What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2025-04-25 compared with 2024-04-30 · 82 added, 135 removed, 199 unchanged (52% of the section changed)

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Market Information for Common Stock

Our Common Stock is traded on NASDAQ under the symbol “MIND.” As of April 29, 2024, there were approximately 1,600 beneficial holders of our Common Stock.

Our common stock, $0.01 par value per share (the "Common Stock") is traded on NASDAQ under the symbol “MIND.” As of April 21, 2025, there were approximately 3,400 beneficial holders of our Common Stock.

Dividend Policy

We have not paid any cash dividends on our Common Stock since our inception and our Board of Directors does not contemplate the payment of cash dividends on our Common Stock in the foreseeable future.

We have not paid any cash dividends on our Common Stock since our inception and our Board of Directors (the "Board") does not contemplate the payment of cash dividends on our Common Stock in the foreseeable future.

In the future, our payment of dividends on our Common Stock will depend on the amount of funds available, our financial condition, capital requirements and such other factors as our Board of Directors may consider.

As of April 29, 2024, there were 1,682,985 shares of Series A Preferred Stock outstanding with a liquidation preference of $25.00 per share.

The quarterly dividends on the outstanding Series A Preferred Stock are approximately $947,000.

However, in response to unexpected demands on our liquidity, we have suspended the quarterly dividend on the Series A Preferred Stock.

Undeclared dividends total approximately $5.7 million.

On March 25, 2024, we commenced the solicitation of proxies to approve an amendment (the “Amendment”) to the Certificate of Designations, Preferences and Rights of our Series A Cumulative Preferred Stock to provide that, at the discretion of our Board of Directors deciding to file the Amendment with the Secretary of State of the State of Delaware at any time prior to July 31, 2024, each share of Series A Preferred Stock shall be converted into 2.7 shares of Common Stock upon the effective time of the Amendment (the “Preferred Stock Proposal”).

Holders of Series A Preferred Stock as of the record date of February 27, 2024 were entitled to vote at a Virtual Special Meeting of Preferred Stockholders to be held on April 25, 2024 (the “Special Meeting”).

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

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

On April 24, 2024, we announced that our Board of Directors had postponed the Special Meeting and would determine a revised date for the Special Meeting, as well as a revised record date.

When the Board of Directors establishes a new record date, we will deliver a new notice of the Special Meeting and an updated proxy statement, which will include a new proxy card.

At the virtual Special Meeting of Preferred Stockholders held on August 29, 2024, our preferred stockholders approved an amendment (the “Amendment”) to our Certificate of Designations, Preferences and Rights of 9.00% Series A Cumulative preferred stock, to provide that, at the discretion of the Board deciding to file the Amendment with the Secretary of State of the State of Delaware at any time prior to October 31, 2024, each share of 9.00% Series A Cumulative Preferred Stock, $1.00 par value per share (the “Preferred Stock”) would be converted (the “Conversion”) into 3.9 shares of Common Stock upon the effective time of the Amendment.

On August 30, 2024, the Board elected to proceed with the Conversion by filing the Amendment with the Delaware Secretary of State.

Effective 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.

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.

As of January 31, 2025, we had deposits in foreign banks equal to approximately $4.8 million.

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Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

Effective January 31, 2023, we split our Marine Technology Products Segment into two segments, Seamap Marine Products and Klein Marine Products, to more accurately reflect our operations.

On August 21, 2023, we sold the Klein Marine Products segment and now operate in one segment.

Our worldwide Seamap Marine Products business includes Seamap Pte Ltd, MIND Maritime Acoustics, LLC, Seamap (Malaysia) Sdn Bhd and Seamap (UK) Ltd (collectively “Seamap”), which designs, manufactures and sells specialized marine seismic equipment.

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Johor, Malaysia and in Singapore.

The majority of our revenues are contracted through our Singapore subsidiary, Seamap Pte Ltd.

The majority of manufacturing activity is performed, and therefore the majority of our material purchases are made, by Seamap Pte Ltd or our Malaysian subsidiary, Seamap (Malaysia) Sdn Bhd.

The discontinued operations of the Klein Marine Products business related to sales of Klein products, which operated from Salem, New Hampshire.

Management believes that the performance of our continued operations is indicated by revenues from sales of products and by gross profit from those sales.

Management believes that the performance of our continued operations is indicated by revenues from sales of products and by gross profit from those sales and the operating profit for those operations.

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.

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Sale of marine technology products

Total revenues

Cost of sales:

Sale of marine technology products

Total cost of sales

Operating expenses:

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Total operating expenses

Operating income (loss)

Operating income

Year Ended January 31,

(in thousands)

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

Net income (loss)

Reconciliation of Net Income to EBITDA and Adjusted EBITDA from continuing operations

Interest expense, net

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Provision for income taxes

(Income) loss from discontinued operations net of depreciation and amortization

Income from discontinued operations net of depreciation and amortization

Stock-based compensation

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

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Changes in prepaid expenses and other current and long-term assets

Non-cash cumulative translation adjustment for discontinued operations

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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.

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EBITDA and Adjusted EBITDA may not be comparable with similarly titled measures reported by other companies.

Within our Seamap business, we design, manufacture and sell a variety of products used primarily in oceanographic, hydrographic, defense, seismic and maritime security industries.

Within our Seamap business, we design, manufacture and sell a variety of products used primarily in oceanographic, hydrographic, seismic and maritime security industries.

Seamap’s primary products include (i) the GunLink seismic source acquisition and control systems;

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The discontinued operations of our Klein business designed, manufactured, and sold side scan sonar and water-side security systems to commercial, governmental, and military customers throughout the world.

Our results of operations can experience fluctuations in activity levels due to a number of factors outside of our control.

These factors include budgetary or financial concerns, difficulties in obtaining licenses or permits, security problems, labor or political issues, inclement weather, and global pandemics.

See Item 1A- “Risk Factors."

Business Outlook

Our financial results during fiscal year 2025 improved significantly when compared to fiscal 2024.

We have continued to experience significant inquiries and bid activity for our Seamap Marine products.

As of January 31, 2025, our backlog of firm orders for Seamap Marine Products was approximately $16.9 million, which is a decrease of approximately 56% from the $38.4 million reported at January 31, 2024.

In addition, we continue to pursue a number of other significant opportunities and expect to secure additional orders, primarily for delivery in fiscal 2026 and beyond.

Subsequent to January 31, 2025 we received orders totaling approximately $15.9 million, which amounts are not included in our backlog as of January 31, 2025.

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.

We believe our backlog as of January 31, 2024 provided visibility that allowed for improved production efficiency which in turn contributed to our improved results.

Nonetheless, we believe there are other production efficiencies which can be obtained and could contribute to improved operating margins in fiscal 2026.

Despite improving results, our operations continue to be impacted by the following factors:

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Delays and uncertainties in the timing of orders due to customer delivery requirements.

Difficulties sourcing skilled labor and obtaining necessary work permits and visas in some jurisdictions in which we operate.

However, we believe general economic and geopolitical trends are now favorable for much of our business.

Global energy prices traded within a fairly tight range during fiscal 2024 but remain significantly higher than the past several years and are generally expected to rise in fiscal 2025.

We believe this is a positive development for our marine seismic customers and many of our customers in this space have recently reported improving financial metrics and outlooks.

Expected increases in energy prices and the global movement towards renewable energy is, we believe, positive for our customers in the marine survey industry.

We have seen increasing demand for our products regarding alternative energy projects, such as marine wind farm installations, and carbon capture projects.

In recent months, we have continued to experience significant inquiries and bid activity for our Seamap Marine products.

As of January 31, 2024, our backlog of firm orders for Seamap Marine Products was approximately $38.4 million, which is an increase of approximately 145% from the $15.7 million reported at January 31, 2023.

In addition, we continue to pursue a number of other significant opportunities and expect to secure additional orders, primarily for delivery in fiscal 2025 and beyond.

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.

Based on our current backlog of orders, continued product inquiries, and current production and delivery schedules, we expect revenue in fiscal 2025 to exceed that of fiscal 2024.

If revenues in fiscal 2025 increase as expected, we believe the Company will report net income from continuing operations and positive EBITDA for fiscal 2025.

Based on our current backlog of orders, pipeline of other prospects and continued product inquiries, and current production and delivery schedules, we expect revenue in fiscal 2026 to be comparable with fiscal 2025.

If fiscal 2026 revenue is in-line with our expectations, we believe the Company will report net income and positive EBITDA for fiscal 2026.

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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Specific applications within those markets include sea-floor survey, mineral and geophysical exploration and maritime security.

We have existing technology and products that meet needs across all these markets such as -

We have existing technology and products that meet the needs in such markets -

Marine seismic equipment, such as GunLink and BuoyLink;

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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.

In response, we have initiated certain strategic initiatives in order to exploit the opportunities that we perceive.

These initiatives include the following:

Development of our Spectral Ai sonar software system;

Introduction of Sea Serpent passive sonar arrays for use in maritime security applications.

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

however, neither initiative has produced material revenue to date.

In response, we have initiated certain strategic initiatives in order to exploit the perceived opportunities including the following:

Product and production process refinements which would allow us to pursue larger projects for Sea Link systems;

Adaption or development of acoustic array technology for passive sonar arrays for use in maritime security applications;

Development of internally produced components in place of components currently sourced from third parties;

Enhanced capabilities for existing products.

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

however, none have produced material revenue to date.

As we grow our business, we are also looking to control our costs.

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In response to these cost increases, in the first quarter of fiscal 2025, we increased the pricing for most of our products.

The amount of the increase varies by product and ranged from approximately 5% to 10%.

The amount of the increase varied by product and ranged from approximately 5% to 10%.

Our revenues and results of operations have not been materially impacted by inflation or changing prices in the past two fiscal years, except as described below.

Results of Continuing Operations

For fiscal 2024, we recorded operating income of approximately $518,000 and for fiscal 2023, we recorded an operating loss of approximately $5.7 million.

The improvement in operating results was driven primarily by significant increases in revenue for the Seamap product lines in addition to cost-saving efforts implemented in the current fiscal year.

For fiscal 2025 and 2024, we recorded operating income of approximately $6.8 million and $518,000, respectively.

The improvement in operating results was driven primarily by significant increases in revenue for the Seamap product lines in addition to cost-saving efforts implemented in the current and prior fiscal year.

Revenues and cost of sales from continued operations were as follows:

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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.

The gross profit and gross profit margins generated by sales of Seamap products were approximately $16.0 million and 44% during fiscal 2024 and approximately $10.0 million and 40% in fiscal 2023.

The increase in gross profit margins between the periods is primarily due to incremental revenue and production activity resulting in higher absorption of fixed costs.

A significant portion of our revenues result from “after market” activity such as spare parts, training, repairs and field service.

In Fiscal 2025 and Fiscal 2024 approximately 37% and 45%, respectively of our revenue related to these activities.

Our gross profit margin increased in fiscal 2025 as compared to fiscal 2024 due to higher overhead absorption from higher revenues and improved production efficiencies.

This improvement was despite an increase in warranty costs in Fiscal 2025 to approximately $900,000 versus approximately $400,000 in Fiscal 2024.

Operating Expenses

Selling, general and administrative expenses for fiscal 2024 amounted to approximately $12.1 million, compared to approximately $12.9 million in 2023, respectively.

In fiscal 2024 compared to fiscal 2023, the decrease of approximately 6% is primarily the result of reductions in headcount, compensation expense and other administrative costs due to cost reduction initiatives implemented in fiscal 2024.

Selling, general and administrative expenses for fiscal 2025 amounted to approximately $11.3 million, compared to approximately $12.1 million in 2024.

The year-over-year decrease of approximately 7% is primarily the result of reductions in headcount, compensation expense and other administrative costs due to cost reduction initiatives implemented throughout fiscal 2024 and fiscal 2025.

Research and development costs were approximately $1.9 million in fiscal 2025 as compared to approximately $2.1 million in fiscal 2024.

The increase in research and development spending was due primarily to development of the next generation of the Sealink product line.

The majority of these costs relate to the development of a next generation streamer system and related activities.

We did not record a provision for credit losses in fiscal 2025 or fiscal 2024.

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Depreciation and amortization expense relates primarily to the depreciation of furniture and fixtures, office and manufacturing equipment and the amortization of intangible assets.

Depreciation and amortization expense was approximately $1.2 million and $1.3 million for fiscal 2024 and 2023, respectively.

Depreciation and amortization expense was approximately $944,000 and $1.2 million for fiscal 2025 and 2024, respectively.

The decrease in depreciation and amortization expense in fiscal 2025 is due primarily to tangible and intangible assets becoming fully depreciated during the current fiscal year.

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Other Income and Expense

In fiscal 2025, we recorded other income of approximately $240,000, consisting primarily of gain from the sale of other assets.

In fiscal 2024, we recorded other expense of approximately $280,000, consisting of interest expense of approximately $675,000 related to the $3.75 million loan that was repaid, in full, in conjunction with the sale of Klein, partially offset by gains from sale of assets.

In fiscal 2023, we recorded other income of approximately $256,000, consisting primarily of gains from sale of assets.

Provision for Income Taxes

Our provision for income taxes for continuing operations for fiscal 2024 was approximately $1.3 million compared to approximately $699,000 for fiscal 2023.

Our provision for income taxes for continuing operations for fiscal 2025 was approximately $2.0 million compared to approximately $1.3 million for fiscal 2024.

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

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

Internal Controls

As of January 31, 2024, the Company’s executive officers determined that the Company’s internal control over financial reporting was not effective due to an identified material weakness.

Controls and Procedures for further details.

As of January 31, 2023, the Company’s executive officers determined that the Company’s internal control over financial reporting was not effective due to an identified material weakness.

Controls and Procedures for further details.

Results of Discontinued Operations

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Other income, including $2.3 million gain on sale of Klein

Income (loss) before income taxes

Income before income taxes

Provision for income taxes

Net income (loss)

In the third quarter of fiscal 2024, we sold the Klein business and therefore present those operations as discontinued operations.

We recorded revenue of $3.3 million from discontinued operations during fiscal 2024, compared to approximately $10.1 million for fiscal 2023.

The revenue recorded in fiscal 2024 and 2023 is from the discontinued operations of Klein.

The drop in revenue is due to only seven months of activity in fiscal 2024 and several large multi-beam system sales in fiscal 2023, not recurring in fiscal 2024.

Costs of sales related to the discontinued operations of Klein dropped to approximately $2.0 million in fiscal 2024 from approximately $7.1 million reported in fiscal 2023.

The reduction in direct costs is commensurate with the decline in revenue.

Selling, general and administrative costs related to the discontinued operations, primarily related to Klein, totaled approximately $2.0 million in fiscal 2024 compared to approximately $5.2 million during fiscal 2023.

The decrease was due primarily to only seven months of activity in fiscal 2024 due to the sale of Klein on August 21, 2023.

Depreciation and amortization expense was approximately $338,000 in fiscal 2024 and approximately $543,000 for fiscal 2023.

The decrease in depreciation and amortization expense in fiscal 2024 is due primarily to the sale of Klein on August 21, 2023.

In fiscal 2024, we recognized approximately $2.3 million of gain on the sale of Klein.

We recorded provision for income taxes of approximately $17,000 and $26,000 related to the discontinued operations of Klein in fiscal 2024 and fiscal 2023, respectively.

The tax provision for the discontinued operations of Klein relates to state income tax varies from the expected provision based on the U.S.

statutory rate due to the proration of profit and loss allocated to the state taxing jurisdiction.

We recorded provision for income taxes of approximately $17,000 related to the discontinued operations of Klein in fiscal 2024.

The tax provision for the discontinued operations of Klein relates to state income tax and varies from the expected provision based on the U.S.

statutory rate due to the proration of profit and loss allocable to the state taxing jurisdiction.

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.

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

However, the Company’s operating results improved significantly in fiscal 2025 as compared to fiscal 2024 and prior years, generating net income from operations and positive Adjusted EBITDA for the fiscal year ended January 31, 2025.

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

As of January 31, 2024, the Company had working capital of approximately $18.1 million, including cash and cash equivalents of approximately $5.3 million, compared to working capital of approximately $13.3 million, including cash and cash equivalents of approximately $778,000, as of January 31, 2023.

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 January 31, 2025, the Company had working capital of approximately $23.5 million, including cash and cash equivalents of approximately $5.3 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.

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The Company had working capital of approximately $23.5 million as of January 31, 2025, including cash of approximately $5.3 million.

In the last nine months of fiscal 2025, the Company generated approximately $5.4 million in cash flow from operating activities, including approximately $2.1 million in the fourth quarter.

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

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The Company has recently 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 has a backlog of orders from continuing operations of approximately $38.4 million as of January 31, 2024, which is an increase of approximately 145% from the $15.7 million reported at January 31, 2023.

The Company has a backlog of orders from continuing operations of approximately $16.9 million as of January 31, 2025, compared to approximately $26.2 million as of October 31, 2024, and $38.4 million as of January 31, 2024.

However, the Company has received additional orders totaling approximately $15.9 million subsequent to January 31, 2025.

Production for certain of these orders was in process and included in inventory as of January 31, 2025, thereby reducing the liquidity needed to complete the orders.

Based largely on this backlog, Management expects the Company to produce positive operating income and EBITDA in fiscal 2025.

The Company declared and paid the quarterly dividend on its Preferred Stock for the first quarter of fiscal 2023, but deferred payment of the quarterly dividend for the first, second and fourth quarters of fiscal 2024 and 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.

On March 25, 2024, the Company 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 deciding to file the Amendment with the Secretary of State of the State of Delaware at any time prior to July 31, 2024, each share of Series A Preferred Stock shall be converted into 2.7 shares of Common Stock upon the effective time of the Amendment.

Holders of Series A Preferred Stock as of the record date of February 27, 2024 were entitled to vote at a Virtual Special Meeting of Preferred Stockholders to be held on April 25, 2024.

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

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

On April 24, 2024, the Company announced that its Board of Directors had postponed the Special Meeting and would determine a revised date for the Special Meeting, as well as a revised record date.

When the Board of Directors establishes a new record date, the Company will deliver a new notice of the Special Meeting and an updated proxy statement, which will include a new proxy card.

In recent years, the Company has raised capital through the sale of Common Stock and Preferred Stock pursuant to the ATM Offering Program (as defined herein) 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.

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

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, at the discretion of the Board deciding to file the Amendment with the Secretary of State of the State of Delaware at any time prior to October 31, 2024, each share of Preferred Stock would be converted into 3.9 shares of Common Stock upon the effective time of the Amendment.

On August 30, 2024, the Board elected to proceed with the Conversion by filing the Amendment with the Delaware Secretary of State.

Effective 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.

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

Upon filing of this Annual Report on Form 10-K the Company expects to become eligible to utilize form S-3 and intends to file a shelf registration statement on this form.

This will provide the Company the ability to efficiently raise additional capital should the need arise.

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.

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

As of this date, under our Amended and Restated Certificate of Incorporation, we have 2,000,000 shares of Preferred Stock authorized, of which 1,682,985 are currently outstanding, leaving 317,015 available for future issuance.

In addition, 40,000,000 shares of Common Stock are authorized, of which 1,405,779 are currently outstanding and 38,377 are reserved for issuance pursuant to our Amended and Restated Stock Awards Plan, leaving 38,555,844 available for future issuance.

We believe these factors provide capacity for subsequent issues of Common Stock or Preferred Stock.

As of April 23, 2025, under our Amended and Restated Certificate of Incorporation, we have 40,000,000 shares of Common Stock are authorized, of which 7,969,421 are currently outstanding and approximately 30,000 are reserved for issuance pursuant to our Amended and Restated Stock Awards Plan, leaving approximately 32,000,000 available for future issuance.

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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Furthermore, some suppliers require prepayments in order to secure some items.

All of these factors combine to increase the Company’s working capital requirements.

All of these factors combine to impact the Company’s working capital requirements.

Furthermore, Management believes there are opportunities to increase production capacity and efficiencies.

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(in thousands)

Net cash used in operating activities

Net cash provided by (used in) operating activities

Net cash provided by investing activities

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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 January 31, 2024, we had working capital of approximately $18.1 million, including cash and cash equivalents of approximately $5.3 million, as compared to working capital of approximately $13.3 million, including cash and cash equivalents of approximately $778,000 at January 31, 2023.

Our working capital increased during fiscal 2024 compared to fiscal 2023 , due primarily to increases in cash, accounts receivable and inventory and a decrease in accounts payable.

Cash Used In Operating Activities.

Cash used in operating activities amounted to approximately $5.0 million in fiscal 2024, compared to approximately $2.9 million in fiscal 2023.

In fiscal 2024, the primary sources of cash used in operating activities was the net change in working capital items, such as accounts receivable, inventories, prepaid assets, and accounts payable, totaling approximately $4.4 million.

Net increase in cash and cash equivalents

Cash Provided by (Used In) Operating Activities.

Cash provided by operating activities amounted to approximately $651,000 in fiscal 2025, compared to cash used in operations of approximately $5.0 million in fiscal 2024.

In fiscal 2025, the primary source of cash provided by operating activities was the increase in net income of approximately $5.1 million.

Cash Flows From Investing Activities .

Cash provided by investing activities during fiscal 2024 increased approximately $10.5 million over fiscal 2023, due primarily to proceeds from the sale of Klein totaling approximately $11.5 million.

Cash provided by investing activities during fiscal 2025 decreased approximately $11 million from fiscal 2024, due primarily to proceeds from the sale of Klein totaling approximately $11.5 million in fiscal 2024.

Cash Flows From Financing Activities .

Net cash used in financing activities during fiscal 2024 consisted of approximately $0.9 million of Preferred Stock dividend payments and approximately $600,000 of net outflows related to the borrowing and repayment of a short-term loan.

Net cash used in financing activities during fiscal 2023 consisted of approximately $1.9 million of Preferred Stock dividend payments.

Net cash used in financing activities during fiscal 2025 consisted of approximately $619,000 of transaction costs associated with the conversion of the Preferred Stock.

Net cash used in financing activities during fiscal 2024 consisted of approximately $946,000 of Preferred Stock dividend payments and approximately $589,000 of net outflows related to the borrowing and repayment of a short-term loan.

As of January 31, 2025, we have no funded debt and no obligations containing restrictive financial covenants.

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However, should these sources of financing not be adequate, we may seek other sources of capital to fund future acquisitions.

These additional sources of capital include bank credit facilities or the issuance of debt or equity securities.

These additional sources of capital may include bank credit facilities or the issuance of debt or equity securities.

We have determined that, due to the potential requirement for additional investment and working capital to achieve our objectives, the undistributed earnings of foreign subsidiaries are not deemed indefinitely reinvested outside of the United States as of January 31, 2025.

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The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions in determining the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period.

Critical accounting estimates made by us in the accompanying consolidated financial statements relate to the allowances for uncollectible accounts receivable and inventory obsolescence, and the impairment assessments of our various intangible assets.

Critical accounting estimates made by us in the accompanying consolidated financial statements relate to the allowances for inventory obsolescence.

Critical accounting estimates are those that are most important to the portrayal of a company’s financial position and results of operations and require management’s subjective judgment.

Below is a brief discussion of our critical accounting estimates.

Allowance for Credit Losses

We make provisions to the allowance for credit losses based on a detailed review of outstanding receivable balances.

Factors considered include the age of the receivable, the payment history of the customer, the general financial condition of the customer, any financial or operational leverage we may have in a particular situation and general industry conditions and reasonable and supportable forecasts.

Our estimates are subject to uncertainty because financial information about our customers may not be public information or readily available, and the information that is available may not be current or verifiable.

However, we have longstanding relationships with most of our Marine Technology business customers and can rely on internal collection history data which we believe is more predictable than most of the other sources of data we use for this purpose.

We typically do not charge fees on past-due accounts, although we reserve the right to do so in most of our contractual arrangements with our customers and have done so from time to time.

No additional allowance for credit losses related to continuing operations was recorded during fiscal 2024 or fiscal 2023.

At January 31, 2024 and 2023, we had an allowance for credit losses of approximately $332,000 related to continuing operations receivables.

Inventory Obsolescence

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In order to make these determinations, we may use estimates of future demand for our products to determine appropriate inventory reserves and to make corresponding reductions in inventory values to reflect the lower of cost or market value.

Our estimates related to inventory obsolescence are subject to uncertainty because many aspects of estimating future demand for our products are beyond our control and subject to change and variation.

We are currently experiencing record levels of confirmed backlog of orders which makes the estimate of future demand more sure and less sensitive to changes beyond our control.

Our estimates related to inventory obsolescence are subject to uncertainty because we estimate future demand for our products based on historical activity which may not be an accurate indicator due to factors beyond our control and subject to change and variation.

For fiscal 2025, we increased our inventory obsolescence reserve for continuing operations by approximately $6,000.

In fiscal 2023 we decreased our inventory obsolescence reserve for continuing operations by approximately $315,000 primarily due to write-offs of obsolete inventory.

Intangible Assets

Intangible assets consist primarily of proprietary rights, customer relationships, patents, trade names, developed software and other developed technology.

Intangible assets with finite lives are amortized over their estimated useful life on a straight-line basis.

We monitor conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization period.

We test these assets for potential impairment whenever our management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable.

The original estimate of an asset’s useful life and the impact of an event or circumstance on either an asset’s useful life or carrying value involve significant judgment regarding estimates of the future cash flows associated with each asset.

Our estimates of an asset’s useful life are subject to uncertainty because our intangible assets are unique and may differ from one to another by type, technology, or use, all of which may impact its estimated useful life.

Likewise, if we perform quantitative analysis to determine the recoverability of the carrying value of an asset, our estimate is subject to uncertainty because cashflow projections involve numerous assumptions, many of which are beyond our control.

However, due to the Company’s improving financial results our facts and circumstances do not mandate quantitative analysis.

For fiscal 2024 and fiscal 2023, management did not identify any events or changes in circumstances that indicated that the carrying amount may not be recoverable.

As a result, no charge for impairment was recorded for fiscal 2024 or fiscal 2023.

In fiscal 2024 we increased our inventory obsolescence reserve for continuing operations by approximately $316,000.

Significant Accounting and Disclosure Changes

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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-K

Item 5. Market for Registrant’s Common Equity