What changed in this filing

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Item 1. Financial Statements

2025-06-11 compared with 2024-12-12 · 206 added, 289 removed, 401 unchanged (55% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

October 31, 2024

April 30, 2025

January 31, 2025

2 unchanged sentences

$ 9,172 $ 5,336

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

Accounts receivable, net of allowance for credit losses of $ 332 at each of April 30, 2025 and January 31, 2025

Inventories, net

18 unchanged sentences

Total current liabilities

10,034 10,277

Operating lease liabilities - non-current

Total liabilities

10,900 10,850

Stockholders’ equity:

Preferred stock, $ 1.00 par value;

2,000 shares authorized;

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;

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

7,969 shares issued and outstanding at April 30, 2025 and January 31, 2025

Additional paid-in capital

11 unchanged sentences

(in thousands, except per share data)

For the Three Months Ended October 31,

For the Nine Months Ended October 31,

For the Three Months Ended April 30,

Sales of marine technology products

8 unchanged sentences

Other income (expense):

Interest expense

Total other income (expense)

Income (loss) from continuing operations before income taxes

Income (loss) before income taxes

Provision for income taxes

Net income (loss) from continuing operations

Income from discontinued operations, net of income taxes

Net income (loss)

Preferred stock dividends - declared

Preferred stock dividends - undeclared

Effect of preferred stock conversion

Net income (loss) attributable to common stockholders

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

Continuing operations

Discontinued operations

Net income (loss)

Net loss per common share - Basic and diluted

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

4 unchanged sentences

(in thousands)

For the Three Months Ended October 31,

For the Nine Months Ended October 31,

For the Three Months Ended April 30,

Net income (loss)

4 unchanged sentences

(in thousands)

For the Nine Months Ended October 31,

For the Three Months Ended April 30,

Cash flows from operating activities:

Net income (loss)

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

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

Depreciation and amortization

Stock-based compensation

Gain on sale of Klein

Provision for inventory obsolescence

6 unchanged sentences

Deferred revenue and customer deposits

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Purchases of property and equipment

Proceeds from the sale of Klein, net

Sale of other equipment

Net cash provided by investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Preferred stock conversion transaction costs

Net proceeds from short-term loan

Payment on short-term loan

Refund of prepaid interest on short-term loan

Net cash used in financing activities

Net cash provided by financing activities

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

3 unchanged sentences

Supplemental cash flow information:

Interest paid

Income taxes paid

8 unchanged sentences

Balances, April 30, 2025

Stock-based compensation

Balances, July 31, 2024

Preferred stock conversion

Stock-based compensation

Balances, October 31, 2024

MIND TECHNOLOGY, INC.

6 unchanged sentences

Balances, April 30, 2024

Stock-based compensation

Balances, July 31, 2023

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.

4 unchanged sentences

The Company, through its wholly owned subsidiaries, Seamap Pte Ltd, MIND Maritime Acoustics, LLC, Seamap (Malaysia) Sdn Bhd and Seamap (UK) Ltd, collectively “Seamap”, designs, manufactures and sells a broad range of proprietary products for the seismic, hydrographic and offshore industries with product sales and support facilities based in Singapore, Malaysia, the United Kingdom and the state of Texas.

Prior to August 21, 2023, the Company, through its wholly owned subsidiary Klein Marine Systems, Inc.

(“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 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.

Liquidity —As of April 30, 2025 , the Company had working capital of approximately $ 22.8 million, including cash and cash equivalents of approximately $ 9.2 million, compared to working capital of approximately $ 23.5 million, including cash and cash equivalents of approximately $ 5.3 million as of January 31, 2025 .

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, 2025 .

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

Sale of Subsidiary

On August 21, 2023, the Company sold Klein pursuant to a Stock Purchase Agreement (the “SPA”) with General Oceans AS (the "Buyer").

In connection with the SPA, the Company granted the Buyer a license to its Spectral Ai software suite (“Spectral Ai”).

The license is exclusive to the Buyer as it relates to side scan sonar.

The Company and the Buyer also entered into a collaboration agreement for the further development of Spectral Ai and potentially other software projects.

The foregoing transactions contemplated by the SPA are referred to as the “Sale of Klein”.

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 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).

During the three months ended April 30, 2025 , there were no changes to those accounting policies.

Basis of Presentation

3 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, 2025 (“fiscal 2025” ).

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.

In the opinion of the Company’s management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position as of April 30, 2025 , the results of operations for the three -months ended April 30, 2025 and 2024 , the cash flows for the three months ended April 30, 2025 and 2024 , and the statement of stockholders’ equity for the three -months ended April 30, 2025 and 2024 , 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, 2026 (“fiscal 2026 ”).

Discontinued Operations

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 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)

Revenue from discontinued operations

$ — $ 140 $ — $ 3,318

Cost of sales:

Cost of discontinued operations

Operating expenses:

Selling, general and administrative

— 179 — 1,348

Research and development

Depreciation and amortization

Total operating expenses

— 242 — 2,361

Operating loss

— ( 113 ) — ( 1,025 )

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 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 Nine Months Ended October 31,

(in thousands)

Depreciation and amortization

Gain on sale of Klein

New Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2023 - 07, Segment Reporting (Topic 280 ):

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

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

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 ):

2 unchanged sentences

The updated guidance is effective for the Company on February 1, 2025.

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

The adoption of this accounting standard did not have an impact on the Company's 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.

ASU 2024 - 03 is effective for the Company for 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.

1 unchanged sentence

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

Three Months Ended October 31,

Nine Months Ended October 31,

Three Months Ended April 30,

Revenue recognized at a point in time:

4 unchanged sentences

Total revenue recognized over time

700 711 1,376 1,166

Total revenue from contracts with customers

$ 7,902 $ 9,678

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

However, from time to time our Seamap business provides repair and maintenance services, or performs upgrades, on customer owned equipment in which case revenue is recognized over time.

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 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 October 31,

Nine Months Ended October 31,

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

Three Months Ended April 30,

(in thousands)

United States

$ 595 $ 353 $ 1,432 $ 852

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

Middle East & Africa

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

396 1,012 1,700 1,182

Total revenue from contracts with customers

$ 7,902 $ 9,678

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

October 31, 2024

January 31, 2024

Performance Obligations

However, revenue is recognized over time when our Seamap business provides repair and maintenance services, or performs upgrades, on customer-owned equipment, which occurs periodically.

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

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

The duration of SMAs is typically one year or less.

We do not have elements of variable consideration within these contracts.

As of April 30, 2025 and January 31, 2025, due to the nature of our contracts and the services and products we provide, there were no significant outstanding liability balances for refunds or returns.

Our warranties are limited to assurance warranties that are of a standard length and are not considered to be material rights.

For the three months ended April 30, 2025 and April 30, 2024, we did not recognize revenue from performance obligations satisfied in a prior period.

Contract Balances

Prepayments and deferred revenue on SMAs have a significant impact our contract liabilities.

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

We do not have any long-term service contracts or related long-term contract assets or liabilities.

Costs to obtain and fulfill contracts are considered immaterial and are expensed during the period when incurred.

Contract liabilities increased by approximately $ 529,000 during the three months ended April 30, 2025 due primarily to recognition of revenue during the year.

As of April 30, 2025 , and April 30, 2024, contract assets and liabilities consisted of the following:

April 30, 2025

April 30, 2024

Contract Assets:

(in thousands)

Unbilled revenue - current

Contract Assets, beginning balance

Revenue accrued

Amounts billed

$ ( 20 ) $ ( 10 )

Total unbilled revenue

Contract Liabilities:

Deferred revenue & customer deposits - current

Contract liabilities, beginning balance

$ 1,792 $ 3,649

Deferred revenue and customer deposits

$ 1,574 $ 625

Revenue recognized

$ ( 1,045 ) $ ( 745 )

Total deferred revenue & customer deposits

$ 2,321 $ 3,529

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

With respect to the disclosures above, sales and transaction-based taxes are excluded from revenue, and we do not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less.

With respect to the presentation of contract assets and liabilities above, sales and transaction-based taxes are excluded from revenue.

Also, we expense costs incurred to obtain contracts because the amortization period would be one year or less.

1 unchanged sentence

Balance Sheet

October 31, 2024

April 30, 2025

January 31, 2025

10 unchanged sentences

$ 13,447 $ 13,745

October 31, 2024

April 30, 2025

January 31, 2025

10 unchanged sentences

Total property and equipment, net

$ 1,048 $ 890

As of January 31, 2025 , 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 2025 .

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 October 31, 2024.

Since January 31, 2025 , there have been no changes to the market, economic or legal environment in which the Company operates or overall performance of the Company, that would, in the aggregate, indicate additional impairment analysis is necessary as of April 30, 2025 .

Depreciation expense on property and equipment for the three months ended April 30, 2025 and April 30, 2024 was approximately $ 77,000 and $ 81,000 , respectively.

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 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

Lease expense for the three months ended April 30, 2025 , and April 30, 2024 , was approximately $ 232,000 and $ 207,000 , 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 $ 1,000 for the three months ended April 30, 2025 , and April 30, 2024 , respectively.

Supplemental balance sheet information related to leases as of April 30, 2025 and January 31, 2025 was as follows:

April 30, 2025

January 31, 2025

9 unchanged sentences

$ 1,221 $ 1,320

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

Lease-term and discount rate details as of April 30, 2025 and January 31, 2025 were as follows:

Lease term and discount rate

October 31, 2024

April 30, 2025

January 31, 2025

5 unchanged sentences

Supplemental cash flow information related to leases was as follows:

For the Nine Months Ended October 31, 2024

For the Three Months Ended April 30,

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

4 unchanged sentences

Operating leases

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

October 31, 2024

Maturities of lease liabilities as of April 30, 2025 were as follows:

April 30, 2025

(in thousands)

3 unchanged sentences

Intangible Assets

October 31, 2024

April 30, 2025

January 31, 2025

Average Life at

Gross Carrying

Average Life at Gross Carrying

Gross Carrying

October 31, 2024

April 30, 2025

(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 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:

During the three months ended April 30, 2025 , there have been no substantive indicators of impairment.

Aggregate amortization expense was approximately $ 148,000 and $ 185,000 for the three months ended April 30, 2025 , and April 30, 2024 , respectively.

As of April 30, 2025 , future estimated amortization expense related to amortizable intangible assets was estimated to be:

For fiscal years ending January 31,

(in thousands)

Notes Payable

On February 2, 2023, we entered into a $ 3.75 million Loan and Security Agreement (“the Loan”).

The Company incurred approximately $ 814,000 of debt acquisition costs associated with the loan, including approximately $ 254,000 in origination and other transaction fees and approximately $ 484,000 of prepaid interest, which is the interest due through maturity.

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 $ 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 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.

For the three -month period ended April 30, 2025 , the income tax expense was approximately $ 294,000 on pre-tax loss of approximately $ 676,000 .

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

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

8 unchanged sentences

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

The Company has determined that the undistributed earnings of foreign subsidiaries are not deemed to be indefinitely reinvested outside of the United States as of October 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 April 30, 2025 .

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 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.

Therefore, the Company has not recorded a deferred tax liability associated with the undistributed foreign earnings as of April 30, 2025 .

For the three -month period ended April 30, 2025 and 2024 , 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 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.

For the three months ended April 30, 2025 and April 30, 2024 , dilutive potential common shares outstanding had no effect on the calculation of earnings per share because shares were anti-dilutive.

The total basic weighted average common shares outstanding for the three months ended April 30, 2025 , and April 30, 2024 , was approximately 8.0 and 1.4 million shares, respectively.

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 11 - "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”).

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

Ladenburg Thalmann & Co.

(“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 (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").

In February 2025, the Company retained Lucid Capital Markets, LLC.

(“Lucid”) to provide advisor and arrangement services for investigation and analysis of opportunities for growth and additional scale.

Lucid received $ 100,000 in retainer fees for such potential services.

The Vice Chairman of Lucid 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.

Equity and Stock-Based Compensation

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.

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.

2 unchanged sentences

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.

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

The Charter Amendment became effective on October 13, 2023.

As a result of the Charter Amendment and Reverse Stock Split, every ten shares of issued and outstanding common stock were combined into one issued and outstanding share of common stock, without any change in par value per share.

Proportionate adjustments were also made to any outstanding securities or rights convertible into, or exchangeable or exercisable for, shares of common stock.

Fractional shares were not issued in connection with the Reverse Stock Split.

Stockholders who would otherwise be entitled to receive a fractional share were entitled to receive one full share of post-Reverse Stock Split common stock, in lieu of receiving such fractional shares.

The Reverse Stock Split affected all stockholders uniformly and did not alter any stockholder’s relative interest in the Company’s equity securities.

The Reverse Stock Split reduced the number of shares of issued and outstanding common stock from approximately 13,788,738 shares to approximately 1,405,779 shares.

Common stock and treasury stock shares have been retroactively adjusted to reflect the Reverse Stock Split in all periods presented.

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 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.

Total compensation expense recognized for stock-based awards granted under the Company’s equity incentive plan during the three -month periods ended April 30, 2025 and April 30, 2024 , was approximately $ 272,000 and $ 48,000 , respectively.

Segment Reporting

Prior to August 22, 2023, the Company operated in two segments, Seamap and Klein.

On August 21, 2023, the Company completed the Sale of Klein.

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

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

As of April 30, 2025, Seamap Marine Products is the Company’s sole reporting segment.

Our Seamap Marine Products segment provides the following:

• GunLink seismic source acquisition and control systems

• BuoyLink relative global navigation satellite positioning systems

• SeaLink marine sensors and solid streamer systems

Our Seamap Marine Products segment provides services and products, including engineering, repairs and software licensing, utilized in marine exploration, marine survey and maritime security for marine survey companies, seismic survey contractors, research institutes, non-military government organizations and operators of port facilities and other offshore installations.

Our chief operating decision maker ("CODM") is our chief executive officer.

Our CODM analyzes each segment's performance using revenue and operating income.

Inter-company revenue and expenses have been eliminated in the reported revenue and operating income.

Our CODM considers revenue and operating income in the annual budgeting and forecasting process and analyzes these on a monthly basis when making determinations on the allocation of resources.

Financial information by business segment is set forth below net of any allocations (in thousands):

Three Months Ended April 30,

Seamap Marine Products

Corporate Expenses

Seamap Marine Products

Corporate Expenses

$ 7,902 $ — $ 7,902 $ 9,678 $ — $ 9,678

Cost of sales

4,571 — 4,571 5,460 — 5,460

Selling, general and administrative

1,676 1,708 3,384 1,496 1,263 2,759

Research and development

302 78 380 383 79 462

Depreciation and amortization expense

221 4 225 263 4 267

Operating income (loss)

1,132 ( 1,790 ) ( 658 ) 2,076 ( 1,346 ) 730

Capital expenditures

211 26 237 64 2 66

Corporate selling, general and administrative expense primarily includes salary and benefit costs of corporate personnel, directors’ fees, professional services, office rent, and insurance premiums.

The following table presents a reconciliation of operating income (loss) to income (loss) before income taxes (in thousands):

Three Months Ended April 30,

Seamap Marine Products

Corporate Expenses

( 1,790 ) ( 1,346 )

Operating (loss) income

Income before income taxes

( 676 ) 1,199

Total assets by business segment is set forth below (in thousands):

As of April 30,

Seamap Marine Products

$ 35,574 $ 34,065

$ 36,226 $ 34,863

Depreciation and Amortization Expense

Depreciation expense on property and equipment, reflected in the table above, was approximately $ 77,000 and $ 81,000 for the three months ended April 30, 2025 and April 30, 2024, respectively.

Amortization expense primarily relating to intangible assets, reflected in the table above was approximately $ 148,000 for the three months ended April 30, 2025 and approximately $ 185,000 for the three months ended April 30, 2024.

Essentially all depreciation and amortization expense relates to the Seamap Marine Products segment.

Amortization in Corporate expenses relates to enterprise resource planning software.

All property and equipment is allocated to the Seamap Marine Products segment.

Corporate assets primarily consist of cash, right of use assets for an operating lease, and prepaid corporate expenses.

Geographic Operating Areas

Revenue is based on the location of our customers.

See Note 4 -"Revenue from Contracts with Customers" for disclosure of revenue by geographic area.

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

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uncertainties regarding our foreign operations, including political, economic, currency, environmental regulation and export compliance risks;

seasonal fluctuations that can adversely affect our business;

fluctuations due to circumstances beyond our control or that of our customers;

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

On August 21, 2023, the Company completed the Sale of Klein (see Note 2-"Sale of Subsidiary" in the accompanying financial statements for additional details).

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

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.

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

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 October 31,

For the Nine Months Ended October 31,

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

For the Three Months Ended April 30,

Reconciliation of Net income (loss) to EBITDA and Adjusted EBITDA

(in thousands)

Net income (loss)

Interest expense, net

Depreciation and amortization

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Stock-based compensation

Income from discontinued operations net of depreciation and amortization

Adjusted EBITDA from continuing operations (1)

Adjusted EBITDA (1)

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

Net cash provided by (used in) operating activities

Gain on Sale of Klein

Stock-based compensation

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Changes in accounts receivable (current and long-term)

Interest paid, net

Taxes paid, net of refunds

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Business Outlook

Our financial performance has improved significantly in recent periods.

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.

On August 21, 2023, we completed the Sale of Klein for cash consideration of $11.5 million.

In addition, in connection with the Sale of Klein, the Company granted the Buyer a license in its Spectral Ai software suite, exclusive to the Buyer as it relates to side scan sonar.

The Company and the Buyer also entered into a collaboration agreement for the further development of Spectral Ai and potentially other software projects.

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

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 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.

Our financial performance has improved significantly in recent periods, despite a decline in revenues in the quarter ended April 30, 2025 as compared to the previous quarter and the comparable period in the prior fiscal year.

Although we had a history of generating operating losses prior to fiscal 2024, we generated operating income in fiscal 2024 and fiscal 2025.

This was due to increased demand within our primary markets and efforts to reduce costs and improve product margins.

The decline in revenue in the current period was, we believe, due to certain expected and unexpected factors.

Delivery and recognition of a significant order of approximately $4.5 million was delayed, even though the manufacturing and assembly had been completed, because of the delay of certain third-party components.

We expect this order to be delivered in the second quarter of fiscal 2026.

Additionally, a significant number of miscellaneous orders, totaling almost $1.0 million, were completed and awaiting shipment as of the end of the period.

However, for various reasons, the customers were unable to arrange for shipment and acceptance of the orders.

Also, during the period our facility in Huntsville, Texas was undergoing expansion in order to handle an expected increase in activity and, as a result, repair and production activities were suspended for the majority of the period.

We expect the expansion of the facility to be completed in the second quarter of fiscal 2026 and for repair and production operation to recommence, with a corresponding increase in revenue from this facility.

As of April 30, 2025, our backlog of firm orders was approximately $21.1 million, which increased from our backlog of approximately $16.9 million as of January 31, 2025.

We believe a significant portion of our current backlog will be completed and shipped by the end of fiscal 2026.

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.

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

Additionally, we have a significant pipeline of pending and potential orders tin addition to our backlog of firm orders.

We believe these orders provide good visibility for the balance in fiscal 2026 and into the next year.

We have seen at least one expected order delayed;

however, based on information from the related customer, we expect the delayed order to be received later this fiscal year.

In addition, we have recently identified new opportunities for later this fiscal year and subsequent periods.

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

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

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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.

We currently expect revenue in fiscal 2026 to be consistent with the revenue reported in fiscal 2025, despite the decline in the first quarter of 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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Other unanticipated delays beyond our control.

In our Seamap business we address the following primary markets:

Marine Survey

Marine Exploration

In our Seamap business, we address the marine survey and exploration markets.

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.

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.

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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:

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

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

These initiatives include adaption of our SeaLink solid streamer technology to:

Alternative applications, such as hydrographic surveys for windfarm and carbon capture projects;

Maritime security applications.

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

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

We have eliminated certain other positions in fiscal 2025.

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

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

We believe many of our costs are variable in nature, such as raw materials and labor-related costs.

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

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 have had a negative impact on our costs;

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

Although these factors have had a negative impact on our costs, our revenues and results of operations have not been materially impacted by inflation or changing prices in the past two fiscal years.

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 above.

Results of Operations

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.

Revenues for the three months ended April 30, 2025 were approximately $7.9 million, compared to approximately $9.7 million for the three months ended April 30, 2024.

The revenue decrease was primarily due to the delayed delivery of a significant order and other factors discussed above.

For the three months ended April 30, 2025, we generated an operating loss of approximately $658,000, compared to operating income of approximately $730,000 for the three months ended April 30, 2024.

The decrease in operating income in the current year was attributable to decreased revenues, and increased selling, general and administrative costs during the three months ended April 30, 2025.

A more detailed explanation of these variations follows.

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Three Months Ended

Nine Months Ended

(in thousands)

Cost of sales:

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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.

Accordingly, sales can significantly vary from one period to another.

During the three month period ended April 30, 2025, approximately 29% of our revenues related to the sale of new systems with the remaining 71% related to “after market” activity such as the sale of spare parts, repairs and services.

The gross profit and gross profit margins for Seamap were approximately $3.3 million and 42%, respectively, and $4.2 million and 44%, respectively, for the three month periods ended April 30, 2025, and April 30, 2024, respectively.

The gross profit margin in first quarter of fiscal 2026 decreased from the prior year comparable period primarily due to lower absorption of fixed costs from lower revenues.

Operating Expenses

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 $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.

General and administrative expenses for the three months ended April 30, 2025, were approximately $3.4 million, compared to approximately $2.8 million for the three months ended April 30, 2024.

The current period included certain items we consider to be non-recurring, including costs related to a restructuring our Seamap operations in the United Kingdom and tax planning and analysis arising from the preferred stock conversion in fiscal 2025.

Also contributing to the increase was higher stock-based compensation and franchise tax expense.

Research and development costs were approximately $380,000, in the three month period ended April 30, 2025, compared to approximately $462,000, in the three month period ended April 30, 2024.

Costs in each of the periods are related primarily to development of our next generation towed streamer system.

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 $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 $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

Other expense primarily relates to gains on the sale of certain ancillary equipment, scrap sales and other income.

These costs were approximately $225,000 and $267,000 in the three month periods ended April 30, 2025, and April 30, 2024, respectively.

Other income primarily relates to gains on the sale of certain ancillary equipment, scrap sales and other income.

Provision for Income Taxes

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.

For the three months ended April 30, 2025, our income tax expense was approximately $294,000 on a pre-tax loss of approximately $676,000.

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

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 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.

statutory rate of 21% to our income or loss 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.

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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 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.

However, the Company generated net income from operations and positive Adjusted EBITDA for fiscal 2025 and fiscal 2024.

Although the Company generated a net loss from operations for the three months ended April 30, 2025, cash provided by operating activities was approximately $4.1 million.

We anticipate generating net income for fiscal 2026.

As of April 30, 2025, the Company had working capital of approximately $22.8 million, including cash and cash equivalents of approximately $9.2 million, compared to working capital of approximately $23.5 million, including cash and cash equivalents of approximately $5.3 million, as of January 31, 2025.

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 six months ended October 31, 2024, the Company generated positive cash from operating activities in the amount of approximately $3.3 million.

During the twelve month period ended April 30, 2025, the Company generated positive cash from operating activities in the amount of approximately $9.5 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 $21.2 million as of October 31, 2024, including cash of approximately $3.5 million.

The Company had working capital of approximately $22.8 million as of April 30, 2025, including cash of approximately $9.2 million.

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

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

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

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

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

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

The Company had a backlog of orders related to the Seamap segment of approximately $21.1 million as of April 30, 2025, as well as a substantial pipeline of other prospects.

Production for certain of these orders was in process and included in inventory as of April 30, 2025, 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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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 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.

In April 2025 the Company filed a registration statement on Form S-3, which was declared effective on May 1, 2025.

The Company believes it could sell debt or equity securities pursuant to this registration statement via a new ATM Offering Program, or other means.

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

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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.

Additionally, due to component shortages and long-lead times for certain items there are requirements in some cases to purchase items well in advance.

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

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

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

However, some of these opportunities may require additional investments such as in production equipment or other fixed assets.

If we are unable to meet suppliers' demands, we may not be able to produce products and fulfill orders from our customers.

In order to fund future growth, we may explore sources of additional capital.

Such sources include private or public issues of equity or debt securities, or a combination of such securities.

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

In order to fund future growth, we may explore sources of additional capital, which could include secured debt financing, the sale of assets or investment from strategic industry participants.

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

For the Nine Months Ended

For the Three Months Ended

(in thousands)

Net cash used in operating activities

Net cash provided by investing activities

Net cash used in financing activities

Net cash provided by (used in) operating activities

Net cash (used in) provided by investing activities

Net cash from financing activities

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

Net decrease in cash and cash equivalents

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.

Net increase (decrease) in cash and cash equivalents

As of April 30, 2025, we had working capital of approximately $22.8 million, including cash and cash equivalents of approximately $9.2 million, as compared to working capital of approximately $23.5 million, including cash and cash equivalents of approximately $5.3 million, at January 31, 2025.

Cash Flows from Operating Activities .

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.

Net cash provided by operating activities was approximately $4.1 million in the first three months of fiscal 2026 as compared to cash used in operating activities of approximately $4.8 million in the first three months of fiscal 2025.

The increase in net cash provided by operating activities was due mainly to collections on accounts receivable.

Cash Flows from Investing Activities .

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.

Net cash used in investing activities during the first three months of fiscal 2026 relates primarily to the purchase of assets and investment related to the expansion of our facility in Huntsville, Texas as discussed above, compared to cash provided by investing activities in the prior year period, which related primarily to proceeds from the sale of other assets.

Cash Flows from Financing Activities .

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.

For the three months ended April 30, 2025, and April 30, 2024, there were no activities related to financing.

We have determined that the undistributed earnings of foreign subsidiaries are not deemed indefinitely reinvested outside of the United States as of April 30, 2025.

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

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.

As of April 30, 2025, we had deposits in foreign banks equal to approximately $9.0 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, 2025.

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

There have been no material changes to our critical accounting estimates during the three-month period ended April 30, 2025.

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