What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-12-12 compared with 2024-09-12 · 160 added, 202 removed, 530 unchanged (41% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

July 31, 2024

October 31, 2024

January 31, 2024

2 unchanged sentences

$ 3,505 $ 5,289

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

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

Inventories, net

25 unchanged sentences

2,000 shares authorized;

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

37,779 37,779

no shares issued and outstanding at October 31, 2024 and 1,683 shares issued and outstanding at January 31, 2024

Common stock, $ 0.01 par value;

40,000 shares authorized;

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

7,969 shares issued and outstanding at October 31, 2024 and 1,406 shares issued and outstanding at January 31, 2024

Additional paid-in capital

11 unchanged sentences

(in thousands, except per share data)

For the Three Months Ended July 31,

For the Six Months Ended July 31,

For the Three Months Ended October 31,

For the Nine Months Ended October 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

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)

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 )

Income from discontinued operations, net of income taxes

Net income (loss)

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

Preferred stock dividends - declared

Preferred stock dividends - undeclared

( 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

Effect of preferred stock conversion

Net Income (loss) attributable to common stockholders

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

Continuing operations

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

Discontinued operations

$ — $ ( 0.52 ) $ — $ ( 0.61 )

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

Net income (loss)

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 July 31,

For the Six Months Ended July 31,

For the Three Months Ended October 31,

For the Nine Months Ended October 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 Six Months Ended July 31,

For the Nine Months Ended October 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:

1 unchanged sentence

Stock-based compensation

Gain on sale of Klein

Provision for inventory obsolescence

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 )

Proceeds from the sale of Klein, net

Sale of other equipment

1 unchanged sentence

Cash flows from financing activities:

Preferred stock conversion transaction costs

Net proceeds from short-term loan

Payment on short-term loan

Net cash provided by financing activities

Refund of prepaid interest on short-term loan

Net cash used in financing activities

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

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

Preferred stock conversion

Stock-based compensation

Balances, October 31, 2024

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

Retirement of treasury stock

Preferred stock dividends

Stock-based compensation

Balances, October 31, 2023

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

6 unchanged sentences

(“Klein”), designed, manufactured and sold a broad range of proprietary products for the seismic, hydrographic and offshore industries from its facility in the state of New Hampshire.

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 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.

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

Liquidity —As of October 31, 2024, the Company had working capital of approximately $ 21.2 million, including cash and cash equivalents of approximately $ 3.5 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 six months ended July 31 , 2024, there were no changes to those accounting policies.

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

Sale of Subsidiary

5 unchanged sentences

The aggregate consideration to the Company consisted of a cash payment of $ 11.5 million, resulting in a gain of approximately $ 2.3 million.

The SPA contained customary representation and warranties.

The SPA contained customary representations and warranties.

On August 22, 2023, following the closing of the Sale of Klein, all outstanding amounts due and owed, including principal, interest, and other charges, under the Loan (as defined below) were repaid in full and the Loan was terminated, and all liens and security interests granted thereunder were released and terminated (see Note 10 -"Notes Payable" for additional details).

4 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 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.

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 October 31, 2024 , the results of operations for the three and nine months ended October 31, 2024 and 2023, the cash flows for the nine months ended October 31, 2024 and 2023, and the statement of stockholders’ equity for the three and nine months ended October 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 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,

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

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

For the Three Months Ended October 31,

For the Nine Months Ended October 31,

(in thousands)

3 unchanged sentences

Cost of discontinued operations

— 863 — 1,971

Operating expenses:

7 unchanged sentences

— ( 113 ) — ( 1,025 )

Loss before income taxes from discontinued operations

Gain on sale of Klein

— 2,393 — 2,393

Income before income taxes from discontinued operations

— 2,282 — 1,441

Provision for income taxes from discontinued operations

— ( 5 ) — ( 17 )

Net loss from discontinued operations

Net Income from discontinued operations

— 2,277 — 1,424

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

For the Six Months Ended July 31,

For the Nine Months Ended October 31,

(in thousands)

Depreciation and amortization

Gain on sale of Klein

New Accounting Pronouncements

3 unchanged sentences

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.

The Company is evaluating the new guidance to determine the impact it will have on the disclosures to its consolidated financial statements.

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ):

3 unchanged sentences

The Company is currently evaluating the new guidance to determine the impact it will have on the disclosures to its consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024 - 03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220 - 40 ) ("ASU 2024 - 03" ), to enhance the disclosures public entities provide regarding specified information about certain costs and expenses at each interim and annual reporting period so that investors can better understand an entity’s overall performance, including its cost structure, and assess potential future cash flows.

ASU 2024 - 03 is effective for our annual periods beginning February 1, 2027 and interim periods within fiscal years beginning February 1, 2028.

The Company is evaluating the new guidance to determine the impact it will have on the disclosures to its consolidated financial statements.

Revenue from Contracts with Customers

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

Three Months Ended July 31,

Six Months Ended July 31,

Three Months Ended October 31,

Nine Months Ended October 31,

Revenue recognized at a point in time:

10 unchanged sentences

In addition, our Seamap business provides annual Software Maintenance Agreements (“SMA”) to customers who have an active license for software embedded in Seamap products.

The revenue from SMA is recognized over time, with the total value of the SMA recognized in equal monthly amounts over the life of the contract.

The revenue from the SMAs is recognized over time, with the total value of the SMAs recognized in equal monthly amounts over the life of the contract.

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

Three Months Ended July 31,

Six Months Ended July 31,

Three Months Ended October 31,

Nine Months Ended October 31,

(in thousands)

2 unchanged sentences

6,162 1,956 15,245 11,013

Middle East & Africa

4,952 1,653 13,442 10,085

2 unchanged sentences

$ 12,105 $ 4,974 $ 31,819 $ 23,132

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

July 31, 2024

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

October 31, 2024

January 31, 2024

13 unchanged sentences

Balance Sheet

July 31, 2024

October 31, 2024

January 31, 2024

10 unchanged sentences

$ 17,249 $ 13,371

July 31, 2024

October 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 July 31, 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 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

Lease expense for the three and nine months ended October 31, 2024, was approximately $ 221,000 and $ 643,000 , respectively, and during the three and nine months ended October 31, 2023, was approximately $ 198,000 and $ 621,000 , 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 $ 20,000 , respectively for the three and nine months ended October 31, 2024, and approximately $ 2,000 and $ 5,000 , respectively for the three and nine months ended October 31, 2023.

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

October 31, 2024

January 31, 2024

9 unchanged sentences

$ 1,526 $ 1,324

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

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

Lease term and discount rate

July 31, 2024

October 31, 2024

January 31, 2024

3 unchanged sentences

Operating leases

The incremental borrowing rate was calculated using the Company's weighted average cost of capital.

The weighted average discount rate was calculated using the Company's weighted average cost of capital.

Supplemental cash flow information related to leases was as follows:

For the Six Months Ended July 31, 2024

For the Nine Months Ended October 31, 2024

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

4 unchanged sentences

Operating leases

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

July 31, 2024

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

October 31, 2024

(in thousands)

3 unchanged sentences

Intangible Assets

July 31, 2024

October 31, 2024

January 31, 2024

2 unchanged sentences

Gross Carrying

July 31, 2024

October 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 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:

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

Aggregate amortization expense was approximately $ 146,000 and $ 491,000 for the three and nine months ended October 31, 2024, respectively, and approximately $ 173,000 and $ 591,000 for the three and nine months ended October 31, 2023, respectively.

As of October 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 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.

Approximately $ 169,000 and $ 536,000 of amortization of debt acquisition costs were recorded as interest expense for the three and nine months ended October 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 - 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.

For the three - and nine -month periods ended October 31, 2024 , the income tax expense from continuing operations was approximately $396,000 and $1.3 million, respectively, on pre-tax income from continuing operations of approximately $ 1.7 million and $ 4.4 million, respectively.

For the three and nine - month period ended October 31, 2023, the income tax expense from continuing operations was approximately $ 112,000 and $ 590,000 , respectively, on pre-tax losses from continuing operations of approximately $ 1.6 million and $ 2.0 million, respectively.

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

statutory rate of 21% is due primarily to the impact of income taxes accrued in certain foreign jurisdictions, mainly Singapore, which do not have net operating losses available to offset taxable income, and because valuation allowances have been recorded against increases in our deferred tax assets.

Valuation allowances have been provided against all deferred tax assets in the United States and several foreign jurisdictions.

Valuation allowances have been provided against all deferred tax assets in the United States and certain foreign jurisdictions, including Malaysia and the United Kingdom.

The Company files U.S.

5 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 July 31, 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 October 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 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.

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

For the three - and nine -month periods ended October 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 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.

For the three and nine months ended October 31, 2024 and October 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 nine months ended October 31, 2024, was approximately 5.5 million shares and 2.8 million shares, respectively.

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

On September 4, 2024, all outstanding shares of our 9.00% Series A Cumulative preferred stock (the “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 (see Note 14 - "Equity and Stock Based Compensation" for additional details).

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”).

Prior periods shares have been restated to reflect the impact of the Reverse Stock Split in calculating earnings per share (see Note 15 - "Equity and Stock Based Compensation " for additional details).

Outstanding shares in prior periods have been restated to reflect the impact of the Reverse Stock Split in calculating earnings per share (see Note 14 - "Equity and Stock Based Compensation" for additional details).

Related Party Transaction

1 unchanged sentence

(“Ladenburg”) provided advisor and arrangement services for the Loan (See Note 10 - "Notes Payable" for additional details) and received $ 75,000 in fees for such services.

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

Additionally, Ladenburg provided advisory services related to the Sale of Klein (see Note 2 -"Sale of Subsidiary" for additional details) and received $ 405,000 of fees for such services.

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 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.

At the virtual Special Meeting of Preferred Stockholders held on August 29, 2024, our preferred stockholders approved an amendment to our Certificate of Designations, Preferences and Rights of 9.00% Series A Cumulative preferred stock, to provide that each share of 9.00% Series A Cumulative Preferred Stock, $ 1.00 par value per share (the “Preferred Stock”) shall be converted into 3.9 shares of common stock, $ 0.01 par value per share (the “common stock”).

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).

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

The common stock issued was recorded at its market value at the date of issuance less transaction costs related to the conversion.

The excess of the carrying value of the preferred stock over the market value of the common stock issued, which amounted to approximately $ 14.8 million, was credited directly to accumulated deficit and is reflected in the calculation of earnings per share attributable to common stockholders.

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

9 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 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.

Total compensation expense recognized for stock-based awards granted under the Company’s equity incentive plan during the three and nine -month periods ended October 31, 2024 was approximately $ 47,000 , and $ 141,000 , respectively, and during the three and nine -month periods ended October 31, 2023, was approximately $ 106,000 and $ 264,000 , respectively.

Segment Reporting

2 unchanged sentences

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

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

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

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

23 unchanged sentences

inability to obtain funding or to obtain funding under acceptable terms;

changes in government spending, including efforts by the U.S.

and other governments to decrease spending for defense contracts, or as a result of U.S.

or other administration transition;

efforts by U.S.

Congress and other U.S.

government bodies to reduce U.S.

government spending and address budgetary constraints and the U.S.

deficit, as well as associated uncertainty around the timing, extent, nature and effect of such efforts;

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;

12 unchanged sentences

Effective with the Sale of Klein, we operate in one segment, Seamap.

Seamap designs, produces and sells seismic exploration and survey equipment.

Our Seamap business designs, produces and sells seismic exploration and survey equipment.

Its customers include foreign and domestic commercial marine survey companies and various governmental institutions.

1 unchanged sentence

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 July 31,

For the Six Months Ended July 31,

For the Three Months Ended October 31,

For the Nine Months Ended October 31,

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

5 unchanged sentences

Stock-based compensation

Loss from discontinued operations net of depreciation and amortization

Income from discontinued operations net of depreciation and amortization

Adjusted EBITDA from continuing operations (1)

1 unchanged sentence

Net cash provided by (used in) operating activities

Gain on Sale of Klein

Stock-based compensation

28 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 and second quarters of fiscal 2025.

Although we had a history of generating operating losses prior to fiscal 2024, we generated operating income from continuing operations in fiscal 2024 and the first three 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.

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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.

As of October 31, 2024, our backlog of firm orders was approximately $26.2 million, which is essentially flat with July 31, 2024.

Our backlog totaled approximately $38.4 million as of January 31, 2024 and $37.4 million as of October 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.

Additionally, we have a significant pipeline of pending and potential orders that we estimate total more than twice our backlog of firm orders.

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

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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).

Accordingly, the Company no longer has obligations regarding preferred stock dividends, including undeclared dividends from previous periods (see Note 14- “Equity and Stock-Based Compensation” for additional details).

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

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.

We currently expect revenue in fiscal 2025 to exceed that of fiscal 2024.

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.

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We see a number of opportunities to add to our technology and to apply existing technology and products to new applications.

Revenue from our Spectral Ai software suite has been de-minimus to date.

However, feedback from customers has been very positive and we believe there are a number of other potential customers.

We are exploring ways in which we can more quickly address an expanded market for this technology.

We also continue to pursue initiatives to further expand our product offerings.

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There can be no assurance that any of these initiatives will ultimately have a material impact on our financial position or results of operations.

Certain business opportunities that we are pursuing are with military or other governmental organizations.

The sales cycle for these projects can be quite long and can be impacted by a variety of factors, including the level of competition and budget limitations.

Therefore, the timing of contract awards is often difficult to predict.

However, once awarded, programs of this type can extend for many years.

To date, the majority of our revenues have been from commercial customers.

The Company is also pursuing certain business opportunities with governmental organizations.

Because the sales cycle for these projects can be quite long and can be impacted by a variety of factors, including the level of competition and budget limitations, the timing of contract awards is often difficult to predict.

We believe there are certain developments within the marine technology industry that can have a significant impact on our business.

These developments include the following:

Demand for economical, commercially developed, technology for maritime security applications;

Increased activity within the marine exploration space, including applications for alternative energy projects such as offshore windfarms and carbon capture projects;

Demand for economical, commercially developed, technology for maritime security applications.

In response to these, and other, developments we have prioritized certain strategic initiatives to exploit the opportunities that we perceive.

These initiatives include the following:

Application of our Spectral Ai software suite technology to side scan sonar systems and potentially other sensor systems;

Adaptation of our SeaLink solid streamer technology to alternative applications, such as hydrographic surveys for windfarm and carbon capture projects;

Application of our SeaLink solid streamer technology to passive sonar arrays for use in maritime security applications, such as domain awareness and anti-submarine warfare.

Application of our Spectral Ai software suite technology to side scan sonar systems and potentially other sensor systems.

We believe that the above applications expand our addressable markets and provide opportunities for further growth in our revenues.

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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.

The Sale of Klein has allowed us to further streamline our operations.

Should future financial results fall below our expectation, we may take further steps to reduce costs.

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Accordingly, we believe we can reduce such costs commensurate with any declines in our business.

General inflation levels have increased recently due in part to supply chain issues, increased energy costs and geopolitical uncertainty.

General inflation levels have increased in recent years due in part to supply chain issues, increased energy costs and geopolitical uncertainty.

In addition, shortages of certain components, such as electronic components, have caused prices for available components to increase in some cases.

These factors can be expected to have a negative impact on our costs;

These factors have had a negative impact on our costs;

however, the magnitude of such impact cannot be accurately determined.

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Results of Operations

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.

Revenues for the three and nine months ended October 31, 2024 were approximately $12.1 million and $31.8 million, respectively, compared to approximately $5.0 million and $23.1 million for the three and nine months ended October 31, 2023, respectively.

The revenue increase in the three and nine month periods ended October 31, 2024, compared to the prior year periods was primarily due to increased activity within the marine technology markets, including those activities related to energy exploration and alternative energy initiatives.

For the three and nine months ended October 31, 2024, we generated operating income of approximately $1.9 million and $4.0 million, respectively, compared to an operating loss of approximately $1.5 million and $1.8 million for the three and nine months ended October 31, 2023.

The increase in operating income in the current year was attributable to increased revenues, decreased selling, general and administrative costs and reduced research and development costs during the nine months ended October 31, 2024.

A more detailed explanation of these variations follows.

Revenues and Cost of Sales

Revenues and cost of sales for our Marine Technology Products business were as follows:

Revenues and cost of sales for our Seamap business were as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

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A significant portion of Seamap’s sales consist of large discrete orders, the timing of which is dictated by our customers.

This timing generally relates to the availability of a vessel in port so that our products can be installed.

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 $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.

This timing generally relates to the availability of a vessel so that our products can be installed.

Accordingly, there can be significant variation in sales from one period to another.

During the three and nine month periods ended October 31, 2024 approximately 60% of our revenues related to the sale of new systems with the remaining 40% related to “after market” activity such as the sale of spare parts, repairs and training.

The gross profit and gross profit margins for Seamap were approximately $5.4 million and 45% and $14.4 million and 45% for the three and nine-month periods ended October 31, 2024, respectively, compared to approximately $2.3 million and 45% and $9.7 million and 42% in the three and nine-month periods ended October 31, 2023, respectively.

For the three month periods, the gross profit margins were comparable, despite significantly higher revenue in the fiscal 2025 period, due mainly to revenue mix.

The gross profit margins in first nine-months of 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 incremental activity levels and production and procurement efficiencies facilitated by increased order backlog.

Operating Expenses

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.

General and administrative expenses for the three and nine-months ended October 31, 2024, respectively, were approximately $2.8 million and $8.3 million, compared to approximately $2.9 million and $9.2 million for the three and nine-months ended October 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 $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.

Research and development costs were approximately $562,000 and $1.4 million, in the three and nine-month periods ended October 31, 2024, respectively, compared to approximately $508,000 and $1.5 million, in the three and nine-month period ended October 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 $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.

These costs were approximately $221,000 and $724,000 in the three and nine-month periods ended October 31, 2024, respectively, as compared to approximately $257,000 and $892,000 in the three and nine-month periods ended October 31, 2023, respectively.

Interest Expense

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).

Interest expense of approximately $169,000 and $536,000 in the three and nine-months ended October 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 2-"Sale of Subsidiary" and note 10-"Notes Payable" for additional details).

Other Expense

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Provision for Income Taxes

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.

For the three and nine-months ended October 31, 2024, we reported tax expense of approximately $396,000 and $1.3 million, respectively, on pre-tax income from continuing operations of approximately $1.7 million and $4.4 million, respectively.

For the three and nine-month period ended October 31, 2023, our income tax expense was approximately $112,000 and $590,000, respectively, on pre-tax loss from continuing operations of approximately $1.6 million and $2.0 million, respectively.

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

statutory rate of 21% to our income or loss from continuing operations before income taxes for the respective periods due primarily to the impact of income taxes accrued in certain foreign jurisdictions, primarily in Singapore, which do not have net operating losses available to offset taxable income, and because valuation allowances have been recorded against increases in our deferred tax assets.

Valuation allowances have been provided against all deferred tax assets in the United States and several foreign jurisdictions.

statutory rate of 21% to our income or loss from continuing operations before income taxes for the respective periods due primarily to the impact of income taxes accrued in certain foreign jurisdictions, primarily Singapore, which do not have net operating losses available to offset taxable income, and because valuation allowances have been recorded against increases in our deferred tax assets.

Valuation allowances have been provided against all deferred tax assets in the United States and certain foreign jurisdictions, including Malaysia and the United Kingdom.

Liquidity and Capital Resources

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 and six months ended July 31, 2024.

Until recently, the Company had a history of generating operating losses and negative cash from operating activities and relied on cash from the sale of lease pool equipment and the sale of preferred stock and common stock.

However, the Company’s operating results improved significantly in fiscal 2024 as compared to fiscal 2023 and prior years.

The Company generated net income from operations and positive Adjusted EBITDA for the fiscal year ended January 31, 2024 and the three and nine month periods ended October 31, 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 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 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.

As of October 31, 2024, the Company had working capital of approximately $21.2 million, including cash and cash equivalents of approximately $3.5 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.

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

In the six months ended October 31, 2024, the Company generated positive cash from operating activities in the amount of approximately $3.3 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 $20.3 million as of July 31, 2024, including cash of approximately $1.9 million.

The Company had working capital of approximately $21.2 million as of October 31, 2024, including cash of approximately $3.5 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.

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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.

The Company had a backlog of orders related to the Seamap segment of approximately $26.2 million as of October 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 October 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.

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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).

The amendment was approved by preferred stockholders at a virtual special meeting held on August 29, 2024 (see Note 14- “Equity and Stock-Based Compensation” 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, with the elimination of the Preferred Stock dividends in arrears, the Company may once again become eligible to utilize Form S-3.

However, with the elimination of the preferred stock dividends in arrears, the Company anticipates becoming eligible to utilize Form S-3 after the Company files its Form 10-K for fiscal 2025.

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

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The Company owns unencumbered real estate near Huntsville, Texas which could be used to generate capital if needed through a mortgage or sale lease transaction.

The Company demonstrated its ability to do this through a secured lending transaction in early fiscal 2024, which was repaid from the proceeds from the Sale of Klein.

The appraised value of this property is approximately $5.0 million.

The Company demonstrated its ability to do this through a secured lending transaction in early fiscal 2024, which was repaid from the proceeds from the Sale of Klein.

Due to the rising level of sales and production activities there are increasing requirements for purchases of inventory and other production costs.

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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 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 Six Months Ended

For the Nine Months Ended

(in thousands)

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Net cash provided by investing activities

Net cash provided by financing activities

Net cash used in financing activities

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

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.

As of October 31, 2024, we had working capital of approximately $21.2 million, including cash and cash equivalents of approximately $3.5 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 $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.

Net cash used in operating activities was approximately $1.4 million in the first nine months of fiscal 2025 as compared to approximately $5.6 million in the first nine months of fiscal 2024.

The decrease in net cash used in operating activities in the first nine months of fiscal 2025 compared to the prior year period was due mainly to an increase in net income.

Cash Flows from Investing Activities .

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 provided by investing activities during the first nine months of fiscal 2025 decreased approximately $10.8 million over the same period in fiscal 2024.

The decrease relates primarily to proceeds from the sale of Klein in fiscal 2024, not recurring in fiscal 2025.

Cash Flows from Financing Activities .

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.

Net cash used in financing activities during the first nine months of fiscal 2025 consisted of approximately $619,000 of transaction costs associated with the conversion of preferred stock to common stock (see Note 14- "Equity and Stock-Based Compensation " for additional details).

Net cash used in financing activities during the first nine months of fiscal 2024 consisted of approximately $589,000 of payments net of 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 October 31, 2024.

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

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.

As of October 31, 2024, we had deposits in foreign banks equal to approximately $3.3 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- and six-month periods ended July 31, 2024.

There have been no material changes to our critical accounting estimates during the three- and nine-month periods ended October 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