• Delivered Strong Net Sales of $10.3 Million, a year-over-year increase of 29% and Gross Profit of $2.8 Million, a year-over-year increase of 14%
• Continued Generating Positive Net Income Available to Common Shareholders with a year-over-year growth of 6%

Surge Components, Inc. (“Surge” or the “Company”) (OTC Pink: SPRS), a leading supplier of capacitors, discrete semi-conductors, switches, and audible/sounding devices, today announced financial results for the third quarter ended August 31, 2025.

Surge Operational Highlights

• Continues to provide best in-class service to customers and preserve its competitive advantage over peers by maintaining superior lead times and stable production.
• Continues to collaborate closely with customers on new design projects.
• Continues to introduce new products to customers, driving differentiation and competitiveness.

Surge Financial Highlights for the Third Quarter Ended August 31, 2025

• Drove net sales of approximately $10.3 million compared to approximately $8.0 million in the prior-year period, a 29% increase year-over-year.
• Increased gross profit to $2.84 million compared to approximately $2.5 million in the prior-year period, a 14% increase year-over-year.
• Achieved net income available to common shareholders of $469,705; earnings per share of $0.08, compared to net income available to common shareholders of $441,852; earnings per share of $0.08 in the prior-year period.

“We are excited by our performance in the third quarter, reporting both strong year-over-year revenue and gross profit growth, reflecting signs of recovery in the electronics industry. This industry recovery is being driven by normalization of excess inventory, which had built up from over-ordering to ensure fulfillment amid supply chain challenges. This adjustment is now stimulating renewed purchasing activity,” said Ira Levy, President and Chief Executive Officer of Surge.

“In addition, our team continues to work diligently on new design projects and product development initiatives which support our momentum. Looking ahead to the next quarter and into early 2026, we are cautiously optimistic, grounded in steady progress.”

“Regarding tariffs, Surge has not experienced any significant negative impact to date, even for imports from Mexico. However, we recognize that customers manufacturing in Mexico and exporting to the U.S. may be affected, which could lead to these customers experiencing higher costs and declines in their sales, including for example market segments such as automotive and consumer home appliances,” continued Levy.

Results of Operations for the Three Months Ended August 31, 2025

Consolidated net sales for the three months ended August 31, 2025 increased by $2,303,715 or 28.9%, to $10,274,031 as compared to net sales of $7,970,316 for the three months ended August 31, 2024. We attribute the increase to an increase in business with new customers as well as an increase in business with existing customers.

Gross profit for the three months ended August 31, 2025 increased by $357,133 to $2,844,703, or 14.4%, as compared to $2,487,570 for the three months ended August 31, 2024. Gross margin as a percentage of net sales decreased to 27.7% for the three months ended August 31, 2025 compared to 31.2% for the three months ended August 31, 2024.

We work with electronic manufacturing service subcontractor customers who manufacture products for other customers who do not have their own manufacturing operations. The Company has agreements with these subcontractor customers to provide periodic cost reductions through rebates in the amount of 5%. These reductions only affect future shipments of our products, and do not affect existing orders. These reductions can have a negative impact on our profit margins since they reduce the amount of commissions we can earn. Even though this rebate can impact the Company’s gross profit margin, these subcontractor customers represent very significant potential growth for the Company, because they can help the Company become an approved supplier at the customers they manufacture for, and they purchase our components for these customers. In fiscal year of 2025, the Company was marginally impacted by tariff costs on certain products imported from China as well as new tariffs that went into effect as of February 4, 2025 in addition to pre-existing tariffs that went into effect as of July 6, 2018. The Company has been able to pass along a portion of these costs to its customers. In addition, the Company has been moving some customer deliveries directly to Hong Kong in order to mitigate some of these costs. However, there can be no assurance that we will be able to pass along any new costs.

Selling and shipping expenses for the three months ended August 31, 2025 was $721,274, an increase of $37,380, or 5.5%, as compared to $683,894 for three months ended August 31, 2024. We attribute the increase for the three months ended August 31, 2025 to increases in commission expenses, sales payroll expenses, travel and entertainment expenses offset by decreases in freight out expenses.

General and administrative expenses for the three months ended August 31, 2025 was $1,446,788, an increase of $196,494, or 15.7% as compared to $1,250,294 for the three months ended August 31, 2024. The increase can be attributed to increases in salaries and related payroll tax expenses as well as bad debt expenses, general insurance, office and computer expenses and professional fees and public company expenses but partially offset by decreases consulting expenses.

The net income for the three months ended August 31, 2025 was $472,205, compared to a net income of $444,352 for the three months ended August 31, 2024.

About Surge

Surge Components Inc is a supplier of electronic products and components. The Company's products include capacitors, which are electrical energy storage devices, and discrete components, such as rectifiers, transistors, and diodes. Its marketed products are utilized in the electronic circuitry of products, comprising of automobiles, telecom, audio, cellular telephones, computers, consumer electronics, garage door openers, household appliances, power supplies and security equipment. In addition, the company's products are also sold to original equipment manufacturers and distributors.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements. All statements other than statements of historical facts contained herein, including statements regarding global economic conditions, expected rebound in the market, excess inventory uses, supply chain challenges, customer lead times, our ability to pass tariff costs on to our customers and its effect on our sales, our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, forward-looking statements can be identified by terms such as "may," "will," "should," "expected," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar words. These statements are only predictions and are based largely on our current expectations and projections about future events and financial trends that may affect our business, financial condition and results of operations. We discuss many of the risks in greater detail under the heading "Risk Factors" in our Annual Report on Form 10-K. These forward-looking statements represent our estimates and assumptions only as of the date of this press release. We assume no obligation to update any forward-looking statements for events or circumstances occurring after the date of this press release, except as required by law.

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