending April 30:	2025	$	48,593,457	$	13,678	$	410,618	$	49,017,753
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
		$	48,593,457	$	326,693	$	3,465,556	$	52,385,706

~~SigmaTron~~*Due ~~International~~to the 2024 Covenant Defaults, ~~Inc~~the facilities under the Credit Agreements were classified as current liabilities on the Consolidated Balance Sheet at July 31, 2024 and April 30, 2024. In addition, due to the lender demand of a Replacement Transaction by September 2025 and the risk of additional covenant compliance failures based on current revenue levels the Company continues to classify this debt as current liabilities as of January 31, 2025.

~~October 31, 2024~~21

~~Notes~~SigmaTron toInternational, ~~Condensed Consolidated Financial Statements~~Inc.

~~(Unaudited)~~January 31, 2025

~~Note~~Notes Fto -Condensed ~~Income~~Consolidated ~~Tax~~Financial Statements

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~~Unaudited)% 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.

~~The~~Note ~~income~~E ~~tax~~- ~~expense~~Long-term ~~was~~Debt ~~$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.

~~The~~Finance ~~Company~~Lease recognizes a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. Given the Company’s recent operating losses and going concern uncertainty identified in the current quarter, the Company determined that it may not reasonably rely on future forecasted income to benefit its deferred assets. For these reasons the Company has established a full valuation allowance on its deferred assets as of the end of the current quarter. Obligations

~~Note~~The GCompany -enters ~~Commitments~~into various finance lease agreements. The terms of the outstanding lease agreements mature through March 1, 2028, with monthly installment payments ranging from $12,940 to $33,706 and ~~Contingencies~~a fixed interest rate ranging from 8.73% to 12.09% per annum.

~~From~~Note ~~time~~F 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~~Income toTax 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.

21The income tax expense was $663,220 for the three month period ended January 31, 2025 compared to an income tax expense of $77,736 for the same period in the prior fiscal year. The Company’s effective tax rate was 14.59% and 11.49% for the three month period ended January 31, 2025 and 2024, respectively. The increase in income tax expense for the three month period ended January 31, 2025 compared to the same period in the previous year is due to variations in income earned by jurisdiction. The increase in effective tax rate is due to variations in income earned by jurisdiction.

~~SigmaTron~~The ~~International~~income tax expense was $6,138,687 ~~Inc~~for the nine month period ended January 31, 2025 compared to an income tax expense of $267,267 for the same period in the prior fiscal year. The Company’s effective tax rate was (224.57)% and 23.10% for the nine month period ended January 31, 2025 and 2024, respectively. The increase in income tax expense for the nine month period ended January 31, 2025 compared to the same period in the previous year is primarily due to an increase in the valuation allowance in the current period. The decrease in effective tax rate is due to variations in income earned by jurisdiction and the recording of valuation allowance.

The Company recognizes a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. Given the Company’s recent operating losses and going concern uncertainty identified in the current fiscal year, the Company determined that it may not reasonably rely on future forecasted income to benefit its deferred assets. For these reasons the Company has established a full valuation allowance on its deferred assets as of the October 31, 2024 quarter.

~~Notes~~The Company has not changed its plan to ~~Condensed~~indefinitely ~~Consolidated~~reinvest ~~Financial~~the ~~Statements~~earnings of the Company’s foreign subsidiaries. The cumulative amount of unremitted earnings for which U.S. income taxes have not been recorded is $16,545,000 as of January 31, 2025.

~~(Unaudited)~~Note G - Commitments and Contingencies

~~Note~~From Htime 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 ~~Significant~~charges ~~Accounting~~to ~~Policies~~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.

Management Estimates and Uncertainties - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made in preparing the consolidated financial statements include depreciation and amortization periods, the allowance for credit losses, excess and obsolete reserves for inventory, deferred income, deferred taxes, uncertain tax positions, valuation allowance for deferred taxes and valuation of long-lived assets. Actual results could materially differ from these estimates.22

~~The~~SigmaTron ~~potential~~International, 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 ordersInc.

~~Accounts~~January ~~Receivable - Accounts 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. 2025

~~The~~Notes ~~following~~to ~~table~~Condensed ~~presents~~Consolidated ~~the~~Financial ~~Company’s accounts receivable balance at the end of each period indicated:~~Statements

	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

(Unaudited)

~~Revenue~~Note ~~Recognition~~H - ~~The~~Significant ~~following~~Accounting ~~table~~Policies ~~presents the Company’s revenue disaggregated by the principal end-user markets it serves:~~

	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

Management Estimates and Uncertainties - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made in preparing the consolidated financial statements include depreciation and amortization periods, the allowance for credit losses, excess and obsolete reserves for inventory, deferred income, deferred taxes, uncertain tax positions, valuation allowance for deferred taxes, valuation of long-lived assets and valuation of contingent warrant liability. Actual results could materially differ from these estimates.

22The potential impact of continued economic uncertainty due to persistent inflation, tariffs, and continuing global supply chain shortages and unpredictability may have a significant adverse impact on the timing of delivery of customer orders and the levels of future customer orders.

~~SigmaTron~~Accounts ~~International~~Receivable - Accounts receivable is presented net of allowance for credit losses of $28,191 ~~Inc~~and $59,466 as of January 31, 2025 and April 30, 2024, respectively. The Company believes that its allowance for credit losses is adequate and represents its best estimate as of January 31, 2025. The Company continues to closely monitor customer liquidity along with industry and economic conditions, which may result in changes to its estimate.

~~October~~The ~~31,~~following ~~2024~~table presents the Company’s accounts receivable balance at the end of each period indicated:

Notes to Condensed Consolidated Financial Statements


	January 31,		April 30,
	2025		2024

Accounts receivable	$	28,640,107	$	32,103,451
Less allowance for credit losses		28,191		59,466
	$	28,611,916	$	32,043,985

~~(Unaudited)~~Revenue Recognition - The following table presents the Company’s revenue disaggregated by the principal end-user markets it serves:

Note H - Significant Accounting Policies - Continued


	Three Months Ended					Nine Months Ended
		January 31,		January 31,		January 31,		January 31,
Net trade sales by end-market		2025		2024		2025		2024
Industrial Electronics	$	48,995,013	$	71,890,794	$	153,152,005	$	209,133,106
Consumer Electronics		18,747,168		19,165,519		64,232,418		63,914,268
Medical / Life Sciences		3,325,682		4,863,575		13,179,778		19,694,554
Total Net Trade Sales	$	71,067,863	$	95,919,888	$	230,564,201	$	292,741,928

During the three and six month periods ended October 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 October 31, 2024. The Company is electing not to disclose the amount of the remaining unsatisfied performance obligations with a duration of one year or less. The Company had no material remaining unsatisfied performance obligations as of October 31, 2024, with an expected duration of greater than one year. 23

~~Contract~~SigmaTron ~~liabilities consist of payments received in advance of the transfer of control to the customer. As products are delivered and control transfers~~International, ~~the Company recognizes the deferred revenue in net sales in the Consolidated Statements of Operations~~Inc. 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.

	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

January 31, 2025

~~Income~~Notes ~~Tax - The Company’s income tax expense, deferred tax assets and liabilities and reserves for unrecognized tax benefits reflect management’s best assessment of estimated future taxes~~ to beCondensed ~~paid. The~~Consolidated ~~Company~~Financial 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.Statements

Deferred income tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. In evaluating the Company’s ability to recover its deferred tax assets within the jurisdiction from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company begins with historical results and changes in accounting policies, and incorporates assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment and estimates by management about the forecasts of future taxable income and are consistent with the plans and estimates the Company uses to manage the underlying businesses. In evaluating the objective evidence that historical results provide, the Company considers three years of cumulative operating income and/or loss. Valuation allowances are established when necessary to reduce deferred income tax assets to an amount more likely than not to be realized. The Company previously maintained a valuation allowance on certain foreign loss carryforwards; however, all foreign tax loss (Unaudited)

23Note H - Significant Accounting Policies - Continued

~~SigmaTron~~During ~~International~~the three and nine month periods ended January 31, ~~Inc~~2025, no material revenues were recognized from performance obligations satisfied or partially satisfied in previous periods and no amounts were allocated to performance obligations that remain unsatisfied or partially unsatisfied at January 31, 2025. The Company is electing not to disclose the amount of the remaining unsatisfied performance obligations with a duration of one year or less. The Company had no material remaining unsatisfied performance obligations as of January 31, 2025, with an expected duration of greater than one year.

~~October~~Periodically, 31certain customers may request bill and hold transactions according to the terms in the contract. In these cases, ~~2024~~customers request that we retain physical possession of the product until customer pickup or delivery at a later date. Under these arrangements, control is transferred to the customer when the product is ready for transfer to the customer which is typically upon shipment to third-party warehouses, the customer has taken legal title, and the Company has a present right to payment. Under the bill and hold arrangements, we recognize sales only when all of the following criteria are met: 1) the customer’s reason for the bill-and-hold arrangement is substantive, 2) the product is separately identified as belonging to the customer, 3) the product is ready for transfer to the customer and 4) we do not have the ability to use the product or direct it to another customer.

~~Notes~~Contract liabilities consist of payments received in advance of the transfer of control to ~~Condensed~~the ~~Consolidated~~customer. ~~Financial~~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.

(Unaudited)


	Nine Months Ended
		January 31,		January 31,
		2025		2024
Contract liability (deferred revenue) beginning of period	$	3,111,062	$	8,063,197
Deferred revenue recognized in period		(6,913,995)		(14,785,967)
Revenue deferred in period		8,970,300		9,863,112
Deferred revenue end of period	$	5,167,367	$	3,140,342

~~Note~~Income HTax - The Company’s income tax expense, deferred tax assets and liabilities and reserves for unrecognized tax benefits reflect management’s best assessment of estimated future taxes to be paid. The Company is subject to income taxes in both the U.S. and several foreign jurisdictions. Significant ~~Accounting~~judgments ~~Policies~~and -estimates ~~Continued~~by management are required in determining the consolidated income tax expense assessment.

~~carryforwards~~Deferred ~~have~~income ~~been~~tax ~~used~~assets asand ofliabilities ~~April~~are ~~30,~~determined ~~2024~~based ~~and~~on nodifferences ~~related~~between ~~valuation~~financial ~~allowance~~reporting ~~remains.~~and ~~Given~~tax ~~the~~basis ~~Company’s~~of ~~recent~~assets ~~operating~~and ~~losses~~liabilities, and ~~going~~are ~~concern~~measured ~~uncertainty~~using ~~identified in~~ the ~~current~~enacted ~~quarter,~~tax ~~the~~rates ~~Company~~and ~~determined~~laws that itare ~~may~~expected ~~not~~to ~~reasonably~~be ~~rely~~in oneffect ~~future~~when ~~forecasted~~the ~~income~~differences are expected to ~~benefit~~reverse. In evaluating the Company’s ability to recover its deferred tax assets~~. For~~ ~~these~~within ~~reasons~~ the ~~Company~~jurisdiction ~~has~~from ~~established~~which athey ~~full~~arise, ~~valuation~~the ~~allowance~~Company onconsiders ~~its~~all ~~deferred~~available ~~tax~~positive ~~assets~~and asnegative ofevidence, ~~October~~including ~~31,~~scheduled ~~2024.~~reversals of

Impairment of Long-Lived Assets - The Company reviews long-lived assets, including amortizable intangible assets, for impairment in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360: Property, Plant and Equipment. Property, machinery and equipment and finite life intangible assets are reviewed whenever events or changes in circumstances occur that indicate possible impairment. If events or changes in circumstances occur that indicate possible impairment, the Company first performs an impairment review based on an undiscounted cash flow analysis at the lowest level at which cash flows of the long-lived assets are largely independent of other groups of its assets and liabilities. This analysis requires management judgment with respect to changes in technology, the continued success of product lines, and future volume, revenue and expense growth rates. If the carrying value exceeds the undiscounted cash flows, the Company records an impairment, if any, for the difference between the estimated fair value of the asset group and its carrying value. The Company further conducts annual reviews of its long-lived asset groups for possible impairment. 24

~~Fair~~SigmaTron ~~Value Measurements Warrants – Fair value measurements are market-based measurements~~International, ~~not entity-specific measurements~~Inc. Therefore, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. The Company follows a three-level hierarchy to prioritize the inputs used in valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below:

~~Level~~January ~~1: Quoted~~31, ~~prices in active markets for identical assets or liabilities.~~2025

~~Level~~Notes ~~2: Quoted~~to ~~prices~~Condensed ~~for~~Consolidated ~~similar~~Financial 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.Statements

~~Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable in active markets.~~(Unaudited)

~~During~~Note ~~the~~H three month period 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~~Significant ~~rate,~~Accounting ~~and~~Policies ~~expected~~– ~~number of warrants ultimately utilized and term that are not observable in active markets.~~Continued

24deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company begins with historical results and changes in accounting policies, and incorporates assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment and estimates by management about the forecasts of future taxable income and are consistent with the plans and estimates the Company uses to manage the underlying businesses. In evaluating the objective evidence that historical results provide, the Company considers three years of cumulative operating income and/or loss. Valuation allowances are established when necessary to reduce deferred income tax assets to an amount more likely than not to be realized. Given the Company’s recent operating losses and going concern uncertainty identified in the previous quarter, the Company determined that it may not reasonably rely on future forecasted income to benefit its deferred tax assets. For these reasons the Company has established a full valuation allowance on its deferred tax assets as of October 31, 2024, which remains effective as of January 31, 2025.

~~SigmaTron~~Impairment ~~International~~of Long-Lived Assets - The Company reviews long-lived assets, ~~Inc~~including amortizable intangible assets, for impairment in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360: Property, Plant and Equipment. Property, machinery and equipment and finite life intangible assets are reviewed whenever events or changes in circumstances occur that indicate possible impairment. If events or changes in circumstances occur that indicate possible impairment, the Company first performs an impairment review based on an undiscounted cash flow analysis at the lowest level at which cash flows of the long-lived assets are largely independent of other groups of its assets and liabilities. This analysis requires management judgment with respect to changes in technology, the continued success of product lines, and future volume, revenue and expense growth rates. If the carrying value exceeds the undiscounted cash flows, the Company records an impairment, if any, for the difference between the estimated fair value of the asset group and its carrying value. The Company further conducts annual reviews of its long-lived asset groups for possible impairment.

~~October~~Fair 31Value Measurements Warrants – Fair value measurements are market-based measurements, ~~2024~~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:

~~Notes~~Level to1: Quoted ~~Condensed~~prices ~~Consolidated~~in ~~Financial~~active ~~Statements~~markets for identical assets or liabilities.

~~(Unaudited)~~Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

~~Note~~Level H3: Valuations -derived ~~Significant~~from ~~Accounting~~valuation ~~Policies~~techniques -in ~~Continued~~which one or more significant inputs are unobservable in active markets.

~~The~~During ~~below~~the ~~table~~three ~~provides~~and anine ~~summary~~month ofperiods ~~the~~ended ~~fair~~January ~~value~~31, of2025, the Company’s ~~warrant~~valued ~~liability~~its ~~during~~contingent ~~the~~warrants ~~six~~which ~~months~~are ~~ended~~classified ~~October~~as ~~31,~~liabilities ~~2024~~under authoritative accounting standards. These common stock warrants are valued using a Monte Carlo model, with level 3 inputs such as expected volatility,

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

~~New~~SigmaTron ~~Accounting~~International, ~~Standards:~~ Inc.

InJanuary 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.~~2025

InNotes ~~November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements~~ to ~~Reportable~~Condensed ~~Segment~~Consolidated ~~Disclosures”.~~Financial 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.Statements

25(Unaudited)

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

~~October~~risk-free 31interest rate, ~~2024~~and expected number of warrants ultimately utilized and term that are not observable in active markets.

~~Notes~~The tobelow ~~Condensed~~table ~~Consolidated~~provides ~~Financial~~a ~~Statements~~summary of the fair value of the Company’s warrant liability during the nine months ended January 31, 2025.

(Unaudited)


		January 31,
		2025
Beginning balance	$	-
Contingent warrants issuance		2,263,000
Issuance of warrants		(175,469)
Change in fair value of warrants		(898,985)
Ending balance	$	1,188,546

~~Note~~New ~~H - Significant~~ Accounting ~~Policies~~Standards: ~~- Continued~~

In ~~December~~June ~~2023~~2016, the FASB issued Accounting Standard Update (ASU) ~~2023~~No. 2016-0913, “~~Income~~Financial ~~Taxes~~Instruments—Credit Losses (Topic ~~740~~326): ~~Improvements~~Measurement toof ~~Income~~Credit ~~Tax~~Losses ~~Disclosures~~on Financial Instruments.” ASU 2016-13, ~~which~~as ~~focuses~~amended by ASU 2019-04 and ASU 2019-05, that introduces a new forward-looking approach, based on ~~income~~expected ~~tax~~losses, ~~disclosures~~to ~~around~~estimate ~~effective~~credit ~~tax~~losses ~~rates~~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 ~~cash~~reasonable ~~income~~and ~~taxes~~supportable ~~paid~~forecasts. This ASU ~~requires~~also ~~public~~expands ~~business~~the ~~entities~~disclosure requirements to ~~disclose~~enable users of financial statements to understand the entity’s assumptions, onmodels anand ~~annual~~methods ~~basis~~for estimating expected credit losses. For smaller reporting companies, aASU ~~rate~~2016- ~~reconciliation~~13 ~~presented~~is ineffective ~~both~~for ~~dollars~~annual and ~~percentages. ASU~~interim ~~2023~~reporting periods beginning after December 15, 2022, and the guidance is to be applied using the modified-09retrospective ~~also~~approach. ~~identifies~~Earlier ~~specific~~adoption ~~categories~~is ~~that~~permitted. ~~would~~The ~~require~~Company ~~disclosure~~adopted this ASU in the first quarter ended July 31, ~~including~~2023 and it had no material impact on the ~~following:~~consolidated financial statements.

~~State~~In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The new standard is intended to improve annual and ~~local~~interim ~~income~~reportable ~~tax~~segment disclosure requirements regardless of number of reporting units, ~~net~~primarily through enhanced disclosures of ~~federal~~significant ~~income~~expenses. ~~tax~~The ~~effect~~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.

~~Foreign tax effects~~26

~~Effect~~SigmaTron ofInternational, ~~cross-border tax laws~~Inc.

~~Enactment~~January of31, ~~new tax laws~~2025

~~Nontaxable~~Notes orto ~~nondeductible~~Condensed ~~items~~Consolidated Financial Statements

~~Tax credits~~(Unaudited)

~~Changes~~Note inH ~~valuation~~- ~~allowances~~Significant Accounting Policies - Continued

~~Changes~~In inDecember ~~unrecognized~~2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which focuses on income tax ~~benefits~~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:

~~This~~State ~~ASU~~and ~~also~~local ~~requires entities to disclose the amount of~~ income ~~taxes paid~~tax, net of ~~refunds received, disaggregated by~~ federal, ~~state~~income ~~and~~tax foreign jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 2024. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. effect

~~Note~~Foreign Itax ~~– Leases~~effects

~~The~~Effect 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 decisioncross-~~making~~border ~~rights~~tax ~~over the asset.~~ laws

~~The~~Enactment ~~Company’s lease terms may include options to extend or terminate the lease. The Company exercises judgment to determine the term~~ of ~~those~~new ~~leases~~tax ~~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.~~ laws

~~The~~Nontaxable ~~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~~nondeductible 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 items

26Tax credits

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

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

~~Notes~~This ASU also requires entities to ~~Condensed~~disclose ~~Consolidated~~the ~~Financial~~amount ~~Statements~~of income taxes paid, net of refunds received, disaggregated by federal, state and foreign jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 2024. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

~~(Unaudited)~~Note I – Leases

~~Note~~The ICompany –leases ~~Leases~~office –and ~~Continued~~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.

~~incurred~~The Company’s lease terms may include options to extend or terminate the lease. The ~~Variable~~Company ~~payments~~exercises ~~made~~judgment to ~~third~~determine ~~parties~~the ~~for~~term ~~these,~~of orthose ~~similar~~leases ~~costs,~~when ~~such~~extension asor ~~utilities,~~termination options are ~~not~~present ~~included~~and includes such options in the calculation of the lease ~~payments~~term when it is reasonably certain that it will exercise those options.

AtThe ~~commencement,~~Company ~~lease-related~~has ~~assets~~elected ~~and~~to ~~liabilities~~include ~~are~~both ~~measured~~lease atand ~~the~~non-lease ~~present~~components ~~value~~in ofthe ~~future~~determination of lease payments. ~~over~~Payments ~~the~~made ~~lease~~to ~~term.~~a Aslessor ~~most~~for ofitems ~~the~~such ~~Company’s~~as ~~leases~~taxes, doinsurance, ~~not~~common ~~provide~~area anmaintenance, ~~implicit~~or ~~rate,~~other ~~the~~costs ~~Company~~commonly ~~exercises~~referred ~~judgment~~to as executory costs, are also included in ~~determining~~lease ~~the~~payments ~~incremental~~if ~~borrowing~~they ~~rate~~are ~~based~~fixed. onThe ~~the~~fixed ~~information~~portion ~~available~~of ~~when~~these payments are included in the calculation of the lease ~~commences~~liability, towhile ~~measure~~any ~~the~~variable ~~present~~portion ~~value~~would ofbe ~~future~~recognized ~~payments.~~as variable lease expenses, when

Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease cost includes amortization, which is recognized on a straight-line basis over the expected life of the leased asset, and interest expense, which is recognized following an effective interest rate method.27

~~Operating~~SigmaTron ~~leases are included in other assets~~International, ~~current operating lease obligations, and operating lease obligations (less current portion) on the Company’s Consolidated Balance Sheet~~Inc. Finance leases are included in property, plant and equipment and current and long-term portion of finance lease obligations on the Company’s Consolidated Balance Sheet. Short term leases with an initial term of 12 months or less are not presented on the balance sheet with expense recognized as incurred.

~~The~~January ~~following~~31, ~~table presents lease assets and liabilities and their balance sheet classification:~~2025

			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 current‎liabilities	Current portion of operating lease‎obligations		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 lease‎obligations		2,043,612		2,214,127
Finance lease noncurrent ‎liabilities	Finance lease obligations, less‎current portion		2,180,940		3,147,447

Notes to Condensed Consolidated Financial Statements

27(Unaudited)

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

~~October~~incurred. 31Variable payments made to third parties for these, ~~2024~~or similar costs, such as utilities, are not included in the calculation of lease payments.

~~Notes~~At commencement, lease-related assets and liabilities are measured at the present value of future lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company exercises judgment in determining the incremental borrowing rate based on the information available when the lease commences to ~~Condensed~~measure ~~Consolidated~~the ~~Financial~~present ~~Statements~~value of future payments.

~~(Unaudited)~~Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease cost includes amortization, which is recognized on a straight-line basis over the expected life of the leased asset, and interest expense, which is recognized following an effective interest rate method.

~~Note~~Operating Ileases –are ~~Leases~~included –in ~~Continued~~other assets, current operating lease obligations, and operating lease obligations (less current portion) on the Company’s Consolidated Balance Sheet. Finance leases are included in property, plant and equipment and current and long-term portion of finance lease obligations on the Company’s Consolidated Balance Sheet. Short term leases with an initial term of 12 months or less are not presented on the balance sheet with expense recognized as incurred.

The ~~components~~following oftable presents lease ~~expense~~assets ~~for the three~~ and ~~six~~liabilities ~~month periods ended October 31, 2024~~ and ~~2023,~~their ~~are~~balance assheet ~~follows~~classification:

		Three Months		Three Months		Six Months	Six Months
			January 31,			April 30,
		Ended		Ended		Ended	Ended
	Classification		2025			2025
	Expense	October 31,		October 31,		October 31,	October 31,
Operating Leases:
	Classification	2024		2023		2024	2023
Right-of-use Assets	Right-of-use assets	$	11,889,695		$	7,463,301
Operating Leases:
Operating lease current‎liabilities	Current portion of operating lease‎obligations		3,929,383			2,789,107
Operating lease cost	Operating	966,308		896,963		1,895,142	1,792,432
Operating lease noncurrent ‎liabilities	Operating lease obligations, less ‎current portion		8,340,370			4,958,247
Variable lease cost	Operating	51,112		56,209		102,223	112,418
Finance Leases:
Short term lease cost	Operating	2,850		2,250		5,700	4,500
Right-of-use Assets	Property, machinery and equipment		6,359,277			6,959,660
Finance Leases:
Finance lease current ‎liabilities	Current portion of finance lease‎obligations		1,970,016			2,214,127
Amortization of ‎right-of-use assets	Operating	674,398		693,341		1,357,303	1,334,188
Finance lease noncurrent ‎liabilities	Finance lease obligations, less‎current portion		1,756,973			3,147,447
Interest expense	Interest	70,606		134,753		202,484	254,439
Total		1,765,274		1,783,516		3,562,852	3,497,978

~~The weighted average lease term and discount rates for the quarters ended October 31, 2024 and 2023, are as follows:~~28

	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%

SigmaTron International, Inc.

28January 31, 2025

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

~~October 31, 2024~~(Unaudited)

~~Notes~~Note toI ~~Condensed~~– ~~Consolidated~~Leases ~~Financial~~– ~~Statements~~Continued

~~(Unaudited)~~The components of lease expense for the three and nine month periods ended January 31, 2025 and 2024, are as follows:

Note I – Leases – Continued


		Three Months	Three Months	Nine Months	Nine Months
		Ended	Ended	Ended	Ended
	Expense	January 31,	January 31,	January 31,	January 31,
	Classification	2025	2024	2025	2024
Operating Leases:
Operating lease cost	Operating	1,125,313	900,315	3,020,455	2,698,737
Variable lease cost	Operating	51,876	50,224	154,099	162,643
Short term lease cost	Operating	2,850	2,250	8,550	6,750
Finance Leases:
Amortization of ‎right-of-use assets	Operating	651,274	738,325	2,008,577	2,072,513
Interest expense	Interest	121,373	141,787	371,274	396,226
Total		1,952,686	1,832,901	5,562,955	5,336,869

~~Future~~The ~~payments~~weighted ~~due~~average ~~under~~lease ~~leases~~term ~~reconciled~~and todiscount ~~lease~~rates ~~liabilities~~for the quarters ended January 31, 2025 and 2024, are as follows:

		Operating Leases			Finance Leases
	January 31,		January 31,
For the remaining 6 months of the fiscal year ending April 30:
	2025		2024
2025	$	1,903,672		$	1,271,464
Operating Leases:
For the fiscal years ending April 30:
Weighted average remaining lease term (months)	58.73		44.52
2026		3,534,597			1,990,280
Weighted average discount rate	7.5%		4.7%
2027		1,432,379			1,160,336
Finance Leases:
2028		1,192,461			362,983
Weighted average remaining lease term (months)	25.14		32.15
2029		1,223,470			-
Weighted average discount rate	10.4%		9.8%
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

~~Supplemental disclosures of cash flow information related to leases for the six months ended October 31, 2024 and 2023 are as follows:~~29

	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.

29January 31, 2025

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

~~October 31, 2024~~(Unaudited)

~~Notes~~Note toI ~~Condensed~~– ~~Consolidated~~Leases ~~Financial~~– ~~Statements~~Continued

~~(Unaudited)~~Future payments due under leases reconciled to lease liabilities are as follows:

Note J – Intangible Assets


		Operating Leases		Finance Leases
For the remaining 3 months of the fiscal year ending April 30:
2025	$	1,221,301	$	704,892
For the fiscal years ending April 30:
2026		4,545,893		1,990,280
2027		2,479,487		1,160,336
2028		1,906,691		362,983
2029		1,223,470		-
2030		954,769		-
Thereafter		2,640,549		-
Total undiscounted lease payments		14,972,160		4,218,491
Present value discount, less interest		2,702,407		491,502
Lease liability	$	12,269,753	$	3,726,989

~~Intangible~~Supplemental ~~assets~~disclosures ~~subject~~of cash flow information related to ~~amortization~~leases ~~are~~for ~~summarized~~the asnine ofmonths ~~October~~ended January 31, 2025 and 2024 are as follows:

		October 31,2024
	Nine Months Ended
		Gross
	January 31,	January 31,
		Carrying		Accumulated		Net Intangible
Other Information	2025	2024
		Amount		Amortization		Asset Balance
Cash paid for amounts included in the measurement of lease liabilities:
Spitfire:
Operating cash flows from finance leases	121,373	141,787
Non-contractual customer relationship			4,690,000		3,873,462		816,538
Operating cash flows from operating leases	452,847	181,263
Total		$	4,690,000	$	3,873,462	$	816,538
Financing cash flows from finance leases	1,634,585	1,463,488
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	-	2,747,984
Right-of-use assets obtained in exchange for ‎operating lease liabilities	6,988,864	3,123,409

~~Intangible assets subject to amortization are summarized as of April~~ 30~~, 2024 as follows:~~

	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 International, Inc.

~~Estimated~~January ~~aggregate amortization expense for the Company’s intangible assets, which become fully amortized in 2028, for the remaining periods as of October~~ 31, ~~2024, are as follows:~~2025

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

Notes to Condensed Consolidated Financial Statements

Amortization expense was $81,028 and $82,809 for the three month periods ended October 31, 2024 and October 31, 2023, respectively. Amortization expense was $162,650 and $166,224 for the six month periods ended October 31, 2024 and October 31, 2023, respectively.(Unaudited)

Note KJ – ~~Subsequent~~Intangible ~~Event~~Assets

~~During~~Intangible ~~December~~assets ~~2024,~~subject ~~the~~to ~~Company~~amortization ~~executed~~are asummarized ~~sale/leaseback~~as ~~transaction~~of ~~for~~January ~~its principal facility in Elk Grove Village~~31, ~~Illinois. The~~2025 ~~sale~~as ~~price~~follows: ~~was $9,500,000. The lease is for a three year term with two, one-year tenant (Company) options. The proceeds are intended to reduce debt.~~


	January 31,2025
	Gross
	Carrying		Accumulated		Net Intangible
	Amount		Amortization		Asset Balance

Spitfire:
Non-contractual customer relationship		4,690,000		3,954,490		735,510
Total	$	4,690,000	$	3,954,490	$	735,510

~~SigmaTron~~Intangible ~~International~~assets subject to amortization are summarized as of April 30, ~~Inc.~~2024 as follows:

October 31, 2024


	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

~~Item~~Estimated ~~2.Management~~aggregate amortization expense for the Company’s ~~Discussion~~intangible ~~and~~assets, ~~Analysis~~which ofbecome ~~Financial~~fully ~~Condition~~amortized ~~and~~in ~~Results~~2028, for the remaining periods as of ~~Operations.~~January 31, 2025, are as follows:

In addition to historical financial information, this discussion of the business of SigmaTron International, Inc. (“SigmaTron”), its subsidiaries Standard Components de Mexico S.A., AbleMex, S.A. de C.V., Digital Appliance Controls de Mexico, S.A. de C.V., Spitfire Controls (Vietnam) Co. Ltd., and Spitfire Controls (Cayman) Co. Ltd., wholly-owned foreign enterprises Wujiang SigmaTron Electronics Co., Ltd. and Wujiang SigmaTron Electronic Technology Co., Ltd., and its international procurement office, SigmaTron International Inc. Taiwan Branch (collectively, the “Company”) and other Items in this Form 10-Q contain forward-looking statements concerning the Company’s business or results of operations. Words such as “continue,” “anticipate,” “will,” “expect,” “believe,” “plan,” and similar expressions identify forward-looking statements. These forward-looking statements are based on the current expectations of the Company. Because these forward-looking statements involve risks and uncertainties, the Company’s plans, actions and actual results could differ materially. Such statements should be evaluated in the context of the direct and indirect risks and uncertainties inherent in the Company’s business including, but not necessarily limited to, the Company’s continued dependence on certain significant customers; the continued market acceptance of products and services offered by the Company and its customers; pricing pressures from the Company’s customers, suppliers and the market; the activities of competitors, some of which may have greater financial or other resources than the Company; the variability of the Company’s operating results; the results of long-lived assets and goodwill impairment testing; the impact of material weaknesses in internal controls over financial reporting; the ability to achieve the expected benefits of acquisitions as well as the expenses of acquisitions; the collection of aged account receivables; the variability of the Company’s customers’ requirements; the impact of inflation on the Company’s operating results; the availability and cost of necessary components and materials; the impact acts of war may have 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; the Company’s ability to generate cash from operations or otherwise, necessary to reduce debt or meet debt covenants as expected; changes in U.S., Mexican, Chinese, Vietnamese or Taiwanese regulations affecting the Company’s business; 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.


For the remaining 3 months of the fiscal year ending April 30:	2025	$	81,027
For the fiscal years ending April 30:	2026		317,728
	2027		310,900
	2028		25,855
		$	735,510

‎Amortization expense was $81,028 and $82,809 for the three month periods ended January 31, 2025 and January 31, 2024, respectively. Amortization expense was $243,678 and $249,033 for the nine month periods ended January 31, 2025 and January 31, 2024, respectively.

SigmaTron International, Inc.

~~October~~January 31, ~~2024~~2025

~~Overview:~~Notes to Condensed Consolidated Financial Statements

~~The Company currently operates in one reportable segment as an independent provider of electronic manufacturing services~~ (~~“EMS”~~Unaudited) and provides manufacturing and assembly services ranging from the assembly of individual components to the assembly and testing of box-build electronic products. The Company has the ability to produce assemblies requiring mechanical as well as electronic capabilities. This includes printed circuit board assemblies, electro-mechanical subassemblies and completely assembled (box-build) electronic products.

~~The~~Note ~~Company~~K ~~relies~~– on numerous third-party suppliers for components used in the Company’s production process. Certain of these components are available only from single-sources or a limited number of suppliers. In addition, a customer’s specifications may require the Company to obtain components from a single-source or a small number of suppliers. The loss of any such suppliers could have a material impact on the Company’s results of operations. Further, the Company could operate at a cost disadvantage compared to competitors who have greater direct buying power from suppliers. The Company does not enter into long-term purchase agreements with major or single-source suppliers. The Company believes that short-term purchase orders with its suppliers provides flexibility, given that the Company’s orders are based on the changing needs of its customers.Sale/Leaseback

InDuring ~~connection~~December ~~with the production of assembled products~~2024, the Company ~~provides~~executed ~~services~~a tosale/leaseback ~~its~~transaction ~~customers,~~for ~~including~~its ~~(1)~~principal ~~automatic~~facility ~~and~~in ~~manual~~Elk ~~assembly~~Grove ~~and~~Village, ~~testing~~Illinois. The ofsale ~~products;~~price ~~(2)~~was ~~material~~$9,500,000. Net ~~sourcing~~proceeds ~~and~~were ~~procurement;~~$8,292,098 ~~(3)~~of ~~manufacturing~~which ~~and~~$7,266,912 ~~test~~was ~~engineering~~held ~~support;~~in ~~(4)~~escrow ~~design~~at ~~services;~~JPM ~~(5)~~as ~~warehousing~~of ~~and~~January ~~distribution~~31, ~~services;~~2025 ~~(6)~~for ~~assistance~~repayment inof ~~obtaining~~the ~~product~~Company’s ~~approval~~debt ~~from~~in ~~governmental~~accordance ~~and~~with ~~other~~its ~~regulatory~~credit ~~bodies and (7) compliance reporting~~agreements. The Company ~~provides~~recorded ~~these~~a ~~manufacturing~~pretax ~~services~~gain ~~through~~of an$7,175,191 ~~international~~on ~~network~~the ofsale, ~~facilities~~which ~~located~~is inreflected ~~the~~under ~~United~~Other ~~States,~~income ~~Mexico,~~on ~~China,~~the ~~Vietnam~~Condensed ~~and~~Consolidated ~~Taiwan~~Statements of Operations.

~~Sales~~In ~~can~~connection bewith athis ~~misleading~~transaction, ~~indicator of~~ the Company’s ~~financial~~entered ~~performance. Sales~~into ~~levels~~a ~~can~~lease ~~vary~~for ~~considerably~~the ~~among~~building. The ~~customers~~lease ~~and~~is ~~products~~for ~~depending~~a onthree ~~the~~year ~~type~~term ofwith ~~services~~two, ~~(turnkey~~one-year ~~versus~~tenant ~~consignment~~(Company) ~~rendered by the Company and the demand by customers~~options. ~~Consignment~~The ~~orders~~lease ~~require~~is ~~the~~classified ~~Company~~as tooperating ~~perform manufacturing services on components~~ and ~~other~~was ~~materials~~recorded ~~supplied~~as by a ~~customer,~~right-of-use ~~and~~asset ~~the~~with ~~Company charges only for its labor, overhead and manufacturing costs, plus~~ a ~~profit. In~~balance ~~the case~~ of ~~turnkey orders~~$2, ~~the Company provides~~623, ~~in addition to manufacturing services~~848, ~~the~~a ~~components~~current ~~and~~operating ~~other~~lease ~~materials~~obligation ~~used~~with ~~in assembly. Turnkey contracts, in general, have~~ a ~~higher~~balance ~~dollar volume~~ of ~~sales for each given assembly~~$783,400 ~~owing to inclusion of the cost of components~~ and ~~other~~a ~~materials~~long-term inoperating ~~net~~lease ~~sales~~obligation ~~and~~with ~~cost~~a ofbalance ~~goods sold. Variations in the number~~ of ~~turnkey orders compared to consignment orders can lead to significant fluctuations in the Company’s revenue and gross margin levels. Consignment orders accounted for less than~~ $1~~% of the Company’s revenues for the three and six month periods ended October 31~~,845,146 ~~2024~~as ~~and~~of ~~October~~January 31, ~~2023~~2025.

The Company’s international footprint provides our customers with flexibility within the Company to manufacture in China, Mexico, Vietnam or the U.S. We believe this strategy will continue to serve the Company well as its customers continuously evaluate their supply chain strategies.32

~~Despite~~SigmaTron ~~supply chain component shortages improving in fiscal 2024~~International, ~~the Company’s business, results of operations, and financial condition continue to be adversely affected by certain supply chain issues due to world-wide component shortages~~Inc. ~~The Company anticipates continuing improvement in supply chain predictability in fiscal 2025.~~

32January 31, 2025

SigmaTronItem International,2.Management’s IncDiscussion and Analysis of Financial Condition and Results of Operations.

~~October~~In 31addition to historical financial information, ~~2024~~this discussion of the business of SigmaTron International, Inc. (“SigmaTron”), its subsidiaries Standard Components de Mexico S.A., AbleMex, S.A. de C.V., Digital Appliance Controls de Mexico, S.A. de C.V., Spitfire Controls (Vietnam) Co. Ltd., and Spitfire Controls (Cayman) Co. Ltd., wholly-owned foreign enterprises Wujiang SigmaTron Electronics Co., Ltd. and Wujiang SigmaTron Electronic Technology Co., Ltd., and its international procurement office, SigmaTron International Inc. Taiwan Branch (collectively, the “Company”) and other Items in this Form 10-Q contain forward-looking statements concerning the Company’s business or results of operations. Words such as “continue,” “anticipate,” “will,” “expect,” “believe,” “plan,” and similar expressions identify forward-looking statements. These forward-looking statements are based on the current expectations of the Company. Because these forward-looking statements involve risks and uncertainties, the Company’s plans, actions and actual results could differ materially. Such statements should be evaluated in the context of the direct and indirect risks and uncertainties inherent in the Company’s business including, but not necessarily limited to, the Company’s continued dependence on certain significant customers; the continued market acceptance of products and services offered by the Company and its customers; pricing pressures from the Company’s customers, suppliers and the market; the activities of competitors, some of which may have greater financial or other resources than the Company; the variability of the Company’s operating results; the results of long-lived assets and goodwill impairment testing; the impact of material weaknesses in internal controls over financial reporting; the ability to achieve the expected benefits of acquisitions as well as the expenses of acquisitions; the collection of aged account receivables; the variability of the Company’s customers’ requirements; the impact of inflation on the Company’s operating results; the availability and cost of necessary components and materials; the impact acts of war may have on the supply chain and the Company’s customers; demand challenges resulting from inflation and supply chain uncertainty; the ability of the Company and its customers to keep current with technological changes within its industries; regulatory compliance, including conflict minerals; the continued availability and sufficiency of the Company’s credit arrangements; the costs of borrowing under the Company’s senior and subordinated credit facilities, including under the rate indices that replaced LIBOR; relatively high interest rates; the ability to meet the Company’s financial and restrictive covenants under its loan agreements; the Company’s ability to generate cash from operations or otherwise, necessary to reduce debt or meet debt covenants as expected; changes in U.S., Mexican, Chinese, Vietnamese or Taiwanese regulations affecting the Company’s business, including but not limited to the imposition of tariffs; the turmoil in the global economy and financial markets; governmental actions or the threats of certain actions, such as tariffs imposed or threatened to be imposed by the federal government and any retaliatory tariffs imposed by other countries; public health crises; the continued availability of scarce raw materials, exacerbated by global supply chain disruptions, necessary for the manufacture of products by the Company; the stability of the U.S., Mexican, Chinese, Vietnamese and Taiwanese economic, labor and political systems and conditions; global business disruption caused by the Russian invasion of Ukraine and related sanctions and the conflict in the Middle East; currency exchange fluctuations; and the ability of the Company to manage its growth. These and other factors which may affect the Company’s future business and results of operations are identified throughout the Company’s Annual Report on Form 10-K, and as risk factors, may be detailed from time to time in the Company’s filings with the Securities and Exchange Commission. These statements speak as of the date of such filings, and the Company undertakes no obligation to update such statements in light of future events or otherwise unless otherwise required by law.

~~Results~~‎ ~~of Operations:~~

~~The following table sets forth the Company’s consolidated results of operations, including the percentage relationships of gross profit and expense items to net sales for the periods indicated:~~33

	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

SigmaTron International, Inc.

~~Net~~January ~~Sales~~31, 2025

Net sales decreased $23,972,324, or -24.3%, to $74,719,360 for the three month period ended October 31, 2024, compared to $98,691,684 for the same period in the prior fiscal year. The Company’s sales decreased for the three month period ended October 31, 2024, in the consumer electronics, industrial electronics and medical/life science markets. The decrease in sales is primarily due to customers that have lowered their demand in the current quarter, compared to the same period in the prior fiscal year.Overview:

~~Costs~~The Company currently operates in one reportable segment as an independent provider of electronic manufacturing services (“EMS”) and provides manufacturing and assembly services ranging from the assembly of individual components to the assembly and testing of box-build electronic products. ~~sold~~The Company has the ability to produce assemblies requiring mechanical as well as electronic capabilities. This includes printed circuit board assemblies, electro-mechanical subassemblies and completely assembled (box-build) electronic products.

~~Cost~~The ofCompany ~~products~~relies ~~sold~~on ~~decreased~~numerous ~~$21,188,773,~~third-party orsuppliers ~~-23.8%,~~for tocomponents ~~$67,815,156~~used ~~(90~~in the Company’s production process.8% Certain of ~~net~~these ~~sales)~~components ~~for~~are ~~the~~available ~~three~~only ~~month~~from ~~period~~single-sources ~~ended~~or ~~October~~a ~~31,~~limited ~~2024,~~number ~~compared~~of tosuppliers. ~~$89~~In addition,~~003,929~~ ~~(90.2%~~a ofcustomer’s ~~net~~specifications ~~sales)~~may ~~for~~require the ~~same~~Company ~~period~~to inobtain ~~the~~components ~~prior~~from ~~fiscal~~a ~~year~~single-source or a small number of suppliers. The ~~increase~~loss inof ~~cost~~any ofsuch ~~products~~suppliers ~~sold~~could ashave a ~~percentage~~material impact on the Company’s results of ~~sales~~operations. isFurther, ~~primarily~~the ~~due~~Company tocould ~~lower~~operate ~~sales~~at ~~volumes,~~a ~~higher~~cost ~~labor~~disadvantage ~~costs~~compared ~~and~~to ~~other~~competitors ~~fixed~~who ~~manufacturing~~have ~~costs~~greater ~~for~~direct ~~the~~buying ~~three~~power ~~month~~from ~~period~~suppliers. ~~ended~~The ~~October~~Company ~~31,~~does ~~2024,~~not ~~than~~enter ininto ~~the~~long-term ~~same~~purchase ~~period~~agreements inwith ~~the~~major ~~prior~~or ~~fiscal~~single-source ~~year~~suppliers. The ~~three~~Company ~~month~~believes ~~period~~that ~~ended~~short-term ~~October~~purchase ~~31,~~orders ~~2024~~with ~~includes~~its ~~approximately~~suppliers ~~$300~~provides flexibility,~~000~~ ofgiven ~~severance~~that ~~related~~the toCompany’s ~~staff~~orders ~~reductions~~are ~~during~~based on the ~~period~~changing needs of its customers.

~~Gross~~In ~~profit~~connection ~~margin~~with the production of assembled products, the Company provides services to its customers, including (1) automatic and manual assembly and testing of products; (2) material sourcing and procurement; (3) manufacturing and test engineering support; (4) design services; (5) warehousing and distribution services; (6) assistance in obtaining product approval from governmental and other regulatory bodies and (7) compliance reporting. The Company provides these manufacturing services through an international network of facilities located in the United States, Mexico, China, Vietnam and Taiwan.

~~Gross~~Sales ~~profit~~can ~~margin~~be ~~was~~a 9misleading indicator of the Company’s financial performance.2% Sales levels can vary considerably among customers and products depending on the type of ~~net~~services ~~sales~~(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, ~~for~~and the ~~three~~Company ~~month~~charges ~~period~~only ~~ended~~for ~~October~~its 31labor, ~~2024~~overhead and manufacturing costs, ~~compared~~plus toa 9profit.8% In ~~for~~the case of turnkey orders, the ~~same~~Company ~~period~~provides, in addition to manufacturing services, the ~~prior~~components ~~fiscal~~and ~~year~~other materials used in assembly. ~~The~~Turnkey ~~decrease~~contracts, in ~~gross~~general, ~~margins~~have as a ~~percentage~~higher dollar volume of sales isfor ~~primarily~~each ~~due~~given assembly, owing to ~~lower~~inclusion ~~sales~~of ~~volumes,~~the ~~higher~~cost ~~labor~~of components and other ~~fixed~~materials ~~manufacturing~~in ~~costs,~~net sales and ~~severance~~cost ~~related~~of ~~expenses~~goods ~~during~~sold. Variations in the ~~three~~number ~~month~~of ~~period~~turnkey ~~ended~~orders ~~October~~compared ~~31,~~to ~~2024,~~consignment ~~compared~~orders can lead to significant fluctuations in the ~~same~~Company’s ~~period~~revenue inand gross margin levels. Consignment orders accounted for less than 1% of the ~~prior~~Company’s ~~fiscal~~revenues ~~year~~for the three and nine month periods ended January 31, 2025 and January 31, 2024.

33The Company’s international footprint provides our customers with flexibility within the Company to manufacture in China, Mexico, Vietnam or the U.S. We believe this strategy will continue to serve the Company well as its customers continuously evaluate their supply chain strategies.

~~SigmaTron~~Despite ~~International~~supply chain component shortages improving in fiscal 2024, ~~Inc~~the Company’s business, results of operations, and financial condition continue to be adversely affected by certain supply chain issues due to world-wide component shortages. The Company anticipates continuing improvement in supply chain predictability in fiscal 2025.

~~October 31, 2024~~34

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

~~Selling~~January ~~and 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.~~2025

~~Change~~Results ~~in fair value~~ of ~~warrants~~Operations:

~~Warrants~~The ~~were~~following ~~issued~~table atsets aforth ~~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~~consolidated ~~stock. The~~results ~~valuation~~of ~~was~~operations, ~~based~~including on the ~~actual~~percentage ~~number~~relationships of ~~warrants~~gross ~~that~~profit ~~can~~and beexpense ~~issued~~items ~~under~~to ~~this~~net ~~amendment~~sales ~~using~~for the ~~Monte~~periods ~~Carlo model subject to remeasurement until warrants are exercised or cancelled.~~ indicated:

Interest expense, net


	Three Months Ended
	January 31,		January 31,
	2025		2024

Net sales	$	71,067,863	$	95,919,888
Cost of products sold		65,514,800		85,992,928
As a percent of net sales		92.2%		89.7%
Gross profit		5,553,063		9,926,960
As a percent of net sales		7.8%		10.3%
Selling and administrative expenses		6,378,141		6,683,488
As a percent of net sales		9.0%		7.0%
Operating (loss)/income		(825,078)		3,243,472

Other income		7,175,191		2,094
Change in fair value of warrants		1,524,985		-
Interest expense, net		(3,328,267)		(2,568,824)
Income before income taxes		4,546,831		676,742
Income tax expense		(663,220)		(77,736)
Net income	$	3,883,611	$	599,006

~~Interest~~Net ~~expense,~~Sales 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.

~~Income~~Net ~~tax~~sales ~~expense~~decreased $24,852,025, or 25.9%, to $71,067,863 for the three month period ended January 31, 2025, compared to $95,919,888 for the same period in the prior fiscal year. The Company’s sales decreased for the three month period ended January 31, 2025, in the consumer electronics, industrial electronics and medical/life science markets. The decrease in sales is primarily due to customers that have lowered their demand in the current quarter, compared to the same period in the prior fiscal year.

~~Income~~Costs tax expense increased $4,329,588 to $4,673,254 for the three month period ended October 31, 2024, compared to $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~~products ~~allowance.~~ sold

~~Net~~Cost ~~income/loss~~of products sold decreased $20,478,128, or 23.8%, to $65,514,800 (92.2% of net sales) for the three month period ended January 31, 2025, compared to $85,992,928 (89.7% of net sales) for the same period in the prior fiscal year. The increase in cost of products sold as a percentage of sales is primarily due to lower sales volumes, inefficient labor costs due to lower sales volumes and other fixed manufacturing costs for the three month period ended January 31, 2025, than in the same period in the prior fiscal year. The three month period ended January 31, 2025 includes approximately $80,000 of severance related to staff reductions during the period.

~~Net~~Gross ~~income~~profit decreased $9,494,931, to a net loss of $9,466,669 for the three month period ended October 31, 2024, compared to a net income of $28,262 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. margin

34Gross profit margin was 7.8% of net sales, for the three month period ended January 31, 2025, compared to 10.3% for the same period in the prior fiscal year. The decrease in gross margins as a percentage of sales is primarily due to lower sales volumes, higher labor and other fixed manufacturing costs during the three month period ended January 31, 2025, compared to the same period in the prior fiscal year.

~~SigmaTron International, Inc.~~35

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

~~The~~January ~~following table sets forth the Company’s consolidated results of operations~~31, ~~including the percentage relationships of gross profit and expense items to net sales for the periods indicated:~~2025

	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

Selling and administrative expenses

~~Net~~Selling ~~Sales~~and administrative expenses decreased $305,347, or 4.6% to $6,378,141 (9.0% of net sales) for the three month period ended January 31, 2025, compared to $6,683,488 (7.0% of net sales) for the same period in the prior fiscal year. The decrease in selling and administrative expenses is primarily due to a decrease in bonus expense and miscellaneous general expenses.

~~Net~~Change ~~sales decreased $37,325,702, or 19.0%, to $159,496,338 for the six month period ended October 31, 2024, compared to $196,822,040 for the same period~~ in ~~the~~fair ~~prior~~value ~~fiscal~~of year. The Company’s sales decreased for the six month period ended October 31, 2024, in the industrial electronics and medical/life science markets. The decrease in sales is primarily due to customers that have lowered their demand in the current quarter, compared to the same period in the prior fiscal year. The decrease in net sales was partially offset by an increase in the consumer electronics market. warrants

~~Costs~~Contingent warrants were issued during fiscal 2025 using a Monte Carlo model. A change in the fair value of ~~products~~contingent ~~sold~~warrants decreased expense by $1,524,985 for a net value as of January 31, 2025 of $1,188,546 in connection with the TCW Amendment which included the obligation to issue contingent warrants to purchase shares of the Company’s common stock. The valuation was based on the actual number of contingent warrants that can be issued under the TCW Amendment using the Monte Carlo model subject to remeasurement until contingent warrants are issued, exercised or cancelled.

~~Cost~~Interest ~~of products sold decreased $31~~expense,~~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.

~~Gross~~Interest ~~profit~~expense, ~~margin~~net, increased to $3,328,267 for the three month period ended January 31, 2025, compared to $2,568,824 for the same period in the prior fiscal year. The increase relates to deferred financing costs required by the debt modification during the second quarter of fiscal 2025.

~~Gross~~Income ~~profit~~tax ~~margin~~expense 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.

35Income tax expense increased $585,484 to $663,220 for the three month period ended January 31, 2025, compared to $77,736 for the same period in the prior fiscal year. The Company’s effective tax rate was 14.59% and 11.49% for the three month period ended January 31, 2025 and 2024, respectively. The increase in income tax expense for the three month period ended January 31, 2025 compared to the same period in the previous year is due to variations in income earned by jurisdiction. The increase in effective tax rate is due to variations in income earned by jurisdiction.

~~SigmaTron~~Net ~~International, Inc.~~income/loss

~~October~~Net income increased $3,284,605, to $3,883,611 for the three month period ended January 31, 2025, compared to a net income of $599,006 for the same period in the prior fiscal year. The increase in net income primarily relates to the gain related to the December 2024 sale/leaseback transaction for the facility located in Elk Grove Village, IL in the amount of $7,175,191.

~~Selling and administrative expenses~~ 36

~~Selling~~SigmaTron ~~and administrative expenses decreased $462~~International,~~062,~~ ~~or -3~~Inc.4% to $12,994,377 (8.1% of net sales) for the six month period ended October 31, 2024, compared to $13,456,439 (6.8% of net sales) for the same period in the prior fiscal year. The decrease in selling and administrative expenses is primarily due to an decrease in bonus expense and legal professional fees.

~~Change~~January in31, ~~fair value of warrants~~2025

~~Warrants~~The ~~were~~following ~~issued~~table atsets aforth ~~valuation of $2,263,000 during~~ the six month period ended October 31, 2024 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~~consolidated ~~stock. The~~results ~~valuation~~of ~~was~~operations, ~~based~~including on the ~~actual~~percentage ~~number~~relationships of ~~warrants~~gross ~~that~~profit ~~can~~and beexpense ~~issued~~items ~~under~~to ~~this~~net ~~amendment~~sales ~~using~~for the ~~Monte~~periods ~~Carlo model subject to remeasurement until warrants are exercised or cancelled.~~ indicated:

Interest expense, net


	Nine Months Ended
		January 31,		January 31,
		2025		2024

Net sales	$	230,564,201	$	292,741,928
Cost of products sold		211,701,740		263,475,993
As a percent of net sales		91.8%		90.0%
Gross profit		18,862,461		29,265,935
As a percent of net sales		8.2%		10.0%
Selling and administrative expenses		19,372,518		20,139,927
As a percent of net sales		8.4%		6.9%
Operating (loss)/income		(510,057)		9,126,008

Other income		7,175,191		27,224
Change in fair value of warrants		898,985		-
Interest expense, net		(10,297,650)		(7,996,598)
(Loss) income before income taxes		(2,733,531)		1,156,634
Income tax expense		(6,138,687)		(267,267)
Net (loss)/income	$	(8,872,218)	$	889,367

~~Interest~~Net 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. Sales

~~Income~~Net ~~tax~~sales ~~expense~~decreased $62,177,727, or 21.2%, to $230,564,201 for the nine month period ended January 31, 2025, compared to $292,741,928 for the same period in the prior fiscal year. The Company’s sales decreased for the nine month period ended January 31, 2025, in the industrial electronics and medical/life science markets. The decrease in sales is primarily due to customers that have lowered their demand during fiscal 2025, compared to the same period in the prior fiscal year. The decrease in net sales was partially offset by an increase in the consumer electronics market.

~~Income~~Costs 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~~products ~~allowance.~~ sold

~~Net~~Cost ~~income/loss~~of products sold decreased $51,774,253, or 19.7%, to $211,701,740 (91.8% of net sales) for the nine month period ended January 31, 2025, compared to $263,475,993 (90.0% of net sales) for the same period in the prior fiscal year. The increase in cost of products sold as a percentage of sales is primarily due to lower sales volumes, inefficient labor costs due to lower sales volumes and other fixed manufacturing costs for the nine month period ended January 31, 2025, than in the same period in the prior fiscal year. The nine month period ended January 31, 2025 includes approximately $697,000 of severance related to staff reductions during the period.

~~Net~~Gross ~~income~~profit 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. margin

~~Liquidity~~Gross profit margin was 8.2% of net sales, for the nine month period ended January 31, 2025, compared to 10.0% for the same period in the prior fiscal year. The decrease in gross margins as a percentage of sales is primarily due to lower sales volumes, higher labor and ~~Capital~~other ~~Resources:~~fixed manufacturing costs, and severance related expenses during the nine month period ended January 31, 2025, compared to the same period in the prior fiscal year.

36SigmaTron International, Inc.

~~SigmaTron~~January ~~International~~31, ~~Inc.~~2025

~~October~~Selling ~~31,~~and ~~2024~~administrative expenses

~~Credit~~Selling ~~Agreements~~and administrative expenses decreased $767,409, or 3.8% to $19,372,518 (8.4% of net sales) infor ~~full~~the nonine ~~later~~month ~~than~~period ~~September~~ended 30January 31, 2025, ~~unless~~compared ~~the~~to ~~Company~~$20,139,927 ~~meets~~(6.9% ~~certain~~of ~~debt~~net ~~ratios~~sales) for the ~~twelve~~same ~~month~~ period ~~ending~~in onthe ~~August~~prior ~~31,~~fiscal ~~2025~~year. InThe ~~addition,~~decrease ~~there~~in selling and administrative expenses is primarily due to a ~~risk~~decrease ofin ~~additional~~bonus ~~covenant~~expense ~~failures~~and ~~based~~miscellaneous ongeneral ~~current~~expenses. The ~~revenue~~decrease ~~levels~~in selling and administrative expenses was partially offset by an increase in accounting professional fees.

~~The~~Change ability of the Company to continue as a going concern is dependent on the Company having adequate capital to fund its operating plan and performance. Management’s plans to continue as a going concern may include raising additional capital through sales of equity securities and borrowing, focusing the Company on its most profitable elements, and exploring alternative funding sources on an as needed basis. However, management cannot provide any assurances that the Company will be successful in ~~accomplishing~~fair ~~its~~value 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. The Company is obligated by its lenders to execute a Replacement Transaction by September 2025. Due to this requirement, there is substantial doubt about the ability of the Company to continue as a going concern for one year from the issuance of the accompanying consolidated financial statements. While the Company expects to refinance under commercially reasonable terms there can be no guarantee of success. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.warrants

~~The~~Contingent ~~Company~~warrants ~~has~~were ~~reduced~~issued ~~its~~at ~~debt~~a byvaluation ~~selling~~of ~~assets~~$2,263,000 ~~reducing~~during ~~workforce~~the nine month period ended January 31, ~~and~~2025 ~~reducing~~using ~~its~~a ~~working~~Monte ~~capital~~Carlo ~~requirements. The~~model ~~Company~~with isa ~~exploring~~subsequent ~~additional~~change ~~activities~~in ~~designed~~the tofair ~~further~~value ~~reduce~~of ~~its~~contingent ~~debt~~warrants ~~load~~decreasing ~~and~~expense ~~improve~~by ~~operating~~$898,985 ~~performance. Subsequent~~for toa ~~October~~net value as of January 31, ~~2024~~2025 of $1,188,546 ~~during~~in ~~December~~connection ~~2024,~~with the ~~Company~~TCW ~~executed~~Amendment awhich ~~sale/leaseback~~included ~~transaction~~the ~~with~~obligation ~~respect~~to issue contingent warrants to ~~its~~purchase ~~Elk~~shares ~~Grove~~of ~~Village,~~the ~~Illinois~~Company’s ~~headquarters,~~common stock. The valuation was based on the actual number of contingent warrants that can be issued under the TCW Amendment using the ~~proceeds~~Monte Carlo model subject to ~~further~~remeasurement ~~reduce~~until ~~its~~warrants ~~debt~~are ~~position~~issued, exercised or cancelled.

~~The~~Interest 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 31expense, 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. net

InInterest ~~the~~expense, ~~event~~net, ~~customers~~increased ~~delay~~to ~~orders or future payments are not made timely~~$10,297,650 ~~economic conditions remain impacted~~ for ~~longer than~~ the ~~Company~~nine ~~expects~~month orperiod ~~deteriorate~~ended ~~further,~~January ~~the Company experiences continued supply chain disruptions on certain raw materials~~31, ~~the Company desires to expand its operations~~2025, ~~its~~compared ~~business grows more rapidly than expected, the Company fails~~ to ~~effectively reduce debt~~$7, ~~any new public health crises arise~~996,598 orfor ~~geopolitical~~the ~~risks~~same ~~continue~~period orin ~~worsen,~~ the ~~Company’s~~prior ~~liquidity~~fiscal ~~position could be severely impacted and additional financing resources may be necessary~~year. The ~~There~~increase isrelates ~~no assurance that the Company will be able~~ to ~~obtain~~deferred ~~equity or debt~~ financing atcosts ~~acceptable~~as ~~terms,~~required orby ~~at all, in~~ the ~~future. There~~debt ismodification noduring ~~assurance that~~ the ~~Company~~second ~~will~~quarter beof ~~able~~fiscal ~~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~~2025.

37Income tax expense

~~SigmaTron~~Income ~~International~~tax expense increased $5,871,420 ~~Inc~~to $6,138,687 for the nine month period ended January 31, 2025, compared to $267,267 for the same period in the prior fiscal year. The Company’s effective tax rate was (224.57)% and 23.10% for the nine month period ended January 31, 2025 and 2024, respectively. The increase in income tax expense for the nine month period ended January 31, 2025 compared to the same period in the previous year is primarily due to an increase in the valuation allowance in the current period. The decrease in effective tax rate is due to variations in income earned by jurisdiction and the recording of valuation allowance.

~~October~~Net ~~31, 2024~~income/loss

~~Operating~~Net ~~Activities~~income decreased $9,761,585, to a net loss of $8,872,218 for the nine month period ended January 31, 2025, compared to net income of $889,367 for the same period in the prior fiscal year. The decrease in net income primarily relates to lower sales volumes, a warrant remeasurement, deferred financing costs related to debt modification, higher labor and other fixed manufacturing costs, severance related costs and a full valuation allowance on deferred tax assets. The decrease in net income is partially offset with the gain related to the December 2024 sale/leaseback transaction for the facility located in Elk Grove Village, IL in the amount of $7,175,191.

~~Cash~~Liquidity flow provided by operating activities was $12,931,640 for 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~~Capital ~~assets~~Resources: 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.

~~Cash~~The ~~flow~~Company’s ~~provided~~financial bystatements ~~operating~~are ~~activities~~prepared ~~was~~using ~~$15,766,616 for the six months ended October 31, 2023~~U. ~~Cash~~S. ~~flow~~GAAP ~~provided~~applicable byto ~~operating activities was primarily the result of~~ a ~~decrease~~going inconcern, ~~inventory~~which incontemplates the ~~amount~~realization of ~~$19,214,849~~assets and aliquidation ~~decrease~~of inliabilities ~~accounts receivable~~ in the ~~amount~~normal course of ~~$5,244,132~~business. ~~Cash~~Over ~~flow~~the ~~from~~past ~~operating~~two ~~activities~~years ~~was~~the ~~offset~~Company byhas abeen ~~decrease~~ in ~~accounts~~violation ~~payable~~of infinancial ~~the~~covenants ~~amount~~in ofits ~~$13,146,965~~credit ~~and~~agreements a(further ~~decrease~~discussion in ~~deferred~~Note ~~revenue~~E in– Long-term Debt), the ~~amount~~Company’s ofsecured ~~$4,140,944.~~lenders

~~Investing Activities.~~38

~~Cash~~SigmaTron ~~used in investing activities was $708~~International,~~301~~ ~~for the six months ended October 31, 2024~~Inc. During 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.

~~Cash~~January ~~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.~~ 2025

~~Financing~~agreed ~~Activities~~to amend the credit agreements. The Company must satisfy the terms of those amended agreements, including the requirement to pursue and close a Replacement Transaction to pay the Obligations (as defined in the Credit Agreements) in full no later than September 30, 2025 unless the Company meets certain debt ratios for the twelve month period ending on August 31, 2025. In addition, there is a risk of additional covenant failures based on current revenue levels.

~~Cash~~The ~~used~~ability inof ~~financing~~the ~~activities~~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 ~~$10~~equity securities and borrowing,~~657~~ focusing the Company on its most profitable elements,~~216~~ ~~for~~and exploring alternative funding sources on an as needed basis. However, management cannot provide any assurances that the ~~six~~Company ~~months~~will ~~ended~~be ~~October~~successful 31in accomplishing its plans. The supply chain challenges, ~~2024~~inflationary pressures, ~~was~~tariff, ~~primarily~~and the ~~result~~broader business climate in its industry have negatively impacted the Company’s business operations and is expected to continue to do so and, these impacts may include reduced access to capital. Additionally, the impact of ~~net~~potential ~~payments~~tariffs ~~under~~may have a negative on the ~~line~~Company’s business operations. The ability of ~~credit~~the Company to continue as a going concern may be dependent upon its ability to successfully secure other sources of financing and ~~term~~sustain ~~loan~~profitable ~~agreement~~operations. The Company is obligated by its lenders to execute a Replacement Transaction by September 2025. Due to this requirement, there is substantial doubt about the ability of the Company to continue as a going concern for one year from the issuance of the accompanying consolidated financial statements. While the Company expects to refinance under commercially reasonable terms, there can be no guarantee of success. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

~~Cash~~The ~~used~~Company inhas ~~financing~~reduced ~~activities~~its ofdebt ~~$12~~by selling assets,~~930~~ reducing workforce,~~306~~ ~~for~~and ~~the~~reducing ~~six~~its ~~months~~working ~~ended~~capital ~~October~~requirements. The ~~31,~~Company ~~2023,~~is ~~was~~exploring ~~primarily~~additional activities designed to further reduce its debt load and improve operating performance. During December 2024, the ~~result~~Company ofexecuted ~~net~~a ~~payments~~sale/leaseback ~~under~~transaction with respect to its Elk Grove Village, Illinois headquarters, using the ~~line~~proceeds ofto ~~credit~~further ~~and~~reduce ~~term~~its ~~loan~~debt ~~agreement~~position.

~~Financing~~The ~~Summary~~Company’s primary sources of liquidity have traditionally been comprised of cash and cash equivalents as well as availability under credit agreements in place at the time. The Company is obligated to either meet certain debt ratios by August 31, 2025 or find a Replacement Transaction no later than September 30, 2025. While the Company expects to have sufficient financial resources available on acceptable terms, there can be no assurance this will occur, particularly in light of increasingly conservative financial markets. The Company continues to explore other strategic initiatives to further reduce its debt to enable it to comply with increasingly stringent financial covenants. Delays or a failure to effectively reduce debt, including due to circumstances outside of our control, could have an adverse effect on our financial position and results of operations.

~~Notes~~In ~~Payable~~the –event ~~Banks~~customers delay orders or future payments are not made timely, economic conditions remain impacted for longer than the Company expects or deteriorate further, the tariff issues persist or worsen, the Company experiences continued supply chain disruptions on certain raw materials, the Company desires to expand its operations, its business grows more rapidly than expected, the Company fails to effectively reduce debt, any new public health crises arise, or geopolitical risks continue or worsen, the Company’s liquidity position could be severely impacted and additional financing resources may be necessary. There is no assurance that the Company will be able to obtain equity or debt financing at acceptable terms, or at all, in the future. There is no assurance that the Company will be able to retain or renew its credit agreements in the future, or that any retention or renewal will be on the same terms as currently exist.

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 39

38SigmaTron International, Inc.

~~SigmaTron~~January ~~International~~31, ~~Inc.~~2025

~~October~~Operating ~~31, 2024~~Activities.

andCash JPMorganflow Chaseprovided Bank,by N.A,operating asactivities lenderwas (“JPM”)$13,714,684 whichfor providesthe fornine amonths securedended creditJanuary facility31, consisting2025, ofcompared ato revolvingcash loanflow facilityprovided and,by untiloperating Julyactivities 2022of $16,837,855 afor termthe loansame facility,period andin the Creditprior Agreementfiscal datedyear. asCash offlow Julyprovided 18,by 2022operating (asactivities amended,was restated,primarily supplementedthe orresult otherwiseof modifieda fromdecrease timein toinventory time,in the “Termamount Loanof Agreement”$21,874,667, andan togetherincrease within theoperating JPMlease Creditliabilities Agreement,in the “Creditamount Agreements”)of by$4,522,399 and amonga thedecrease Company,in accounts receivable in the financialamount institutionsof identified$3,400,794. thereinCash (theflow “TCWfrom Lenders”)operating andactivities TCWwas Assetoffset Managementby Companyan LLC,increase asin administrativeright-of-use agentassets forin the TCWamount Lendersof ($4,426,394, a decrease in suchaccounts capacity,payable in the “Agentamount of $5,”167,332 and collectivelya withdecrease thein TCWcustomer Lendersdeposits andin JPM, the “Lenderamount Parties”)of $3,673,999. whichThe providesdecrease forin ainventory termis loanthe facility. Theresult Facility,of asimprovement amended,in the component marketplace which has allowed the Company to borrowcomplete onassemblies afor revolvingshipping. basisThe updecrease toin theaccounts lesserpayable ofis (i)a $70,000,000result orof (ii)lower anaccounts amountpayable equalbalances due to alower percentagepurchases of raw materials and the eligibletiming receivableof borrowingpayments. baseThe plusdecrease in accounts receivable is a percentageresult of thelower inventoryaccounts borrowingreceivable basebalances minusdue anyto reserveslower establishedvolumes byduring Lender (the “Revolvingnine Commitment”).months Theended maturityJanuary date31, of2025, as compared to the Facilitysame isperiod Julyin 18,the 2027prior year.

~~The~~Cash ~~Credit~~flow ~~Agreements~~provided ~~contain~~by ~~financial~~operating ~~covenants~~activities ~~relating~~was to$16,837,855 ~~(i)~~for the ~~Fixed~~nine ~~Charge~~months ~~Coverage~~ended ~~Ratio~~January ~~(as~~31, ~~defined~~2024. Cash inflow ~~the~~provided ~~Credit~~by ~~Agreements),~~operating ~~which~~activities iswas primarily the ~~ratio~~result of ~~the~~a ~~Company’s~~decrease ~~fixed~~in ~~payments~~inventory onin ~~its~~the ~~indebtedness~~amount ~~made~~of ~~during~~$30,072,373 ~~any~~and ~~fiscal~~an ~~period~~increase ~~minus~~in ~~non-financed~~customer ~~capital~~deposits ~~expenditures to EBITDA (as defined~~ in the ~~Credit~~amount ~~Agreements)~~of ~~and~~$6,159,254. Cash ~~(ii)~~flow ~~the~~from ~~Total~~operating ~~Debt~~activities towas ~~EBITDA~~offset ~~Ratio~~by ~~(as~~a ~~defined~~decrease in ~~the~~accounts ~~Credit~~payable ~~Agreements),~~in ~~which is~~ the ~~ratio~~amount of ~~the~~$17,063,059 ~~Company’s~~and ~~borrowed~~a ~~money~~decrease orin ~~letters~~deferred ofrevenue ~~credit~~in tothe ~~EBITDA~~amount of $4,922,855.

InInvesting 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 daysActivities.

InCash ~~connection~~provided ~~with~~by investing activities was $7,359,036 for the ~~entry~~nine ~~into~~months ended January 31, 2025. During the ~~JPM~~first ~~Credit~~nine ~~Agreement~~months of fiscal year 2025, ~~Lender~~the ~~and~~Company ~~TCW~~purchased $933,062 asin ~~administrative~~machinery ~~agent~~and ~~under~~equipment to be used in the ~~Term~~ordinary ~~Loan~~course ~~Agreement~~of business. The Company anticipates future purchases of machinery and equipment will be funded by lease transactions. However, ~~entered~~there ~~into~~is no assurance that the ~~Intercreditor~~Company ~~Agreement~~will be able to obtain funding for leases at acceptable terms, ~~dated~~if ~~July~~at 18all, ~~2022~~in the future. During December 2024, ~~and~~the ~~acknowledged~~Company byexecuted ~~SigmaTron~~a ~~and~~sale/leaseback ~~Wagz~~transaction ~~(the~~for ~~“ICA”)~~its principal facility in Elk Grove Village, toIllinois. The ~~set~~sale ~~forth~~price ~~and~~was ~~govern~~$9,500,000. Net ~~the~~proceeds ~~lenders’~~were ~~respective~~$8,292,098 ~~lien~~of ~~priorities~~which $7,266,912 ~~rights~~was ~~and~~held ~~remedies~~in ~~under~~escrow ~~the~~at JPM ~~Credit~~as ~~Agreement~~of ~~and~~January 31, 2025 for repayment of the ~~Term~~Company’s ~~Loan~~debt ~~Agreement~~in accordance with its credit agreements.

~~The~~Cash ~~facility~~used ~~under the JPM Credit Agreement is secured by: (a) a first priority security interest~~ in ~~SigmaTron’s~~investing ~~(i)~~activities ~~accounts~~was ~~receivable and inventory (excluding Term Priority Mexican Inventory (as defined in the ICA) and certain inventory in transit~~$1, ~~(ii) deposit accounts~~672,441 ~~(iii)~~for ~~proceeds of business interruption insurance that constitute ABL BI Insurance Share (as defined in~~ the ~~ICA),~~nine ~~(iv)~~months ~~certain~~ended ~~other~~January ~~property~~31, ~~including~~2024. During ~~payment intangibles, instruments, equipment, software and hardware and similar systems, books and records, to~~ the ~~extent~~first ~~related~~nine tomonths ~~the foregoing, and (v) all proceeds~~ of ~~the~~fiscal ~~foregoing,~~year 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~~Company ~~loan~~purchased ~~facility compared to an outstanding balance of~~ $281,~~598~~672,~~719~~441 ~~and~~in ~~$13,443,766~~machinery ~~of unused availability at April 30, 2024. As of October 31, 2024~~ and ~~April~~equipment ~~30,~~used ~~2024,~~in the ~~unamortized~~ordinary ~~deferred~~course ~~financing~~of ~~amount offset against outstanding debt was $529,987 and $592,664, respectively~~business.

~~The~~Financing ~~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”)~~Activities. ~~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,

39Cash used in financing activities of $21,390,793 for the nine months ended January 31, 2025, was primarily the result of net payments under the line of credit and term loan agreement.

~~SigmaTron~~Cash ~~International~~used in financing activities of $12,267,545 ~~Inc~~for the nine months ended January 31, 2024, was primarily the result of net payments under the line of credit and term loan agreement.

~~October 31, 2024~~40

~~the~~SigmaTron ~~unamortized deferred financing amount offset against outstanding debt was $2~~International,~~992,817~~ ~~and $935,492, respectively~~Inc.

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