What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2026-04-20 compared with 2025-04-25 · 65 added, 115 removed, 166 unchanged (52% of the section changed)

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

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.

Revenue from the Seamap Marine Products business relates to sales of Seamap products, which operates from locations near Bristol, United Kingdom;

Our worldwide Seamap 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.

Revenue from the Seamap business relates to sales of Seamap products, which operates from locations near Bristol, United Kingdom;

Huntsville, Texas;

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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 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.

The following table presents certain operating information of our continuing operations:

The following table presents certain operating information of our operations:

Year Ended January 31,

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(in thousands)

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

Interest expense, net

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

Depreciation and amortization

Provision for income taxes

Income from discontinued operations net of depreciation and amortization

Stock-based compensation

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

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Stock-based compensation

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Changes in accounts receivable (current and long-term)

Interest paid

Taxes paid, net of refunds

Gain on sale of other equipment

Gain on sale of Klein

Changes in inventory

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These towed streamer products are primarily designed for three-dimensional, high-resolution marine surveys in survey and exploration applications.

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.

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.

As of January 31, 2026, our backlog of firm orders for Seamap was approximately $13.9 million, which is a decrease of approximately 18% from the $16.9 million reported at January 31, 2025.

We continue to pursue a number of other significant opportunities and expect to secure additional orders, primarily for delivery in fiscal 2027 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.

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:

Extended lead times for key components.

Requirements for advanced payments from some vendors for key components.

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

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.

During fiscal 2026, we experienced a decline in order activity, as is evidenced by the decline in our backlog.

We believe this decline was due in large part to global economic and political uncertainty and believe this decline to be temporary.

Based on discussions with our customers and general industry commentary, we think the longer-term outlook for marine exploration and survey activity is very encouraging.

Recent disruptions in global energy markets due to the war in Iran are generally expected to result in renewed energy exploration and survey activity.

However, the reduced order activity does result in less visibility for fiscal 2027.

We maintain a robust and promising pipeline of prospects, the timing of which is uncertain.

We expect the first quarter of fiscal 2027 to be comparable to recent quarters, but we have less visibility into subsequent periods.

Accordingly, it is more likely than not that revenue in fiscal 2027 will be less than that in fiscal 2026.

Nonetheless, we expect to maintain positive Adjusted EBITDA for the full year of fiscal 2027.

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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Higher than anticipated costs.

We continue to address three primary markets through our continued operations businesses -

Our operation can also be impacted by the following factors:

Extended lead time for key components;

Requirements for advance payments from some vendors for key components;

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

We address three primary markets through our Seamap businesses -

Marine Survey;

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Acoustic arrays, such as SeaLink

Despite the near-term uncertainty discussed above, we are optimistic for the future of the Company.

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

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

Development of new products in cooperation with third parties;

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.

We also continue to explore ways in which to expand the scale of our operations.

We think this can be achieved in a number of ways, including acquiring businesses, entering into business combinations or other strategic transactions or a potential sale of the Company.

We are exploring all these options, but no assurance can be given that any such transactions will be pursued or consummated.

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

During fiscal 2024, we eliminated several executive and management level positions to control general and administrative costs.

Over the past several fiscal years, we eliminated several executive and management level positions to control general and administrative costs.

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.

Many of our costs, including raw materials and labor-related costs, are variable in nature.

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

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

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

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

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

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 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 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:

Results of Operations

For fiscal 2026 and 2025, we recorded operating income of approximately $2.9 million and $6.8 million respectively.

The decline in fiscal 2026 operating results was driven primarily by decreases in revenue and increases in professional fees, stock-based compensation, and franchise tax expense.

Revenues and cost of sales were as follows:

Year Ended January 31,

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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 decline in fiscal 2026 revenue resulted from the timing of order deliveries and the impact of the reduced order activity discussed above.

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

In fiscal 2026 and fiscal 2025, approximately 60% and 37%, 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.

Our gross profit margin remained essentially flat in fiscal 2026 as compared to fiscal 2025.

Operating Expenses

Selling, general and administrative expenses for fiscal 2026 amounted to approximately $13.3 million, compared to approximately $11.3 million in 2025.

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.

The year-over-year increase of approximately 17% is primarily the result of increased professional fees, stock-based compensation and franchise tax.

Research and development costs were approximately $1.6 million in fiscal 2026 as compared to approximately $1.9 million in fiscal 2025.

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.

We did not record a provision for credit losses in fiscal 2026 or 2025.

On January 31, 2026, and 2025, we had trade accounts and note receivables over 180 days past due of approximately $52,000 and $4,000, respectively.

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In our industry, and in our experience, it is not unusual for accounts to become delinquent from time-to-time, and this is not necessarily indicative of an account becoming uncollectable.

As of January 31, 2025, 2024 and 2023, our allowance for credit losses receivable for continuing operations amounted to approximately $332,000.

As of January 31, 2026, and 2025 our allowance for credit losses receivable amounted to approximately $332,000.

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 $944,000 and $1.2 million for fiscal 2025 and 2024, respectively.

Depreciation and amortization expense was approximately $873,000 and $944,000 for fiscal 2026 and 2025, respectively.

The decrease in depreciation and amortization expense in fiscal 2026 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 2026, we recorded other income of approximately $43,000, consisting primarily of interest income on interest bearing cash deposits.

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.

Provision for Income Taxes

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.

Our provision for income taxes for fiscal 2026 was approximately $2.2 million compared to approximately $2.0 million for fiscal 2025.

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

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

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 in Singapore, which do not have net operating losses available to offset taxable income, and because valuation allowances have been recorded against increases in our deferred tax assets.

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

Results of Discontinued Operations

Revenues and cost of sales from discontinued operations were comprised of the following:

Year Ended January 31,

(in thousands)

Sales of Klein Equipment

Cost of sales:

Cost of sales

Operating expenses:

Selling, general and administrative

Depreciation and amortization

Total operating expenses

Operating loss

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

Income before income taxes

Provision for income taxes

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

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 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 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.

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

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

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 has a recent history of generating operating income and positive EBITDA, including in fiscal 2026 and the two previous fiscal years.

As of January 31, 2026, the Company had working capital of approximately $37.4 million, including cash and cash equivalents of approximately $19.1 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 did 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 addition, management believes there are additional factors and actions available to the Company to address liquidity concerns, including the following:

Such belief is supported by the following factors and actions available to the Company:

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

The Company had working capital of approximately $37.4 million as of January 31, 2026, including cash of approximately $19.1 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.

In fiscal 2026, the Company generated approximately $2.6 million in cash flow from operating activities.

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.

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

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 $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.

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.

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.

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.

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

The Company has recently eliminated several executive and management level positions, and additional reductions in operations, sales, and general and administrative headcount could be made, if deemed necessary by management.

During fiscal 2026 the Company established an at-the-market (“ATM”) offering of common stock from which it raised approximately $11.7 million.

Management believes additional capital could be raised through this facility 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-back transaction.

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

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.

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.

As of April 16, 2026, under our Amended and Restated Certificate of Incorporation, 40,000,000 shares of Common Stock are authorized, of which 9,089,055 are currently outstanding and approximately 52,000 are reserved for issuance pursuant to our Amended and Restated Stock Awards Plan, leaving approximately 30,860,000 available for future issuance.

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 to secure certain items.

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

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(in thousands)

Net cash provided by (used in) operating activities

Net cash provided by investing activities

Net cash used in financing activities

Net cash provided by operating activities

Net cash (used in) provided by investing activities

Net cash provided by (used in) financing activities

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

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 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 .

Cash Provided by Operating Activities.

Cash provided by operating activities amounted to approximately $2.6 million in fiscal 2026, compared to approximately $651,000 in fiscal 2025.

In fiscal 2026, the primary source of cash provided by operating activities was the consumption of inventories.

Cash Flows (Used in) Provided by Investing Activities .

Cash used in investing activities during fiscal 2026 increased approximately $683,000 from fiscal 2025, due primarily to the build-out of the Huntsville facility in fiscal 2026.

Cash Flows Provided by (Used in) Financing Activities .

Net cash provided by financing activities during fiscal 2026 consisted of approximately $11.8 million of sales of common stock primarily related to sales at the market.

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, 2026, we have no funded debt and no obligations containing restrictive financial covenants.

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

The Loan was due February 1, 2024, and bore interest at 12.9% per annum, payable monthly.

However, the interest due through maturity and an origination fee equal to $240,000 were withheld from the proceeds issued by the Lender.

The Loan was secured by mortgages on certain real estate owned by the Company and contained terms customary with this type of transaction, including representations, warranties, covenants, and reporting requirements.

The terms of the Loan also allowed for prepayment at any time without penalty.

On August 22, 2023, following the sale of Klein, all outstanding amounts due and owed, including principal, interest, and other charges, with respect to the Loan were repaid, in full.

We regularly evaluate opportunities to expand our business through the acquisition of other companies, businesses or product lines.

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These factors could limit our ability to pay cash dividends in the future.

Subsequent to the close of fiscal 2026, Semap Pte Ltd entered into a trade finance facility with The Hong Kong Bank Corporation Limited, Singapore Branch (“HSBC Singapore”) for the issuance from time to time of letters of credit or bank guarantees.

Off-Balance Sheet Arrangements

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

For fiscal 2026, we increased our inventory obsolescence reserve by approximately $58,000.

In fiscal 2025 we increased our inventory obsolescence reserve by approximately $6,000.

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