What changed in this filing

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Item 1. Financial Statements

2024-02-28 compared with 2023-12-05 · 153 added, 123 removed, 473 unchanged (37% of the section changed)

48 unchanged sentences

Common Stock, no par value, authorized 115,000,000 shares;

46,022,885 and 45,488,595 shares issued at October 28, 2023 and April 29, 2023, respectively

46,189,311 and 45,488,595 shares issued at January 27, 2024 and April 29, 2023, respectively

65,371 63,023

1 unchanged sentence

Retained earnings 135,513 103,410

Treasury Stock, at cost, 1,907,445 shares at October 28, 2023 and April 29, 2023, respectively

Treasury Stock, at cost, 1,907,445 shares at January 27, 2024 and April 29, 2023, respectively

( 10,285 ) ( 10,285 )

7 unchanged sentences

(in thousands, except per share data)

Three Months Ended Six Months Ended

2023 October 29,

2022 October 28,

2023 October 29,

Three Months Ended Nine Months Ended

2024 January 28,

2023 January 27,

2024 January 28,

Net sales $ 170,303 $ 184,975 $ 602,203 $ 544,334

5 unchanged sentences

Product design and development 8,835 7,250 26,459 21,655

Goodwill impairment — 4,576 — 4,576

33,682 34,595 99,376 96,086

Operating income (loss) 19,436 1,526 59,652 ( 3,993 )

Operating income 8,036 7,118 67,688 3,125

Nonoperating (expense) income:

2 unchanged sentences

Other expense and debt issuance costs write-off, net ( 1,000 ) ( 1,380 ) ( 6,282 ) ( 2,335 )

Income (loss) before income taxes 6,157 1,055 34,253 ( 5,271 )

Income before income taxes 12,631 5,340 46,884 69

Income tax expense 1,889 1,627 14,781 14,666

11 unchanged sentences

(in thousands)

Three Months Ended Six Months Ended

2023 October 29,

2022 October 28,

2023 October 29,

Three Months Ended Nine Months Ended

2024 January 28,

2023 January 27,

2024 January 28,

Net income (loss) $ 10,742 $ 3,713 $ 32,103 $ ( 14,597 )

Other comprehensive (loss):

Other comprehensive income (loss):

Cumulative translation adjustments 1,041 1,976 ( 401 ) ( 187 )

Unrealized gain (loss) on available-for-sale securities, net of tax 9 ( 1 ) 16 —

Total other comprehensive (loss), net of tax ( 1,181 ) ( 1,522 ) ( 1,426 ) ( 2,163 )

Unrealized gain on available-for-sale securities, net of tax 7 6 23 6

Total other comprehensive income (loss), net of tax 1,048 1,982 ( 378 ) ( 181 )

Comprehensive income (loss) $ 11,790 $ 5,695 $ 31,725 $ ( 14,778 )

8 unchanged sentences

Cumulative translation adjustments — — — — ( 252 ) ( 252 )

Unrealized gain on available-for-sale securities, net of tax — — — — 7 7

Unrealized gain (loss) on available-for-sale securities, net of tax — — — — 7 7

Share-based compensation — 557 — — — 557

4 unchanged sentences

Cumulative translation adjustments — — — — ( 1,190 ) ( 1,190 )

Unrealized gain on available-for-sale securities, net of tax 9 9

Unrealized gain (loss) on available-for-sale securities, net of tax — — — — 9 9

Share-based compensation — 534 — — — 534

2 unchanged sentences

Balance as of October 28, 2023 $ 64,643 $ 51,047 $ 124,771 $ ( 10,285 ) $ ( 6,955 ) $ 223,221

Net income — — 10,742 — — 10,742

Cumulative translation adjustments — — — — 1,041 1,041

Unrealized gain (loss) on available-for-sale securities, net of tax — — — — 7 7

Share-based compensation — 507 — — — 507

Exercise of stock options 142 — — — — 142

Employee savings plan activity 586 — — — — 586

Balance as of January 27, 2024 $ 65,371 $ 51,554 $ 135,513 $ ( 10,285 ) $ ( 5,907 ) $ 236,246

See notes to condensed consolidated financial statements.

17 unchanged sentences

Balance as of October 29, 2022 $ 62,388 $ 49,217 $ 78,298 $ ( 10,285 ) $ ( 7,088 ) $ 172,530

Net income — — 3,713 — — 3,713

Cumulative translation adjustments — — — — 1,976 1,976

Unrealized gain (loss) on available-for-sale securities, net of tax — — — — 6 6

Share-based compensation — 502 — — — 502

Employee savings plan activity 614 — — — — 614

Balance as of January 28, 2023 $ 63,002 $ 49,719 $ 82,011 $ ( 10,285 ) $ ( 5,106 ) $ 179,341

See notes to condensed consolidated financial statements.

3 unchanged sentences

(in thousands)

Six Months Ended

2023 October 29,

Nine Months Ended

2024 January 28,

CASH FLOWS FROM OPERATING ACTIVITIES:

57 unchanged sentences

In each 53-week fiscal year, an additional week is added to the first quarter, and each of the last three quarters is comprised of a 13-week period.

The six months ended October 28, 2023 and October 29, 2022 contained operating results for 26 weeks.

The nine months ended January 27, 2024 and January 28, 2023 contained operating results for 39 weeks.

There have been no material changes to our significant accounting policies and estimates as described in our Annual Report on Form 10-K for the fiscal year ended April 29, 2023.

1 unchanged sentence

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the totals of the same amounts shown in the condensed consolidated statements of cash flows.

Restricted cash consists of cash and cash equivalents held in bank deposit accounts to secure issuances of foreign bank guarantees and letters of credit outstanding under a previous credit agreement.

2023 October 29,

Restricted cash consists of cash and cash equivalents held in bank deposit accounts to secure certain issuances of foreign bank guarantees.

2024 January 28,

2023 April 29,

Cash and cash equivalents $ 76,764 $ 10,022 $ 23,982

1 unchanged sentence

Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows $ 77,193 $ 10,730 $ 24,690

The increase in the restricted cash balance is due to bank guarantees or other financial instruments for display installations issued by other banks and secured by restricted cash deposits.

We have foreign currency cash accounts to operate our global business.

These accounts are impacted by changes in foreign currency rates.

Of our $ 64,740 in cash and cash equivalent balances as of October 28, 2023, $ 54,245 were denominated in United States dollars, of which $ 737 were held by our foreign subsidiaries.

As of October 28, 2023, we had an additional

$ 10,495 in cash balances denominated in foreign currencies, of which $ 8,466 were maintained in accounts of our foreign subsidiaries.

Of our $ 76,764 in cash and cash equivalent balances as of January 27, 2024, $ 63,179 were denominated in United States dollars, of which $ 1,568 were held by our foreign subsidiaries.

As of January 27, 2024, we had an additional $ 13,585 in cash balances denominated in foreign currencies, of which $ 9,761 were maintained in accounts of our foreign subsidiaries.

Recent Accounting Pronouncements

Accounting Standards Adopted

In August 2020, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40):

In August 2020, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) .

ASU 2020-06 simplified the accounting for certain financial instruments with characteristics of liabilities and equity.

This ASU (1) simplified the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in Accounting Standards Codification ("ASC") 470-20, Debt:

ASU 2020-06 (1) simplified the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in Accounting Standards Codification ("ASC") 470-20, Debt:

Debt with Conversion and Other Options , that required entities to account for beneficial conversion features and cash conversion features in equity separately from the host convertible debt or preferred stock;

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For all other entities, ASU 2020-06 was effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

In the first quarter of fiscal 2024, we adopted ASU 2020-06.

Upon adoption, we prospectively utilized the if-converted method to calculate the dilutive impact of our convertible note issued on May 11, 2023 (the "Convertible Note").

In the first quarter of fiscal 2024, we adopted ASU 2020-06 with no material impact to the Condensed Consolidated Financial Statements.

On May 11, 2023, we borrowed $25,000 in aggregate principal amount evidenced by a secured convertible note due May 11, 2027 (the "Convertible Note").

Financing Agreements" of the Notes to our Condensed Consolidated Financial Statements included in this Form 10-Q for further information on the Convertible Note.

Accounting Standards Not Yet Adopted

We have reviewed all recently issued accounting pronouncements and concluded the standards were either not applicable or not expected to have a significant impact on our consolidated financial statements .

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures ("ASU 2023-07").

ASU 2023-07 requires enhanced disclosures about significant segment expenses.

The Company is required to adopt ASU 2023-07 for its annual reporting in fiscal year 2025 and for interim period reporting beginning in the first quarter of fiscal year 2026 on a retrospective basis.

Early adoption is permitted.

We are currently evaluating the impact of ASU 2023-07 on our segment disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures ("ASU 2023-09").

ASU 2023-09 requires the disclosure of specified additional information in its income tax rate reconciliation and to provide additional information for reconciling items that meet a quantitative threshold.

ASU 2023-09 will also require disaggregation of income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions.

The Company is required to adopt this guidance for its annual reporting in fiscal year 2025 on a prospective basis.

Early adoption and retroactive application are permitted.

We are currently evaluating the impact of ASU 2023-09 on our income tax disclosures.

Investments in Affiliates

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therefore, the investment in Miortech is accounted for under the equity method.

The aggregate amount of our investments accounted for under the equity method was $ 9,819 and $ 11,934 as of October 28, 2023 and April 29, 2023, respectively.

The aggregate amount of our investments accounted for under the equity method was $ 8,513 and $ 11,934 as of January 27, 2024 and April 29, 2023, respectively.

Our proportional share of the respective affiliates' earnings or losses is included in the "Other expense and debt issuance costs write-off, net" line item in our condensed consolidated statements of operations.

For the three and six months ended October 28, 2023, our share of the losses of our affiliates was $ 771 and $ 1,461 as compared to $ 811 and $ 1,701 for the three and six months ended October 29, 2022.

For the three and nine months ended January 27, 2024, our share of the losses of our affiliates was $ 869 and $ 2,330 as compared to $ 895 and $ 2,596 for the three and nine months ended January 28, 2023.

We purchased services for research and development activities from our equity method investees.

The total of these related party transactions for the six months ended October 28, 2023 and October 29, 2022 was $ 123 and $ 672 , respectively, which is included in the "Product design and development" line item in our condensed consolidated statements of operations, and for the six months ended October 28, 2023, $ 14 remains unpaid and is included in the "Accounts payable" line item in our condensed consolidated balance sheets.

During the six months ended October 28, 2023, we invested $ 2,250 in convertible notes and $ 649 in promissory notes (collectively, the "Affiliate Notes") of our affiliates, which is included in the "Investment in affiliates and other assets" line item in our condensed consolidated balance sheets.

During the six months ended October 28, 2023, we did not convert any Affiliate Notes to stock ownership.

Our ownership in Miortech was 55.9 percent and in Xdisplay TM was 16.4 percent as of October 28, 2023.

The total amount of Affiliate Notes as of October 28, 2023 was $ 11,663 and is included in the "Investments in affiliates and other assets" line item in our condensed consolidated balance sheets.

The Affiliate Notes

balance combined with the investment in affiliates balance totaled $ 21,483 and $ 25,343 as of October 28, 2023 and October 29, 2022, respectively.

The total of these related party transactions for the nine months ended January 27, 2024 and January 28, 2023 was $ 162 and $ 672 , respectively, which is included in the "Product design and development" line item in our condensed consolidated statements of

operations, and for the nine months ended January 27, 2024, $ 2 remains unpaid and is included in the "Accounts payable" line item in our condensed consolidated balance sheets.

During the nine months ended January 27, 2024, we invested $ 3,000 in convertible notes and $ 1,084 in promissory notes (collectively, the "Affiliate Notes") issued by our affiliates, which is included in the "Investment in affiliates and other assets" line item in our condensed consolidated balance sheets.

During the nine months ended January 27, 2024, we did not convert any Affiliate Notes to stock ownership.

Our ownership in Miortech was 55.9 percent and in Xdisplay TM was 16.4 percent as of January 27, 2024.

The total amount of Affiliate Notes as of January 27, 2024 was $ 13,134 and is included in the "Investments in affiliates and other assets" line item in our condensed consolidated balance sheets.

The Affiliate Notes balance combined with the investment in affiliates balance totaled $ 21,647 and $ 24,836 as of January 27, 2024 and January 28, 2023, respectively.

Earnings Per Share ("EPS")

In the first quarter of fiscal 2024, we adopted ASU 2020-06.

Upon adoption, we prospectively utilized the if-converted method to calculate the dilutive impact of our Convertible Note.

Under the if-converted method, the Convertible Note is assumed to be converted into common stock at the beginning of the reporting period or at time of issuance, if later, and the resulting shares are included in the denominator of the calculation.

In addition, interest charges, net of any income tax effects, and the change in fair value of Convertible Note are added back to the numerator of the calculation.

Financing Agreements" of the Notes to our Condensed Consolidated Financial Statements included in this Form 10-Q for further information on the Convertible Note.

Under the if-converted method, the Convertible Note is assumed to be converted into common stock at the beginning of the reporting period, and the resulting shares are included in the denominator of the calculation.

In addition, interest charges, net of any income tax effects, are added back to the numerator of the calculation.

The following is a reconciliation of the net income (loss) and common share amounts used in the calculation of basic and diluted EPS for the three and six months ended October 28, 2023 and October 29, 2022:

Three Months Ended Six Months Ended

2023 October 29,

2022 October 28,

2023 October 29,

The following is a reconciliation of the net income (loss) and common share amounts used in the calculation of basic and diluted EPS for the three and nine months ended January 27, 2024 and January 28, 2023:

Three Months Ended Nine Months Ended

2024 January 28,

2023 January 27,

2024 January 28,

Earnings per share - basic

4 unchanged sentences

Net income (loss) $ 10,742 $ 3,713 $ 32,103 $ ( 14,597 )

Change in fair value of convertible note ( 6,340 ) — — —

Interest expense on convertible note, net of tax 404 — — —

Diluted net income (loss) $ 4,806 $ 3,713 $ 32,103 $ ( 14,597 )

4 unchanged sentences

Diluted earnings (loss) per share $ 0.09 $ 0.08 $ 0.69 $ ( 0.32 )

Options outstanding to purchase 521 shares of common stock with a weighted average exercise price of $ 10.76 for the three months ended October 28, 2023 and 2,063 shares of common stock with a weighted average exercise price of $ 7.51 for the three months ended October 29, 2022 were not included in the computation of diluted earnings per share because the effects would be anti-dilutive.

Options outstanding to purchase 1,039 shares of common stock with a weighted average exercise price of $ 9.53 for the six months ended October 28, 2023 and 2,082 shares of common stock with a weighted average exercise price of $ 7.82 for the six months ended October 29, 2022 were not included in the computation of diluted earnings per share because the effects would be anti-dilutive.

During the three and six months ended October 28, 2023, respectively, shares of common stock issuable upon conversion of the Convertible Note have been excluded from the computation of diluted earnings per share as the effect would be anti-dilutive, as under the if-converted method, the income statement impact of the fair value adjustment and interest expense is added back to net income available to common shareholders, thereby increasing earnings per share.

For the three and six months ended October 28, 2023, 4,051 and 3,806 potential common shares related to the convertible note were excluded from the calculation of diluted earnings per share.

The convertible debt was not outstanding during fiscal year 2023.

Options outstanding to purchase 484 shares of common stock with a weighted average exercise price of $ 10.73 for the three months ended January 27, 2024 and 2,102 shares of common stock with a weighted average exercise price of $ 7.13 for the three months ended January 28, 2023 were not included in the computation of diluted earnings per share because the effects would be anti-dilutive.

Options outstanding to purchase 695 shares of common stock with a weighted average exercise price of $ 10.30 for the nine months ended January 27, 2024 and 2,089 shares of common stock with a weighted average exercise price of $ 7.59 for the nine months ended January 28, 2023 were not included in the computation of diluted earnings per share because the effects would be anti-dilutive.

During the nine months ended January 27, 2024, shares of common stock issuable upon conversion of the Convertible Note were not included in the computation of diluted earnings per share, as the effect would be anti-dilutive.

For the nine months ended January 27, 2024, 3,875 potential common shares related to the Convertible Note were excluded from the calculation of diluted earnings per share.

The debt evidenced by the Convertible Note was not outstanding during fiscal year 2023.

Revenue Recognition

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The following table presents our disaggregation of revenue by segments:

Three Months Ended October 28, 2023

Three Months Ended January 27, 2024

Commercial Live Events High School

10 unchanged sentences

$ 33,292 $ 73,393 $ 28,764 $ 19,605 $ 15,249 $ 170,303

Six Months Ended October 28, 2023

Nine Months Ended January 27, 2024

Commercial Live Events High School

10 unchanged sentences

$ 122,628 $ 233,602 $ 133,940 $ 61,217 $ 50,816 $ 602,203

Three Months Ended October 29, 2022

Three Months Ended January 28, 2023

Commercial Live Events High School

10 unchanged sentences

$ 49,967 $ 67,748 $ 28,312 $ 17,578 $ 21,370 $ 184,975

Six Months Ended October 29, 2022

Nine Months Ended January 28, 2023

Commercial Live Events High School

21 unchanged sentences

Contract liabilities - noncurrent 16,347 13,096 3,251 24.8

The changes in our contract assets and contract liabilities from April 29, 2023 to October 28, 2023 were due to the timing of billing schedules and revenue recognition, which can vary significantly depending on the contractual payment terms and the seasonality of the sports markets.

We had no impairments of contract assets for the six months ended October 28, 2023.

The changes in our contract assets and contract liabilities from April 29, 2023 to January 27, 2024 were due to the timing of billing schedules and revenue recognition, which can vary significantly depending on the contractual payment terms and the seasonality of the sports markets.

We had immaterial impairments of contract assets for the nine months ended January 27, 2024.

For service-type warranty contracts, we allocate revenue to this performance obligation, recognize the revenue over time, and recognize costs as incurred.

Earned and unearned revenues for these contracts are included in the "Contract assets" and "Contract liabilities".

Earned and unearned revenues for these contracts are included in the "Contract assets" and "Contract liabilities" line items of our Condensed Consolidated Balance Sheets.

Changes in unearned service-type warranty contracts, net were as follows:

3 unchanged sentences

Foreign currency translation and other ( 2,651 )

Balance as of October 28, 2023 $ 34,000

Contracts in progress identified as loss contracts as of October 28, 2023 and as of April 29, 2023 were immaterial.

Balance as of January 27, 2024 $ 32,882

Contracts in progress identified as loss contracts as of January 27, 2024 and as of April 29, 2023 were immaterial.

Loss provisions are recorded in the "Accrued expenses" line item in our Condensed Consolidated Balance Sheets.

During the six months ended October 28, 2023, we recognized revenue of $ 77,788 related to our contract liabilities as of April 29, 2023.

During the nine months ended January 27, 2024, we recognized revenue of $ 82,938 related to our contract liabilities as of April 29, 2023.

Remaining performance obligations

As of October 28, 2023, the aggregate amount of the transaction price allocated to the remaining performance obligations was $ 369,879 .

Remaining performance obligations related to product and service agreements as of October 28, 2023 were $ 306,934 and $ 62,945 , respectively.

As of January 27, 2024, the aggregate amount of the transaction price allocated to the remaining performance obligations was $ 393,203 .

Remaining performance obligations related to product and service agreements as of January 27, 2024 were $ 328,279 and $ 64,924 , respectively.

We expect approximately $ 328,491 of our remaining performance obligations to be recognized over the next 12 months, with the remainder recognized thereafter.

1 unchanged sentence

Any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations, and project deferrals are reflected or excluded in the remaining performance obligation balance, as appropriate.

The amount of revenue recognized associated with performance obligations satisfied in prior years during the six months ended October 28, 2023 and October 29, 2022 was immaterial.

The amount of revenue recognized associated with performance obligations satisfied in prior years during the nine months ended January 27, 2024 and January 28, 2023 was immaterial.

Segment Reporting

The following table sets forth certain financial information for each of our five reporting segments for the periods indicated:

Three Months Ended Six Months Ended

2023 October 29,

2022 October 28,

2023 October 29,

Three Months Ended Nine Months Ended

2024 January 28,

2023 January 27,

2024 January 28,

Commercial $ 33,292 $ 49,967 $ 122,628 $ 127,132

15 unchanged sentences

Product design and development 8,835 7,250 26,459 21,655

Goodwill impairment — 4,576 — 4,576

33,682 34,595 99,376 96,086

Operating income (loss) 19,436 1,526 59,652 ( 3,993 )

Operating income 8,036 7,118 67,688 3,125

Nonoperating (expense) income:

2 unchanged sentences

Other expense and debt issuance costs write-off, net ( 1,000 ) ( 1,380 ) ( 6,282 ) ( 2,335 )

Income (loss) before income taxes $ 6,157 $ 1,055 $ 34,253 $ ( 5,271 )

Income before income taxes $ 12,631 $ 5,340 $ 46,884 $ 69

Depreciation and amortization:

8 unchanged sentences

The following table presents information about net sales and property and equipment, net of accumulated depreciation, in the United States and elsewhere:

Three Months Ended Six Months Ended

2023 October 29,

2022 October 28,

2023 October 29,

Three Months Ended Nine Months Ended

2024 January 28,

2023 January 27,

2024 January 28,

United States $ 152,962 $ 161,467 $ 545,699 $ 474,048

10 unchanged sentences

however, we have a complex global supply chain subject to geopolitical and transportation risks and a number of single-source suppliers that could limit our supply or cause delays in obtaining raw materials and components needed in manufacturing.

The changes in the carrying amount of goodwill related to each segment with a goodwill balance for the nine months ended January 27, 2024 were as follows:

Commercial Transportation Total

Balance as of April 29, 2023 $ 3,198 $ 41 $ 3,239

Foreign currency translation 19 5 24

Balance as of January 27, 2024 $ 3,217 $ 46 $ 3,263

We perform an analysis of goodwill on an annual basis, and it is tested for impairment more frequently if events or changes in circumstances indicate that an asset might be impaired.

Our annual analysis is performed during our third quarter of each fiscal year based on the goodwill amount as of the first business day of our third fiscal quarter.

We performed our annual impairment test as of October 29, 2023 and concluded no goodwill impairment existed.

Accumulated impairments to goodwill as of January 27, 2024 and April 29, 2023 was $4,576.

Financing Agreements

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The Credit Facility consists of a $ 60,000 asset-based revolving credit facility (the "ABL") maturing on May 11.

2026, secured by first priority lien on the Company's assets and which is subject to certain factors which can impact our borrowing capacity, and a $ 15,000 delayed draw loan (the "Delayed Draw Loan") secured by a first priority mortgage on our Brookings, South Dakota real estate (the "Mortgage").

2026, which is secured by first priority lien on the Company's assets and is subject to certain factors that can impact our borrowing capacity, and a $ 15,000 delayed draw loan (the "Delayed Draw Loan") secured by a first priority mortgage on our Brookings, South Dakota real estate (the "Mortgage").

The ABL and Delayed Draw Loan are evidenced by a Credit Agreement dated as of May 11, 2023 (the "Credit Agreement") between the Company and JPMorgan Chase Bank, N.A., as the lender.

On May 11, 2023 the Company paid all amounts outstanding on the prior credit agreement, and this prior credit agreement was terminated as of

On May 11, 2023, the Company paid all amounts outstanding on the prior credit agreement, and this prior credit agreement was terminated as of this date.

No gain or loss was recognized upon termination, and the Company incurred no early termination penalties in connection with such termination.

Under the ABL, certain factors can impact our borrowing capacity.

As of October 28, 2023, our borrowing capacity was $ 50,611 , there were no borrowings outstanding and there was $ 5,875 used to secure letters of credit outstanding.

As of January 27, 2024, our borrowing capacity was $ 32,907 , there were no borrowings outstanding, and there was $ 5,426 used to secure letters of credit outstanding.

The interest rate on the ABL is set on a sliding scale based on the trailing 12-month fixed charge coverage and ranges from 2.5 to 3.5 percent over the standard overnight financing rate (SOFR).

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The interest rate on the Delayed Draw Loan is set on a sliding scale based on the trailing 12-month fixed charge coverage ratio and ranges between 1.0 and 2.0 percent over the Commercial Bank Floating Rate (CBFR).

The interest rate as of January 27, 2024 for Delayed Draw Loan was 9.5 percent.

Convertible Note

On May 11, 2023, we issued $ 25,000 in aggregate principal amount evidenced by the secured Convertible Note due May 11, 2027.

On May 11, 2023, we borrowed $ 25,000 in aggregate principal amount evidenced by the secured Convertible Note due May 11, 2027.

The Convertible Note holder (the "Holder") has a second priority lien on assets securing the ABL facility and a first priority lien on substantially all of the other assets of the Company, excluding all real property, subject to the Intercreditor Agreement dated as of May 11, 2023 by and among the Company, JPMorgan Chase Bank N.A., and the Holder of the Convertible Note.

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Upon an event of default under the Convertible Note, the annual interest rate will increase to 12.0 percent.

The annual rate of 9.0 percent was used to calculate the interest accrued as of October 28, 2023, as interest will be paid in cash.

The annual rate of 9.0 percent was used to calculate the interest accrued as of January 27, 2024, as interest will be paid in cash.

We elected the fair value option to account for the Convertible Note as described in "Note 10.

Fair Value Measurement" of the Notes to our Condensed Consolidated Financial Statements included in this Form 10-Q for further information.

Fair Value Measurement" of the Notes to our Condensed Consolidated Financial Statements included in this Form 10-Q.

The financial liability was initially measured at its issue-date fair value and is subsequently remeasured at fair value on a recurring basis at each reporting period date.

We have elected to present the fair value and the accrued interest component separately in the income statement.

We have elected to present the fair value and the accrued interest component separately in the Condensed Consolidated Statements of Operations.

Therefore, interest will be recognized and accrued separately in interest expense, with changes in fair value of the Convertible Note presented in the "Change in fair value of convertible note" line item in our Condensed Consolidated Statements of Operations.

The changes in fair value of the Convertible Note during the six months ended October 28, 2023 are as follows:

The changes in fair value of the Convertible Note during the nine months ended January 27, 2024 are as follows:

Liability Component

3 unchanged sentences

Fair value change recognized 11,570

Balance as of October 28, 2023 $ 42,910

The estimated fair value of the Convertible Note upon its issuance date of May 11, 2023 and as of October 28, 2023 was computed using a binomial lattice model which incorporates significant inputs that are not observable in the market, and thus represents a Level 3 measurement.

Balance as of January 27, 2024 $ 36,570

The estimated fair value of the Convertible Note upon its issuance date of May 11, 2023 and as of January 27, 2024 was computed using a binomial lattice model which incorporates significant inputs that are not observable in the market and thus represents a Level 3 measurement.

We determined the fair value by using the following key assumptions in the binomial lattice model:

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The Credit Agreement and the Convertible Note require a fixed charge coverage ratio of greater than 1.1 and include other customary non-financial covenants.

As of October 28, 2023, we were in compliance with our financial covenants under the Credit Agreement and the Convertible Note.

As of January 27, 2024, we were in compliance with our financial covenants under the Credit Agreement and the Convertible Note.

Debt Issuance Costs

2 unchanged sentences

As part of these financings, we capitalized $ 8,195 in debt issuance costs.

During the six months ended October 28, 2023, due to the Convertible Note being accounted for at fair value, we expensed $ 3,353 of the related debt issuance costs which is included in the "Other expense and debt issuance costs write-off, net" line item in our condensed consolidated statements of operations.

During the six months ended October 28, 2023, we amortized $ 744 of debt issuance costs.

The remaining debt issuance costs of $ 4,098 are being amortized over the three-year term of the Credit Facility agreement.

Fair Value and Future Maturities

As of October 28, 2023 and April 29, 2023, the fair value of long-term debt, gross was $ 57,535 and $ 17,750 , respectively.

The fair value of the Convertible Note was $ 42,910 as of October 28, 2023.

During the nine months ended January 27, 2024, due to the Convertible Note being accounted for at fair value, we expensed $ 3,353 of the related debt issuance costs which is included in the "Other expense and debt issuance costs write-off, net" line item in our Condensed Consolidated Statements of Operations.

During the nine months ended January 27, 2024, we amortized $ 1,148 of debt issuance costs.

The remaining debt issuance costs of $ 3,694 are being amortized over the three-year term of the Credit Facility.

Future Maturities

Aggregate contractual maturities of debt in future fiscal years are as follows:

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2029 and beyond —

Total senior secured notes and convertible notes $ 39,625

Total debt $ 39,250

Commitments and Contingencies

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We do not expect the ultimate liability of these unresolved legal proceedings or claims to have a material effect on our financial position, liquidity, or capital resources.

Changes in our warranty obligation for the six months ended October 28, 2023 consisted of the following:

Changes in our warranty obligation for the nine months ended January 27, 2024 consisted of the following:

Balance as of April 29, 2023 $ 32,541

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Changes in accrued warranty obligations for pre-existing warranties during the period, including expirations 954

Balance as of October 28, 2023 $ 34,813

Balance as of January 27, 2024 $ 34,690

Performance guarantees:

We have entered into standby letters of credit, bank guarantees and surety bonds with financial institutions relating to the guarantee of our future performance on contracts, primarily construction-type contracts.

As of October 28, 2023, we had outstanding letters of credit, bank guarantees and surety bonds in the amount of $ 5,875 , $ 558 and $ 40,633 , respectively.

As of January 27, 2024, we had outstanding letters of credit, bank guarantees and surety bonds in the amount of $ 5,426 , $ 163 and $ 45,746 , respectively.

Performance guarantees are issued to certain customers to guarantee the operation and installation of the equipment and our ability to complete a contract.

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We make efforts to negotiate reasonable caps and limitations on the recovery of such damages.

As of October 28, 2023, we were not aware of any material indemnification claims.

Our effective tax rate for the three and six months ended October 28, 2023 was a tax rate of 64.8 and 37.6 percent, respectively.

As of January 27, 2024, we were not aware of any material indemnification claims.

Our effective tax rate for the three and nine months ended January 27, 2024 was a tax rate of 15.0 and 31.5 percent, respectively.

Income before tax includes the impacts of the change in the Convertible Note fair value;

however, these changes are not deductible, resulting in the high effective tax rate.

The rates for the three and six months ended October 29, 2022 were skewed by the valuation allowance placed on deferred taxes.

We operate both domestically and internationally and, as of October 28, 2023, undistributed earnings of our foreign subsidiaries were considered to be reinvested indefinitely.

Additionally, as of October 28, 2023, we had $ 527 of unrecognized tax benefits which would reduce our effective tax rate if recognized.

however, these changes are not deductible or taxable, which impacts the effective tax rate.

Our effective tax rate for the three months ended January 28, 2023 was a tax rate of 30.5 percent.

The rate for the nine months ended January 28, 2023 was skewed by the valuation allowance placed on deferred taxes during the second quarter of fiscal 2023.

We operate both domestically and internationally and, as of January 27, 2024, the undistributed earnings of our foreign subsidiaries were considered to be reinvested indefinitely.

Additionally, as of January 27, 2024, we had $ 352 of unrecognized tax benefits which would reduce our effective tax rate if recognized.

Fair Value Measurement

The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of October 28, 2023 and April 29, 2023 according to the valuation techniques we used to determine their fair values.

The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of January 27, 2024 and April 29, 2023 according to the valuation techniques we used to determine their fair values.

There have been no transfers of assets or liabilities among the fair value hierarchies presented.

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Level 1 Level 2 Level 3 Total

Balance as of October 28, 2023

Balance as of January 27, 2024

Cash and cash equivalents $ 76,764 $ — $ — $ 76,764

Restricted cash 429 — — 429

Convertible Note Payable — — 42,910 42,910

Available-for-sale securities:

US Government sponsored entities — 546 — 546

Convertible note — — ( 36,570 ) ( 36,570 )

$ 77,193 $ — $ ( 36,570 ) $ 40,623

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$ 24,690 $ ( 45 ) $ — $ 24,645

We elected to value the Convertible Note at fair value in accordance with ASC 825-10-15-4(a) because of the embedded derivatives contained in the note.

We elected to value the Convertible Note at fair value in accordance with ASC 825-10-15-4(a) because of the embedded derivatives contained in the Convertible Note.

The fair value of the Convertible Note was estimated using a binomial lattice model.

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Related Party Transactions

The Board has adopted a written policy and procedures with respect to related party transactions, which the Audit Committee oversees.

The Company's Board of Directors has adopted a written policy and procedures with respect to related party transactions, which the Audit Committee oversees.

Under the policy, a "related party transaction" is generally defined as a transaction, arrangement, or relationship in which the Company was, is or will be a participant;

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and in which any "related person" had, has or will have a direct or indirect material interest.

The policy generally defines a "related person"

as a Director, executive officer or beneficial owner of more than five percent of any class of our voting securities and any immediate family member of any of the foregoing persons.

The policy generally defines a "related person" as a Director, executive officer or beneficial owner of more than five percent of any class of our voting securities and any immediate family member of any of the foregoing persons.

The Audit Committee reviews and, if appropriate, approves related party transactions, including certain transactions which are deemed to be pre-approved under the policy.

On an annual basis, the Audit Committee reviews any previously approved related party transaction that is ongoing.

As reported in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the section entitled “Liquidity and Capital Resources” of our Annual Report on Form 10-K for the fiscal year ended April 29, 2023, effective on May 11, 2023, the Company entered into the Securities Purchase Agreement with Alta Fox Opportunities Fund, LP, as the Holder of the Convertible Note.

Under the Securities Purchase Agreement, the Company sold and issued to the Holder the Convertible Note in exchange for the payment by the Holder to the Company of $ 25,000 .

As of May 11, 2023, and based on Amendment No.

3 to the Schedule 13D filed by the Investor and its affiliates named therein on May 15, 2023 with the SEC, the Holder and its affiliates beneficially owned 4,768 shares of common stock of the Company, representing 9.99 percent of the Company’s common stock, causing the Holder to be a “related party” of the Company under the Company’s written policy and procedures and the applicable definitions under the Securities Act of 1933.

2 to the Schedule 13D filed by the Holder and its affiliates named therein on May 15, 2023 with the SEC, the Holder and its affiliates beneficially owned 4,768 shares of common stock of the Company, representing 9.99 percent of the Company’s common stock, causing the Holder to be a “related party” of the Company under the Company’s written policy and procedures and the applicable definitions under the Securities Act of 1933.

The Securities Purchase Agreement, the Convertible Note, the Pledge and Security Agreement dated as of May 11, 2023 by and between the Holder and the Company, and the Registration Rights Agreement were approved in advance of their execution by the Company’s Strategy and Financing Review Committee, the members of which include all members of the Company’s Audit Committee.

Since May 11, 2023 the largest aggregate amount outstanding under the Convertible Note was $ 25,563 , consisting of $ 25,000 of principal and $ 563 of interest for a total of $ 25,563 outstanding.

In the first six months of fiscal 2024, we have made interest payments of $ 563 under the Convertible Note.

Since May 11, 2023, the largest aggregate amount outstanding under the Convertible Note was $ 25,563 , consisting of $ 25,000 of principal and $ 563 of interest.

In the first nine months of fiscal 2024, we have made interest payments of $ 1,125 under the Convertible Note.

The description of the Securities Purchase Agreement, the Convertible Note, the Pledge and Security Agreement, and the Registration Rights Agreement dated as of May 11, 2023 by and between the Holder and the Company and their respective terms set forth in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the section entitled “Liquidity and Capital Resources” of the Company's Annual Report on Form 10-K for the fiscal year ended April 29, 2023 is hereby incorporated by reference into this Report.

In addition, the Company is a party to the Standstill and Voting Agreement dated as of March 19, 2023 with Alta Fox Management, LLC and Connor Haley (the “Standstill Agreement”).

In addition, the Company is a party to the Standstill and Voting Agreement dated as of March 19, 2023 with Alta Fox Management, LLC and Connor Haley (the “Standstill Agreement”), who are affiliates of the Holder.

The Standstill Agreement is filed as Exhibit 10.13 to Company's Annual Report on Form 10-K for the fiscal year ended April 29, 2023.

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Connor Haley, as the sole owner, member and manager of each of Alta Fox Capital Management, LLC and Alta Fox Equity LLC.

On June 7, 2023, the Company received from the Holder written notice of a decrease in the “Percentage Cap” (as such term is defined in the Convertible Note) from 9.99 percent to 4.99 percent which decrease became effective immediately upon the Company’s receipt of such written notice.

On June 7, 2023, the Company received from the Holder a written notice of a decrease in the “Percentage Cap” (as such term is defined in the Convertible Note) from 9.99 percent to 4.99 percent, which decrease became effective immediately upon the Company’s receipt of such written notice.

The Percentage Cap generally represents the maximum percentage of shares of the Company’s common stock the Holder may own.

Based on Amendment No.

In Amendment No.

3, the Holder and its affiliates identified in Amendment No.

3 owned 2,293 shares of common stock on June 9, 2023, representing 4.99 percent of the common stock of the Company, meaning the Holder and its affiliates are no longer “related parties” of the Company under the Company’s written policy and procedures and the applicable definitions under the Securities Act of 1933.

During the first quarter of fiscal 2024, the Company and South Dakota Board of Regents entered into a contract for video display systems for Dakota State University.

The amount of the contract was $ 150 .

During the first nine months of fiscal 2024, the Company and the South Dakota Board of Regents entered into contracts for video display systems for Dakota State University.

The amount of the contracts was $ 1,178 .

A member of the Company's Board of Directors is the President of Dakota State University.

See Note 2 for further details of related party transactions with our investments in the affiliates Notes issued by our affiliates.

Investments in Affiliates" for further details of related party transactions with our investments in the Affiliate Notes issued by our affiliates.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements