UNITED STATES

SECURITIES AND EXCHANGE COMMISSION



Washington, D.C. 20549



_________________





Form 10-Q



__________________



(Mark One)

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

      EXCHANGE ACT OF 1934



For the quarterly period ended July 31, 2020



OR



 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    No 


 

SigmaTron International, Inc.

July 31, 2020

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.  Yes    No 



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of a “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large Accelerated Filer     Accelerated Filer 



Non-accelerated Filer            Smaller Reporting Company 



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.



Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).  Yes    No 



Indicate the number of shares outstanding of the registrant’s common stock, $0.01 par value, as of September 9,  20204,242,508







 

2

 


 

 



SigmaTron International, Inc.



Index





 

 

 

 



 

 

 

 

PART 1.

FINANCIAL INFORMATION:         

 

Page No.



Item 1.

Condensed Consolidated Financial Statements

 

 



 

Condensed Consolidated Balance Sheets – July 31, 2020 (Unaudited) and April 30, 2020

 



 

Condensed Consolidated Statements of Operations – (Unaudited)

 

 



 

Three Months Ended July 31, 2020 and 2019

 



 

Condensed Consolidated Statements of Changes in Stockholders’

 

 



 

Equity – (Unaudited) Three Months Ended July 31, 2020 and 2019

 



 

Condensed Consolidated Statements of Cash Flows – (Unaudited)

 

 



 

Three Months Ended July 31, 2020 and 2019

 



 

Notes to Condensed Consolidated Financial Statements – (Unaudited)  

 

10 



Item 2.

Management’s Discussion and Analysis of Financial Condition and

 

 



 

Results of Operations

 

24 



Item 3.

Quantitative and Qualitative Disclosures About Market Risks

 

31 



Item 4.

Controls and Procedures

 

31 



 

 

 

 

PART II

OTHER INFORMATION:

 

 



Item 1.

Legal Proceedings

 

32 



Item 1A.

Risk Factors

 

32 



Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

32 



Item 3.

Defaults Upon Senior Securities

 

32 



Item 4.

Mine Safety Disclosures

 

32 



Item 5.

Other Information

 

32 



Item 6.

Exhibits

 

33 



 

Signatures

 

34 



 

 

 

 

 



 

3

 


 

 



SigmaTron International, Inc.

Condensed Consolidated Balance Sheets





 

 

 

 

 



 

 

 

 

 



 

July 31,

 

 

 



 

2020

 

 

April 30,



 

(Unaudited)

 

 

2020



 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

2,846,096 

 

$

6,779,445 



 

 

 

 

 

Accounts receivable, less allowance for doubtful accounts of

 

 

 

 

 

$395,969 and $727,252 at July 31, 2020 and April 30, 2020, respectively

 

28,017,482 

 

 

30,804,976 

Inventories, net

 

85,206,598 

 

 

87,179,369 

Prepaid expenses and other assets

 

1,222,861 

 

 

1,510,943 

Refundable and prepaid income taxes

 

1,759,210 

 

 

1,699,970 

Other receivables

 

4,137,033 

 

 

2,642,094 



 

 

 

 

 

Total current assets

 

123,189,280 

 

 

130,616,797 



 

 

 

 

 

Property, machinery and equipment, net

 

33,632,655 

 

 

33,935,760 



 

 

 

 

 



 

 

 

 

 

Intangible assets, net

 

2,261,913 

 

 

2,350,949 

Deferred income taxes

 

280,764 

 

 

284,435 

Other assets

 

9,482,870 

 

 

8,891,090 

   

 

 

 

 

 

Total other long-term assets

 

12,025,547 

 

 

11,526,474 



 

 

 

 

 

Total assets

$

168,847,482 

 

$

176,079,031 



 

 

 

 

 

Liabilities and stockholders' equity:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Trade accounts payable

$

44,652,683 

 

$

55,770,953 

Accrued wages

 

5,202,388 

 

 

4,206,825 

Accrued expenses

 

2,596,582 

 

 

2,670,504 

Income taxes payable

 

246,124 

 

 

469,143 

Current portion of long-term debt

 

4,114,057 

 

 

2,878,160 

Current portion of finance lease obligations

 

1,772,662 

 

 

1,902,295 

Current portion of operating lease obligations

 

2,213,415 

 

 

2,150,161 



 

 

 

 

 

Total current liabilities

 

60,797,911 

 

 

70,048,041 



 

 

 

 

 

Long-term debt, less current portion

 

41,211,579 

 

 

38,537,064 

Income taxes payable

 

404,975 

 

 

452,619 

Finance lease obligations, less current portion

 

1,464,597 

 

 

1,884,722 

Operating lease obligations, less current portion

 

5,949,279 

 

 

5,281,811 

Other long-term liabilities

 

842,700 

 

 

810,769 

Deferred income taxes

 

186,079 

 

 

188,206 



 

 

 

 

 

Total long-term liabilities

 

50,059,209 

 

 

47,155,191 



 

 

 

 

 

Total liabilities

 

110,857,120 

 

 

117,203,232 



 

 

 

 

 

4

 


 

 

Commitments and contingencies

 

 

 

 

 



 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

Preferred stock, $.01 par value; 500,000 shares

 

 

 

 

 

authorized, none issued or outstanding

 

 -

 

 

 -

Common stock, $.01 par value; 12,000,000 shares

 

 

 

 

 

authorized, 4,257,508 and 4,242,508 shares issued and

 

 

 

 

 

outstanding at July 31, 2020 and April 30, 2020, respectively

 

42,296 

 

 

42,265 

Capital in excess of par value

 

23,634,711 

 

 

23,619,513 

Retained earnings

 

34,313,355 

 

 

35,214,021 



 

 

 

 

 

Total stockholders' equity

 

57,990,362 

 

 

58,875,799 



 

 

 

 

 

Total liabilities and stockholders' equity

$

168,847,482 

 

$

176,079,031 



 

 

 

 

 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.



























5

 


 

 

SigmaTron International, Inc.

Condensed Consolidated Statements of Operations









 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months

 

 

Three Months

 



 

Ended

 

 

Ended

 

 

 

July 31,

 

 

July 31,

 



 

2020

 

 

2019

 



 

(Unaudited)

 

 

(Unaudited)

 



 

 

 

 

 

 

Net sales

$

60,524,956 

 

$

74,009,981 

 

Cost of products sold

 

56,252,765 

 

 

67,049,649 

 



 

 

 

 

 

 

Gross profit

 

4,272,191 

 

 

6,960,332 

 



 

 

 

 

 

 

Selling and administrative expenses

 

5,059,525 

 

 

5,827,326 

 



 

 

 

 

 

 

Operating (loss) income

 

(787,334)

 

 

1,133,006 

 



 

 

 

 

 

 

Other income

 

(4,098)

 

 

(66,362)

 

Interest expense

 

338,264 

 

 

591,228 

 

(Loss) income before income tax expense

 

(1,121,500)

 

 

608,140 

 



 

 

 

 

 

 

Income tax (benefit) expense

 

(220,834)

 

 

247,115 

 



 

 

 

 

 

 

Net (loss) income

$

(900,666)

 

$

361,025 

 



 

 

 

 

 

 



 

 

 

 

 

 

(Loss) earnings per share – basic

$

(0.21)

 

$

0.09 

 



 

 

 

 

 

 

(Loss) earnings per share – diluted

$

(0.21)

 

$

0.09 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

Weighted average shares of common stock outstanding

 

 

 

 

 

 

Basic

 

4,250,986 

 

 

4,241,883 

 



 

 

 

 

 

 

Weighted average shares of common stock outstanding

 

 

 

 

 

 

Diluted

 

4,250,986 

 

 

4,241,883 

 



 

 

 

 

 

 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.













6

 


 

 

SigmaTron International, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity







 

 

 

 

 

 

 

 

 

 

 

 

 

 



For the three months ended July 31, 2020 (Unaudited)



 

 

 

 

 

 

 

Capital in

 

 

 

 

 

Total



 

Preferred

 

 

Common

 

 

excess of par

 

 

Retained

 

 

stockholders’



 

stock

 

 

stock

 

 

value

 

 

earnings

 

 

equity



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at May 1, 2020

$

 -

 

$

42,265 

 

$

23,619,513 

 

$

35,214,021 

 

$

58,875,799 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock awards

 

 -

 

 

31 

 

 

15,198 

 

 

 -

 

 

15,229 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 -

 

 

 -

 

 

 -

 

 

(900,666)

 

 

(900,666)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at July 31, 2020

$

 -

 

$

42,296 

 

$

23,634,711 

 

$

34,313,355 

 

$

57,990,362 



 

 

 

 

 

 

 

 

 

 

 

 

 

 









 

 

 

 

 

 

 

 

 

 

 

 

 

 



For the three months ended July 31, 2019 (Unaudited)



 

 

 

 

 

 

 

Capital in

 

 

 

 

 

Total



 

Preferred

 

 

Common

 

 

excess of par

 

 

Retained

 

 

stockholders’



 

stock

 

 

stock

 

 

value

 

 

earnings

 

 

equity



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at May 1, 2019

$

 -

 

$

42,146 

 

$

23,474,379 

 

$

34,770,924 

 

$

58,287,449 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative-effect adjustment for the adoption of Topic 842

 

 -

 

 

 -

 

 

 -

 

 

(5)

 

 

(5)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 -

 

 

 -

 

 

 -

 

 

361,025 

 

 

361,025 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at July 31, 2019

$

 -

 

$

42,146 

 

$

23,474,379 

 

$

35,131,944 

 

$

58,648,469 













7

 


 

 

SigmaTron International, Inc.

Condensed Consolidated Statements of Cash Flows







 

 

 

 

 



 

 

 

 

 



 

Three

 

 

Three



 

Months Ended

 

 

Months Ended



 

July 31,

 

 

July 31,



 

2020

 

 

2019



 

(Unaudited)

 

 

(Unaudited)



 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

Net (loss) income

$

(900,666)

 

$

361,025 



 

 

 

 

 

Adjustments to reconcile net income (loss)

 

 

 

 

 

to net cash provided by (used in) operating activities:

 

 

 

 

 

Depreciation and amortization of property, machinery and equipment

 

1,265,719 

 

 

1,235,516 

Amortization of right-of-use operating lease assets

 

(392,989)

 

 

532,418 

Restricted stock expense

 

15,229 

 

 

 -

Deferred income tax expense

 

1,544 

 

 

9,286 

Amortization of intangible assets

 

89,036 

 

 

91,420 

Amortization of financing fees

 

36,926 

 

 

26,614 

Loss from disposal or sale of machinery and equipment

 

4,242 

 

 

51 

Changes in operating assets and liabilities

 

 

 

 

 

Accounts receivable

 

2,787,494 

 

 

(487,711)

Inventories

 

1,972,771 

 

 

11,324,564 

Prepaid expenses and other assets

 

(190,700)

 

 

57,808 

Refundable and prepaid income taxes

 

(59,240)

 

 

195,046 

Income taxes payable

 

(270,663)

 

 

(66,734)

Trade accounts payable

 

(11,118,270)

 

 

(9,386,019)

Operating lease liabilities

 

730,722 

 

 

(586,079)

Accrued expenses and wages

 

886,244 

 

 

763,629 



 

 

 

 

 

Net cash (used in) provided by operating activities

 

(5,142,601)

 

 

4,070,834 



 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchases of machinery and equipment

 

(966,856)

 

 

(684,667)

Advances on other receivables

 

(1,131,900)

 

 

 -



 

 

 

 

 

Net cash used in investing activities

 

(2,098,756)

 

 

(684,667)



 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Proceeds under equipment notes

 

1,128,608 

 

 

 -

Payments of contingent consideration

 

 -

 

 

(57,537)

Payments under finance lease and sale leaseback agreements

 

(549,758)

 

 

(612,300)

Payments under equipment notes

 

(118,599)

 

 

(102,925)

Payments under building notes payable

 

(80,416)

 

 

(70,000)

Borrowings under revolving line of credit

 

76,661,576 

 

 

82,796,750 

Payments under revolving line of credit

 

(73,725,348)

 

 

(84,852,276)

Payments of debt financing costs

 

(8,055)

 

 

(5,959)



 

 

 

 

 

Net cash provided by (used in) financing activities

 

3,308,008 

 

 

(2,904,247)



 

 

 

 

 

8

 


 

 

Change in cash and cash equivalents

 

(3,933,349)

 

 

481,920 

Cash and cash equivalents at beginning of period

 

6,779,445 

 

 

1,005,810 



 

 

 

 

 

Cash and cash equivalents at end of period

$

2,846,096 

 

$

1,487,730 



 

 

 

 

 

Supplementary disclosures of cash flow information

 

 

 

 

 

Cash paid for interest

$

338,898 

 

$

564,188 

Cash paid for income taxes

 

96,288 

 

 

162,276 

Financing of insurance policy

 

83,048 

 

 

96,556 



 

 

 

 

 



 





 

9

 


 

SigmaTron International, Inc.

July 31, 2020

 

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, the “Company”) operates in one business segment as an independent provider of electronic manufacturing services (“EMS”), which includes printed circuit board assemblies and completely assembled (box-build) electronic products.  In connection with the production of assembled products, the Company 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; and (6) assistance in obtaining product approval from governmental and other regulatory bodies. 



Note B - Basis of Presentation



The accompanying unaudited condensed consolidated financial statements of SigmaTron International, Inc. (“SigmaTron”), SigmaTron’s wholly-owned 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., Spitfire Controls (Cayman) Co. Ltd. and wholly-owned foreign enterprises Wujiang SigmaTron Electronics Co., Ltd. and SigmaTron Electronic Technology Co., Ltd. (“SigmaTron China”) and international procurement office SigmaTron Taiwan branch (collectively, the “Company”) 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 10 of Regulation S-X.



Accordingly, the 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 month period ended July 31, 2020 is not necessarily indicative of the results that may be expected for the year ending April 30, 2021.  The condensed consolidated balance sheet at April 30, 2020, was derived from audited annual financial statements but does not contain all of the footnotes 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, 2020



COVID-19 and CARES Act



A pandemic of respiratory disease (abbreviated "COVID-19") began to spread globally, including to the United States, in early 2020. On March 11, 2020, the World Health Organization (WHO) declared COVID-19 to be a public health emergency of international concern. The full impact of the COVID-19 outbreak is inherently uncertain at the time of this report. The COVID-19 outbreak has resulted in travel restrictions and in some cases, prohibitions of non-essential activities, disruption and shutdown of certain businesses and greater uncertainty in global financial markets. The full extent to which COVID-19 impacts the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak within the U.S., China, Mexico, Vietnam and Taiwan, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

10

 


 

SigmaTron International, Inc.

July 31, 2020

 

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note B - Basis of Presentation - Continued



Even after COVID-19 has subsided, the Company may continue to experience materially adverse impacts to its business as a result of its global economic impact, including any recession that has occurred or may occur in the future. There are no comparable recent events which may provide guidance as to the effect of the spread of COVID-19, and, as a result, the ultimate impact of COVID-19, or a similar health epidemic or pandemic, is highly uncertain and subject to change. The Company has adopted several measures in response to the COVID-19 outbreak.  To date, the Company has been able to continue to meet the needs of its customers.  Although the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it will have a material adverse effect on the Company’s results of future operations, financial position, and liquidity in fiscal year 2021.



On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security (CARES) Act.” The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property. It also appropriated funds for the SBA Paycheck Protection Program loans that are forgivable in certain situations to promote continued employment, as well as Economic Injury Disaster Loans to provide liquidity to small businesses harmed by COVID-19.



As further described in Note E, the Company has applied for, and has received, funds under the Paycheck Protection in the amount of $6,282,973. The application for these funds required the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further requires the Company to take into account its current business activity and its ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. The receipt of these funds, and the forgiveness of the loan attendant to these funds, is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on its future adherence to the forgiveness criteria.



Due to the size of the PPP Loan, it is subject to review, which introduces a layer of uncertainty. If, despite the Company’s actions and certification that it satisfied all eligibility requirements for the PPP, it is later determined that it violated applicable laws or was otherwise ineligible to receive the PPP, the Company may be required to repay the PPP in its entirety in a lump sum or be subject to additional penalties, which could also result in adverse publicity and damage to the Company’s reputation. If these events were to transpire, they could have a material adverse effect on the Company’s business, results of operations, financial condition and liquidity in fiscal year 2021 and beyond.





 

11

 


 

SigmaTron International, Inc.

July 31, 2020

 

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note C - Inventories, net



The components of inventory consist of the following:









 

 

 

 

 



 

 

 

 

 



July 31,

 

April 30,



2020

 

2020



 

 

 

 

 

Finished products

$

24,251,266 

 

$

20,998,329 

Work-in-process

 

5,005,217 

 

 

5,215,280 

Raw materials

 

57,191,430 

 

 

62,316,122 



 

86,447,913 

 

 

88,529,731 

Less excess and obsolescence reserve

 

(1,241,315)

 

 

(1,350,362)



$

85,206,598 

 

$

87,179,369 

 



Note D - Earnings Per Share and Stockholders’ Equity



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







 

 

 

 

 

 



Three Months Ended

 



July 31,

 



2020

 

2019

 



 

 

 

 

 

 

Net (loss) income

$

(900,666)

 

$

361,025 

 

Weighted-average shares

 

 

 

 

 

 

Basic

 

4,250,986 

 

 

4,241,883 

 

Effect of dilutive stock options

 

 -

 

 

 -

 



 

 

 

 

 

 

Diluted

 

4,250,986 

 

 

4,241,883 

 



 

 

 

 

 

 

Basic (loss) earnings per share

$

(0.21)

 

$

0.09 

 



 

 

 

 

 

 

Diluted (loss) earnings per share

$

(0.21)

 

$

0.09 

 



Options to purchase 513,232 and 465,232 shares of common stock were outstanding at July 31, 2020 and 2019, respectively.  There were no options granted during the three month periods ended July 31, 2020 and 2019.  There was no stock option expense recognized for the three month periods ended July 31, 2020 and 2019.  There was no balance of unrecognized compensation expense related to the Company’s stock option plans at July 31, 2020 and 2019.  For the three month period ended July 31, 2020 and 2019,  299,129 and 424,484 shares, respectively, were not included in the diluted weighted average common shares outstanding calculation as they were anti-dilutive.    



12

 


 

SigmaTron International, Inc.

July 31, 2020

 

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note E - Long-term Debt



Debt and capital lease obligations consisted of the following at July 31, 2020 and April 30, 2020:







 

 

 

 

 



 

July 31,

 

 

April 30,



 

2020

 

 

2020



 

 

 

 

 

Debt:

 

 

 

 

 

Notes Payable - Banks

$

36,424,073 

 

$

33,472,125 

Notes Payable - Buildings

 

6,842,145 

 

 

6,922,561 

Notes Payable - Equipment

 

2,310,287 

 

 

1,300,278 

Unamortized deferred financing costs

 

(250,869)

 

 

(279,740)

Total debt

 

45,325,636 

 

 

41,415,224 

Less current maturities

 

4,114,057 

 

 

2,878,160 

Long-term debt

$

41,211,579 

 

$

38,537,064 



 

 

 

 

 

Finance lease obligations

$

3,237,259 

 

$

3,787,017 

Less current maturities

 

1,772,662 

 

 

1,902,295 

Total finance lease obligations, less current portion

$

1,464,597 

 

$

1,884,722 



Notes Payable – Banks



On March 31, 2017, the Company entered into a $35,000,000 senior secured credit facility with U.S. Bank, which expires on March 31, 2022.  The credit facility is collateralized by substantially all of the Company’s domestically located assets. The facility allows the Company to choose among interest rates at which it may borrow funds:  the bank fixed rate of five percent or LIBOR plus one and one half percent (effectively 1.74% at July 31, 2020).  Interest is due monthly. 



On July 16, 2018, the Company and U.S. Bank entered into an amendment of the revolving line of credit under the senior secured credit facility.  The amended revolving credit facility allows the Company to borrow up to the lesser of (i) $45,000,000 (the “Revolving Line Cap”) less reserves or (ii) the Borrowing Base, but no more than 90% of the Company’s Revolving Line Cap, except that the 90% limitation will expire if (i) the Company’s actual revolving loans for 90 consecutive days after the amendment’s effective date are less than 80% of the Company’s Borrowing Base and (ii) the Company maintains a Fixed Charge Coverage Ratio of 1.2 to 1.0 for four consecutive quarters.  The amendment also imposes sublimits on categories of inventory of $10,500,000 on raw materials, $10,000,000 on finished goods and $28,000,000 on all eligible inventory. 



On December 13, 2018, the Company and U.S. Bank entered into an amendment of the revolving credit facility.  The amendment provides an exception to otherwise ineligible foreign receivables for up to $3,000,000 of receivables paid by certain enumerated account debtors outside of the U.S. and Canada.





13

 


 

SigmaTron International, Inc.

July 31, 2020

 

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note E - Long-term Debt - Continued 



As of July 31, 2020, there was $28,836,868 outstanding and $12,224,733 of unused availability under the U.S. Bank facility compared to an outstanding balance of $26,884,494 and $13,850,575 of unused availability at April 30, 2020.  Deferred financing costs of $8,051 were capitalized during the three month period ended July 31, 2020, which are amortized over the term of the agreement.  As of July 31, 2020 and April 30, 2020, the unamortized amount offset against outstanding debt was $197,236 and $218,062, respectively.    



On April 23, 2020, the Company entered into a loan with U.S. Bank, as lender, pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), as administered by the U.S. Small Business Administration (the “SBA”) in the amount of $6,282,973 (the “PPP Loan”). The PPP Loan, in the form of a promissory note, matures on April 23, 2022.  No additional collateral or guarantees were provided by the Company for the PPP Loan. The PPP Loan provides for customary events of default.  Under the CARES Act, loan forgiveness may be available for the sum of documented payroll costs, rent payments, mortgage interest and covered utilities during the 24-week period beginning on the date of loan disbursement.  The amount of loan forgiveness will be reduced if recipients terminate employees or reduce salaries during the covered period.  The Company may be required to repay any portion of the outstanding principal that is not forgiven, along with accrued interest, and it cannot provide any assurance that it will be eligible for loan forgiveness, or that any amount of the PPP Loan will ultimately be forgiven by the SBA.  All aspects of the PPP Loan are subject to review by the SBA, including without limitation, the Company’s eligibility for and the size of the loan.  The review procedures have not been made public.  The Company cannot predict the outcome of that review nor be assured that all or any part of the PPP Loan will be forgiven.  To the extent that all or part of the PPP Loan is not forgiven, the Company will be required to make payments, including interest accruing at an annual interest rate of 1.0% beginning on the date of disbursement. 



On July 15, 2020 and August 7, 2020, the Company and U.S. Bank entered into amendments of the revolving credit facility.  The amendments revise the Fixed Charge Coverage Ratio.



On September 8, 2020, the Company and U.S. Bank entered into an amendment of the revolving credit facility.  The amendment allows the Company to borrow up to the lesser of (i) the Revolving Line Cap less reserves or (ii) the Borrowing Base, but no more than 80% of the Company’s Revolving Line Cap.  The amendment also imposes sublimits on categories of other investments to $4,000,000.



On March 15, 2019, the Company’s wholly-owned subsidiary, SigmaTron Electronic Technology Co., Ltd., entered into a credit facility with China Construction Bank.  Under the agreement SigmaTron Electronic Technology Co., Ltd. can borrow up to 10,000,000 Renminbi, approximately $1,430,000 as of July  31, 2020, 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 6.09%.  The term of the facility extends to March 14, 2024.  There was $1,288,512 outstanding under the facility at July  31, 2020 compared to an outstanding balance of $304,658 at April 30, 2020.



The Company is in compliance with its financial covenant as of July 31, 2020.



14

 


 

SigmaTron International, Inc.

July 31, 2020

 

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note E - Long-term Debt - Continued 



Notes Payable – Buildings



The Company entered into a mortgage agreement on December 21, 2017, in the amount of $5,200,000, with U.S. Bank to refinance the property that serves as the Company’s corporate headquarters and its Illinois manufacturing facility in Elk Grove Village, Illinois.  The note requires the Company to pay monthly principal payments in the amount of $17,333, bears interest at a fixed rate of 4.0% per year and is payable over a fifty-one month period.  Deferred financing costs of $74,066 were capitalized in fiscal year 2018 which are amortized over the term of the agreement.  As of July  31, 2020, the unamortized amount included as a reduction to long-term debt was $28,487A final payment of approximately $4,347,778 is due on or before March 31, 2022The outstanding balance was $4,680,000 and $4,732,000 at July, 31 2020 and April 30, 2020, respectively.



The Company entered into a mortgage agreement on December 21, 2017, in the amount of $1,800,000, with U.S. Bank to refinance the property that serves as the Company’s engineering and design center in Elgin, Illinois.  The note requires the Company to pay monthly principal payments in the amount of $6,000, bears interest at a fixed rate of 4.0% per year and is payable over a fifty-one month period.  Deferred financing costs of $65,381 were capitalized in the fiscal year 2018 which are amortized over the term of the agreement.  As of July 31, 2020 the unamortized amount included as a reduction to long-term debt was $25,146A final payment of approximately $1,505,000 is due on or before March 31, 2022The outstanding balance was $1,620,000 and $1,638,000 at July, 31 2020 and April 30, 2020, respectively. 



The Company entered into a mortgage agreement on March 3, 2020, in the amount of $556,000, with The Bank and Trust SSB to purchase 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, bears interest at a fixed rate of 5.75% per year and is payable over a 120 month period.  The outstanding balance was $542,145 and $552,561 at July 31, 2020 and April, 30 2020, respectively. 



Notes Payable – Equipment



The Company routinely enters into secured note agreements with Engencap Fin S.A. DE C.V. to finance the purchase of equipment. The terms of these secured note agreements mature from November 2021 through May 2023, with quarterly installment payments ranging from $11,045 to $37,941 and a fixed interest rate ranging from 6.65% to 8.00%.



The Company routinely enters into secured note agreements with FGI Equipment Finance LLC to finance the purchase of equipment. The terms of these secured note agreements mature from March 2025 through June 2025, with quarterly installment payments ranging from $10,723 to $69,439 and a fixed interest rate of 8.25%.



15

 


 

SigmaTron International, Inc.

July 31, 2020

 

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note E - Long-term Debt - Continued 



Annual maturities of the Company’s debt, net of deferred financing fees for the remaining periods as of July  31, 2020, are as follows:







 

 

 

 

 

 

 

 

 

 

 

 



 

Bank

 

Building

 

Equipment

 

Total



 

 

 

 

 

 

 

 

 

 

 

 

For the remaining 9 months of the fiscal year ending April 30:

2021

$

3,122,730 

 

$

242,160 

 

$

499,126 

 

$

3,864,016 

For the fiscal years ending April 30:

2022

 

31,761,962 

 

 

6,135,090 

 

 

654,483 

 

 

38,551,535 



2023

 

 -

 

 

47,752 

 

 

410,201 

 

 

457,953 



2024

 

1,288,512 

 

 

50,571 

 

 

330,128 

 

 

1,669,211 



2025

 

 -

 

 

53,557 

 

 

348,313 

 

 

401,870 



2026

 

 -

 

 

56,719 

 

 

68,036 

 

 

124,755 



Thereafter

 

 -

 

 

256,296 

 

 

 -

 

 

256,296 



 

$

36,173,204 

 

$

6,842,145 

 

$

2,310,287 

 

$

45,325,636 



 

 

 

 

 

 

 

 

 

 

 

 



Finance Lease and Sales Leaseback Obligations



The Company enters into various finance lease and sales leaseback agreements.  The terms of the lease agreements mature through November 2023, with monthly installment payments ranging from $1,455 to $40,173 and a fixed interest rate ranging from 3.75% to 12.73%.  





Note F - Income Tax



The income tax benefit was $220,834 for the three month period ended July 31, 2020 compared to an income tax expense of $247,115 for the same period in the prior fiscal year.  The Company’s effective tax rate was 19.69% and 40.63% for the quarters ended July 31, 2020 and 2019, respectively.  The decrease in income tax expense for the three month period ended July 31, 2020 compared to the same period in the previous year is due to a loss recognized in the current period as opposed to operating income recognized in the same period in the previous year. The decrease in effective tax rate is due primarily to a greater operating loss recognized in Vietnam in the previous period as compared to the current period for which no tax benefit was recorded due to a full valuation allowance. 



As described in Note E, the Company received a PPP Loan under the CARES Act of $6,282,963. For federal income tax purposes, the CARES Act expressly provides that any forgiveness or cancellation of all or part of such loans will not be treated as income for tax purposes. It is expected, however, that if the loan is deemed forgiven any deductions for the covered expenses that gave rise to the loan forgiveness will be disallowed to prevent a double tax benefit. As of July 31, 2020, the loan has not been forgiven and thus the expenses have not been disallowed for federal income tax purposes.



The Company has not changed its plans to indefinitely reinvest the earnings of the Company’s foreign subsidiaries.  The cumulative amount of unremitted earnings for which U.S. income taxes have not been recorded is $4,077,000 as of July 31, 2020. 

16

 


 

SigmaTron International, Inc.

July 31, 2020

 

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note G - Commitments and Contingencies



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



Note H - Critical Accounting Policies



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



The potential impact of future disruptions, continued economic uncertainty over COVID-19 may have a significant adverse impact on the timing of delivery of customer orders and the levels of future customer orders.  It is reasonably possible that these potential adverse impacts may result in the recognition of material impairments of the Company’s long-lived assets or other related charges in future periods.



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







 

 

 

 

 

 

 

 



 

 

 

Three Months Ended

 



 

 

 

July 31,

 



Net trade sales by
end-market

 

 

2020

 

 

2019

 



Industrial Electronics

 

$

36,617,258 

 

$

42,848,712 

 



Consumer Electronics

 

 

21,168,239 

 

 

26,659,187 

 



Medical / Life Sciences

 

 

2,739,459 

 

 

4,502,082 

 



Total Net Trade Sales

 

$

60,524,956 

 

$

74,009,981 

 



 

 

 

 

 

 

 

 



During the three month period ending July 31, 2020,  no revenues were recognized from performance obligations satisfied or partially satisfied in previous periods and no amounts were allocated to



17

 


 

SigmaTron International, Inc.

July 31, 2020

 

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note H - Critical Accounting Policies - Continued



performance obligations that remain unsatisfied or partially unsatisfied at July 31, 2020.  The Company is electing not to disclose the value of the remaining unsatisfied performance obligation with a duration of one year or less as permitted by the practical expedient in ASU 2014-09, “Revenue from Contracts with Customers.”  The Company had no material remaining unsatisfied performance obligations as of July 31, 2020, with an expected duration of greater than one year.



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



Deferred income tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.  In evaluating the Company’s ability to recover its deferred tax assets within the jurisdiction from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations.  In projecting future taxable income, the Company begins with historical results and changes in accounting policies, and incorporates assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies.  These assumptions require significant judgment and estimates by management about the forecasts of future taxable income and are consistent with the plans and estimates the Company uses to manage the underlying businesses.  In evaluating the objective evidence that historical results provide, the Company considers three years of cumulative operating income and/or loss.  Valuation allowances are established when necessary to reduce deferred income tax assets to an amount more likely than not to be realized.    The Company’s valuation allowance was $1,023,489 and $ 989,194 as of July 31, 2020 and April 30, 2020, respectively.



Investment in Wagz - As more fully described in Note I - Related Parties, the Company has recorded an investment in Wagz, a privately held company whose equity does not have a readily determinable fair value.  As permitted by ASC 321, Investments - Equity Securities, paragraph 321-35-2, the Company has elected to carry its investment in Wagz equity at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or a similar investment of the same issuer until the investment no longer qualifies to be measured under paragraph 321-35-2.  At July 31, 2020 and April 30, 2020, the Company continued to recognize the fair value of the Wagz common stock at $600,000.    



On May 29, 2020, Wagz entered into a Convertible Secured Promissory Note with the Company in the principal sum of up to $4,052,478.  The outstanding principal amount of the Note shall be due and payable on the earliest to occur of (1) August 31, 2021; (2) upon the closing of a sale of all or substantially all of the assets or common stock of  Wagz, or (3) an event of default, (the Maturity Date). Interest is payable at the rate of four percent (4%) per annum and is payable on the Maturity Date. At July 31, 2020, $2,297,779 was outstanding under other receivables compared to $768,500 at April 30, 2020.

18

 


 

SigmaTron International, Inc.

July 31, 2020

 

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note H - Critical Accounting Policies - Continued



On June 4, 2020, the Company and Wagz announced that they have executed a LOI relating to a proposed business combination.  Subject to the terms and conditions set forth in the LOI, the Company expects to issue approximately 2,270,000 shares of its common stock that would result in the stockholders of Wagz owning in the aggregate approximately one-third of the combined company.  The parties expect the transaction to close by the end of October 2020 and the acquisition remains subject to achievement of certain milestones and satisfaction of conditions by both parties prior to closing such as finalizing a material definitive agreement and the Company raising of additional capital that it projects will be needed for the expanded operations in the amount of at least $7,500,000



New Accounting Standards:



In June 2016, the FASB issued 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, 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 small 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 for annual and interim reporting periods beginning after December 15, 2018. The Company is currently evaluating the new guidance and has not determined the impact this ASU may have on its consolidated financial statements.



In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, which simplifies accounting for income taxes by removing certain exceptions to intra-period allocations, investments, calculations in interim periods and to improve consistent application. ASU 2019-12 is effective for annual and interim reporting periods beginning after December 15, 2020. The Company is currently evaluating the new guidance and has not determined the impact this ASU may have on its consolidated financial statements.



In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, which provides optional guidance for a period of time to ease the potential burden in accounting for the transition from reference rates that are expected to be discontinued. Regulators and market participants in various jurisdictions have undertaken efforts to eliminate certain reference rates and introduce new reference rates that are based on a larger and more liquid population of observable transactions. The changes provide optional expedients and exceptions for applying US GAAP to contract, hedging relationships and other transactions affected by reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 and can be adopted no later than December 31, 2022. The Company is currently evaluating the

19

 


 

SigmaTron International, Inc.

July 31, 2020

 

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note H - Critical Accounting Policies - Continued



new guidance and has not determined the impact this ASU may have on its consolidated financial statements.



Note I - Related Parties



In March 2015, two of the Company’s executive officers invested in a start-up customer, Petzila, Inc. (“Petzila”).  The executive officers’ investments constituted less than 2% (individually and in aggregate) of the outstanding beneficial ownership of Petzila, according to information provided by Petzila to the executive officers.  



On April 30, 2018, the Company foreclosed on its security interest and held a public sale of the assets in accordance with the requirements of Article 9 of the California Uniform Commercial Code.  The Company acquired all of the assets of Petzila as the winning bidder at the public sale by a credit bid of $3,500,000, the aggregate amount of Petzila’s liability to the company. Concurrent with the foreclosure sale, the Company entered into an Asset Purchase Agreement with Wagz, Inc. (Wagz) whereby the Company sold the assets to Wagz for $350,000 cash, 600,000 shares of Wagz common stock and an earn-out based on sales by Wagz generated from use of the assets through July 31, 2022.  The earn-out is $6.00 per unit of a product specified in the asset purchase agreement and any upgrade to such product.



The fair value of the non-cash consideration consisted of $600,000 for the 600,000 shares of Wagz common stock which is recorded within other assets.  The Company determined the fair value of the equity using the price per common share received by Wagz in the most recent financing transaction, a level 3 input.  The Company did not assign any value to the earn-out because any receipts from the earn-out are highly uncertain and contingent upon Wagz selling the product specified in the asset purchase agreement between the Company and Wagz. Accordingly, the Company recognized the fair value of the assets received from Wagz and derecognized the receivables from Petzila. 





Note J  Leases



The Company leases office and storage space, vehicles and other equipment under non-cancellable operating leases with initial terms typically ranging from 1 to 5 years.  At contract inception, the Company reviews the facts and circumstances of the arrangement to determine if the contract is or contains a lease.  The Company follows the guidance in Topic 842 to evaluate whether the contract has an identified asset; if the Company has the right to obtain substantially all economic benefits from the asset; and if the Company has the right to direct the use of the underlying asset.  When determining if a contract has an identified asset, the Company considers both explicit and implicit assets, and whether the supplier has the right to substitute the asset.  When determining if the Company has the right to direct the use of an underlying asset, the Company considers if they have the right to direct how and for what purpose the asset is used throughout the period of use and if they control the decision-making rights over the asset.



The Company’s lease terms may include options to extend or terminate the lease.  The Company exercises judgment to determine the term of those leases when extension or termination options are

20

 


 

SigmaTron International, Inc.

July 31, 2020

 

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note J - Leases - Continued



present and include such options in the calculation of the lease term when it is reasonably certain that it will exercise those options.



The Company has elected to include both lease and non-lease components in the determination of lease payments. Payments made to a lessor for items such as taxes, insurance, common area maintenance, or other costs commonly referred to as executory costs, are also included in lease payments if they are fixed. The fixed portion of these payments are included in the calculation of the lease liability, while any variable portion would be recognized as variable lease expenses, when incurred. Variable payments made to third parties for these, or similar costs, such as utilities, are not included in the calculation of lease payments.



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



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



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



The following table presents lease assets and liabilities and their balance sheet classification:



 

 

 

 

 

 

 



 

 

 

July 31,

 

 

April 30,



Classification

 

 

2020

 

 

2020

Operating Leases:

 

 

 

 

 

 

 

Right-of-use Assets

Other assets

 

$

7,962,685 

 

$

7,235,166 

Operating lease current
liabilities

Current portion of operating lease
obligations

 

 

2,213,415 

 

 

2,150,161 

Operating lease noncurrent
liabilities

Operating lease obligations, less
current portion

 

 

5,949,279 

 

 

5,281,811 

Finance Leases:

 

 

 

 

 

 

 

Right-of-use Assets

Property, plant and equipment

 

 

5,867,019 

 

 

6,443,954 

Finance lease current
liabilities

Current portion of finance lease
obligations

 

 

1,772,662 

 

 

1,902,295 

Finance lease noncurrent
liabilities

Finance lease obligations, less
current portion

 

 

1,464,597 

 

 

1,884,722 



21

 


 

SigmaTron International, Inc.

July 31, 2020

 

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note J - Leases - Continued



The components of lease expense for the three month period ended July 31, 2020 and 2019,  are as follows:







 

 

 

 

 

 



 

 

Three Months

 

Three Months

 



 

 

Ended

 

Ended

 



 

 

July 31,

 

July 31,

 



Classification

 

2020

 

2019

 

Operating Leases:

 

 

 

 

 

 

Operating lease cost

Operating expenses

 

373,696 

 

594,494 

 

Variable lease cost

Operating expenses

 

78,347 

 

73,897 

 

Short term lease cost

Operating expenses

 

1,350 

 

1,350 

 

Finance Leases:

 

 

 

 

 

 

Amortization of right-of-use assets

Operating expenses

 

419,693 

 

347,375 

 

Interest expense

Interest expense

 

66,358 

 

67,786 

 

Total

 

 

939,444 

 

1,084,902 

 



The weighted average lease term and discount rates for the three month period ended July 31, 2020 and 2019, are as follows:





 

 

 

 



 

July 31,

 

July 31,



 

2020

 

2019

Operating Leases:

 

 

 

 

Weighted average remaining lease term (months)

 

59.30

 

41.10

Weighted average discount rate

 

3.1%

 

3.8%

Finance Leases:

 

 

 

 

Weighted average remaining lease term (months)

 

24.43

 

28.63

Weighted average discount rate

 

7.6%

 

5.9%































22

 


 

SigmaTron International, Inc.

July 31, 2020

 

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note J - Leases - Continued



Future payments due under leases reconciled to lease liabilities are as follows:







 

 

 

 

 

 



 

 

Operating Leases

 

 

Finance Leases

For the remaining 9 months of the fiscal year ending April 30:

 

 

 

 

 

 

2021 

 

$

1,855,572 

 

$

1,502,802 

For the fiscal years ending April 30:

 

 

 

 

 

 

2022 

 

 

1,623,526 

 

 

1,374,628 
2023 

 

 

1,528,798 

 

 

498,307 
2024 

 

 

1,812,484 

 

 

167,721 
2025 

 

 

630,276 

 

 

 -

2026 

 

 

776,763 

 

 

 -

Thereafter

 

 

199,354 

 

 

 -

Total undiscounted lease payments

 

 

8,426,773 

 

 

3,543,458 

Present value discount, less interest

 

 

264,079 

 

 

306,199 

Lease liability

 

$

8,162,694 

 

$

3,237,259 



Supplemental disclosures of cash flow information related to leases for the three month period ended July 31, 2020 and 2019 are as follows:







 

 



Three Months

Three Months



Ended

Ended



July 31,

July 31,

Other Information

2020

2019

Cash paid for amounts included in the measurement of lease liabilities

 

 

Operating cash flows from finance leases

66,358  67,786 

Operating cash flows from operating leases

54,021  62,155 

Financing cash flows from finance leases

549,758  612,300 

Supplemental non-cash information on lease labilities arising from
obtaining right-of-use assets:

 

 

Right-of-use assets obtained in exchange for
new finance lease liabilities

 -

 -

Right-of-use assets obtained in exchange for
operating lease liabilities

334,530 

 -







 

23

 


 

SigmaTron International, Inc.

July 31, 2020

 

 

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.



In addition to historical financial information, this discussion of the business of SigmaTron International, Inc. (“SigmaTron”), its wholly-owned 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., Spitfire Controls (Cayman) Co. Ltd., wholly-owned foreign enterprises Wujiang SigmaTron Electronics Co., Ltd. and SigmaTron Electronic Technology Co., Ltd. (collectively, “SigmaTron China”) and international procurement office SigmaTron Taiwan branch (collectively, the “Company”) and other Items in this Quarterly Report on 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 risks inherent in any merger and business combination of two companies, 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 impairment testing; the ability to achieve the expected benefits of acquisitions; the collection of aged account receivables; the variability of the Company’s customers’ requirements; the availability and cost of necessary components and materials; 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, including the phase-out of LIBOR; the ability to meet the Company’s financial covenant; changes in U.S., Mexican, Chinese, Vietnamese or Taiwanese regulations affecting the Company’s business; the turmoil in the global economy and financial markets; the spread of COVID-19 (commonly known as “Coronavirus”) which has threatened the Company’s financial stability by causing a decrease in consumer revenues, caused a disruption to the Company’s global supply chain, caused plant closings or reduced operations thus reducing output at those facilities; the stability of the U.S., Mexican, Chinese, Vietnamese and Taiwanese economic, labor and political systems and conditions; 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.

24

 


 

SigmaTron International, Inc.

July 31, 2020

 

 

Overview:



The Company operates in one business segment as an independent provider of EMS, which includes printed circuit board assemblies and completely assembled (box-build) electronic products.  In connection with the production of assembled products, the Company 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; and (6) assistance in obtaining product approval from governmental and other regulatory bodies.  The Company provides these manufacturing services through an international network of facilities located in the United States, Mexico, China, Vietnam and Taiwan.



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



Sales levels can vary considerably among customers and products depending on the type of services (turnkey versus consignment) rendered by the Company and the demand by customers.  Consignment orders require the Company to perform manufacturing services on components and other materials supplied by a customer, and the Company charges only for its labor, overhead and manufacturing costs, plus a profit.  In the case of turnkey orders, the Company provides, in addition to manufacturing services, the components and other materials used in assembly.  Turnkey contracts, in general, have a higher dollar volume of sales for each given assembly, owing to inclusion of the cost of components and other materials in net sales and cost of goods sold.  Variations in the number of turnkey orders compared to consignment orders can lead to significant fluctuations in the Company’s revenue and gross margin levels.  Consignment orders accounted for less than 1% of the Company’s revenues for the three month periods ended July  31, 2020 and July  31, 2019.



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.



As previously reported in the Company’s fiscal year 2020 press release and 10-K, SigmaTron is reporting a pre-tax loss for the first quarter of fiscal year 2021.  Over the past two quarters the Company experienced a v-shaped curve in terms of revenue.  February was close to expected, March saw a 10% drop, April and May had a 30% or higher drop, June had a significant rebound where the Company was 10% below expectations and finally in July the revenue line showed a full recovery in terms of revenue.  The May loss was greater than the loss for the quarter so the Company was slightly above breakeven for the last two months of the quarter.  During the first quarter, results were negatively affected by the revenue reduction and also continuing manufacturing inefficiencies caused by COVID, especially in Mexico.  Several of the Company’s plants were shut down while it still incurred the labor costs and as they reopened, the Company experienced significant inefficiencies.  None of this is a surprise given the far-reaching effects of the pandemic. 



25

 


 

SigmaTron International, Inc.

July 31, 2020

 

 

The second fiscal quarter is more encouraging.  The backlog for the second fiscal quarter is strong and while several major customers continue to be negatively affected by the pandemic, others have benefitted and are making up for those customers with lower than expected revenue.  It is difficult to predict how things will go after the second quarter given the continuing volatile nature of the pandemic.



As reported at fiscal 2020 year-end, the Company elected to account for its PPP Loan by using loan accounting.  As of the end of our first quarter, the Company is not able to apply for forgiveness of the loan.  Accordingly, there is no effect from any potential loan forgiveness reflected in the first fiscal quarter results.  Once the procedure to apply for forgiveness is finalized by the government, the Company will decide what makes the most sense in terms of applying for the forgiveness of the entire loan. 



As previously reported, the Company and Wagz, Inc. entered into a Letter of Intent under which Wagz would be acquired by the end of August 2020.  To date that has not happened but both companies are continuing to work towards closing the transaction by the end of our second fiscal quarter. 



The current trend for the Company is positive and heading in the right direction.  Uncertainty remains regarding the general economy because of the pandemic and the election.  The Company continues to add new customers and is working on several significant new opportunities. 

 

Results of Operations:



The following table sets forth selective financial data as a percentage of net sales for the periods indicated.





 

 

 

 



Three Months

 

Three Months

 



Ended

 

Ended

 



July 31,

 

July 31,

 



2020

 

2019

 



(Unaudited)

 

(Unaudited)

 



 

 

 

 

Net sales

100.0%

 

100.0%

 

Operating expenses:

 

 

 

 

Cost of products sold

92.9

 

90.6

 

Selling and administrative expenses

8.4

 

7.9

 

Total operating expenses

101.3

 

98.5

 

Operating (loss) income

(1.3%)

 

1.5%

 



Net Sales



Net sales decreased for the three month period ended July 31, 2020, to $60,524,956 from $74,009,981for the three month period ended July 31, 2019The Company’s sales decreased for the three month period ended July 31, 2020, as compared to the prior year in the consumer electronics, industrial electronics and medical/life science marketplaces.  Sales decreased by approximately 20% due to the COVID pandemic. 





26

 


 

SigmaTron International, Inc.

July 31, 2020

 

 

Gross Profit



Gross profit dollars decreased during the three month period ended July 31, 2020, to $4,272,191 or 7.1% of net sales compared to $6,960,332 or 9.4% of net sales for the same period in the prior fiscal year.    The decrease in gross profit for the three month period ended July 31, 2020, was primarily the result of decreased sales due to the COVID pandemic



Selling and Administrative Expenses



Selling and administrative expenses decreased to $5,059,525 or 8.4% of net sales for the three month period ended July 31, 2020, compared to $5,827,326 or 7.9% of net sales for the same period in the prior fiscal year.  The net decrease in selling and administrative expenses for the three month period ended July 31, 2020, was attributable to sales salaries, financing fees and bonus expenseThe decrease in the foregoing selling and administrative expenses was partially offset by an increase in legal professional fees.



Interest Expense



Interest expense decreased to $338,264 for the three month period ended July 31, 2020, compared to $591,228 for the same period in the prior fiscal year.  The decrease in interest expense for the three month period ended July 31, 2020, was due to the decreased borrowings under the Company’s banking arrangements and mortgage obligations.



Income Tax Expense



The income tax benefit was $220,834 for the three month period ended July 31, 2020, compared to an income tax expense of $247,115 for the same period in the prior fiscal year.  The Company’s effective tax rate was 19.69% and 40.63% for the quarters ended July 31, 2020 and 2019, respectively.  The decrease in income tax expense for the three month period ended July 31, 2020 compared to the same period in the previous year is due to a loss recognized in the current period as opposed to operating income recognized in the same period in the previous year. The decrease in effective tax rate is due primarily to a greater operating loss recognized in Vietnam in the previous period as compared to the current period for which no tax benefit was recorded due to a full valuation allowance. 



Net Income



Net income decreased to a net loss of $900,666 for the three month period ended July 31, 2020, compared to net income of $361,025 for the same period in the prior fiscal year.  Basic and diluted loss per share for the first quarter of fiscal year 2021 were $0.21, compared to basic and diluted earnings per share of $0.09 for the same period in the prior fiscal year. 

 

Liquidity and Capital Resources:



Operating Activities.



Cash flow used in operating activities was $5,142,601 for the three months ended July 31, 2020.   During the first three months of fiscal year 2021, cash flow used in operating activities was primarily the result of net loss,  a  decrease in accounts payable of $11,118,270.   The decrease in accounts payable was primarily the result of the timing of payments.  Cash flow used in operating activities was partially

27

 


 

SigmaTron International, Inc.

July 31, 2020

 

 

offset by the result of a decrease in accounts receivable and inventory of $2,787,494 and $1,972,771, respectively.



Cash flow provided by operating activities was $4,070,834 for the three months ended July 31, 2019During the first three months of fiscal year 2020, cash flow provided by operating activities was primarily the result of net income, a decrease in inventory of $11,324,564 and an increase in accrued expenses and wages.  The decrease in inventory was primarily the result of increased sales and the implementation of an inventory reduction program.  Cash flow provided by operating activities was partially offset by the result of a decrease in accounts payable of $9,386,019.



Investing Activities.



For the three months ended July 31, 2020, the Company purchased $966,856 in machinery and equipment to be used in the ordinary course of business.  The Company has received forecasts from current customers for increased business that would require additional investment in capital equipment and facilities.  To the extent that these forecasts come to fruition, the Company anticipates that it will make additional machinery and equipment purchases in fiscal year 2021.  The Company anticipates future purchases will be funded by lease transactions.



During the first three months of fiscal year 2020, the Company purchased $684,667 in machinery and equipment used in the ordinary course of business.  The Company made additional machinery and equipment purchases of $3,961,658 during the balance of fiscal year 2020.



Financing Activities.



Cash provided by financing activities of $3,308,008 for the three months ended July 31, 2020, was primarily the result of net borrowings under the line of credit.



Cash used in financing activities of $2,904,247 for the three months ended July 31, 2019, was primarily the result of net payments under the line of credit.



Financing Summary.



Notes Payable – Banks



On March 31, 2017, the Company entered into a $35,000,000 senior secured credit facility with U.S. Bank, which expires on March 31, 2022.  The credit facility is collateralized by substantially all of the Company’s domestically located assets. The facility allows the Company to choose among interest rates at which it may borrow funds:  the bank fixed rate of five percent or LIBOR plus one and one half percent (effectively 1.74% at July 31, 2020).  Interest is due monthly. 



On July 16, 2018, the Company and U.S. Bank entered into an amendment of the revolving line of credit under the senior secured credit facility.  The amended revolving credit facility allows the Company to borrow up to the lesser of (i) $45,000,000 (the “Revolving Line Cap”) less reserves or (ii) the Borrowing Base, but no more than 90% of the Company’s Revolving Line Cap, except that the 90% limitation will expire if (i) the Company’s actual revolving loans for 90 consecutive days after the amendment’s effective date are less than 80% of the Company’s Borrowing Base and (ii) the Company maintains a Fixed Charge Coverage Ratio of 1.2 to 1.0 for four consecutive quarters.  The

28

 


 

SigmaTron International, Inc.

July 31, 2020

 

 

amendment also imposes sublimits on categories of inventory of $10,500,000 on raw materials, $10,000,000 on finished goods and $28,000,000 on all eligible inventory. 



On December 13, 2018, the Company and U.S. Bank entered into an amendment of the revolving credit facility.  The amendment provides an exception to otherwise ineligible foreign receivables for up to $3,000,000 of receivables paid by certain enumerated account debtors outside of the U.S. and Canada.



As of July 31, 2020, there was $28,836,868 outstanding and $12,224,733 of unused availability under the U.S. Bank facility compared to an outstanding balance of $26,884,494 and $13,850,575 of unused availability at April 30, 2020.  Deferred financing costs of $8,051 were capitalized during the three month period ended July 31, 2020, which are amortized over the term of the agreement.  As of July 31, 2020 and April 30, 2020, the unamortized amount offset against outstanding debt was $197,236 and $218,062, respectively.    



On April 23, 2020, the Company entered into a loan with U.S. Bank, as lender, pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), as administered by the U.S. Small Business Administration (the “SBA”) in the amount of $6,282,973 (the “PPP Loan”). The PPP Loan, in the form of a promissory note, matures on April 23, 2022.  No additional collateral or guarantees were provided by the Company for the PPP Loan. The PPP Loan provides for customary events of default.  Under the CARES Act, loan forgiveness may be available for the sum of documented payroll costs, rent payments, mortgage interest and covered utilities during the 24-week period beginning on the date of loan disbursement.  The amount of loan forgiveness will be reduced if recipients terminate employees or reduce salaries during the covered period.  The Company may be required to repay any portion of the outstanding principal that is not forgiven, along with accrued interest, and it cannot provide any assurance that it will be eligible for loan forgiveness, or that any amount of the PPP Loan will ultimately be forgiven by the SBA.  All aspects of the PPP Loan are subject to review by the SBA, including without limitation, the Company’s eligibility for and the size of the loan.  The review procedures have not been made public.  The Company cannot predict the outcome of that review nor be assured that all or any part of the PPP Loan will be forgiven.  To the extent that all or part of the PPP Loan is not forgiven, the Company will be required to make payments, including interest accruing at an annual interest rate of 1.0% beginning on the date of disbursement. 



On July 15, 2020 and August 7, 2020, the Company and U.S. Bank entered into amendments of the revolving credit facility.  The amendments revise the Fixed Charge Coverage Ratio.



On September 8, 2020, the Company and U.S. Bank entered into an amendment of the revolving credit facility.  The amendment allows the Company to borrow up to the lesser of (i) the Revolving Line Cap less reserves or (ii) the Borrowing Base, but no more than 80% of the Company’s Revolving Line Cap.  The amendment also imposes sublimits on categories of other investments to $4,000,000.



On March 15, 2019, the Company’s wholly-owned subsidiary, SigmaTron Electronic Technology Co., Ltd., entered into a credit facility with China Construction Bank.  Under the agreement SigmaTron Electronic Technology Co., Ltd. can borrow up to 10,000,000 Renminbi, approximately $1,430,000 as of July 31, 2020, 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 6.09%.  The term of the facility extends to March 14, 2024.  There was $1,288,512

29

 


 

SigmaTron International, Inc.

July 31, 2020

 

 

outstanding under the facility at July 31, 2020 compared to an outstanding balance of $304,658 at April 30, 2020.



Notes Payable – Buildings



The Company entered into a mortgage agreement on December 21, 2017, in the amount of $5,200,000, with U.S. Bank to refinance the property that serves as the Company’s corporate headquarters and its Illinois manufacturing facility in Elk Grove Village, Illinois.  The note requires the Company to pay monthly principal payments in the amount of $17,333, bears interest at a fixed rate of 4.0% per year and is payable over a fifty-one month period.  Deferred financing costs of $74,066 were capitalized in fiscal year 2018 which are amortized over the term of the agreement.  As of July 31, 2020, the unamortized amount included as a reduction to long-term debt was $28,487.  A final payment of approximately $4,347,778 is due on or before March 31, 2022.  The outstanding balance was $4,680,000 and $4,732,000 at July, 31 2020 and April 30, 2020, respectively.



The Company entered into a mortgage agreement on December 21, 2017, in the amount of $1,800,000, with U.S. Bank to refinance the property that serves as the Company’s engineering and design center in Elgin, Illinois.  The note requires the Company to pay monthly principal payments in the amount of $6,000, bears interest at a fixed rate of 4.0% per year and is payable over a fifty-one month period.  Deferred financing costs of $65,381 were capitalized in the fiscal year 2018 which are amortized over the term of the agreement.  As of July 31, 2020 the unamortized amount included as a reduction to long-term debt was $25,146.  A final payment of approximately $1,505,000 is due on or before March 31, 2022.  The outstanding balance was $1,620,000 and $1,638,000 at July, 31 2020 and April 30, 2020, respectively. 



The Company entered into a mortgage agreement on March 3, 2020, in the amount of $556,000, with The Bank and Trust SSB to purchase 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, bears interest at a fixed rate of 5.75% per year and is payable over a 120 month period.  The outstanding balance was $542,145 and $552,561 at July 31, 2020 and April, 30 2020, respectively. 



Notes Payable – Equipment



The Company routinely enters into secured note agreements with Engencap Fin S.A. DE C.V. to finance the purchase of equipment. The terms of these secured note agreements mature from November 2021 through May 2023, with quarterly installment payments ranging from $11,045 to $37,941 and a fixed interest rate ranging from 6.65% to 8.00%.



The Company routinely enters into secured note agreements with FGI Equipment Finance LLC to finance the purchase of equipment. The terms of these secured note agreements mature from March 2025 through June 2025, with quarterly installment payments ranging from $10,723 to $69,439 and a fixed interest rate of 8.25%.



Finance Lease and Sales Leaseback Obligations



The Company enters into various finance lease and sales leaseback agreements.  The terms of the lease agreements mature through November 2023, with monthly installment payments ranging from $1,455 to $40,173 and a fixed interest rate ranging from 3.75% to 12.73%.



30

 


 

SigmaTron International, Inc.

July 31, 2020

 

 

Other



The Company provides funds for salaries, wages, overhead and capital expenditure items as necessary to operate its wholly-owned Mexican, Vietnamese and Chinese subsidiaries and the Taiwan IPO.  The Company provides funding in U.S. Dollars, which are exchanged for Pesos, Dong, Renminbi, and New Taiwan dollars.  The fluctuation of currencies from time to time, without an equal or greater increase in inflation, could have a material impact on the financial results of the Company.  The impact of currency fluctuations for the three month period ended July  31, 2020, resulted in net foreign currency transaction losses of $145,670 compared to net foreign currency losses of approximately $109,000 for the same period in the prior year.  During the first three months of fiscal year 2021, the Company paid approximately $13,460,000 to its foreign subsidiaries for manufacturing services.  All intercompany balances have been eliminated upon consolidation. 



The Company has not changed its plans to indefinitely reinvest the earnings of the Company’s foreign subsidiaries.  The cumulative amount of unremitted earnings for which U.S. income taxes have not been recorded is $4,077,000 as of July 31, 2020. 



The Company expects that the significant disruption in business activity and the financial markets created by the COVID-19 global pandemic will impact several sources of its liquidity, and is therefore continuously and critically reviewing its liquidity and anticipated capital requirements.  For more information on the potential impact of the COVID-19 pandemic on the Company, see Note B - Basis of Presentation.



The impact of inflation on the Company’s net sales, revenues and income from operations for the past two fiscal years has been minimal.



Off-balance Sheet Transactions:



The Company has no off-balance sheet transactions.



Tabular Disclosure of Contractual Obligations:



As a smaller reporting company, as defined in Item 10(f)(1) of Regulation S-K under the Exchange Act, the Company is not required to provide the information required by this item.

 

Item 3.Quantitative and Qualitative Disclosures About Market Risks.



As a smaller reporting company, as defined in Item 10(f)(1) of Regulation S-K under the Exchange Act, the Company is not required to provide the information required by this item.



Item 4.Controls and Procedures.



Disclosure Controls:



The Company’s management, including its President and Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rules 13a-15(e) and 15(d)-15(e) thereunder) as of July  31, 2020.  The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and

31

 


 

SigmaTron International, Inc.

July 31, 2020

 

 

its President and Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of July  31, 2020.



Internal Controls:



There has been no change in the Company’s internal control over financial reporting during the three months ended July 31, 2020, that has materially affected or is reasonably likely to materially affect, its internal control over financial reporting.  The Company’s internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with U.S. GAAP.

 

PART II – OTHER INFORMATION



Item 1.              Legal Proceedings. 



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



Item 1A.            Risk Factors.



As a smaller reporting company, as defined in Item 10(f)(1) of Regulation S-K under the Exchange Act, the Company is not required to provide the information required by this item. 



Item 2.              Unregistered Sales of Equity Securities and Use of Proceeds.



None.



Item 3.              Defaults Upon Senior Securities.



None.



Item 4.              Mine Safety Disclosures.



Not applicable.



Item 5.              Other Information.



The information contained in the Company’s Current Report on Form 8-K filed on September 9, 2020 with respect to the 6th Amendment (as defined therein) is incorporated herein by reference.

 

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SigmaTron International, Inc.

July 31, 2020

 

 

Item 6.Exhibits.





 

10.1

Promissory Note, entered into May 26, 2020, by and between FGI Equipment Finance LLC and SigmaTron International, Inc.



 

10.2

Amendment No. 6 to Amended and Restated Loan and Security Agreement entered into as of July 15, 2020, by and between SigmaTron International, Inc., and U.S. Bank National Association incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on September 9, 2020.



 

31.1

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



 

31.2

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



 

32.1

Certification by the Principal Executive Officer of SigmaTron International, Inc. Pursuant to Rule 13a-14(b) under the Exchange Act and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).



 

32.2

Certification by the Principal Financial Officer of SigmaTron International, Inc. Pursuant to Rule 13a-14(b) under the Exchange Act and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).



 

101.INS

XBRL Instance Document



 

101.SCH

XBRL Taxonomy Extension Scheme Document



 

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document



 

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document



 

101.LAB

XBRL Taxonomy Extension Label Linkbase Document



 

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document



 

33

 


 

SigmaTron International, Inc.

July 31, 2020

 

 

SIGNATURES:



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



SIGMATRON INTERNATIONAL, INC.





 

 

/s/ Gary R. Fairhead

 

September  11, 2020



 

 

Gary R. Fairhead

 

Date

President and CEO (Principal Executive Officer)

 

 



 

 



 

 

/s/ Linda K. Frauendorfer

 

September  11, 2020

 

 

 

Linda K. Frauendorfer

 

Date

Chief Financial Officer, Secretary and Treasurer

 

 

(Principal Financial Officer and Principal

 

 

Accounting Officer)

 

 





 



34

 


Exhibit 101

Exhibit 10.1

 

PROMISSORY NOTE

May 26, 2020

FOR VALUE RECEIVED, SigmaTron International, Inc., a Delaware corporation, located at 2201 Landemeier Road, Elk Grove Village, IL 60007, United States of America (“Maker”) promises, jointly and severally if more than one, to pay to the order of FGI Equipment Finance LLC or any subsequent holder hereof (each, a “Payee”) at its office located at 777 Yamato Road, Office 135, Boca Raton, FL 33431 or at such other place as Payee may designate as follows:



(a)

the principal sum of One Million One Hundred Twenty-Eight Thousand Six Hundred Eight and 15/100 United States Dollars ($1,128,608.15), and



(b)

interest on the unpaid principal balance from June 1st, 2020 through and including the dates of payment, at a fixed interest rate of Eight point Twenty Five percent (8.25%) per annum (the “Contract Rate”) in Twenty (20) consecutive quarterly installments of principal and interest as follows:



Periodic Installment

 

Amount

20

@

$69,438.97



(each, a “Periodic Installment”) plus any outstanding and unpaid accrued interest and any and all other amounts due hereunder and under the other Debt Documents (as defined below). For the period from the date hereof through but not including the date of the first Periodic Installment, Maker shall pay Payee interests on the unpaid principal balance in the amount of One Thousand Two Hundred Ninety-Three and 20/100 United States Dollars ($1,293.20); such payment shall be due and payable on June 1st, 2020. The first Periodic Installment, plus (as applicable) interest accrued at the Contract Rate on the unpaid principal balance hereunder for the period from June 1st, 2020 through but not including the starting date covered by such first Periodic Installment, shall be due and payable on September 1st, 2020 and the following Periodic Installments including the final installment shall be due and payable on the first day of December, March, June and September of each succeeding year (each, a “Payment Date”), with the last Payment Date being June 1, 2025. All payments shall be applied: first, to interest due and unpaid hereunder and under the other Debt Documents; second, to all other amounts (other than principal) due and unpaid hereunder and under the other Debt Documents, and then to principal due hereunder and under the other Debt Documents. The acceptance by Payee of any payment which is less than payment in full of all amounts due and owing at such time shall not constitute a waiver of Payee’s right to receive payment in full at such time or at any prior or subsequent time. Interest shall be calculated on the basis of a 365-day year (or a 366-day leap year, as applicable) and will be charged at the Contract Rate for each calendar day on which any principal is outstanding. The payment of any Periodic Installment after its due date shall result in a corresponding decrease in the portion of the Periodic Installment credited to the remaining unpaid principal balance. The payment of any Periodic Installment prior to its due date shall result in a corresponding increase in the portion of the Periodic Installment credited to the remaining unpaid principal balance.


 

All amounts due hereunder and under the other Debt Documents are payable in the lawful currency of the United States of America. Maker hereby expressly authorizes Payee to insert the date value is actually given in the blank space on the face hereof and on all related documents pertaining hereto.



This Note is secured by that certain Master Security Agreement dated February 4th, 2020 (the “Master Agreement”) and may also be secured by a security agreement, chattel mortgage, pledge agreement or like instrument (each of which is hereinafter called a “Security Agreement”, and collectively with the Master Agreement and any other document or agreement related thereto or to this Note, the “Debt Documents”), in each case signed by Maker or one of its subsidiaries in favor of Payee.



Conditions Precedent to Funding. Payee’s obligation to make the loan evidenced by this Note is subject to the satisfaction of all the following conditions precedent no later than the date hereof, each in form and substance satisfactory to Payee at its sole discretion: (i) Payee shall have received the Collateral Schedule describing the Collateral that secures this Note (the “Collateral Schedule Collateral”), duly executed by Maker; (ii) Payee shall have a first priority perfected security interest in the Collateral Schedule Collateral; (iii) no Event of Default (as defined in the Security Agreement) or event which with the passage of time or the giving of notice would become an Event of Default (a “Default”) has occurred under the Debt Documents; and (iv) as of the date hereof, there will have been no adverse change (as determined by Payee in its sole discretion) in the business prospects or projections, operations, management, financial or other conditions of the Maker or any Guarantor since the date of the Master Agreement. If any such condition precedent is not so satisfied by the date hereof, Payee shall have no obligation to make the loan contemplated under this Note or any other Debt Documents related to this Note.



Time is of the essence hereof. If Payee does not receive from Maker payment in full of any Periodic Installment or any other sum due under this Note or any other Debt Document is not received within ten (10) days after its due date: (i) Maker agrees to pay a late fee equal to four percent (4.00%) on such late Periodic Installment or other sum, but not exceeding any lawful maximum, plus such other costs, fees and expenses that Maker may owe as a result of such late payment; and (ii) interests on the due and unpaid Periodic Installment, together with all accrued interest thereon and any other due and unpaid sum payable under this Note or any other Debt Document, shall accrue penalty interests payable at demand at the lesser of 12.25% per annum or the highest rate not prohibited by applicable law until all such amounts are paid; provided that, before delay on payment constitutes an event of default hereunder, Maker shall have 10 days after receipt of notice from Payee to cure such default. However, if an Event of Default (as defined in the Security Agreement) occurs and is continuing, then the entire principal sum remaining unpaid, together with all accrued interest thereon and any other sum payable under this Note or any other Debt Document, at the election of Payee, shall immediately become due and payable, or, with respect to an Event of Default arising under Section 5(viii)(E) of the Master Agreement, shall become automatically due and payable, in each case, with interest thereon at the lesser of 12.25% per annum or the highest rate not prohibited by applicable law from the date of such accelerated maturity until paid (both before and after any judgment). The application of such 12.25% interest rate shall not be interpreted or deemed to extend any cure period set forth in this Note or any other Debt Document, cure any default or otherwise limit Payee’s right or remedies hereunder or under any Debt Document.


 

Maker may prepay in full, but not in part, all outstanding amounts hereunder before they are due on any scheduled Payment Date upon at least thirty (30) days’ prior written notice to Payee. Payee is authorized and entitled to apply any amounts paid by Maker as a prepayment of indebtedness to delinquent interest or other amounts (other than principal) due and owing from Maker to Payee hereunder and under any other Debt Documents before application of such funds to principal outstanding hereunder.



If Maker makes a prepayment of this Note for any reason, Maker shall pay irrevocably and in full to Payee (i) all outstanding principal amounts, (ii) all accrued interest, (iii) the Break-Funding Costs (as defined below), (iv) the Prepayment Fee (as defined below) and (v) any and all other amounts due hereunder or under the other Debt Documents. Maker specifically acknowledges that, to the fullest extent allowed by applicable law, it shall be liable for the Break-Funding Costs and the Prepayment Fee on any acceleration hereof or under the other Debt Documents. In the event of an acceleration hereof or under the other Debt Documents, the Break-Funding Costs and the Prepayment Fee shall be determined as if (a) Maker prepaid this Note in full immediately before such acceleration and (b) the prepayment notice referred to above was received by Payee thirty (30) days prior to such date.



For purposes hereof, the term “Prepayment Fee” shall be an amount equal to an additional sum equal to the following percentage of remaining principal balance for prepayments occurring in the indicated period: five percent (5.0%) (for prepayments occurring prior to the first anniversary of the date hereof); four percent (4.0%) (for prepayments occurring on and thereafter and prior to the second anniversary of the date hereof); three percent (3.0%) (for prepayments occurring on and thereafter and prior to the third anniversary of the date hereof); and two percent (2%) (for prepayments occurring any time thereafter). For the purposes hereof, the term “Break-Funding Costs” means the amounts that would be payable to Payee if Payee incurs in additional costs and expenses as a result of the interruption of the term of this Note, which shall be equal to (i) the net present value of the remaining scheduled principal and interest payments through the end of the term of this Note (including any balloon or other amount of principal payable that but for the prepayment of this Note would be payable on or prior to the scheduled maturity date hereof), at the LIBOR Rate (as defined below) published on the date of execution of this Note, less (ii) the net present value of the remaining scheduled principal and interest payments through the end of the term of this Note (including any balloon or other amount of principal payable that but for the prepayment of this Note would be payable on or prior to the scheduled maturity date hereof), at the LIBOR Rate published on the date of the prepayment, provided however that the Break- Funding Costs shall be deemed zero if the calculation results in a negative number. Por purposes hereof, the term “LIBOR Rate” means on the applicable determination date, the rate applicable in the London interbank market for deposits in United States Dollars for a period of three months, as published in the Wall Street Journal or, in its absence, on Page 3750 of the Telerate Service (or any other page that replaces Page 3750), as of 11:00 a.m., London time, on the date that is two business days prior to the applicable payment date, or if the LIBOR Rate ceases to be published, the interest rate that replaces it published in the Wall Street Journal or, failing that, on Page 3750 of the Telerate Service (or any other page that replaces Page 3750).



Maker hereby consents to any and all extensions of time, renewals, waivers or modifications of, and all substitutions or releases of, security or of any party primarily or secondarily liable on this Note or any other Debt Document or any term and provision of either, which may be made, granted

 


 

or consented to by Payee, and agrees that suit may be brought and maintained against Maker and/or any and all sureties, endorsers, guarantors or any others who may at any time become liable for payments and performance under this Note and any other Debt Documents, at the election of Payee without joinder of any other as a party thereto, and that Payee shall not be required first to foreclose, proceed against, or exhaust any security hereof in order to enforce payment of this Note. Maker hereby waives presentment, demand for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, and all other notices in connection herewith, as well as filing of suit (if permitted by law) and diligence in collecting this Note or enforcing any of the security hereof, and agrees to pay (if permitted by law) all expenses incurred in collection, including Payee’s actual attorneys’ fees.



The consent to jurisdiction, jury trial waiver and usury provisions contained in the Master Agreement are hereby incorporated by reference as if fully set forth herein. The laws of the State of New York shall govern all matters arising out of, in connection with or relating to this Note and any related Debt Documents, without limitation, validity, interpretation, construction, performance and enforcement thereof (including, without limitation, any claims sounding in contract or tort law arising out of the subject matter hereof and any determinations with respect to post-judgment interest).



This Note and the other Debt Documents constitute the entire agreement of Maker and Payee with respect to the subject matter hereof and supersede all prior understandings, agreements and representations, express or implied.



No variation or modification of this Note, or any waiver of any of its provisions or conditions, shall be valid unless in writing and signed by an authorized representative of Maker and Payee. Any such waiver, consent, modification or change shall be effective only in the specific instance and for the specific purpose given.



Payment Authorization. Payee is hereby directed and authorized by Maker to advance and/or apply the proceeds of the loan as evidenced by this Note following the instructions set forth below:



Amount to be advanced: One Million Fifty-Nine Thousand One Hundred Sixty-Nine and 18/100 United States Dollars ($1,059,169.18).



Beneficiary: SigmaTron International, Inc.

Bank Name: U.S. Bank National Association

Account Number: 1-993-8124-9549

ABA: 071 904 779



Payee is hereby irrevocably authorized and directed by Maker to apply from the proceeds of the loan evidenced by this Note, the sum of Sixty-Nine Thousand Four Hundred Thirty-Eight and 97/100 United States Dollars ($69,438.97), to constitute and deliver to Payee the Security Deposit pursuant to the terms of Collateral Schedule No. 3  that is part of the Debt Documents.



Any provision in this Note or any of the other Debt Documents which is in conflict with any statute, law or applicable rule shall be deemed omitted, modified or altered to conform thereto.


 



 

 



 

SigmaTron International, Inc.



 

 



By:

/s/ Gary R. Fairhead



Name:

Gary R. Fairhead



Title:

Chairman of the Board, CEO and President



Federal Tax ID #:

363918470



Address:

2201 Landmeier Road, Elk Grove Village, IL 60007.




Exhibit 311

SigmaTron International, Inc.

July 31, 2020

 

EXHIBIT 31.1



Certification of Principal Executive Officer of

SigmaTron International, Inc.

Pursuant to Rule 13a-14(a) under the Exchange Act,

as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002



I, Gary R. Fairhead, President and Chief Executive Officer of SigmaTron International, Inc., certify that:



1.I have reviewed the Quarterly Report on Form 10-Q of SigmaTron International, Inc. for the quarter ended July 31, 2020 (this “report”);



2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:



a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


 

SigmaTron International, Inc.

July 31, 2020

 



5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):



a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and



b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.







 

 

Date:  September  11, 2020

 

 



 

 



 

 



 

/s/ Gary R. Fairhead



 

Gary R. Fairhead



 

President and Chief Executive Officer of



 

SigmaTron International, Inc.




Exhibit 312

SigmaTron International, Inc.

July 31, 2020

 

EXHIBIT 31.2



Certification of Principal Financial Officer of

SigmaTron International, Inc.

Pursuant to Rule 13a-14(a) under the Exchange Act,

as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002



I, Linda K. Frauendorfer, Chief Financial Officer, Secretary and Treasurer of SigmaTron International, Inc., certify that:



1.I have reviewed the Quarterly Report on Form 10-Q of SigmaTron International, Inc. for the quarter ended July 31, 2020 (this “report”);



2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:



a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


 

SigmaTron International, Inc.

July 31, 2020

 



5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):



a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and



b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.







 

 

Date:  September 11, 2020

 

 



 

 



 

 



 

/s/ Linda K. Frauendorfer



 

Linda K. Frauendorfer



 

Chief Financial Officer, Secretary and



 

Treasurer of SigmaTron International, Inc.








Exhibit 321

SigmaTron International, Inc.

July 31, 2020

 

EXHIBIT 32.1



Certification by the Principal Executive Officer of

SigmaTron International, Inc.

Pursuant to Rule 13a-14(b) under the Exchange Act and

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)



I, Gary R. Fairhead, am President and Chief Executive Officer of SigmaTron International, Inc. (the “Company”).

 

This certification is being furnished pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of the Company’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2020 (the “Report”).

 

I hereby certify that to the best of my knowledge:

 

(a)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act (15 U.S.C. 78 m(a) or 78o(d)); and



(b)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.







 

 

Date:  September  11, 2020

 

 



 

 



 

 



 

/s/ Gary R. Fairhead



 

Gary R. Fairhead



 

President and Chief Executive Officer of



 

SigmaTron International, Inc.




Exhibit 322

SigmaTron International, Inc.

July 31, 2020



EXHIBIT 32.2



Certification by the Principal Financial Officer of

SigmaTron International, Inc.

Pursuant to Rule 13a-14(b) under the Exchange Act and

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)



I, Linda K. Frauendorfer, am Chief Financial Officer, Secretary and Treasurer of SigmaTron International, Inc. (the “Company”).

 

This certification is being furnished pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of the Company’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2020 (the “Report”).

 

I hereby certify that to the best of my knowledge:

 

(a)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act (15 U.S.C. 78 m(a) or 78o(d)); and



(b)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.







 

 

Date:  September 11, 2020

 

 



 

 



 

 



 

/s/ Linda K. Frauendorfer



 

Linda K. Frauendorfer



 

Chief Financial Officer, Secretary and



 

Treasurer of SigmaTron International, Inc.




v3.20.2
Document And Entity Information - shares
3 Months Ended
Jul. 31, 2020
Sep. 09, 2020
Document And Entity Information [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jul. 31, 2020  
Document Transition Report false  
Entity File Number 0-23248  
Entity Registrant Name SIGMATRON INTERNATIONAL INC  
Entity Incorporation State Country Code DE  
Entity Tax Identification Number 36-3918470  
Entity Address Address Line 1 2201 Landmeier Road  
Entity Address City Or Town Elk Grove Village  
Entity Address State Or Province IL  
Entity Address Postal Zip Code 60007  
City Area Code 847  
Local Phone Number 956-8000  
Title of 12b Security Common Stock $0.01 par value per share  
Trading Symbol sgma  
Security Exchange Name NASDAQ  
Entity Current Reporting Status No  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   4,242,508
Document Fiscal Period Focus Q1  
Current Fiscal Year End Date --04-30  
Document Fiscal Year Focus 2021  
Amendment Flag false  
Entity Central Index Key 0000915358  
v3.20.2
Condensed Consolidated Balance Sheets - USD ($)
Jul. 31, 2020
Apr. 30, 2020
Current assets:    
Cash and cash equivalents $ 2,846,096 $ 6,779,445
Accounts receivable, less allowance for doubtful accounts of $395,969 and $727,252 at July 31, 2020 and April 30, 2020, respectively 28,017,482 30,804,976
Inventories, net 85,206,598 87,179,369
Prepaid expenses and other assets 1,222,861 1,510,943
Refundable and prepaid income taxes 1,759,210 1,699,970
Other receivables 4,137,033 2,642,094
Total current assets 123,189,280 130,616,797
Property, machinery and equipment, net 33,632,655 33,935,760
Intangible assets, net 2,261,913 2,350,949
Deferred income taxes 280,764 284,435
Other assets 9,482,870 8,891,090
Total other long-term assets 12,025,547 11,526,474
Total assets 168,847,482 176,079,031
Current liabilities:    
Trade accounts payable 44,652,683 55,770,953
Accrued expenses 2,596,582 2,670,504
Accrued wages 5,202,388 4,206,825
Income taxes payable 246,124 469,143
Current portion of long-term debt 4,114,057 2,878,160
Current portion of finance lease obligations 1,772,662 1,902,295
Current portion of operating lease obligations 2,213,415 2,150,161
Total current liabilities 60,797,911 70,048,041
Long-term debt, less current portion 41,211,579 38,537,064
Finance lease obligations, less current portion 1,464,597 1,884,722
Operating lease obligations, less current portion 5,949,279 5,281,811
Income taxes payable 404,975 452,619
Other long-term liabilities 842,700 810,769
Deferred income taxes 186,079 188,206
Total long-term liabilities 50,059,209 47,155,191
Total liabilities 110,857,120 117,203,232
Commitments and contingencies
Stockholders' equity:    
Preferred stock, $.01 par value; 500,000 shares authorized, none issued or outstanding
Common stock, $.01 par value; 12,000,000 shares authorized, 4,257,508 and 4,242,508 shares issued and outstanding at July 31, 2020 and April 30, 2020, respectively 42,296 42,265
Capital in excess of par value 23,634,711 23,619,513
Retained earnings 34,313,355 35,214,021
Total stockholders' equity 57,990,362 58,875,799
Total liabilities and stockholders' equity $ 168,847,482 $ 176,079,031
v3.20.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
Jul. 31, 2020
Apr. 30, 2020
Condensed Consolidated Balance Sheets [Abstract]    
Accounts receivable, allowance for doubtful accounts $ 395,969 $ 727,252
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares authorized 500,000 500,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 12,000,000 12,000,000
Common stock, shares issued 4,257,508 4,242,508
Common stock, shares outstanding 4,257,508 4,242,508
v3.20.2
Condensed Consolidated Statements Of Operations - USD ($)
3 Months Ended
Jul. 31, 2020
Jul. 31, 2019
Condensed Consolidated Statements Of Operations [Abstract]    
Net sales $ 60,524,956 $ 74,009,981
Cost of products sold 56,252,765 67,049,649
Gross profit 4,272,191 6,960,332
Selling and administrative expenses 5,059,525 5,827,326
Operating (loss) income (787,334) 1,133,006
Other income (4,098) (66,362)
Interest expense 338,264 591,228
(Loss) income before income taxes (1,121,500) 608,140
Income tax (benefit) expense (220,834) 247,115
Net (loss) income $ (900,666) $ 361,025
(Loss) earnings per common share - basic $ (0.21) $ 0.09
(Loss) earnings per common share - diluted $ (0.21) $ 0.09
Weighted average shares of common stock outstanding - Basic 4,250,986 4,241,883
Weighted average shares of common stock outstanding - Diluted 4,250,986 4,241,883
v3.20.2
Condensed Consolidated Statements Of Changes In Stockholders' Equity - USD ($)
Preferred stock
Common stock
Capital in excess of par value
Retained earnings
Total
Balance at Apr. 30, 2019   $ 42,146 $ 23,474,379 $ 34,770,924 $ 58,287,449
Net income (loss)       361,025 361,025
Balance at Jul. 31, 2019   42,146 23,474,379 35,131,944 58,648,469
Cumulative-effect adjustment for the adoption of Topic 842       (5) (5)
Balance at Apr. 30, 2020 42,265 23,619,513 35,214,021 58,875,799
Restricted stock awards 31 15,198   15,229
Net income (loss) (900,666) (900,666)
Balance at Jul. 31, 2020 $ 42,296 $ 23,634,711 $ 34,313,355 $ 57,990,362
v3.20.2
Condensed Consolidated Statements Of Cash Flows - USD ($)
3 Months Ended
Jul. 31, 2020
Jul. 31, 2019
Cash flows from operating activities    
Net (loss) income $ (900,666) $ 361,025
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities    
Depreciation and amortization of property, machinery and equipment 1,265,719 1,235,516
Amortization of right-of-use operating lease assets (392,989) 532,418
Restricted stock expense 15,229  
Deferred income tax expense 1,544 9,286
Amortization of intangible assets 89,036 91,420
Amortization of financing fees 36,926 26,614
Loss from disposal or sale of machinery and equipment 4,242 51
Changes in operating assets and liabilities    
Accounts receivable 2,787,494 (487,711)
Inventories 1,972,771 11,324,564
Prepaid expenses and other assets (190,700) 57,808
Refundable and prepaid income taxes (59,240) 195,046
Income taxes payable (270,663) (66,734)
Trade accounts payable (11,118,270) (9,386,019)
Operating lease liabilities 730,722 (586,079)
Accrued expenses and wages 886,244 763,629
Net cash (used in) provided by operating activities (5,142,601) 4,070,834
Cash flows from investing activities    
Purchases of machinery and equipment (966,856) (684,667)
Advances on other receivables (1,131,900)  
Net cash used in investing activities (2,098,756) (684,667)
Cash flows from financing activities    
Proceeds under equipment notes 1,128,608  
Payments of contingent consideration   (57,537)
Payments under finance lease and sale leaseback agreements (549,758) (612,300)
Payments under equipment notes (118,599) (102,925)
Payments under building notes payable (80,416) (70,000)
Borrowings under revolving line of credit 76,661,576 82,796,750
Payments under revolving line of credit (73,725,348) (84,852,276)
Payments of debt financing costs (8,055) (5,959)
Net cash provided by (used in) financing activities 3,308,008 (2,904,247)
Change in cash and cash equivalents (3,933,349) 481,920
Cash and cash equivalents at beginning of period 6,779,445 1,005,810
Cash and cash equivalents at end of period 2,846,096 1,487,730
Supplementary disclosures of cash flow information    
Cash paid for interest 338,898 564,188
Cash paid for income taxes 96,288 162,276
Financing of insurance policy $ 83,048 $ 96,556
v3.20.2
Description Of The Business
3 Months Ended
Jul. 31, 2020
Description Of The Business [Abstract]  
Description Of The Business

Note A - Description of the Business



SigmaTron International, Inc., its subsidiaries, foreign enterprises and international procurement office (collectively, the “Company”) operates in one business segment as an independent provider of electronic manufacturing services (“EMS”), which includes printed circuit board assemblies and completely assembled (box-build) electronic products.  In connection with the production of assembled products, the Company 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; and (6) assistance in obtaining product approval from governmental and other regulatory bodies. 

v3.20.2
Basis Of Presentation
3 Months Ended
Jul. 31, 2020
Basis Of Presentation [Abstract]  
Basis Of Presentation

Note B - Basis of Presentation



The accompanying unaudited condensed consolidated financial statements of SigmaTron International, Inc. (“SigmaTron”), SigmaTron’s wholly-owned 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., Spitfire Controls (Cayman) Co. Ltd. and wholly-owned foreign enterprises Wujiang SigmaTron Electronics Co., Ltd. and SigmaTron Electronic Technology Co., Ltd. (“SigmaTron China”) and international procurement office SigmaTron Taiwan branch (collectively, the “Company”) 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 10 of Regulation S-X.



Accordingly, the 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 month period ended July 31, 2020 is not necessarily indicative of the results that may be expected for the year ending April 30, 2021.  The condensed consolidated balance sheet at April 30, 2020, was derived from audited annual financial statements but does not contain all of the footnotes 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, 2020. 



COVID-19 and CARES Act



A pandemic of respiratory disease (abbreviated "COVID-19") began to spread globally, including to the United States, in early 2020. On March 11, 2020, the World Health Organization (WHO) declared COVID-19 to be a public health emergency of international concern. The full impact of the COVID-19 outbreak is inherently uncertain at the time of this report. The COVID-19 outbreak has resulted in travel restrictions and in some cases, prohibitions of non-essential activities, disruption and shutdown of certain businesses and greater uncertainty in global financial markets. The full extent to which COVID-19 impacts the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak within the U.S., China, Mexico, Vietnam and Taiwan, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

Note B - Basis of Presentation - Continued



Even after COVID-19 has subsided, the Company may continue to experience materially adverse impacts to its business as a result of its global economic impact, including any recession that has occurred or may occur in the future. There are no comparable recent events which may provide guidance as to the effect of the spread of COVID-19, and, as a result, the ultimate impact of COVID-19, or a similar health epidemic or pandemic, is highly uncertain and subject to change. The Company has adopted several measures in response to the COVID-19 outbreak.  To date, the Company has been able to continue to meet the needs of its customers.  Although the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it will have a material adverse effect on the Company’s results of future operations, financial position, and liquidity in fiscal year 2021.



On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security (CARES) Act.” The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property. It also appropriated funds for the SBA Paycheck Protection Program loans that are forgivable in certain situations to promote continued employment, as well as Economic Injury Disaster Loans to provide liquidity to small businesses harmed by COVID-19.



As further described in Note E, the Company has applied for, and has received, funds under the Paycheck Protection in the amount of $6,282,973. The application for these funds required the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further requires the Company to take into account its current business activity and its ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. The receipt of these funds, and the forgiveness of the loan attendant to these funds, is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on its future adherence to the forgiveness criteria.



Due to the size of the PPP Loan, it is subject to review, which introduces a layer of uncertainty. If, despite the Company’s actions and certification that it satisfied all eligibility requirements for the PPP, it is later determined that it violated applicable laws or was otherwise ineligible to receive the PPP, the Company may be required to repay the PPP in its entirety in a lump sum or be subject to additional penalties, which could also result in adverse publicity and damage to the Company’s reputation. If these events were to transpire, they could have a material adverse effect on the Company’s business, results of operations, financial condition and liquidity in fiscal year 2021 and beyond.





 

v3.20.2
Inventories, Net
3 Months Ended
Jul. 31, 2020
Inventories, Net [Abstract]  
Inventories, Net

Note C - Inventories, net



The components of inventory consist of the following:









 

 

 

 

 



 

 

 

 

 



July 31,

 

April 30,



2020

 

2020



 

 

 

 

 

Finished products

$

24,251,266 

 

$

20,998,329 

Work-in-process

 

5,005,217 

 

 

5,215,280 

Raw materials

 

57,191,430 

 

 

62,316,122 



 

86,447,913 

 

 

88,529,731 

Less excess and obsolescence reserve

 

(1,241,315)

 

 

(1,350,362)



$

85,206,598 

 

$

87,179,369 

 

v3.20.2
Earnings Per Share And Stockholders' Equity
3 Months Ended
Jul. 31, 2020
Earnings Per Share And Stockholders' Equity [Abstract]  
Earnings Per Share And Stockholders' Equity

Note D - Earnings Per Share and Stockholders’ Equity



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







 

 

 

 

 

 



Three Months Ended

 



July 31,

 



2020

 

2019

 



 

 

 

 

 

 

Net (loss) income

$

(900,666)

 

$

361,025 

 

Weighted-average shares

 

 

 

 

 

 

Basic

 

4,250,986 

 

 

4,241,883 

 

Effect of dilutive stock options

 

 -

 

 

 -

 



 

 

 

 

 

 

Diluted

 

4,250,986 

 

 

4,241,883 

 



 

 

 

 

 

 

Basic (loss) earnings per share

$

(0.21)

 

$

0.09 

 



 

 

 

 

 

 

Diluted (loss) earnings per share

$

(0.21)

 

$

0.09 

 



Options to purchase 513,232 and 465,232 shares of common stock were outstanding at July 31, 2020 and 2019, respectively.  There were no options granted during the three month periods ended July 31, 2020 and 2019.  There was no stock option expense recognized for the three month periods ended July 31, 2020 and 2019.  There was no balance of unrecognized compensation expense related to the Company’s stock option plans at July 31, 2020 and 2019.  For the three month period ended July 31, 2020 and 2019, 299,129 and 424,484 shares, respectively, were not included in the diluted weighted average common shares outstanding calculation as they were anti-dilutive. 

v3.20.2
Long-Term Debt
3 Months Ended
Jul. 31, 2020
Long-Term Debt [Abstract]  
Long-Term Debt

Note E - Long-term Debt



Debt and capital lease obligations consisted of the following at July 31, 2020 and April 30, 2020:







 

 

 

 

 



 

July 31,

 

 

April 30,



 

2020

 

 

2020



 

 

 

 

 

Debt:

 

 

 

 

 

Notes Payable - Banks

$

36,424,073 

 

$

33,472,125 

Notes Payable - Buildings

 

6,842,145 

 

 

6,922,561 

Notes Payable - Equipment

 

2,310,287 

 

 

1,300,278 

Unamortized deferred financing costs

 

(250,869)

 

 

(279,740)

Total debt

 

45,325,636 

 

 

41,415,224 

Less current maturities

 

4,114,057 

 

 

2,878,160 

Long-term debt

$

41,211,579 

 

$

38,537,064 



 

 

 

 

 

Finance lease obligations

$

3,237,259 

 

$

3,787,017 

Less current maturities

 

1,772,662 

 

 

1,902,295 

Total finance lease obligations, less current portion

$

1,464,597 

 

$

1,884,722 



Notes Payable – Banks



On March 31, 2017, the Company entered into a $35,000,000 senior secured credit facility with U.S. Bank, which expires on March 31, 2022.  The credit facility is collateralized by substantially all of the Company’s domestically located assets. The facility allows the Company to choose among interest rates at which it may borrow funds:  the bank fixed rate of five percent or LIBOR plus one and one half percent (effectively 1.74% at July 31, 2020).  Interest is due monthly. 



On July 16, 2018, the Company and U.S. Bank entered into an amendment of the revolving line of credit under the senior secured credit facility.  The amended revolving credit facility allows the Company to borrow up to the lesser of (i) $45,000,000 (the “Revolving Line Cap”) less reserves or (ii) the Borrowing Base, but no more than 90% of the Company’s Revolving Line Cap, except that the 90% limitation will expire if (i) the Company’s actual revolving loans for 90 consecutive days after the amendment’s effective date are less than 80% of the Company’s Borrowing Base and (ii) the Company maintains a Fixed Charge Coverage Ratio of 1.2 to 1.0 for four consecutive quarters.  The amendment also imposes sublimits on categories of inventory of $10,500,000 on raw materials, $10,000,000 on finished goods and $28,000,000 on all eligible inventory. 



On December 13, 2018, the Company and U.S. Bank entered into an amendment of the revolving credit facility.  The amendment provides an exception to otherwise ineligible foreign receivables for up to $3,000,000 of receivables paid by certain enumerated account debtors outside of the U.S. and Canada.





Note E - Long-term Debt - Continued 



As of July 31, 2020, there was $28,836,868 outstanding and $12,224,733 of unused availability under the U.S. Bank facility compared to an outstanding balance of $26,884,494 and $13,850,575 of unused availability at April 30, 2020.  Deferred financing costs of $8,051 were capitalized during the three month period ended July 31, 2020, which are amortized over the term of the agreement.  As of July 31, 2020 and April 30, 2020, the unamortized amount offset against outstanding debt was $197,236 and $218,062, respectively.    



On April 23, 2020, the Company entered into a loan with U.S. Bank, as lender, pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), as administered by the U.S. Small Business Administration (the “SBA”) in the amount of $6,282,973 (the “PPP Loan”). The PPP Loan, in the form of a promissory note, matures on April 23, 2022.  No additional collateral or guarantees were provided by the Company for the PPP Loan. The PPP Loan provides for customary events of default.  Under the CARES Act, loan forgiveness may be available for the sum of documented payroll costs, rent payments, mortgage interest and covered utilities during the 24-week period beginning on the date of loan disbursement.  The amount of loan forgiveness will be reduced if recipients terminate employees or reduce salaries during the covered period.  The Company may be required to repay any portion of the outstanding principal that is not forgiven, along with accrued interest, and it cannot provide any assurance that it will be eligible for loan forgiveness, or that any amount of the PPP Loan will ultimately be forgiven by the SBA.  All aspects of the PPP Loan are subject to review by the SBA, including without limitation, the Company’s eligibility for and the size of the loan.  The review procedures have not been made public.  The Company cannot predict the outcome of that review nor be assured that all or any part of the PPP Loan will be forgiven.  To the extent that all or part of the PPP Loan is not forgiven, the Company will be required to make payments, including interest accruing at an annual interest rate of 1.0% beginning on the date of disbursement.



On July 15, 2020 and August 7, 2020, the Company and U.S. Bank entered into amendments of the revolving credit facility.  The amendments revise the Fixed Charge Coverage Ratio.



On September 8, 2020, the Company and U.S. Bank entered into an amendment of the revolving credit facility.  The amendment allows the Company to borrow up to the lesser of (i) the Revolving Line Cap less reserves or (ii) the Borrowing Base, but no more than 80% of the Company’s Revolving Line Cap.  The amendment also imposes sublimits on categories of other investments to $4,000,000.



On March 15, 2019, the Company’s wholly-owned subsidiary, SigmaTron Electronic Technology Co., Ltd., entered into a credit facility with China Construction Bank.  Under the agreement SigmaTron Electronic Technology Co., Ltd. can borrow up to 10,000,000 Renminbi, approximately $1,430,000 as of July 31, 2020, 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 6.09%.  The term of the facility extends to March 14, 2024.  There was $1,288,512 outstanding under the facility at July 31, 2020 compared to an outstanding balance of $304,658 at April 30, 2020.



The Company is in compliance with its financial covenant as of July 31, 2020.



Note E - Long-term Debt - Continued 



Notes Payable – Buildings



The Company entered into a mortgage agreement on December 21, 2017, in the amount of $5,200,000, with U.S. Bank to refinance the property that serves as the Company’s corporate headquarters and its Illinois manufacturing facility in Elk Grove Village, Illinois.  The note requires the Company to pay monthly principal payments in the amount of $17,333, bears interest at a fixed rate of 4.0% per year and is payable over a fifty-one month period.  Deferred financing costs of $74,066 were capitalized in fiscal year 2018 which are amortized over the term of the agreement.  As of July 31, 2020, the unamortized amount included as a reduction to long-term debt was $28,487A final payment of approximately $4,347,778 is due on or before March 31, 2022The outstanding balance was $4,680,000 and $4,732,000 at July, 31 2020 and April 30, 2020, respectively.



The Company entered into a mortgage agreement on December 21, 2017, in the amount of $1,800,000, with U.S. Bank to refinance the property that serves as the Company’s engineering and design center in Elgin, Illinois.  The note requires the Company to pay monthly principal payments in the amount of $6,000, bears interest at a fixed rate of 4.0% per year and is payable over a fifty-one month period.  Deferred financing costs of $65,381 were capitalized in the fiscal year 2018 which are amortized over the term of the agreement.  As of July 31, 2020 the unamortized amount included as a reduction to long-term debt was $25,146A final payment of approximately $1,505,000 is due on or before March 31, 2022The outstanding balance was $1,620,000 and $1,638,000 at July, 31 2020 and April 30, 2020, respectively. 



The Company entered into a mortgage agreement on March 3, 2020, in the amount of $556,000, with The Bank and Trust SSB to purchase 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, bears interest at a fixed rate of 5.75% per year and is payable over a 120 month period.  The outstanding balance was $542,145 and $552,561 at July 31, 2020 and April, 30 2020, respectively. 



Notes Payable – Equipment



The Company routinely enters into secured note agreements with Engencap Fin S.A. DE C.V. to finance the purchase of equipment. The terms of these secured note agreements mature from November 2021 through May 2023, with quarterly installment payments ranging from $11,045 to $37,941 and a fixed interest rate ranging from 6.65% to 8.00%.



The Company routinely enters into secured note agreements with FGI Equipment Finance LLC to finance the purchase of equipment. The terms of these secured note agreements mature from March 2025 through June 2025, with quarterly installment payments ranging from $10,723 to $69,439 and a fixed interest rate of 8.25%.



Note E - Long-term Debt - Continued 



Annual maturities of the Company’s debt, net of deferred financing fees for the remaining periods as of July 31, 2020, are as follows:







 

 

 

 

 

 

 

 

 

 

 

 



 

Bank

 

Building

 

Equipment

 

Total



 

 

 

 

 

 

 

 

 

 

 

 

For the remaining 9 months of the fiscal year ending April 30:

2021

$

3,122,730 

 

$

242,160 

 

$

499,126 

 

$

3,864,016 

For the fiscal years ending April 30:

2022

 

31,761,962 

 

 

6,135,090 

 

 

654,483 

 

 

38,551,535 



2023

 

 -

 

 

47,752 

 

 

410,201 

 

 

457,953 



2024

 

1,288,512 

 

 

50,571 

 

 

330,128 

 

 

1,669,211 



2025

 

 -

 

 

53,557 

 

 

348,313 

 

 

401,870 



2026

 

 -

 

 

56,719 

 

 

68,036 

 

 

124,755 



Thereafter

 

 -

 

 

256,296 

 

 

 -

 

 

256,296 



 

$

36,173,204 

 

$

6,842,145 

 

$

2,310,287 

 

$

45,325,636 



 

 

 

 

 

 

 

 

 

 

 

 



Finance Lease and Sales Leaseback Obligations



The Company enters into various finance lease and sales leaseback agreements.  The terms of the lease agreements mature through November 2023, with monthly installment payments ranging from $1,455 to $40,173 and a fixed interest rate ranging from 3.75% to 12.73%.  

v3.20.2
Income Tax
3 Months Ended
Jul. 31, 2020
Income Tax [Abstract]  
Income Tax

Note F - Income Tax



The income tax benefit was $220,834 for the three month period ended July 31, 2020 compared to an income tax expense of $247,115 for the same period in the prior fiscal year.  The Company’s effective tax rate was 19.69% and 40.63% for the quarters ended July 31, 2020 and 2019, respectively.  The decrease in income tax expense for the three month period ended July 31, 2020 compared to the same period in the previous year is due to a loss recognized in the current period as opposed to operating income recognized in the same period in the previous year. The decrease in effective tax rate is due primarily to a greater operating loss recognized in Vietnam in the previous period as compared to the current period for which no tax benefit was recorded due to a full valuation allowance. 



As described in Note E, the Company received a PPP Loan under the CARES Act of $6,282,963. For federal income tax purposes, the CARES Act expressly provides that any forgiveness or cancellation of all or part of such loans will not be treated as income for tax purposes. It is expected, however, that if the loan is deemed forgiven any deductions for the covered expenses that gave rise to the loan forgiveness will be disallowed to prevent a double tax benefit. As of July 31, 2020, the loan has not been forgiven and thus the expenses have not been disallowed for federal income tax purposes.



The Company has not changed its plans to indefinitely reinvest the earnings of the Company’s foreign subsidiaries.  The cumulative amount of unremitted earnings for which U.S. income taxes have not been recorded is $4,077,000 as of July 31, 2020. 

v3.20.2
Commitments And Contingencies
3 Months Ended
Jul. 31, 2020
Commitments And Contingencies [Abstract]  
Commitments And Contingencies

Note G - Commitments and Contingencies



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

v3.20.2
Critical Accounting Policies
3 Months Ended
Jul. 31, 2020
Critical Accounting Policies [Abstract]  
Critical Accounting Policies



Note H - Critical Accounting Policies



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



The potential impact of future disruptions, continued economic uncertainty over COVID-19 may have a significant adverse impact on the timing of delivery of customer orders and the levels of future customer orders.  It is reasonably possible that these potential adverse impacts may result in the recognition of material impairments of the Company’s long-lived assets or other related charges in future periods.



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







 

 

 

 

 

 

 

 



 

 

 

Three Months Ended

 



 

 

 

July 31,

 



Net trade sales by
end-market

 

 

2020

 

 

2019

 



Industrial Electronics

 

$

36,617,258 

 

$

42,848,712 

 



Consumer Electronics

 

 

21,168,239 

 

 

26,659,187 

 



Medical / Life Sciences

 

 

2,739,459 

 

 

4,502,082 

 



Total Net Trade Sales

 

$

60,524,956 

 

$

74,009,981 

 



 

 

 

 

 

 

 

 



During the three month period ending July 31, 2020, no revenues were recognized from performance obligations satisfied or partially satisfied in previous periods and no amounts were allocated to



Note H - Critical Accounting Policies - Continued



performance obligations that remain unsatisfied or partially unsatisfied at July 31, 2020.  The Company is electing not to disclose the value of the remaining unsatisfied performance obligation with a duration of one year or less as permitted by the practical expedient in ASU 2014-09, “Revenue from Contracts with Customers.”  The Company had no material remaining unsatisfied performance obligations as of July 31, 2020, with an expected duration of greater than one year.



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



Deferred income tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.  In evaluating the Company’s ability to recover its deferred tax assets within the jurisdiction from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations.  In projecting future taxable income, the Company begins with historical results and changes in accounting policies, and incorporates assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies.  These assumptions require significant judgment and estimates by management about the forecasts of future taxable income and are consistent with the plans and estimates the Company uses to manage the underlying businesses.  In evaluating the objective evidence that historical results provide, the Company considers three years of cumulative operating income and/or loss.  Valuation allowances are established when necessary to reduce deferred income tax assets to an amount more likely than not to be realized.    The Company’s valuation allowance was $1,023,489 and $ 989,194 as of July 31, 2020 and April 30, 2020, respectively.



Investment in Wagz - As more fully described in Note I - Related Parties, the Company has recorded an investment in Wagz, a privately held company whose equity does not have a readily determinable fair value.  As permitted by ASC 321, Investments - Equity Securities, paragraph 321-35-2, the Company has elected to carry its investment in Wagz equity at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or a similar investment of the same issuer until the investment no longer qualifies to be measured under paragraph 321-35-2.  At July 31, 2020 and April 30, 2020, the Company continued to recognize the fair value of the Wagz common stock at $600,000.    



On May 29, 2020, Wagz entered into a Convertible Secured Promissory Note with the Company in the principal sum of up to $4,052,478.  The outstanding principal amount of the Note shall be due and payable on the earliest to occur of (1) August 31, 2021; (2) upon the closing of a sale of all or substantially all of the assets or common stock of  Wagz, or (3) an event of default, (the Maturity Date). Interest is payable at the rate of four percent (4%) per annum and is payable on the Maturity Date. At July 31, 2020, $2,297,779 was outstanding under other receivables compared to $768,500 at April 30, 2020.

Note H - Critical Accounting Policies - Continued



On June 4, 2020, the Company and Wagz announced that they have executed a LOI relating to a proposed business combination.  Subject to the terms and conditions set forth in the LOI, the Company expects to issue approximately 2,270,000 shares of its common stock that would result in the stockholders of Wagz owning in the aggregate approximately one-third of the combined company.  The parties expect the transaction to close by the end of October 2020 and the acquisition remains subject to achievement of certain milestones and satisfaction of conditions by both parties prior to closing such as finalizing a material definitive agreement and the Company raising of additional capital that it projects will be needed for the expanded operations in the amount of at least $7,500,000



New Accounting Standards:



In June 2016, the FASB issued 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, 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 small 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 for annual and interim reporting periods beginning after December 15, 2018. The Company is currently evaluating the new guidance and has not determined the impact this ASU may have on its consolidated financial statements.



In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, which simplifies accounting for income taxes by removing certain exceptions to intra-period allocations, investments, calculations in interim periods and to improve consistent application. ASU 2019-12 is effective for annual and interim reporting periods beginning after December 15, 2020. The Company is currently evaluating the new guidance and has not determined the impact this ASU may have on its consolidated financial statements.



In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, which provides optional guidance for a period of time to ease the potential burden in accounting for the transition from reference rates that are expected to be discontinued. Regulators and market participants in various jurisdictions have undertaken efforts to eliminate certain reference rates and introduce new reference rates that are based on a larger and more liquid population of observable transactions. The changes provide optional expedients and exceptions for applying US GAAP to contract, hedging relationships and other transactions affected by reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 and can be adopted no later than December 31, 2022. The Company is currently evaluating the

Note H - Critical Accounting Policies - Continued



new guidance and has not determined the impact this ASU may have on its consolidated financial statements.

v3.20.2
Related Parties
3 Months Ended
Jul. 31, 2020
Related Parties [Abstract]  
Related Parties

Note I - Related Parties



In March 2015, two of the Company’s executive officers invested in a start-up customer, Petzila, Inc. (“Petzila”).  The executive officers’ investments constituted less than 2% (individually and in aggregate) of the outstanding beneficial ownership of Petzila, according to information provided by Petzila to the executive officers.  



On April 30, 2018, the Company foreclosed on its security interest and held a public sale of the assets in accordance with the requirements of Article 9 of the California Uniform Commercial Code.  The Company acquired all of the assets of Petzila as the winning bidder at the public sale by a credit bid of $3,500,000, the aggregate amount of Petzila’s liability to the company. Concurrent with the foreclosure sale, the Company entered into an Asset Purchase Agreement with Wagz, Inc. (Wagz) whereby the Company sold the assets to Wagz for $350,000 cash, 600,000 shares of Wagz common stock and an earn-out based on sales by Wagz generated from use of the assets through July 31, 2022.  The earn-out is $6.00 per unit of a product specified in the asset purchase agreement and any upgrade to such product.



The fair value of the non-cash consideration consisted of $600,000 for the 600,000 shares of Wagz common stock which is recorded within other assets.  The Company determined the fair value of the equity using the price per common share received by Wagz in the most recent financing transaction, a level 3 input.  The Company did not assign any value to the earn-out because any receipts from the earn-out are highly uncertain and contingent upon Wagz selling the product specified in the asset purchase agreement between the Company and Wagz. Accordingly, the Company recognized the fair value of the assets received from Wagz and derecognized the receivables from Petzila. 



v3.20.2
Leases
3 Months Ended
Jul. 31, 2020
Leases [Abstract]  
Leases

Note J – Leases



The Company leases office and storage space, vehicles and other equipment under non-cancellable operating leases with initial terms typically ranging from 1 to 5 years.  At contract inception, the Company reviews the facts and circumstances of the arrangement to determine if the contract is or contains a lease.  The Company follows the guidance in Topic 842 to evaluate whether the contract has an identified asset; if the Company has the right to obtain substantially all economic benefits from the asset; and if the Company has the right to direct the use of the underlying asset.  When determining if a contract has an identified asset, the Company considers both explicit and implicit assets, and whether the supplier has the right to substitute the asset.  When determining if the Company has the right to direct the use of an underlying asset, the Company considers if they have the right to direct how and for what purpose the asset is used throughout the period of use and if they control the decision-making rights over the asset.



The Company’s lease terms may include options to extend or terminate the lease.  The Company exercises judgment to determine the term of those leases when extension or termination options are

Note J - Leases - Continued



present and include such options in the calculation of the lease term when it is reasonably certain that it will exercise those options.



The Company has elected to include both lease and non-lease components in the determination of lease payments. Payments made to a lessor for items such as taxes, insurance, common area maintenance, or other costs commonly referred to as executory costs, are also included in lease payments if they are fixed. The fixed portion of these payments are included in the calculation of the lease liability, while any variable portion would be recognized as variable lease expenses, when incurred. Variable payments made to third parties for these, or similar costs, such as utilities, are not included in the calculation of lease payments.



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



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



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



The following table presents lease assets and liabilities and their balance sheet classification:



 

 

 

 

 

 

 



 

 

 

July 31,

 

 

April 30,



Classification

 

 

2020

 

 

2020

Operating Leases:

 

 

 

 

 

 

 

Right-of-use Assets

Other assets

 

$

7,962,685 

 

$

7,235,166 

Operating lease current
liabilities

Current portion of operating lease
obligations

 

 

2,213,415 

 

 

2,150,161 

Operating lease noncurrent
liabilities

Operating lease obligations, less
current portion

 

 

5,949,279 

 

 

5,281,811 

Finance Leases:

 

 

 

 

 

 

 

Right-of-use Assets

Property, plant and equipment

 

 

5,867,019 

 

 

6,443,954 

Finance lease current
liabilities

Current portion of finance lease
obligations

 

 

1,772,662 

 

 

1,902,295 

Finance lease noncurrent
liabilities

Finance lease obligations, less
current portion

 

 

1,464,597 

 

 

1,884,722 



Note J - Leases - Continued



The components of lease expense for the three month period ended July 31, 2020 and 2019, are as follows:







 

 

 

 

 

 



 

 

Three Months

 

Three Months

 



 

 

Ended

 

Ended

 



 

 

July 31,

 

July 31,

 



Classification

 

2020

 

2019

 

Operating Leases:

 

 

 

 

 

 

Operating lease cost

Operating expenses

 

373,696 

 

594,494 

 

Variable lease cost

Operating expenses

 

78,347 

 

73,897 

 

Short term lease cost

Operating expenses

 

1,350 

 

1,350 

 

Finance Leases:

 

 

 

 

 

 

Amortization of right-of-use assets

Operating expenses

 

419,693 

 

347,375 

 

Interest expense

Interest expense

 

66,358 

 

67,786 

 

Total

 

 

939,444 

 

1,084,902 

 



The weighted average lease term and discount rates for the three month period ended July 31, 2020 and 2019, are as follows:





 

 

 

 



 

July 31,

 

July 31,



 

2020

 

2019

Operating Leases:

 

 

 

 

Weighted average remaining lease term (months)

 

59.30

 

41.10

Weighted average discount rate

 

3.1%

 

3.8%

Finance Leases:

 

 

 

 

Weighted average remaining lease term (months)

 

24.43

 

28.63

Weighted average discount rate

 

7.6%

 

5.9%































Note J - Leases - Continued



Future payments due under leases reconciled to lease liabilities are as follows:







 

 

 

 

 

 



 

 

Operating Leases

 

 

Finance Leases

For the remaining 9 months of the fiscal year ending April 30:

 

 

 

 

 

 

2021

 

$

1,855,572 

 

$

1,502,802 

For the fiscal years ending April 30:

 

 

 

 

 

 

2022

 

 

1,623,526 

 

 

1,374,628 

2023

 

 

1,528,798 

 

 

498,307 

2024

 

 

1,812,484 

 

 

167,721 

2025

 

 

630,276 

 

 

 -

2026

 

 

776,763 

 

 

 -

Thereafter

 

 

199,354 

 

 

 -

Total undiscounted lease payments

 

 

8,426,773 

 

 

3,543,458 

Present value discount, less interest

 

 

264,079 

 

 

306,199 

Lease liability

 

$

8,162,694 

 

$

3,237,259 



Supplemental disclosures of cash flow information related to leases for the three month period ended July 31, 2020 and 2019 are as follows:







 

 



Three Months

Three Months



Ended

Ended



July 31,

July 31,

Other Information

2020

2019

Cash paid for amounts included in the measurement of lease liabilities

 

 

Operating cash flows from finance leases

66,358  67,786 

Operating cash flows from operating leases

54,021  62,155 

Financing cash flows from finance leases

549,758  612,300 

Supplemental non-cash information on lease labilities arising from
obtaining right-of-use assets:

 

 

Right-of-use assets obtained in exchange for
new finance lease liabilities

 -

 -

Right-of-use assets obtained in exchange for
operating lease liabilities

334,530 

 -



v3.20.2
Critical Accounting Policies (Policy)
3 Months Ended
Jul. 31, 2020
Critical Accounting Policies [Abstract]  
Management Estimates And Uncertainties

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



The potential impact of future disruptions, continued economic uncertainty over COVID-19 may have a significant adverse impact on the timing of delivery of customer orders and the levels of future customer orders.  It is reasonably possible that these potential adverse impacts may result in the recognition of material impairments of the Company’s long-lived assets or other related charges in future periods.

Revenue Recognition

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







 

 

 

 

 

 

 

 



 

 

 

Three Months Ended

 



 

 

 

July 31,

 



Net trade sales by
end-market

 

 

2020

 

 

2019

 



Industrial Electronics

 

$

36,617,258 

 

$

42,848,712 

 



Consumer Electronics

 

 

21,168,239 

 

 

26,659,187 

 



Medical / Life Sciences

 

 

2,739,459 

 

 

4,502,082 

 



Total Net Trade Sales

 

$

60,524,956 

 

$

74,009,981 

 



 

 

 

 

 

 

 

 



During the three month period ending July 31, 2020, no revenues were recognized from performance obligations satisfied or partially satisfied in previous periods and no amounts were allocated to



Note H - Critical Accounting Policies - Continued



performance obligations that remain unsatisfied or partially unsatisfied at July 31, 2020.  The Company is electing not to disclose the value of the remaining unsatisfied performance obligation with a duration of one year or less as permitted by the practical expedient in ASU 2014-09, “Revenue from Contracts with Customers.”  The Company had no material remaining unsatisfied performance obligations as of July 31, 2020, with an expected duration of greater than one year.

Income Taxes

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



Deferred income tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.  In evaluating the Company’s ability to recover its deferred tax assets within the jurisdiction from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations.  In projecting future taxable income, the Company begins with historical results and changes in accounting policies, and incorporates assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies.  These assumptions require significant judgment and estimates by management about the forecasts of future taxable income and are consistent with the plans and estimates the Company uses to manage the underlying businesses.  In evaluating the objective evidence that historical results provide, the Company considers three years of cumulative operating income and/or loss.  Valuation allowances are established when necessary to reduce deferred income tax assets to an amount more likely than not to be realized.    The Company’s valuation allowance was $1,023,489 and $ 989,194 as of July 31, 2020 and April 30, 2020, respectively.

Investment In Wagz

Investment in Wagz - As more fully described in Note I - Related Parties, the Company has recorded an investment in Wagz, a privately held company whose equity does not have a readily determinable fair value.  As permitted by ASC 321, Investments - Equity Securities, paragraph 321-35-2, the Company has elected to carry its investment in Wagz equity at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or a similar investment of the same issuer until the investment no longer qualifies to be measured under paragraph 321-35-2.  At July 31, 2020 and April 30, 2020, the Company continued to recognize the fair value of the Wagz common stock at $600,000.    



On May 29, 2020, Wagz entered into a Convertible Secured Promissory Note with the Company in the principal sum of up to $4,052,478.  The outstanding principal amount of the Note shall be due and payable on the earliest to occur of (1) August 31, 2021; (2) upon the closing of a sale of all or substantially all of the assets or common stock of  Wagz, or (3) an event of default, (the Maturity Date). Interest is payable at the rate of four percent (4%) per annum and is payable on the Maturity Date. At July 31, 2020, $2,297,779 was outstanding under other receivables compared to $768,500 at April 30, 2020.

Note H - Critical Accounting Policies - Continued



On June 4, 2020, the Company and Wagz announced that they have executed a LOI relating to a proposed business combination.  Subject to the terms and conditions set forth in the LOI, the Company expects to issue approximately 2,270,000 shares of its common stock that would result in the stockholders of Wagz owning in the aggregate approximately one-third of the combined company.  The parties expect the transaction to close by the end of October 2020 and the acquisition remains subject to achievement of certain milestones and satisfaction of conditions by both parties prior to closing such as finalizing a material definitive agreement and the Company raising of additional capital that it projects will be needed for the expanded operations in the amount of at least $7,500,000

New Accounting Standards

New Accounting Standards:



In June 2016, the FASB issued 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, 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 small 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 for annual and interim reporting periods beginning after December 15, 2018. The Company is currently evaluating the new guidance and has not determined the impact this ASU may have on its consolidated financial statements.



In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, which simplifies accounting for income taxes by removing certain exceptions to intra-period allocations, investments, calculations in interim periods and to improve consistent application. ASU 2019-12 is effective for annual and interim reporting periods beginning after December 15, 2020. The Company is currently evaluating the new guidance and has not determined the impact this ASU may have on its consolidated financial statements.



In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, which provides optional guidance for a period of time to ease the potential burden in accounting for the transition from reference rates that are expected to be discontinued. Regulators and market participants in various jurisdictions have undertaken efforts to eliminate certain reference rates and introduce new reference rates that are based on a larger and more liquid population of observable transactions. The changes provide optional expedients and exceptions for applying US GAAP to contract, hedging relationships and other transactions affected by reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 and can be adopted no later than December 31, 2022. The Company is currently evaluating the

Note H - Critical Accounting Policies - Continued



new guidance and has not determined the impact this ASU may have on its consolidated financial statements.

v3.20.2
Inventories, Net (Tables)
3 Months Ended
Jul. 31, 2020
Inventories, Net [Abstract]  
Components Of Inventory



 

 

 

 

 



 

 

 

 

 



July 31,

 

April 30,



2020

 

2020



 

 

 

 

 

Finished products

$

24,251,266 

 

$

20,998,329 

Work-in-process

 

5,005,217 

 

 

5,215,280 

Raw materials

 

57,191,430 

 

 

62,316,122 



 

86,447,913 

 

 

88,529,731 

Less excess and obsolescence reserve

 

(1,241,315)

 

 

(1,350,362)



$

85,206,598 

 

$

87,179,369 



v3.20.2
Earnings Per Share And Stockholders' Equity (Tables)
3 Months Ended
Jul. 31, 2020
Earnings Per Share And Stockholders' Equity [Abstract]  
Computation Of Basic And Diluted Earnings (Loss) Per Share



 

 

 

 

 

 



Three Months Ended

 



July 31,

 



2020

 

2019

 



 

 

 

 

 

 

Net (loss) income

$

(900,666)

 

$

361,025 

 

Weighted-average shares

 

 

 

 

 

 

Basic

 

4,250,986 

 

 

4,241,883 

 

Effect of dilutive stock options

 

 -

 

 

 -

 



 

 

 

 

 

 

Diluted

 

4,250,986 

 

 

4,241,883 

 



 

 

 

 

 

 

Basic (loss) earnings per share

$

(0.21)

 

$

0.09 

 



 

 

 

 

 

 

Diluted (loss) earnings per share

$

(0.21)

 

$

0.09 

 



v3.20.2
Long-Term Debt (Tables)
3 Months Ended
Jul. 31, 2020
Long-Term Debt [Abstract]  
Schedule Of Debt And Finance Lease Obligations



 

 

 

 

 



 

July 31,

 

 

April 30,



 

2020

 

 

2020



 

 

 

 

 

Debt:

 

 

 

 

 

Notes Payable - Banks

$

36,424,073 

 

$

33,472,125 

Notes Payable - Buildings

 

6,842,145 

 

 

6,922,561 

Notes Payable - Equipment

 

2,310,287 

 

 

1,300,278 

Unamortized deferred financing costs

 

(250,869)

 

 

(279,740)

Total debt

 

45,325,636 

 

 

41,415,224 

Less current maturities

 

4,114,057 

 

 

2,878,160 

Long-term debt

$

41,211,579 

 

$

38,537,064 



 

 

 

 

 

Finance lease obligations

$

3,237,259 

 

$

3,787,017 

Less current maturities

 

1,772,662 

 

 

1,902,295 

Total finance lease obligations, less current portion

$

1,464,597 

 

$

1,884,722 



Aggregate Amount Of Debt, Net Deferred Financing Fees



 

 

 

 

 

 

 

 

 

 

 

 



 

Bank

 

Building

 

Equipment

 

Total



 

 

 

 

 

 

 

 

 

 

 

 

For the remaining 9 months of the fiscal year ending April 30:

2021

$

3,122,730 

 

$

242,160 

 

$

499,126 

 

$

3,864,016 

For the fiscal years ending April 30:

2022

 

31,761,962 

 

 

6,135,090 

 

 

654,483 

 

 

38,551,535 



2023

 

 -

 

 

47,752 

 

 

410,201 

 

 

457,953 



2024

 

1,288,512 

 

 

50,571 

 

 

330,128 

 

 

1,669,211 



2025

 

 -

 

 

53,557 

 

 

348,313 

 

 

401,870 



2026

 

 -

 

 

56,719 

 

 

68,036 

 

 

124,755 



Thereafter

 

 -

 

 

256,296 

 

 

 -

 

 

256,296 



 

$

36,173,204 

 

$

6,842,145 

 

$

2,310,287 

 

$

45,325,636 



 

 

 

 

 

 

 

 

 

 

 

 



v3.20.2
Critical Accounting Policies (Tables)
3 Months Ended
Jul. 31, 2020
Critical Accounting Policies [Abstract]  
Revenue Disaggregated By Principal End-User Markets



 

 

 

 

 

 

 

 



 

 

 

Three Months Ended

 



 

 

 

July 31,

 



Net trade sales by
end-market

 

 

2020

 

 

2019

 



Industrial Electronics

 

$

36,617,258 

 

$

42,848,712 

 



Consumer Electronics

 

 

21,168,239 

 

 

26,659,187 

 



Medical / Life Sciences

 

 

2,739,459 

 

 

4,502,082 

 



Total Net Trade Sales

 

$

60,524,956 

 

$

74,009,981 

 



 

 

 

 

 

 

 

 



v3.20.2
Lease (Tables)
3 Months Ended
Jul. 31, 2020
Leases [Abstract]  
Lease Assets And Liabilities Related To Balance Sheet Classification



 

 

 

 

 

 

 



 

 

 

July 31,

 

 

April 30,



Classification

 

 

2020

 

 

2020

Operating Leases:

 

 

 

 

 

 

 

Right-of-use Assets

Other assets

 

$

7,962,685 

 

$

7,235,166 

Operating lease current
liabilities

Current portion of operating lease
obligations

 

 

2,213,415 

 

 

2,150,161 

Operating lease noncurrent
liabilities

Operating lease obligations, less
current portion

 

 

5,949,279 

 

 

5,281,811 

Finance Leases:

 

 

 

 

 

 

 

Right-of-use Assets

Property, plant and equipment

 

 

5,867,019 

 

 

6,443,954 

Finance lease current
liabilities

Current portion of finance lease
obligations

 

 

1,772,662 

 

 

1,902,295 

Finance lease noncurrent
liabilities

Finance lease obligations, less
current portion

 

 

1,464,597 

 

 

1,884,722 



Components Of Lease Expense



 

 

 

 

 

 



 

 

Three Months

 

Three Months

 



 

 

Ended

 

Ended

 



 

 

July 31,

 

July 31,

 



Classification

 

2020

 

2019

 

Operating Leases:

 

 

 

 

 

 

Operating lease cost

Operating expenses

 

373,696 

 

594,494 

 

Variable lease cost

Operating expenses

 

78,347 

 

73,897 

 

Short term lease cost

Operating expenses

 

1,350 

 

1,350 

 

Finance Leases:

 

 

 

 

 

 

Amortization of right-of-use assets

Operating expenses

 

419,693 

 

347,375 

 

Interest expense

Interest expense

 

66,358 

 

67,786 

 

Total

 

 

939,444 

 

1,084,902 

 



Weighted Average Lease Term And Discount Rate



 

 

 

 



 

July 31,

 

July 31,



 

2020

 

2019

Operating Leases:

 

 

 

 

Weighted average remaining lease term (months)

 

59.30

 

41.10

Weighted average discount rate

 

3.1%

 

3.8%

Finance Leases:

 

 

 

 

Weighted average remaining lease term (months)

 

24.43

 

28.63

Weighted average discount rate

 

7.6%

 

5.9%



Future Payments Due Under Operating and Finance Leases



 

 

 

 

 

 



 

 

Operating Leases

 

 

Finance Leases

For the remaining 9 months of the fiscal year ending April 30:

 

 

 

 

 

 

2021

 

$

1,855,572 

 

$

1,502,802 

For the fiscal years ending April 30:

 

 

 

 

 

 

2022

 

 

1,623,526 

 

 

1,374,628 

2023

 

 

1,528,798 

 

 

498,307 

2024

 

 

1,812,484 

 

 

167,721 

2025

 

 

630,276 

 

 

 -

2026

 

 

776,763 

 

 

 -

Thereafter

 

 

199,354 

 

 

 -

Total undiscounted lease payments

 

 

8,426,773 

 

 

3,543,458 

Present value discount, less interest

 

 

264,079 

 

 

306,199 

Lease liability

 

$

8,162,694 

 

$

3,237,259 



Supplemental Cash Flow Information Related To Leases



 

 



Three Months

Three Months



Ended

Ended



July 31,

July 31,

Other Information

2020

2019

Cash paid for amounts included in the measurement of lease liabilities

 

 

Operating cash flows from finance leases

66,358  67,786 

Operating cash flows from operating leases

54,021  62,155 

Financing cash flows from finance leases

549,758  612,300 

Supplemental non-cash information on lease labilities arising from
obtaining right-of-use assets:

 

 

Right-of-use assets obtained in exchange for
new finance lease liabilities

 -

 -

Right-of-use assets obtained in exchange for
operating lease liabilities

334,530 

 -



v3.20.2
Description Of The Business (Narrative) (Details)
3 Months Ended
Jul. 31, 2020
segment
Description Of Business [Abstract]  
Number of business segments as an independent provider of electronic manufacturing services 1
v3.20.2
Basis Of Presentation (Narrative) (Details)
Apr. 23, 2020
USD ($)
U.S. Bank [Member] | Paycheck Protection Program [Member]  
Basis Of Presentation [Line Items]  
Loan $ 6,282,973
v3.20.2
Inventories, Net (Components Of Inventory) (Details) - USD ($)
Jul. 31, 2020
Apr. 30, 2020
Inventories, Net [Abstract]    
Finished products $ 24,251,266 $ 20,998,329
Work-in-process 5,005,217 5,215,280
Raw materials 57,191,430 62,316,122
Total inventory, gross 86,447,913 88,529,731
Less excess and obsolescence reserve 1,241,315 1,350,362
Total inventory, net $ 85,206,598 $ 87,179,369
v3.20.2
Earnings Per Share And Stockholders' Equity (Narrative) (Details) - USD ($)
3 Months Ended
Jul. 31, 2020
Jul. 31, 2019
Earnings Per Share And Stockholders' Equity [Abstract]    
Options to purchase, common stock outstanding 513,232 465,232
Options granted 0 0
Stock option expense $ 0 $ 0
Balance of unrecognized compensation expense related to stock options plans $ 0 $ 0
Anti-dilutive common stock outstanding excluded from the calculation of diluted earnings per share 299,129 424,484
v3.20.2
Earnings Per Share And Stockholders' Equity (Computation Of Basic And Diluted Earnings (Loss) Per Share) (Details) - USD ($)
3 Months Ended
Jul. 31, 2020
Jul. 31, 2019
Earnings Per Share And Stockholders' Equity [Abstract]    
Net (loss) income $ (900,666) $ 361,025
Weighted-average shares, Basic 4,250,986 4,241,883
Diluted 4,250,986 4,241,883
Basic (loss) earnings per share $ (0.21) $ 0.09
Diluted (loss) earnings per share $ (0.21) $ 0.09
v3.20.2
Long-Term Debt (Narrative) (Details)
1 Months Ended 3 Months Ended
Sep. 08, 2020
USD ($)
Apr. 23, 2020
USD ($)
Mar. 03, 2020
USD ($)
Jul. 16, 2018
USD ($)
Dec. 21, 2017
USD ($)
Jul. 16, 2017
Mar. 31, 2017
USD ($)
Mar. 31, 2017
USD ($)
Jul. 31, 2020
USD ($)
Apr. 30, 2020
USD ($)
Mar. 15, 2019
CNY (¥)
Dec. 13, 2018
USD ($)
Apr. 30, 2018
USD ($)
U.S. Bank [Member] | Notes Payable - Buildings [Member] | Corporate Headquarters And Manufacturing Facility [Member]                          
Debt Instrument [Line Items]                          
Deferred financing costs                         $ 74,066
Unamortized amount offset against outstanding debt                 $ 28,487        
Mortgage agreement, amount         $ 5,200,000                
Mortgage agreement, monthly principal payment         $ 17,333                
Mortgage agreement, interest rate         4.00%                
Mortgage agreement, payable period         51 months                
Mortgage agreement, final payment                 $ 4,347,778        
Mortgage agreement, maturity date                 Mar. 31, 2022        
Mortgage agreement, outstanding amount                 $ 4,680,000 $ 4,732,000      
U.S. Bank [Member] | Notes Payable - Buildings [Member] | Engineering And Design Center [Member]                          
Debt Instrument [Line Items]                          
Deferred financing costs                         $ 65,381
Unamortized amount offset against outstanding debt                 25,146        
Mortgage agreement, amount         $ 1,800,000                
Mortgage agreement, monthly principal payment         $ 6,000                
Mortgage agreement, interest rate         4.00%                
Mortgage agreement, payable period         51 months                
Mortgage agreement, final payment                 $ 1,505,000        
Mortgage agreement, maturity date                 Mar. 31, 2022        
Mortgage agreement, outstanding amount                 $ 1,620,000 1,638,000      
U.S. Bank [Member] | Paycheck Protection Program [Member]                          
Debt Instrument [Line Items]                          
Loan   $ 6,282,973                      
Effective interest rate   1.00%                      
Maturity date   Apr. 23, 2022                      
U.S. Bank [Member] | Senior secured credit facility | Notes Payable - Banks [Member]                          
Debt Instrument [Line Items]                          
Credit facility credit limit             $ 35,000,000 $ 35,000,000          
Expiration date               Mar. 31, 2022          
Fixed interest rate             5.00% 5.00%          
Effective interest rate                 1.74%        
U.S. Bank [Member] | Senior secured credit facility | LIBOR [Member] | Notes Payable - Banks [Member]                          
Debt Instrument [Line Items]                          
Variable interest rate             1.50%            
U.S. Bank [Member] | Revolving Line Cap [Member] | Notes Payable - Banks [Member]                          
Debt Instrument [Line Items]                          
Credit facility credit limit       $ 45,000,000                  
Unused availability under the credit facility                 $ 12,224,733 13,850,575      
Outstanding balance under the credit facility                 28,836,868 26,884,494      
Deferred financing costs                 8,051        
Unamortized amount offset against outstanding debt                 197,236 218,062      
Borrowing base percentage       90.00%                  
Number of days in measuring borrowing base requirements       90 days                  
Borrowing base minimum requirement       80.00%                  
Sublimits on raw materials       $ 10,500,000                  
Sublimits on finished goods       10,000,000                  
Sublimits on all eligible inventory       $ 28,000,000                  
U.S. Bank [Member] | Revolving Line Cap [Member] | Notes Payable - Banks [Member] | Subsequent Event [Member]                          
Debt Instrument [Line Items]                          
Borrowing base minimum requirement 80.00%                        
Sublimits on categories of other investments $ 4,000,000                        
The Bank And Trust SSB [Member] | Notes Payable - Buildings [Member] | Warehousing And Distribution Center [Member]                          
Debt Instrument [Line Items]                          
Mortgage agreement, amount     $ 556,000                    
Mortgage agreement, monthly principal payment     $ 6,103                    
Mortgage agreement, interest rate     5.75%                    
Mortgage agreement, payable period     120 months                    
Mortgage agreement, outstanding amount                 $ 542,145 552,561      
FGI Equipment Finance LLC [Member] | Notes Payable - Equipment [Member]                          
Debt Instrument [Line Items]                          
Fixed interest rate                 8.25%        
Minimum [Member] | Finance Lease And Sales Leaseback Agreements [Member]                          
Debt Instrument [Line Items]                          
Fixed interest rate                 3.75%        
Quarterly installment payments under secured note agreements                 $ 1,455        
Minimum [Member] | U.S. Bank [Member] | Revolving Line Cap [Member] | Notes Payable - Banks [Member]                          
Debt Instrument [Line Items]                          
Fixed charge coverage ratio           1.00%              
Minimum [Member] | Engencap Fin S.A. DE C.V. [Member] | Notes Payable - Equipment [Member]                          
Debt Instrument [Line Items]                          
Fixed interest rate                 6.65%        
Maturity date                 Nov. 01, 2021        
Quarterly installment payments under secured note agreements                 $ 11,045        
Minimum [Member] | FGI Equipment Finance LLC [Member] | Notes Payable - Equipment [Member]                          
Debt Instrument [Line Items]                          
Maturity date                 Mar. 01, 2025        
Quarterly installment payments under secured note agreements                 $ 10,723        
Maximum [Member] | Finance Lease And Sales Leaseback Agreements [Member]                          
Debt Instrument [Line Items]                          
Fixed interest rate                 12.73%        
Maturity date                 Nov. 01, 2023        
Quarterly installment payments under secured note agreements                 $ 40,173        
Maximum [Member] | U.S. Bank [Member] | Revolving Line Cap [Member] | Notes Payable - Banks [Member]                          
Debt Instrument [Line Items]                          
Fixed charge coverage ratio       1.20%                  
Maximum [Member] | Engencap Fin S.A. DE C.V. [Member] | Notes Payable - Equipment [Member]                          
Debt Instrument [Line Items]                          
Fixed interest rate                 8.00%        
Maturity date                 May 01, 2023        
Quarterly installment payments under secured note agreements                 $ 37,941        
Maximum [Member] | FGI Equipment Finance LLC [Member] | Notes Payable - Equipment [Member]                          
Debt Instrument [Line Items]                          
Maturity date                 Jun. 01, 2025        
Quarterly installment payments under secured note agreements                 $ 69,439        
Foreign Subsidiaries [Member] | Maximum [Member] | U.S. Bank [Member] | Credit Facility [Member] | Notes Payable - Banks [Member]                          
Debt Instrument [Line Items]                          
Credit facility credit limit                       $ 3,000,000  
SigmaTron Electronic Technology Co [Member] | China Construction Bank [Member] | Credit Facility [Member] | Notes Payable - Banks [Member]                          
Debt Instrument [Line Items]                          
Credit facility credit limit                 $ 1,430,000   ¥ 10,000,000    
Fixed interest rate                 6.09%        
Outstanding balance under the credit facility                 $ 1,288,512 $ 304,658      
Maturity date                 Mar. 14, 2024        
v3.20.2
Long-Term Debt (Schedule Of Debt And Finance Lease Obligations) (Details) - USD ($)
Jul. 31, 2020
Apr. 30, 2020
Debt Instrument [Line Items]    
Unamortized deferred financing costs $ (250,869) $ (279,740)
Total debt 45,325,636 41,415,224
Less current maturities 4,114,057 2,878,160
Long-term debt 41,211,579 38,537,064
Finance lease obligations 3,237,259 3,787,017
Less current maturities 1,772,662 1,902,295
Total finance lease obligations, less current portion 1,464,597 1,884,722
Notes Payable - Banks [Member]    
Debt Instrument [Line Items]    
Debt 36,424,073 33,472,125
Total debt 36,173,204  
Notes Payable - Buildings [Member]    
Debt Instrument [Line Items]    
Debt 6,842,145 6,922,561
Total debt 6,842,145  
Notes Payable - Equipment [Member]    
Debt Instrument [Line Items]    
Debt 2,310,287 $ 1,300,278
Total debt $ 2,310,287  
v3.20.2
Long-Term Debt (Aggregate Amount Of Debt, Net Deferred Financing Fees) (Details) - USD ($)
Jul. 31, 2020
Apr. 30, 2020
For the remaining 9 months of the fiscal year ending April 30: 2021 $ 3,864,016  
For the fiscal years ending April 30:    
2022 38,551,535  
2023 457,953  
2024 1,669,211  
2025 401,870  
2026 124,755  
Thereafter 256,296  
Total debt 45,325,636 $ 41,415,224
Notes Payable - Banks [Member]    
For the remaining 9 months of the fiscal year ending April 30: 2021 3,122,730  
For the fiscal years ending April 30:    
2022 31,761,962  
2023  
2024 1,288,512  
2025  
2026  
Thereafter  
Total debt 36,173,204  
Notes Payable - Buildings [Member]    
For the remaining 9 months of the fiscal year ending April 30: 2021 242,160  
For the fiscal years ending April 30:    
2022 6,135,090  
2023 47,752  
2024 50,571  
2025 53,557  
2026 56,719  
Thereafter 256,296  
Total debt 6,842,145  
Notes Payable - Equipment [Member]    
For the remaining 9 months of the fiscal year ending April 30: 2021 499,126  
For the fiscal years ending April 30:    
2022 654,483  
2023 410,201  
2024 330,128  
2025 348,313  
2026 68,036  
Thereafter  
Total debt $ 2,310,287  
v3.20.2
Income Tax (Narrative) (Details) - USD ($)
3 Months Ended
Jul. 31, 2020
Jul. 31, 2019
Apr. 23, 2020
Income Tax [Line Items]      
Income tax expense (benefit) $ (220,834) $ 247,115  
U.S. statutory income tax rate 19.69% 40.63%  
Cumulative earnings $ 4,077,000    
Paycheck Protection Program [Member] | U.S. Bank [Member]      
Income Tax [Line Items]      
Loan     $ 6,282,973
Vietnam [Member] | Foreign [Member]      
Income Tax [Line Items]      
Operating loss carryforwards, valuation allowance $ 0    
v3.20.2
Critical Accounting Policies (Narrative) (Details) - USD ($)
3 Months Ended
Jun. 04, 2020
May 29, 2020
Jul. 31, 2020
Apr. 30, 2020
Critical Accounting Policies [Line Items]        
Revenues recognized from performance obligations satisfied or partially satisfied     $ 0  
Amounts allocated to performance obligations remain unsatisfied or partially unsatisfied     0  
Valuation allowances     1,023,489 $ 989,194
Fair value of the common stock     600,000  
Outstanding under other receivables     4,137,033 2,642,094
New shares expects to issue 2,270,000      
Minimum [Member]        
Critical Accounting Policies [Line Items]        
Proceeds from issuance of new shares to raise additional capital $ 7,500,000      
Convertible Secured Promissory Note [Member]        
Critical Accounting Policies [Line Items]        
Maturity date   Aug. 31, 2021    
Interest rate   4.00%    
Outstanding under other receivables     $ 2,297,779 768,500
Convertible Secured Promissory Note [Member] | Maximum [Member]        
Critical Accounting Policies [Line Items]        
Convertible secured promissory note   $ 4,052,478    
Wagz [Member]        
Critical Accounting Policies [Line Items]        
Fair value of the common stock       $ 600,000
v3.20.2
Critical Accounting Policies (Revenue Disaggregated By Principal End-User Markets) (Details) - USD ($)
3 Months Ended
Jul. 31, 2020
Jul. 31, 2019
Disaggregation of Revenue [Line Items]    
Total Net Sales $ 60,524,956 $ 74,009,981
Industrial Electronics [Member]    
Disaggregation of Revenue [Line Items]    
Total Net Sales 36,617,258 42,848,712
Consumer Electronics [Member]    
Disaggregation of Revenue [Line Items]    
Total Net Sales 21,168,239 26,659,187
Medical / Life Sciences [Member]    
Disaggregation of Revenue [Line Items]    
Total Net Sales $ 2,739,459 $ 4,502,082
v3.20.2
Related Parties (Narrative) (Details)
Apr. 30, 2018
USD ($)
$ / shares
shares
Jul. 31, 2020
USD ($)
Apr. 30, 2020
USD ($)
Mar. 31, 2015
employee
Related Party Transaction [Line Items]        
Amount owed by Petzila $ 3,500,000      
Cash from sold assets to Wagz $ 350,000      
Fair value of non-cash consideration   $ 600,000    
Executive [Member]        
Related Party Transaction [Line Items]        
Number of executive officers invested in a start-up customer | employee       2
Maximum [Member] | Executive [Member]        
Related Party Transaction [Line Items]        
Executive officers' investment holding, percentage       2.00%
Wagz [Member]        
Related Party Transaction [Line Items]        
Asset Purchase Agreement end date Jul. 31, 2022      
Asset Purchase Agreement earn-out | $ / shares $ 6.00      
Fair value of non-cash consideration     $ 600,000  
Common Class C [Member] | Wagz [Member]        
Related Party Transaction [Line Items]        
Shares acquired from Asset Purchase Agreement | shares 600,000      
v3.20.2
Leases (Narratives) (Details)
Jul. 31, 2020
Minimum [Member]  
Leases [Line Items]  
Operating leases, term 1 year
Maximum [Member]  
Leases [Line Items]  
Operating leases, term 5 years
v3.20.2
Leases (Lease Assets And Liabilities Related To Balance Sheet Classification) (Details) - USD ($)
Jul. 31, 2020
Apr. 30, 2020
Leases [Abstract]    
Operating Leases: Right-of-use Assets $ 7,962,685 $ 7,235,166
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] Other Assets, Noncurrent Other Assets, Noncurrent
Operating lease current liabilities $ 2,213,415 $ 2,150,161
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] Operating lease current liabilities Operating lease current liabilities
Operating lease noncurrent liabilities $ 5,949,279 $ 5,281,811
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] Operating lease noncurrent liabilities Operating lease noncurrent liabilities
Finance Leases: Right-of-use Assets $ 5,867,019 $ 6,443,954
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] Property Plant And Equipment Net Property Plant And Equipment Net
Finance lease current liabilities $ 1,772,662 $ 1,902,295
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] Finance lease current liabilities Finance lease current liabilities
Finance lease noncurrent liabilities $ 1,464,597 $ 1,884,722
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] Finance lease noncurrent liabilities Finance lease noncurrent liabilities
v3.20.2
Leases (Components Of Lease Expense) (Details) - USD ($)
3 Months Ended
Jul. 31, 2020
Jul. 31, 2019
Leases [Abstract]    
Operating lease cost $ 373,696 $ 594,494
Variable lease cost 78,347 73,897
Short term lease cost 1,350 1,350
Amortization of right-of-use assets 419,693 347,375
Interest expense 66,358 67,786
Total $ 939,444 $ 1,084,902
v3.20.2
Leases (Weighted Average Lease Term And Discount Rate) (Details)
Jul. 31, 2020
Jul. 31, 2019
Leases [Abstract]    
Operating Leases: Weighted average remaining lease term (months) 59 months 9 days 41 months 3 days
Operating Leases: Weighted average discount rate 3.10% 3.80%
Finance Leases: Weighted average remaining lease term (months) 24 months 13 days 28 months 19 days
Finance Leases: Weighted average discount rate 7.60% 5.90%
v3.20.2
Leases (Future Payments Due Under Operating And Finance Leases) (Details) - USD ($)
Jul. 31, 2020
Apr. 30, 2020
Operating Leases    
For the remaining 9 months of the fiscal year ending April 30: 2021 $ 1,855,572  
For the fiscal year ending April 30: 2022 1,623,526  
For the fiscal year ending April 30: 2023 1,528,798  
For the fiscal year ending April 30: 2024 1,812,484  
For the fiscal year ending April 30: 2025 630,276  
For the fiscal year ending April 30: 2026 776,763  
Thereafter 199,354  
Total undiscounted lease payments 8,426,773  
Present value discount, less interest 264,079  
Lease liability 8,162,694  
Finance Leases    
For the remaining 9 months of the fiscal year ending April 30: 2021 1,502,802  
For the fiscal year ending April 30: 2022 1,374,628  
For the fiscal year ending April 30: 2023 498,307  
For the fiscal year ending April 30: 2024 167,721  
For the fiscal year ending April 30: 2025  
For the fiscal year ending April 30: 2026  
Thereafter  
Total undiscounted lease payments 3,543,458  
Present value discount, less interest 306,199  
Lease liability $ 3,237,259 $ 3,787,017
v3.20.2
Leases (Supplemental Cash Flow Information Related To Leases) (Details) - USD ($)
3 Months Ended
Jul. 31, 2020
Jul. 31, 2019
Leases [Abstract]    
Operating cash flows from finance leases $ 66,358 $ 67,786
Operating cash flows from operating leases 54,021 62,155
Financing cash flows from finance leases 549,758 612,300
Right-of-use assets obtained in exchange for new finance lease liabilities
Right-of-use assets obtained in exchange for operating lease liabilities $ 334,530