SigmaTron sells controlling interest in Wagz

ELK GROVE VILLAGE - SigmaTron International Inc., an electronic manufacturing services provider, said Thursday it sold a majority position of its wholly owned subsidiary, Wagz Inc., to creditors.

The sales agreement was reached on April 28 with its secured lenders, the company said.

Wagz is a maker or smart dog collars and other pet technologies based in Portsmouth, New Hampshire. The company was purchased by SigmaTron early last year in a deal that involved shareholders of Wagz receiving 1.5 million newly issued shares of SigmaTron common stock.

During the preparation of SigmaTron's third quarter financial statements, it was determined that updated projections triggered a default under the company's credit agreements with J.P. Morgan Chase Bank N.A. and TCW Asset Management Co., it said.

Wagz was in the process of developing three new products that were scheduled to be released during the middle of calendar year 2023. Sales of existing products during this development period did not materialize to expectations and resulted in a significantly higher level of losses and cash consumption than anticipated, SigmaTron said. Sales were negatively impacted by a shortage of parts for production for several months, resulting in missing the holiday season for sales, a slowing economy relating to inflation and a slower than anticipated acceptance of the product by the market.