UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K
_________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 7, 2021
_______________________________
SIGMATRON INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
_______________________________
| Delaware | 000-23248 | 36-3918470 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
2201 Landmeier Road
Elk Grove Village, Illinois 60007
(Address of Principal Executive Offices) (Zip Code)
(847) 956-8000
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
_______________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock $0.01 par value per share | SGMA | The NASDAQ Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
As previously disclosed, on July 19, 2021, SigmaTron International, Inc. (the “Company”), Remy Pom, Inc., a wholly-owned subsidiary of the Company (“Merger Sub”), Wagz, Inc. (“Wagz”), Terry B. Anderton, solely in his capacity as Wagz shareholders’ representative (the “Shareholders’ Representative”) and Terry B. Anderton, individually solely for purposes of Section 7.02 (“Anderton”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, subject to the terms and conditions therein, Merger Sub will be merged with and into Wagz, resulting in Wagz being the surviving corporation and a wholly-owned subsidiary of the Company (such transaction, the “Merger”). The material terms of the Merger Agreement were summarized in a Form 8-K filed by the Company on July 21, 2021.
On December 7, 2021, the Company, Merger Sub, Wagz, the Shareholders’ Representative and Anderton entered into a First Amendment to Agreement and Plan of Merger (the “Amendment”), which (1) establishes that out of the 2,443,870 shares of common stock of the Company to be issued in the Merger (the “Merger Shares”), 1,546,592 shares are allocated to Wagz shareholders (excluding the Company) and 897,278 shares are allocated to the Company and treated and retired as treasury stock, and (2) makes other administrative and conforming changes. Of the 897,278 shares allocated to the Company that will be retired as treasury stock, 624,351 shares result from the conversion of 600,000 shares of Wagz common stock owned by the Company and $12 million of the Company’s outstanding Convertible Secured Promissory Notes, and 272,927 shares represent a reduction of shares allocated to Wagz shareholders (excluding the Company). In negotiating the Amendment and reaching a final allocation of the Merger Shares, both the Company and Wagz took into account the financial resources provided to Wagz as well as the projected future financial requirements.
The Merger Shares to be issued pursuant to the Merger Agreement to the Wagz shareholders have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and by Rule 506 of Regulation D, and in reliance on similar exemptions under applicable state laws.
The parties to the Merger Agreement expect that the Merger will close by December 31, 2021, subject to the satisfaction of conditions by both parties prior to closing.
The description of the Amendment provided herein is qualified by reference to the Amendment, which is attached to this Form 8-K as Exhibit 10.2 and is incorporated by reference herein.
On December 10, 2021, the Company issued a press release announcing the Company’s financial results for its fiscal quarter ended October 31, 2021 and announcing the entry into the Amendment described above in Item 1.01 of this Form 8-K. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.
The disclosure set forth in Item 1.01 of this Form 8-K is incorporated by reference into this Item 3.02.
(d) Exhibits
* Exhibits and schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a supplemental copy of any omitted exhibit or schedule to the SEC upon request.
SIGNATURE
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 hereunto duly authorized.
| SIGMATRON INTERNATIONAL, INC. | ||
| Date: December 10, 2021 | By: | /s/ Gary R. Fairhead |
| Gary R. Fairhead | ||
| Chief Executive Officer | ||
EXHIBIT 10.2
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
This FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER, is entered into as of December 7, 2021 (this “Amendment”), by and among SigmaTron International, Inc., a Delaware corporation (“SigmaTron”), Remy Pom, Inc., a Delaware corporation (“Merger Sub”), Wagz, Inc., a Delaware corporation (the “Seller”), Terry B. Anderton, not individually but solely in his capacity as the representative, agent and attorney-in-fact of the Stockholders (“Representative”), and Terry B. Anderton, individually solely for purposes of Section 7.02 (“Anderton”). SigmaTron, Merger Sub, Seller, Representative and Anderton are herein referred to individually as a “Party” and, collectively, as the “Parties”. Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Merger Agreement (as defined below).
RECITALS
WHEREAS, the Parties entered into that certain Agreement and Plan of Merger, dated as of July 19, 2021 (the “Merger Agreement”); and
WHEREAS, the Parties desire to amend the Merger Agreement in certain respects as provided herein.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the Parties agree as follows:
1. Amendments.
| a. | The first sentence of Section 1.06 of the Merger Agreement is amended to read in its entirety as follows: |
“Each of the Parties shall take all necessary action to cause the (a) director of Merger Sub immediately prior to the Effective Time (consisting of Gary R. Fairhead) to be the director of the Surviving Corporation from and after the Effective Time, until his successor is duly elected or appointed in accordance with applicable Law or his earlier resignation or removal, and (b) officers of the Merger Sub immediately prior to the Effective Time (consisting of Gary R. Fairhead, as Chairman of the Board and Chief Executive Officer, and James J. Reiman, as Chief Financial Officer, Vice President Finance, Secretary and Treasurer) to be the officers of the Surviving Corporation from and after the Effective Time, until their successors are duly elected or appointed in accordance with applicable Law or their earlier resignation or removal.”
| b. | Subsection (a) of Section 2.01 of the Merger Agreement is amended to read in its entirety as follows: |
“(a) on December 31, 2021 or such other date as is mutually agreed in writing by the Parties, or”
| c. | Section 2.02(a)(iv) of the Merger Agreement is amended to read in its entirety as follows: |
“At least three Business Days before the Closing, the Seller shall prepare and deliver to SigmaTron a spreadsheet (the “Consideration Spreadsheet”), certified by the President of the Seller, which shall set forth, as of the Closing Date and immediately prior to the Effective Time, the following: (i) the names and addresses of all Stockholders and the number of shares of Seller Common Stock held by such Persons; (ii) the names and address of all holders of Warrants to purchase Seller Common Stock (“Warrantholders”) and the number of shares of Seller Common Stock subject to such Warrants (after giving effect to those certain Amended and Restated Warrant Cancellation Agreements entered into between the Seller and each of the Warrantholders); and (ii) calculations of the number of shares of SigmaTron Shares issuable to each Stockholder and Warrantholder as of the Effective Time based on the Exchange Ratio (after giving effect to those certain Amended and Restated Warrant Cancellation Agreements entered into between the Seller and each of the Warrantholders).”
| d. | Section 3.05(d) of the Merger Agreement is amended to read in its entirety as follows: |
“The number of SigmaTron Shares being issued to the Wagz Stockholders (excluding, for the avoidance of doubt, SigmaTron) is approximately 85% of 1,819,519, or 1,546,592 (the difference, or 272,927, shares of SigmaTron Common Stock are referred to as the “Discount Shares”). The exchange ratio will be equal to said number of SigmaTron Shares divided into 36,719,668 shares of the Seller Common Stock issued and outstanding as of the Closing Date and immediately prior to the Effective Time, after giving effect to the conversion of all Seller Preferred Stock and Seller convertible notes (excluding the Converted Stock) and the exercise or cancellation of all Seller options and warrants then outstanding into Seller Common Stock in accordance with Section 5.17(b) and the calculation attached to the Amendment as Schedule 1, all such shares of Seller Common Stock will be accurately reflected in the Consideration Spreadsheet delivered to SigmaTron in accordance with Section 2.02(a)(iv).”
| e. | Section 5.07 of the Merger Agreement is amended to read in its entirety as follows: |
“Securities Representations. To the extent that any Stockholder does not sign a Letter of Transmittal containing such investment representations and warranties that SigmaTron reasonably requests to enable SigmaTron, in its discretion, to comply with applicable securities Laws, SigmaTron shall have the option, but not the obligation, with respect to one or more of such Stockholders, to pay, in cash, the value of the Merger Consideration otherwise due to any such Stockholder so long as the aggregate of all such cash payments does not exceed 20% of the value of the aggregate Merger Consideration payable to all Stockholders.”
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| f. | The first sentence of Section 5.15 of the Merger Agreement is amended to read in its entirety as follows: |
“Termination of PEO. Seller and SigmaTron will mutually agree on the effective date and other terms relating to the termination of the Contract and powers of attorney with TriNet HR III, Inc.”
| g. | Section 5.17(a) of the Merger Agreement is amended to read in its entirety as follows: |
“In connection with the Merger, SigmaTron will cause (i) the Convertible Note and the 600,000 shares of Seller Common Stock now owned by SigmaTron to convert into 624,351 shares of SigmaTron Common Stock (the “Converted Stock”) using the exchange ratio of 20.1810 (see Schedule 1 to the Amendment), and (ii) retire as treasury stock the Converted Stock and the Discount Shares.”
| h. | Section 6.03(g) of the Merger Agreement is amended to read in its entirety as follows: |
“SigmaTron shall have received a fairness opinion from a reputable firm selected by SigmaTron to the effect that, as of December 7, 2021 and based upon and subject to the qualifications and assumptions set forth therein, the Merger Consideration is fair, from a financial point of view, to the holders of shares of SigmaTron Common Stock, and, as of the Closing Date, such opinion has not been withdrawn, revoked, or modified.”
| i. | The following definition in Section 11.01 of the Merger Agreement is amended to read in its entirety as follows: |
“Convertible Note” means collectively, all convertible secured promissory notes issued by Seller to SigmaTron, including the Convertible Secured Promissory Note dated May 29, 2020, the Convertible Secured Promissory Note dated January 27, 2021, and the Convertible Secured Promissory Note dated April 30, 2021, the Convertible Secured Promissory Note dated July 31, 2021, the Convertible Secured Promissory Note dated October 31, 2021 and any additional convertible secured promissory notes issued by Seller to SigmaTron, each as amended, renewed or otherwise modified, the principal and interest of which are capped at $12,000,000.”
2. Closing Conditions. The Parties acknowledge and agree that the closing conditions described in Sections 6.01(b), 6.03(h), 6.03(i) and 6.03(j) of the Merger Agreement have been satisfied.
3. Non-Convertible Debt. The Parties agree that any principal or interest that Seller owes to SigmaTron that exceeds $12,000,000 will be subject to one or more non-convertible secured promissory notes, on the same terms as provided in the Secured Promissory Note issued by Seller to SigmaTron dated October 31, 2021.
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4. Miscellaneous. Except as expressly set forth above, all of the terms and conditions of the Merger Agreement shall remain in effect without modification and the Parties reserve all other rights thereunder. This Amendment may be executed in any number of counterparts (including by means of facsimile and electronically transmitted portable document format (pdf) signature pages), each of which shall be an original but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of this Amendment by facsimile or other electronic means, including as a pdf attachment to an email, shall be effective as delivery of a manually executed counterpart of this Amendment.
[Remainder of page left intentionally blank]
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In Witness Whereof, this Amendment has been signed by or on behalf of each of the Parties as of the day first written above.
| SIGMATRON: | ||
| SIGMATRON INTERNATIONAL, INC. | ||
| By: | /s/ Gary R. Fairhead | |
| Name: Gary R. Fairhead | ||
| Title: Chief Executive Officer | ||
| MERGER SUB: | ||
| REMY POM, INC. | ||
| By: | /s/ Gary R. Fairhead | |
| Name: Gary R. Fairhead | ||
| Title: President | ||
| SELLER: | ||
| WAGZ, INC. | ||
| By: | /s/ Terry B. Anderton | |
| Name: Terry B. Anderton | ||
| Title: President | ||
| REPRESENTATIVE: | ||
| /s/ Terry B. Anderton | ||
| Terry B. Anderton | ||
| TERRY B. ANDERTON, solely for purposes of Section 7.02: | ||
| /s/ Terry B. Anderton | ||
| Terry B. Anderton |
[Signature Page to First Amendment to Agreement and Plan of Merger]
EXHIBIT 99.1
SigmaTron International, Inc. Reports Second Quarter Financial Results for Fiscal 2022 and Update on Wagz Pending Transaction
ELK GROVE VILLAGE, Ill., Dec. 10, 2021 (GLOBE NEWSWIRE) -- SigmaTron International, Inc. (NASDAQ: SGMA), an electronic manufacturing services (“EMS”) company (the “Company”), today reported revenues and earnings for the fiscal quarter ended October 31, 2021.
Revenues increased $30.6 million, or 44 percent, to $100.2 million in the second quarter of fiscal 2022 from $69.6 million for the same quarter in the prior year. Net income for the second quarter ended October 31, 2021 was $3,150,205, compared to $626,858 for the same period in the prior year. Basic and diluted earnings per share for the quarter ended October 31, 2021, were $0.73 and $0.69, respectively, compared to basic and diluted earnings per share of $0.15 each for the same quarter ended October 31, 2020.
For the six months ended October 31, 2021, revenues increased $55.8 million, or 43 percent, to $186.0 million compared to $130.1 million for the same period in the prior year. Net income for the six-month period ended October 31, 2021 was $11,946,921 compared to a net loss of $273,808 for the same period in the prior year. Basic and diluted income per share for the six months ended October 31, 2021, were $2.78 and $2.69, respectively, compared to basic and diluted loss per share each of $0.06 each for the six months ended October 31, 2020.
Commenting on SigmaTron’s second quarter, fiscal 2022 results, Gary R. Fairhead, Chief Executive Officer and Chairman of the Board, said, “I’m pleased to report record quarterly revenue and operating results for the quarter ending October 31, 2021. The revenue line, as well as the cost of products sold, are inflated due to significant premiums paid for raw material by our customers, which are close to a pass through in terms of margin. The premiums were a little over 10% of the revenue reported and roughly the same number in terms of cost of products sold. However, putting that aside, we still reported operating income of $5.0 million for the quarter, which is a record for income from operations. Coupled with our first quarter results, we also set records for the six months ended October 31, 2021, after eliminating the gain from the forgiveness of the PPP Loan previously reported in our first quarter financial results press release.
“The record results were driven by a strong and growing demand from existing customers as well as several new customers that have been added over the last year. The backlog remains strong, and new opportunities are significant. There has been no perceivable change in terms of trade policy between the United States and China and this continues to drive existing and potential customers to look at Mexico as a favored supply chain solution. Unfortunately, the volatility of the electronic component marketplace remains with us and from our perspective, is getting worse and not better. We do not see any end in sight for the shortages. We continue to experience and have reached a stage where shortages in other commodity markets affected final production for our customers causing them to slow or push out consumption of assemblies from us. Accordingly, the Company continues to be negatively affected by the disruptions in the component marketplace and other times are negatively affected by other supply chain providers. Unfortunately, there is no predictability regarding when these disruptions will occur so it’s a challenge in terms of reacting to these disruptions.
“With that said, these disruptions have required that we work closer than ever with our customers and the silver lining is that I believe we have built even stronger relationships. That bodes well going forward.
“I’m also pleased to announce that we have reached a new 3-year labor agreement with our Elk Grove Village production union, with which we have always enjoyed an excellent working relationship.
“Regarding the pending Wagz acquisition, both companies currently anticipate closing the transaction by the end of calendar 2021. On December 7th, the Company amended its Agreement and Plan of Merger with Wagz. The amendment decreases the number of SigmaTron shares given to Wagz in conjunction with the transaction. Please refer to Form 8-K, filed December 10, 2021 for more information regarding the amendment. We remain excited about the opportunities we see in the Pet Tech market.
“While significant uncertainty remains in the electronic manufacturing services market, both in terms of customer requirements and raw material/component availability, I believe that we are well positioned with three plants in Mexico to continue to grow as electronics and electronic products continue to be incorporated into more applications and products for the North American market.”
About SigmaTron International, Inc.
Headquartered in Elk Grove Village, Illinois, SigmaTron International, Inc. is an electronic manufacturing services company that provides printed circuit board assemblies and completely assembled electronic products. SigmaTron International, Inc. operates manufacturing facilities in Elk Grove Village, Illinois; Acuna, Chihuahua, and Tijuana Mexico; Union City, California; Suzhou, China, and Biên Hòa City, Vietnam. SigmaTron International, Inc. maintains engineering and materials sourcing offices in Elgin, Illinois and Taipei, Taiwan.
Forward-Looking Statements
Note: This press release contains forward-looking statements. Words such as “continue,” “anticipate,” “will,” “expect,” “believe,” “plan,” and similar expressions identify forward-looking statements. These forward-looking statements are based on the current expectations of the Company. Because these forward-looking statements involve risks and uncertainties, the Company’s plans, actions and actual results could differ materially. Such statements should be evaluated in the context of the direct and indirect risks and uncertainties inherent in the Company’s business including, but not necessarily limited to, the Company’s continued dependence on certain significant customers; the continued market acceptance of products and services offered by the Company and its customers; pricing pressures from the Company’s customers, suppliers and the market; the activities of competitors, some of which may have greater financial or other resources than the Company; the variability of the Company’s operating results; the results of long-lived assets 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.
For Further Information Contact:
SigmaTron International, Inc.
James J. Reiman
1-800-700-9095