What changed in this filing

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Item 1. Financial Statements

2024-09-12 compared with 2024-06-11 · 219 added, 111 removed, 513 unchanged (39% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

April 30, 2024

July 31, 2024

January 31, 2024

1 unchanged sentence

Cash and cash equivalents

Accounts receivable, net of allowance for credit losses of $332 at each of April 30, 2024 and January 31, 2024

$ 1,904 $ 5,289

Accounts receivable, net of allowance for credit losses of $ 332 at each of July 31, 2024 and January 31, 2024

Inventories, net

19,069 13,371

Prepaid expenses and other current assets

Total current assets

32,634 28,339

Property and equipment, net

2 unchanged sentences

Deferred tax asset

$ 37,836 $ 33,491

LIABILITIES AND STOCKHOLDERS’ EQUITY

1 unchanged sentence

Accounts payable

$ 4,387 $ 1,623

Deferred revenue

Customer deposits

Accrued expenses and other current liabilities

2 unchanged sentences

Total current liabilities

12,364 10,277

Operating lease liabilities - non-current

Total liabilities

13,349 10,850

Stockholders’ equity:

1 unchanged sentence

2,000 shares authorized;

1,683 shares issued and outstanding at each of April 30, 2024 and January 31, 2024

1,683 shares issued and outstanding at each of July 31, 2024 and January 31, 2024

37,779 37,779

Common stock, $ 0.01 par value;

40,000 shares authorized;

1,406 shares issued at April 30, 2024 and January 31, 2024

1,406 shares issued and outstanding at July 31, 2024 and January 31, 2024

Additional paid-in capital

113,215 113,121

Accumulated deficit

( 126,555 ) ( 128,307 )

Accumulated other comprehensive gain

Total stockholders’ equity

24,487 22,641

Total liabilities and stockholders’ equity

$ 37,836 $ 33,491

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

2 unchanged sentences

(in thousands, except per share data)

For the Three Months Ended April 30,

For the Three Months Ended July 31,

For the Six Months Ended July 31,

Sales of marine technology products

$ 10,036 $ 7,561 19,714 18,158

Cost of sales:

Sales of marine technology products

5,258 4,620 10,718 10,681

4,778 2,941 8,996 7,477

Operating expenses:

Selling, general and administrative

2,784 2,913 5,543 6,219

Research and development

328 493 790 971

Depreciation and amortization

236 302 503 635

Total operating expenses

Operating income

3,348 3,708 6,836 7,825

Operating income (loss)

1,430 ( 767 ) 2,160 ( 348 )

Other income (expense):

Interest expense

— ( 163 ) — ( 367 )

40 238 509 310

Total other income (expense)

Income from continuing operations before income taxes

40 75 509 ( 57 )

Income (loss) from continuing operations before income taxes

1,470 ( 692 ) 2,669 ( 405 )

Provision for income taxes

( 672 ) ( 66 ) ( 917 ) ( 477 )

Net income (loss) from continuing operations

798 ( 758 ) 1,752 ( 882 )

Loss from discontinued operations, net of income taxes

— ( 736 ) — ( 852 )

Net income (loss)

$ 798 $ ( 1,494 ) $ 1,752 $ ( 1,734 )

Preferred stock dividends - declared

Preferred stock dividends - undeclared

Net income (loss) attributable to common stockholders

Net income (loss) per common share - Basic and Diluted

( 947 ) ( 947 ) ( 1,894 ) ( 1,894 )

Net loss attributable to common stockholders

$ ( 149 ) $ ( 2,441 ) $ ( 142 ) $ ( 3,628 )

Net loss per common share - Basic and Diluted

Continuing operations

$ ( 0.11 ) $ ( 1.21 ) $ ( 0.10 ) $ ( 1.97 )

Discontinued operations

Net income (loss)

$ — $ ( 0.52 ) $ — $ ( 0.61 )

$ ( 0.11 ) $ ( 1.74 ) $ ( 0.10 ) $ ( 2.58 )

Shares used in computing net income (loss) per common share:

Basic and diluted

1,406 1,406 1,406 1,406

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

2 unchanged sentences

(in thousands)

For the Three Months Ended April 30,

For the Three Months Ended July 31,

For the Six Months Ended July 31,

Net income (loss)

$ 798 $ ( 1,494 ) $ 1,752 $ ( 1,734 )

Comprehensive income (loss)

$ 798 $ ( 1,494 ) 1,752 ( 1,734 )

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

2 unchanged sentences

(in thousands)

For the Three Months Ended April 30,

For the Six Months Ended July 31,

Cash flows from operating activities:

Net income (loss)

$ 1,752 $ ( 1,734 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

3 unchanged sentences

Gross profit from sale of other equipment

( 457 ) ( 336 )

Accounts receivable

( 3,032 ) ( 3,238 )

Unbilled revenue

( 5,742 ) ( 333 )

Prepaid expenses and other current and long-term assets

1 unchanged sentence

Accounts payable, accrued expenses and other current liabilities

2,465 ( 1,556 )

Deferred revenue and customer deposits

( 495 ) 1,199

Net cash used in operating activities

( 3,695 ) ( 3,477 )

Cash flows from investing activities:

Purchases of property and equipment

( 146 ) ( 102 )

Sale of other equipment

1 unchanged sentence

Cash flows from financing activities:

Net proceeds from short-term loan

Payment on short-term loan

Net cash provided by financing activities

1 unchanged sentence

Net change in cash and cash equivalents

( 3,385 ) ( 284 )

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

$ 1,904 $ 494

Supplemental cash flow information:

6 unchanged sentences

Preferred Stock

Additional Other

Comprehensive

Balances, January 31, 2024

1,406 $ 14 1,683 $ 37,779 $ 113,121 $ — $ ( 128,307 ) $ 34 $ 22,641

— — — — — — 954 — 954

Stock-based compensation

— — — — 48 — — — 48

Balances, April 30, 2024

1,406 $ 14 1,683 $ 37,779 $ 113,169 $ — $ ( 127,353 ) $ 34 $ 23,643

— — — — — — 798 — 798

Stock-based compensation

— — — — 46 — — — 46

Balances, July 31, 2024

1,406 $ 14 1,683 $ 37,779 $ 113,215 $ — $ ( 126,555 ) $ 34 $ 24,487

MIND TECHNOLOGY, INC.

4 unchanged sentences

Balances, January 31, 2023

1,599 $ 16 $ 1,683 $ 37,779 $ 129,721 $ ( 16,863 ) $ ( 127,635 ) $ 34 $ 23,052

— — — — — — ( 240 ) — ( 240 )

Stock-based compensation

— — — — 50 — — — 50

Balances, April 30, 2023

1,599 $ 16 $ 1,683 $ 37,779 $ 129,771 $ ( 16,863 ) $ ( 127,875 ) $ 34 $ 22,862

— — — — — — ( 1,494 ) — ( 1,494 )

Stock-based compensation

— — — — 108 — — — 108

Balances, July 31, 2023

1,600 $ 16 1,683 $ 37,779 $ 129,879 $ ( 16,863 ) $ ( 129,369 ) $ 34 $ 21,476

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

7 unchanged sentences

Effective August 21, 2023, the Company sold Klein and retrospectively presented its prior periods financial results reported as discontinued operations (see Note 2 – “Sale of a Subsidiary” for additional details).

Liquidity —As of April 30, 2024, the Company had working capital of approximately $ 19.3 million, including cash and cash equivalents of approximately $ 924,000 , compared to working capital of approximately $ 18.1 million, including cash and cash equivalents of approximately $ 5.3 million as of January 31, 2024.

Liquidity —As of July 31, 2024, the Company had working capital of approximately $ 20.3 million, including cash and cash equivalents of approximately $ 1.9 million, compared to working capital of approximately $ 18.1 million, including cash and cash equivalents of approximately $ 5.3 million as of January 31, 2024.

The Company does not have a credit facility in place and depends on cash on hand and cash flows from operations to satisfy its liquidity needs.

1 unchanged sentence

Summary of Significant Accounting Policies —We describe our significant accounting policies in Note 1 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10 -K for the fiscal year ended January 31, 2024.

During the three months ended April 30, 2024 , there were no changes to those accounting policies.

During the six months ended July 31 , 2024, there were no changes to those accounting policies.

Sale of Subsidiary

12 unchanged sentences

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s Annual Report on Form 10 -K for the year ended January 31, 2024 (“fiscal 2024” ).

In the opinion of the Company’s management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position as of April 30, 2024 , the results of operations for the three months ended April 30, 2024 and 2023, the cash flows for the three months ended April 30, 2024 and 2023, and the statement of stockholders’ equity for the three -months ended April 30, 2024 and 2023, have been included in these condensed consolidated financial statements.

In the opinion of the Company’s management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position as of July 31, 2024 , the results of operations for the three and six months ended July 31, 2024 and 2023, the cash flows for the six months ended July 31, 2024 and 2023, and the statement of stockholders’ equity for the three and six months ended July 31, 2024 and 2023, have been included in these condensed consolidated financial statements.

The foregoing interim results are not necessarily indicative of the results of operations to be expected for the full fiscal year ending January 31, 2025 (“fiscal 2025” ).

1 unchanged sentence

On August 21, 2023, the Company sold Klein pursuant to the SPA with the Buyer.

As a result, its results of operations are reported as discontinued operations for the three -month period ended April 30, 2023.

The results of operations from discontinued operations for the three months ended April 30, 2023 consist of the following:

For the Three Months Ended April 30,

As a result, its results of operations are reported as discontinued operations for the three and six -month period ended July 31, 2023.

The results of operations from discontinued operations for the three and six months ended July 31, 2024 and 2023 consist of the following:

For the Three Months Ended July 31,

For the Six Months Ended July 31,

(in thousands)

Revenue from discontinued operations

$ — $ 1,189 $ — $ 3,178

Cost of sales:

Cost of discontinued operations

— 863 — 1,971

Operating expenses:

Selling, general and administrative

— 600 — 1,168

Research and development

1 unchanged sentence

Total operating expenses

— 1,107 — 2,118

Operating loss

— ( 781 ) — ( 911 )

Loss before income taxes from discontinued operations

— ( 726 ) — ( 835 )

Provision for income taxes from discontinued operations

— ( 10 ) — ( 17 )

Net loss from discontinued operations

— ( 736 ) — ( 852 )

The significant operating and investing noncash items and capital expenditures related to discontinued operations are summarized below:

For the Three Months Ended April 30,

For the Six Months Ended July 31,

(in thousands)

4 unchanged sentences

Improvements to Reportable Segment Disclosures ("ASU 2023 - 07" ), to enhance the disclosures public entities provide regarding significant segment expenses so that investors can better understand an entity’s overall performance and assess potential future cash flows.

ASU 2023 - 07 is effective four our annual periods beginning February 1, 2024 and interim periods within fiscal years beginning February 1, 2025.

ASU 2023 - 07 is effective for our annual periods beginning February 1, 2024 and interim periods within fiscal years beginning February 1, 2025.

The Company is evaluating the impacts of adoption.

6 unchanged sentences

The following table presents revenue from contracts with customers disaggregated by timing of revenue recognition:

Three Months Ended April 30,

Three Months Ended July 31,

Six Months Ended July 31,

Revenue recognized at a point in time:

1 unchanged sentence

Total revenue recognized at a point in time

$ 9,661 $ 7,191 $ 19,038 $ 17,703

Revenue recognized over time:

Total revenue recognized over time

375 370 676 455

Total revenue from contracts with customers

$ 10,036 $ 7,561 $ 19,714 $ 18,158

The revenue from products manufactured and sold by our Seamap business is generally recognized at a point in time, or when the customer takes possession of the product, based on the terms and conditions stipulated in our contracts with customers.

3 unchanged sentences

The following table presents revenue from contracts with customers disaggregated by geography, based on the shipping location of our customers:

Three Months Ended April 30,

Three Months Ended July 31,

Six Months Ended July 31,

(in thousands)

United States

$ 492 $ 107 $ 837 $ 499

6,298 2,557 9,083 9,057

2,647 4,850 8,490 8,432

599 47 1,304 170

Total revenue from contracts with customers

As of April 30, 2024 , and January 31, 2024 , contract assets and liabilities consisted of the following:

April 30, 2024

$ 10,036 $ 7,561 $ 19,714 $ 18,158

As of July 31, 2024 , and January 31, 2024 , contract assets and liabilities consisted of the following:

July 31, 2024

January 31, 2024

5 unchanged sentences

Deferred revenue & customer deposits - current

$ 3,154 $ 3,649

Total deferred revenue & customer deposits

$ 3,154 $ 3,649

Considering the products manufactured and sold by our Seamap business and the Company’s standard contract terms and conditions, we expect the Company's contract assets and liabilities to turn over, on average, within a period of three to nine months.

3 unchanged sentences

Balance Sheet

April 30, 2024

July 31, 2024

January 31, 2024

10 unchanged sentences

$ 19,069 $ 13,371

April 30, 2024

July 31, 2024

January 31, 2024

11 unchanged sentences

As of January 31, 2024 , the Company completed an annual review of property and equipment noting no indications that the recorded value of assets may not be recoverable, and no impairment was recorded for fiscal 2024.

Since January 31, 2024 , there have been no changes to the market, economic or legal environment in which the Company operates or overall performance of the Company, that would, in the aggregate, indicate additional impairment analysis is necessary as of April 30, 2024.

The Company has certain non-cancelable operating lease agreements for office, production and warehouse space in Texas, Singapore, Malaysia, and the United Kingdom.

Lease expense for the three months ended April 30, 2024 was approximately $ 207,000 , respectively, and during the three months ended April 30, 2023 was approximately $ 221,000 , respectively, and was recorded as a component of operating income (loss).

Included in these costs was short-term lease expense of approximately$ 1,000 for the three months ended April 30, 2024 , and during the three months ended April 30, 2023 was approximately$2,000.

Supplemental balance sheet information related to leases as of April 30, 2024 and January 31, 2024 was as follows:

April 30, 2024

Lease expense for the three and six months ended July 31, 2024, was approximately $ 207,000 and $ 422,000 , respectively, and during the three and six months ended July 31, 2023, was approximately $ 201,000 and $ 422,000 , respectively, and was recorded as a component of operating income (loss).

Included in these costs was short-term lease expense of approximately$7,000 and $ 13,100 , respectively for the three and six months ended July 31, 2024, and approximately $ 2,000 and $ 4,000 , respectively for the three and six months ended July 31, 2023.

Supplemental balance sheet information related to leases as of July 31, 2024 and January 31, 2024 was as follows:

July 31, 2024

January 31, 2024

9 unchanged sentences

$ 1,732 $ 1,324

Lease-term and discount rate details as of April 30, 2024 and January 31, 2024 were as follows:

Lease-term and discount rate details as of July 31, 2024 and January 31, 2024 were as follows:

Lease term and discount rate

April 30, 2024

July 31, 2024

January 31, 2024

5 unchanged sentences

Supplemental cash flow information related to leases was as follows:

For the Three Months Ended April 30,

For the Six Months Ended July 31, 2024

Cash paid for amounts included in the measurement of lease liabilities:

4 unchanged sentences

Operating leases

Maturities of lease liabilities at April 30, 2024 were as follows:

April 30, 2024

Maturities of lease liabilities at July 31, 2024 were as follows:

July 31, 2024

(in thousands)

3 unchanged sentences

Intangible Assets

April 30, 2024

July 31, 2024

January 31, 2024

2 unchanged sentences

Gross Carrying

April 30, 2024

July 31, 2024

(in thousands)

11 unchanged sentences

Based on a review of qualitative factors, it was determined that there were no events or changes in circumstances indicating that the carrying value of amortizable intangible assets was not recoverable.

During the three months ended April 30, 2024, there have been no substantive indicators of impairment.

Aggregate amortization expense was $ 185,000 and $ 224,000 for the three months ended April 30, 2024 and 2023 , respectively.

As of April 30, 2024 , future estimated amortization expense related to amortizable intangible assets was estimated to be:

During the six months ended July 31, 2024, there have been no substantive indicators of impairment.

Aggregate amortization expense was approximately $ 159,000 and $ 345,000 for the three and six months ended July 31, 2024, respectively, and approximately $ 223,000 and $ 445,000 for the three and six months ended July 31, 2023, respectively.

As of July 31, 2024 , future estimated amortization expense related to amortizable intangible assets was estimated to be:

For fiscal years ending January 31,

4 unchanged sentences

These costs were recorded as a reduction to the carrying value of our debt and amortized to interest expense straight-line over the term of the Loan.

Approximately $ 204,000 of amortization of debt acquisition costs were recorded as interest expense for the three months ended April 30, 2023.

Approximately $ 204,000 and $ 407,000 of amortization of debt acquisition costs were recorded as interest expense for the three and six months ended July 31, 2023, respectively.

On August 22, 2023, in connection with the Sale of Klein, the Loan was repaid in full (see Note 2 - "Sale of Subsidiary" for additional details).

For the three -month period ended April 30, 2024 , the income tax expense from continuing operations was approximately $ 245,000 , on pre-tax income from continuing operations of approximately $ 1.2 million.

For the three - month period ended April 30, 2023, the income tax expense from continuing operations was approximately $ 411,000 , on pre-tax income from continuing operations of $ 287,000 .

For the three - and six -month periods ended July 31, 2024 , the income tax expense from continuing operations was approximately $672,000 and $917,000, respectively, on pre-tax income from continuing operations of approximately $ 1.5 million and $ 2.7 million, respectively.

For the three and six - month period ended July 31, 2023, the income tax expense from continuing operations was approximately $ 66,000 and $ 477,000 , respectively, on pre-tax losses from continuing operations of approximately $ 692,000 and $ 405,000 , respectively.

The variance between our actual provision and the expected provision when applying the U.S.

8 unchanged sentences

The Company’s tax returns in other foreign jurisdictions are generally subject to examination for the fiscal years ended January 31, 2018 through 2024.

The Company has determined that the undistributed earnings of foreign subsidiaries are not deemed to be indefinitely reinvested outside of the United States as of April 30, 2024 .

The Company has determined that the undistributed earnings of foreign subsidiaries are not deemed to be indefinitely reinvested outside of the United States as of July 31, 2024 .

Furthermore, the Company has concluded that any deferred taxes with respect to the undistributed foreign earnings would be immaterial.

Therefore, the Company has not recorded a deferred tax liability associated with the undistributed foreign earnings as of April 30, 2024 .

For the three -month period ended April 30, 2024 and 2023 , the Company did not recognize any tax expense or benefit related to uncertain tax positions.

Therefore, the Company has not recorded a deferred tax liability associated with the undistributed foreign earnings as of July 31, 2024 .

For the three - and six -month periods ended July 31, 2024 and 2023 , the Company did not recognize any tax expense or benefit related to uncertain tax positions.

Earnings per Share

2 unchanged sentences

Potential common shares result from the assumed exercise of outstanding common stock options having a dilutive effect and from the assumed vesting of unvested shares of restricted stock.

For the three months ended April 30, 2024 and April 30, 2023, dilutive potential common shares outstanding were immaterial and had no effect on the calculation of earnings per share because shares were anti-dilutive.

The total basic weighted average common shares outstanding for the three months ended April 30, 2024 and April 30,2023, was approximately 1.4 million shares.

For the three and six months ended July 31, 2024 and July 31, 2023, dilutive potential common shares outstanding were immaterial and had no effect on the calculation of earnings per share because shares were anti-dilutive.

The total basic weighted average common shares outstanding for the three and six months ended July 31, 2024 and July 31, 2023, was approximately 1.4 million shares.

On October 12, 2023, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Charter (the “Charter Amendment”) to effect a one -for- ten reverse stock split (the “Reverse Stock Split”).

4 unchanged sentences

Additionally, Ladenburg provided advisory services related to the Sale of Klein and received fees of $ 405,000 for such services.

The former Co-Chief Executive Officer and Co-President of Ladenburg is the Non-Executive Chairman of our Board.

The former Co-Chief Executive Officer and Co-President of Ladenburg is the Non-Executive Chairman of the Company's board of directors (the "Board").

Our Non-Executive Chairman of the Board received no portion of the above-mentioned compensation.

Subsequent Event

On September 4, 2024, The Company filed an amendment to the Certificate of Designations, Preferences and Rights of 9.00 % Series A Cumulative Preferred Stock to provide that each share of Preferred Stock shall be converted into 3.9 shares of common stock.

The amendment was approved by the holders of the Preferred Stock at a Virtual Special Meeting on August 29, 2024.

As a result, the Company issued approximately 6.6 million shares of common stock in exchange for all outstanding shares of Preferred Stock.

Following the transaction, there are approximately 8.0 million shares of common stock and no preferred stock outstanding.

Equity and Stock-Based Compensation

As of April 30, 2024 , there are approximately 1,683,000 shares of Preferred Stock outstanding with an aggregate liquidation preference of approximately $ 48.7 million, which amount includes approximately $ 6.6 million in undeclared cumulative dividends.

As of July 31, 2024 , there were approximately 1,683,000 shares of Preferred Stock outstanding with an aggregate liquidation preference of approximately $ 49.6 million, which amount includes approximately $ 7.6 million in undeclared cumulative dividends.

Holders of our Preferred Stock are entitled to receive, when and as declared by the Board out of funds of the Company available for the payment of distributions, quarterly cumulative preferential cash dividends of $ 0.5625 per share of the $ 25.00 per share stated liquidation preference on our Preferred Stock.

Dividends on the Preferred Stock are payable quarterly in arrears, on April 30, July 31, October 31, and January 31, of each year.

On September 4, 2024, all outstanding shares of Preferred Stock were converted into common stock and retired.

The Company issued approximately 6,600,000 shares of common stock in connection with the conversion.

Accordingly, the Company no longer has obligations regarding Preferred Stock dividends, including undeclared dividends from previous periods (see Note 14 - "Subsequent Events" for additional details).

On September 28, 2023, the Board approved the Reverse Stock Split at a ratio of one -for-ten.

On October 12, 2023, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Charter Amendment to effect the Reverse Stock Split.

On October 12, 2023, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Charter (the "Charter Amendment") to effect the Reverse Stock Split.

The Charter Amendment became effective on October 13, 2023.

7 unchanged sentences

In connection with the reverse stock split, the Company retired all treasury stock.

Total compensation expense recognized for stock-based awards granted under the Company’s equity incentive plan during the three -month period ended April 30, 2024 was approximately $ 48,000 , and during the three -month period ended April 30, 2023, was approximately $ 50,000 .

Total compensation expense recognized for stock-based awards granted under the Company’s equity incentive plan during the three and six -month periods ended July 31, 2024 was approximately $ 46,000 , and $ 95,000 , respectively, and during the three and six -month periods ended July 31, 2023, was approximately $ 108,000 and $ 158,000 , respectively.

Segment Reporting

2 unchanged sentences

(see Note 2 -"Sale of Subsidiary" for additional details).

As a result, at April 30, 2024, Seamap is the Company’s sole operating segment.

As a result, at July 31, 2024, Seamap is the Company’s sole reportable segment.

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

32 unchanged sentences

fluctuations in demand for seismic data, which is dependent on the level of spending by oil and gas companies for exploration, production and development activities, and may potentially negatively impact the value of our assets held for sale;

inflation and price volatility in the global economy could negatively impact our business and results of operations;

inflation and price volatility in the global economy that could negatively impact our business and results of operations;

the consequences of future geopolitical events, which we cannot predict but which may adversely affect the markets in which we operate, our operations, or our results of operations;

14 unchanged sentences

Management monitors EBITDA and Adjusted EBITDA, both as defined and reconciled to the most directly comparable financial measures calculated and presented in accordance with United States generally accepted accounting principles (“GAAP”), in the following table, as key indicators of our overall performance and liquidity.

For the Three Months Ended April 30,

For the Three Months Ended July 31,

For the Six Months Ended July 31,

Reconciliation of Net income (loss) to EBITDA and Adjusted EBITDA from continuing operations

5 unchanged sentences

Stock-based compensation

Income from discontinued operations net of depreciation and amortization

Loss from discontinued operations net of depreciation and amortization

Adjusted EBITDA from continuing operations (1)

Reconciliation of Net Cash Used in Operating Activities to EBITDA

Net cash used in operating activities

Reconciliation of Net Cash Provided by (Used in) Operating Activities to EBITDA

Net cash provided by (used in) operating activities

Stock-based compensation

9 unchanged sentences

EBITDA is defined as net income before (a) interest income and interest expense, (b) provision for (or benefit from) income taxes and (c) depreciation and amortization.

Adjusted EBITDA excludes non-cash foreign exchange gains and losses, stock-based compensation, impairment of intangible assets, other non-cash tax related items and non-cash costs of lease pool equipment sales.

Adjusted EBITDA excludes non-cash foreign exchange gains and losses, stock-based compensation, impairment of intangible assets and other non-cash tax related items.

We consider EBITDA and Adjusted EBITDA to be important indicators for the performance of our business, but not measures of performance or liquidity calculated in accordance with GAAP.

16 unchanged sentences

Our financial performance has improved significantly in recent periods.

Although we have a history of operating losses, we generated positive operating income from continuing operations in fiscal 2024 and the first quarter of fiscal 2025.

Although we have a history of operating losses, we generated positive operating income from continuing operations in fiscal 2024 and the first and second quarters of fiscal 2025.

We believe this is due to increased demand within our primary markets and efforts to reduce costs and improve product margins.

3 unchanged sentences

The license and collaboration agreements provide opportunities for recurring licensing revenue and recovery of certain ongoing operating costs.

We believe the Sale of Klein serves to streamline the Company’s operations and provides needed working capital to address the financial requirements associated with the continuing growth of our Seamap business.

We have experienced increased inquiries and bid activity for our marine technology products.

As of April 30, 2024, our backlog of firm orders was approximately $31.0 million, as compared to approximately $38.4 million as of January 31, 2024, and $18.1 million as of April 30, 2023.

We believe that essentially all of our current backlog will be completed and shipped by the end of fiscal 2025.

We believe that these firm orders provide good visibility for the balance of this fiscal year and into the next year.

The Sale of Klein served to streamline the Company’s operations and provided needed working capital to address the financial requirements associated with the continuing growth of our Seamap business.

As of July 31, 2024, our backlog of firm orders was approximately $26.2 million, as compared to approximately $38.4 million as of January 31, 2024, and $17.0 million as of July 31, 2023.

We believe a significant portion of our current backlog will be completed and shipped by the end of fiscal 2025.

Additionally, we have a significant pipeline of pending and potential orders that we are pursuing.

There are more than $6 million of such orders that have been received subsequent to July 31, 2024 or that we believe are imminent.

We believe these orders provide good visibility for the balance of this fiscal year and into the next year.

However, the level of backlog at a particular point in time may not necessarily be indicative of results in subsequent periods as the size and delivery period of individual orders can vary significantly.

On September 4, 2024, all outstanding shares of Preferred Stock were converted into common stock and retired.

The Company issued approximately 6.6 million shares of common stock in connection with the conversion.

Accordingly, the Company no longer has obligations regarding Preferred Stock dividends, including undeclared dividends from previous periods (see Note 14- “Subsequent Events” for additional details).

Our revenues tend to fluctuate from quarter to quarter due to delivery schedules and other factors.

We currently expect revenue in the fiscal year ending January 31, 2025 to exceed that of fiscal 2024.

We currently expect revenue in fiscal 2025 to exceed that of fiscal 2024 and revenue in the second half of fiscal 2025 to somewhat exceed that for the first half of fiscal 2025.

However, no assurances of such results can be made, and there are a number of risks which could cause results to be less than anticipated.

28 unchanged sentences

In fiscal 2024, we eliminated two executive management positions and certain other administrative positions in order to further control general and administrative costs.

We have eliminated certain other positions in fiscal 2025.

The Sale of Klein has allowed us to further streamline our operations and may provide opportunities to further reduce overhead costs.

8 unchanged sentences

Results of Operations

Revenues for the three months ended April 30, 2024 were approximately $9.7 million, compared to approximately $10.6 million for the three months ended April 30, 2023 The decrease in the first three months of fiscal 2025 compared to the prior year period was primarily due to timing of completion of projects.

For the three months ended April 30, 2024, we generated operating income of approximately $730,000, compared to operating income of approximately $419,000 for the three months ended April 30, 2023.

The increase in operating income in the current three month periods was primarily attributable to decreased selling, general and administrative costs during the three months ended April 30, 2024.

Revenues for the three and six months ended July 31, 2024 were approximately $10.0 million and $19.7 million, respectively, compared to approximately $7.6 million and $18.2 million for the three and six months ended July 31, 2023 , respectively.

The increase in the three and six month periods ended July 31, 2024, compared to the prior year period was primarily due to timing of completion of order shipments.

For the three and six months ended July 31, 2024, we generated operating income of approximately $1.4 million and $2.2 million, respectively, compared to an operating loss of approximately $767,000 and $348,000 for the three and six months ended July 31, 2023.

The increase in operating income in the current year was attributable to improved gross profit margins, decreased selling, general and administrative costs and reduced research and development costs during the three and six months ended July 31, 2024.

A more detailed explanation of these variations follows.

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Three Months Ended

Six Months Ended

(in thousands)

Cost of sales:

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Accordingly, there can be significant variation in sales from one period to another, which does not necessarily indicate a fundamental change in demand for these products.

Revenue from the sale of Seamap products was approximately $9.7 million for the three-month period ended April 30, 2024, compared to revenue of approximately $10.6 million for three-month period ended April 30, 2023.

The gross profit and gross profit margins remained consistent for Seamap and were approximately $4.2 million and 44% and approximately $4.5 million and 43% in the three-month periods ended April 30, 2024 and 2023, respectively.

The gross profit margin in the first quarter of fiscal 2025 improved from the comparable period in the prior fiscal year, despite lower revenues, due to price increases implemented in fiscal 2024 and increased production efficiencies.

The increased production efficiencies were due primarily to production and procurement efficiencies facilitated by increased order backlog.

Revenue from the sale of Seamap products was approximately $10.0 million and $19.7 million for the three and six-month periods ended July 31, 2024, compared to revenue of approximately $7.6 million and $18.2 million for the three and six-month periods ended July 31, 2023.

The gross profit and gross profit margins for Seamap were approximately $4.8 million and 48% and $9.0 million and 46% for the three and six-month periods ended July 31, 2024, respectively, compared to approximately $2.9 million and 39% and $7.5 million and 41% in the three and six-month periods ended July 31, 2023, respectively.

The gross profit margins in fiscal 2025 improved from the comparable period in the prior fiscal year, due to price increases implemented in fiscal 2024 and increased production efficiencies.

The increased production efficiencies were due primarily to higher overhead absorption from higher activity levels and production and procurement efficiencies facilitated by increased order backlog.

Operating Expenses

General and administrative expenses for the three months ended April 30, 2024, were approximately $2.8 million, compared to approximately $3.3 million for the three months ended April 30, 2023.

General and administrative expenses for the three and six-months ended July 31, 2024, respectively, were approximately $2.8 million and $5.5 million, compared to approximately $2.9 million and $6.2 million for the three and six-months ended July 31, 2023, respectively.

The decrease from the prior periods is primarily the result of lower compensation expense due to headcount reductions, and the impact of broader cost control measures.

Research and development costs were approximately $462,000 in the three-month period ended April 30, 2024, compared to approximately $478,000 in the three-month period ended April 30, 2023, respectively.

Research and development costs were approximately $328,000 and $790,000, in the three and six-month periods ended July 31, 2024, respectively, compared to approximately $493,000 and $971,000, in the three and six-month period ended July 31, 2023, respectively.

Costs in each of the periods are related primarily to our next generation towed streamer system and ongoing development of our Spectral Ai software suite.

Depreciation and amortization expense, which includes depreciation of equipment, furniture and fixtures and the amortization of intangible assets, decreased primarily attributable to assets becoming fully depreciated and amortized over the year.

These costs were approximately $267,000 in the three -month period ended April 30, 2024, as compared to approximately $333,000 in the three-month period ended April 30, 2023.

These costs were approximately $236,000 and $503,000 in the three and six-month periods ended July 31, 2024, respectively, as compared to approximately $302,000 and $635,000 in the three and six-month periods ended July 31, 2023, respectively.

Interest Expense

Interest expense of approximately $204,000 in the three months ended April 30, 2023, was primarily due to interest on the Loan.

Interest expense of approximately $163,000 and $367,000 in the three and six-months ended July 31, 2023, respectively, was primarily due to interest on the Loan.

The Loan was repaid in fiscal 2024 in connection with the Sale of Klein (see note 10-"Notes Payable" and Note 2-"Sale of Subsidiary" for additional details).

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Provision for Income Taxes

For the three-months ended April 30, 2024, we reported tax expense of approximately $245,000 on pre-tax income from continuing operations of approximately $1.2 million.

For the three-month period ended April 30, 2023, our income tax expense was approximately $411,000 on pre-tax Income from continuing operations of approximately $287,000.

For the three and six-months ended July 31, 2024, we reported tax expense of approximately $672,000 and $917,000, respectively, on pre-tax income from continuing operations of approximately $1.5 million and $2.7 million, respectively.

For the three and six-month period ended July 31, 2023, our income tax expense was approximately $66,000 and $477,000, respectively, on pre-tax loss from continuing operations of approximately $692,000 and $405,000, respectively.

These amounts differed from the result expected when applying the U.S.

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The Company has a history of generating operating losses and negative cash from operating activities and has relied on cash from the sale of lease pool equipment and the sale of Preferred Stock and common stock for the past several years.

However, the Company’s operating results improved significantly in fiscal 2024 as compared to fiscal 2023 and prior years, generating net income from operations and positive Adjusted EBITDA for the fiscal year ended January 31, 2024 and the three months ended April 30, 2024.

In addition, the Company sold its Klein business on August 21, 2023, generating net proceeds of approximately $7.3 million after settlement of closing cost and all outstanding amounts due and owed, including principal, interest, and other charges, on the Company’s $3.75 million loan.

In addition, the Company sold its Klein business on August 21, 2023, generating net proceeds of approximately $7.3 million after settlement of closing costs and all outstanding amounts due and owed, including principal, interest, and other charges, on the Company’s $3.75 million loan.

The Sale of Klein increased the Company’s working capital and improved its liquidity situation.

As of April 30, 2024, the Company had working capital of approximately $19.3 million, including cash and cash equivalents of approximately $924,000, compared to working capital of approximately $18.1 million, including cash and cash equivalents of approximately $5.3 million, as of January 31, 2024.

As of July 31, 2024, the Company had working capital of approximately $20.3 million, including cash and cash equivalents of approximately $1.9 million, compared to working capital of approximately $18.1 million, including cash and cash equivalents of approximately $5.3 million, as of January 31, 2024.

The Company does not have a credit facility in place and depends on cash on hand, cash flows from operations, and potential sales of remaining lease pool equipment to satisfy its liquidity needs.

The Company believes it will have adequate liquidity to meet its future operating requirements through a combination of cash on hand, cash expected to be generated from operations, potential financing secured by company owned real property, disciplined working capital commitments, and potentially securing a credit facility or some other form of financing.

In addition, management believes there are a number of additional factors and actions available to the Company to address any liquidity needs, including the following:

In the three months ended July 31, 2024, the Company generated positive cash from operating activities in the amount of approximately $1.1 million.

In addition, management believes there are a number of other factors and actions available to the Company to address any liquidity needs, including the following:

The Company has no obligations or agreements containing “maintenance type” financial covenants.

The Company had working capital of approximately $19.3 million as of April 30, 2024, including cash of approximately $924,000.

The Company had working capital of approximately $20.3 million as of July 31, 2024, including cash of approximately $1.9 million.

Should revenues be less than projected, the Company believes it is able, and has plans, to reduce costs proportionately in order to maintain positive cash flow.

The majority of the Company’s costs are variable in nature, such as raw materials and personnel related costs.

In fiscal 2024, the Company eliminated two executive level positions, and additional reductions in operations, sales, and general and administrative headcount could be made, if deemed necessary by management.

The Company had a backlog of orders related to the Seamap segment of approximately $31.0 million as of April 30, 2024, production for certain of these orders was in process and included in inventory as of April 30, 2024, thereby reducing the liquidity needed to complete the orders.

The Company has deferred payment of the quarterly dividend on its Series A Preferred Stock for seven fiscal quarters, including the first quarter of fiscal 2025.

The Company also has the option to defer future quarterly dividend payments if deemed necessary.

The dividends are a cumulative dividend that accrue for payment in the future.

During a deferral period, the Company is prohibited from paying dividends or distributions on its common stock or redeeming any of those shares.

The Company has commenced the solicitation of proxies to approve an amendment to the Certificate of Designations, Preferences and Rights of its Series A Cumulative Preferred Stock to provide that, at the discretion of its Board of Directors at any time prior to July 31, 2024, each share of Series A Preferred Stock shall be converted into 3.9 shares of Common Stock upon the effective time of the Amendment.

Holders of Series A Preferred Stock as of the record date of April 26, 2024 are entitled to vote at a Virtual Special Meeting of Preferred Stockholders to be held on June 13, 2024.

The affirmative vote of two-thirds (66 2/3%) of the outstanding shares of Series A Preferred Stock is required for approval of the Preferred Stock Proposal.

Holders of Common Stock are not entitled to vote at the Special Meeting.

In fiscal 2024, the Company eliminated two executive level positions and has made additional headcount reductions in fiscal 2025.

Furthermore, additional reductions in operations, sales, and general and administrative headcount could be made, if deemed necessary by management.

The Company had a backlog of orders related to the Seamap segment of approximately $26.2 million as of July 31, 2024, as well as a substantial pipeline of other prospects.

Production for certain of these orders was in process and included in inventory as of July 31, 2024, thereby reducing the liquidity needed to complete the orders.

On September 4, 2024 all outstanding shares of Preferred Stock were converted into common stock and retired.

The Company issued approximately 6.6 million shares of common stock in connection with the conversion.

Accordingly, the Company no longer has obligations regarding Preferred Stock dividends, including undeclared dividends from previous periods.

The conversion of Preferred Stock into common stock was effected pursuant to an amendment to the Certificate of Designations, Preferences and Rights of the Preferred Stock.

The amendment was approved by preferred stockholders at a virtual special meeting held on August 29, 2024 (see Note 16- “Subsequent Events” for additional details).

In recent years, the Company has raised capital through the sale of common stock and Preferred Stock pursuant to the at-the-market program (the "ATM Offering Program") and underwritten offerings on Form S-1.

Currently, the Company is not eligible to issue securities pursuant to Form S-3 and accordingly cannot sell securities pursuant to the ATM Offering Program.

However, the Company may sell securities pursuant to Form S-1 or in private transactions.

However, with the elimination of the Preferred Stock dividends in arrears, the Company may once again become eligible to utilize Form S-3.

Additionally, the Company may sell securities pursuant to Form S-1 or in private transactions.

Management expects to be able to raise further capital through these available means should the need arise.

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Other sources could include secured debt financing, the sale of assets or investment from strategic industry participants.

The Company has deferred payment of quarterly dividends for seven fiscal quarters including the first quarter of fiscal 2025.

Accumulated and undeclared dividends amount to approximately $6.6 million as of April 30, 2024.

Management does not believe that current operations can simultaneously fund the capital requirements of the ongoing business, as discussed above, as well as ongoing or accumulated dividends related to the Preferred Stock.

Accordingly, although no firm decisions have been made, management currently believes it is unlikely that the Company will declare dividends on the Preferred Stock for the foreseeable future.

The Company has deferred payment of quarterly dividends for seven fiscal quarters including the first and second quarters of fiscal 2025.

Accumulated and undeclared dividends amount to approximately $7.6 million as of July 31, 2024.

On September 4, 2024 all outstanding shares of the Company’s Series A Preferred Stock were exchanged for common stock and retired.

The Company issued approximately 6.6 million shares of common stock in the transaction.

Accordingly, the Company no longer has obligations regarding preferred stock dividends, including undeclared dividends from previous periods.

The following table sets forth selected historical information regarding cash flows from our Consolidated Statements of Cash Flows:

For the Three Months Ended

For the Six Months Ended

(in thousands)

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Effect of changes in foreign exchange rates on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

As of April 30, 2024, we had working capital of approximately $19.3 million, including cash and cash equivalents of approximately $924,000, as compared to working capital of approximately $18.1 million, including cash and cash equivalents of approximately $5.3 million, at January 31, 2024.

Net decrease in cash and cash equivalents

As of July 31, 2024, we had working capital of approximately $20.3

million, including cash and cash equivalents of approximately $1.9 million, as compared to working capital of approximately $18.1 million, including cash and cash equivalents of approximately $5.3 million, at January 31, 2024.

Cash Flows from Operating Activities .

Net cash used in operating activities was approximately $4.8 million in the first three months of fiscal 2025 as compared to approximately $3.0 million in the first three months of fiscal 2024.

The increase in net cash used in operating activities in the first three months of fiscal 2025 compared to the prior year period was due mainly to an increase in accounts receivable and inventories.

Net cash used in operating activities was approximately $3.7 million in the first six months of fiscal 2025 as compared to approximately $3.5 million in the first six months of fiscal 2024.

The increase in net cash used in operating activities in the first six months of fiscal 2025 compared to the prior year period was due mainly to an increase in accounts receivable and inventories.

Cash Flows from Investing Activities .

Cash provided by investing activities during the first three months of fiscal 2025 increased approximately $310,000 over the same period in fiscal 2024.

Cash provided by investing activities during the first six months of fiscal 2025 increased approximately $77,000 over the same period in fiscal 2024.

The increase relates primarily to sales of other equipment.

Cash Flows from Financing Activities .

Net cash provided by financing activities during the first three months of fiscal 2024 consisted of approximately $2.9 million of net proceeds related to short-term loans (see Note 10 - "Notes Payable" for additional details).

We have determined that the undistributed earnings of foreign subsidiaries are not deemed indefinitely reinvested outside of the United States as of April 30, 2024.

Net cash provided by financing activities during the first six months of fiscal 2024 consisted of approximately $2.9 million of net proceeds related to short-term loans (see Note 10 - "Notes Payable" for additional details).

We have determined that the undistributed earnings of foreign subsidiaries are not deemed indefinitely reinvested outside of the United States as of July 31, 2024.

Furthermore, we have concluded that any deferred taxes with respect to the undistributed foreign earnings would be immaterial.

As of April 30, 2024, we had deposits in foreign banks equal to approximately $710,000, all of which we believe could be distributed to the United States without adverse tax consequences.

As of July 31, 2024, we had deposits in foreign banks equal to approximately $1.4 million, all of which we believe could be distributed to the United States without adverse tax consequences.

However, in certain cases, the transfer of these funds may result in withholding taxes payable to foreign taxing authorities.

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Information regarding our critical accounting estimates is included in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended January 31, 2024.

There have been no material changes to our critical accounting estimates during the three-month period ended April 30, 2024.

There have been no material changes to our critical accounting estimates during the three- and six-month periods ended July 31, 2024.

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