Perma-Pipe International Holdings, Inc. 10-K

Item 9A. CONTROLS AND PROCEDURES   Evaluation of Disclosure Controls and Procedures.  The Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)) under the Exchange Act as of January 31, 2023 . This evaluation included consideration of the controls, processes and procedures that are designed to ensure that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, the certifying officers have concluded that, as of the end of the period covered by this Annual Report on Form 10-K, our disclosure controls and procedures were not effective because of the material weakness described below under "Management's Annual Report on Internal Control Over Financial Reporting."    Management's Annual Report on Internal Control Over Financial Reporting. The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. As required by Rule 13a-15(c) under the Exchange Act, the Company's management carried out an evaluation, with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of its internal control over financial reporting as of January 31, 2023 . The framework on which such evaluation was based is contained in the report entitled Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.   The Company's system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.   A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.  Management has identified a material weakness in the Company's internal control over financial reporting regarding the design and operating effectiveness of controls related to the existence of inventory during the fiscal year ended January 31, 2023. Specifically, the Company failed to appropriately perform cycle count procedures at one of the Company's operating facilities, resulting in a significant adjustment during the full physical inventory count at period end. Further, management review of the process and resulting adjustments on a periodic basis failed to identify the issue. The material weakness did not result in any material misstatements to the Company’s consolidated financial statements.   As a result, at January 31, 2023 and on the date of this Annual Report, the Company's internal control over financial reporting is not effective.    Remediation Plan for the Material Weakness in Internal Control over Financial Reporting: To address the material weakness, the Company will do the following:     • Hire additional resources and expertise to oversee inventory management;   • Engage outside consultants for additional expertise to review current practices and advise management on industry best practices regarding policies and procedures;   • Redesign cycle count parameters to ensure higher value and more active inventory parts are counted more frequently and include additional review by finance and accounting personnel to ensure any necessary adjustments are addressed in a timely manner;   • Perform full physical inventory counts periodically throughout the year at the Lebanon, Tennessee plant until management determines that other inventory controls are operating effectively to prevent or detect a material misstatement; and   • Review and update physical organization of inventory to better identify and segregate inventory.   The Company anticipates the actions described above and resulting improvements in controls will strengthen the Company's processes, procedures and controls related to inventory management and will address the related material weakness described above. However, the material weakness cannot be considered fully remediated until the remediation processes have been in operation for a period of time and successfully tested.   Changes in Internal Control over Financial Reporting. While the Company continues to implement design enhancements to our internal control procedures, we believe that, other than the changes described above regarding the ongoing remediation efforts, there were no changes to our internal control over financial reporting which were identified in connection with the evaluation required by Rules 13a-15(d) or 15d-15(d) under the Exchange Act during the fourth quarter of the fiscal year ending January 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.    Attestation Report of Registered Public Accounting Firm.  This Annual Report does not contain an attestation report of our independent registered public accounting firm related to internal control over financial reporting because the rules for smaller reporting companies provide an exemption from the attestation requirement.    Item 9B. OTHER INFORMATION - Not applicable.   Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS  - Not applicable.   19 Table of Contents   PART III   Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE   Information with respect to this item is incorporated herein by reference to the Company's definitive proxy statement for its  2023  annual meeting of stockholders.   Information with respect to executive officers of the Company is included in Part I, Item 1, hereof under the caption "Information about our Executive Officers".   Item 11. EXECUTIVE COMPENSATION   Information with respect to this item is incorporated herein by reference to the Company's definitive proxy statement for its  2023  annual meeting of stockholders.   Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS   Equity Compensation Plan Information   The following table provides information regarding the number of shares of common stock that may be issued upon exercise of outstanding options, warrants and rights under the Company's equity compensation plans and the weighted average exercise price and number of shares of common stock remaining available for issuance under those plans as of January 31, 2023 .         Number of shares to be issued upon exercise of outstanding options, warrants and rights   Weighted-average exercise price of outstanding options, warrants and rights   Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in column (a)) Plan Category   (a)(1)   (b)(1)   (c)(2) Equity compensation plans approved by stockholders   40,100   $10.85   260,981     (1) The amounts shown in columns (a) and (b) of the above table do not include 267,377  outstanding shares of restricted stock granted under the Company's 2013 Omnibus Stock Incentive Plan as amended on June 14, 2013, the 2017 Omnibus Stock Incentive Plan as amended on June 13, 2017 ("2017 Plan") or the 2021 Omnibus Stock Incentive Plan dated May 26, 2021 ("2021 Plan"). (2) The 2017 Plan expired in June 2020. The 2021 Plan will expire on May 26, 2024.   The other information with respect to this item is incorporated herein by reference to the Company's definitive proxy statement for its  2023  annual meeting of stockholders.   Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE   Information with respect to this item is incorporated herein by reference to the Company's definitive proxy statement for its  2023  annual meeting of stockholders.   Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES   Information with respect to this item is incorporated herein by reference to the Company's definitive proxy statement for its  2023  annual meeting of stockholders.   PART IV   Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES     a. List of documents filed as part of this report:   (1) Financial Statements - Consolidated Financial Statements of the Company Refer to Part II, Item 8 of this report.   (2) Financial Statement Schedules Schedule II - Valuation and Qualifying Accounts   (3) Report of Registered Public Accounting Firm (Grant Thornton LLP, Houston, Texas, Auditor Firm ID 248)   b. Exhibits: The exhibits, as listed in the Exhibit Index included herein, are submitted as a separate section of this report.   c. The response to this portion of Item 15 is submitted under 15a(2) above.   20 Table of Contents   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM     Board of Directors and Stockholders Perma-Pipe International Holdings, Inc.   Opinion on the financial statements We have audited the accompanying consolidated balance sheets of Perma-Pipe International Holdings, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of January 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the two years in the period ended January 31, 2023, and the related notes and financial statement schedule (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended January 31, 2023, in conformity with accounting principles generally accepted in the United States of America.   Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.   We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.   Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.   Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.   Revenue at U.S. operating entities for specialty piping systems and coating is recognized using the input method over time As described further in Note 2 and 4 to the consolidated financial statements, the Company’s U.S. operating entities record specialty piping and coating systems revenue over time based upon the costs incurred to date relative to the estimated total contract costs. Significant changes in estimates could have a material effect on the Company’s results of operations. We identified revenue being recognized using the input method over time as a critical audit matter.   The principal considerations for our determination that revenue recognition using the input method over time is a critical audit matter are the Company’s estimates include all labor and materials necessary to complete the contract to arrive at the total contract costs.  These estimates are based on management’s assessment of the current status of the contract and historical results.   Our audit procedures included the following, among others:   • Evaluated the design and implementation of controls that are designed to address the reasonableness of estimates of costs to complete contracts; • Obtained supporting documentation for a sample of contract costs incurred to date as well as recalculated revenue recognition based on the percentage of completion; • Evaluated the reasonableness of management's estimates related to the cost to complete for contracts through testing of the key components of the estimated costs to complete, including: labor, materials, and subcontractor costs; • Performed a retrospective review to assess management's historical ability to accurately estimate the transaction price and cost to complete the contracts including investigating significant cost changes; and • Obtained confirmations of significant contract terms and status for a sample of contracts.      /s/ GRANT THORNTON LLP   We have served as the Company’s auditor since 2004.   Houston, Texas April 27, 2023   21 Table of Contents     PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)       Year ended January 31,       2023     2022                     Net sales   $ 142,569     $ 138,552   Cost of sales     104,268       106,022   Gross profit     38,301       32,530                     Operating expenses:                 General and administrative expenses     21,994       19,893   Selling expense     5,163       4,526   Total operating expenses     27,157       24,419                     Income from operations     11,144       8,111                     Interest expense, net     2,119       828   Other income, net     533       1,044   Income before income tax     9,558       8,327                     Income tax expense     3,613       2,265                     Net income   $ 5,945     $ 6,062                     Weighted average common shares outstanding                 Basic     7,976       8,110   Diluted     8,116       8,395                     Earnings per share                 Basic   $ 0.75     $ 0.75   Diluted   $ 0.73     $ 0.72     See accompanying Notes to Consolidated Financial Statements. Note: Earnings per share calculations could be impacted by rounding.   22 Table of Contents       PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands)       Year ended January 31,       2023     2022                     Net income   $ 5,945     $ 6,062                     Other comprehensive (loss)/income                 Currency translation adjustments, net of tax     ( 4,592 )     ( 357 ) Minimum pension liability adjustment, net of tax     1,247       540   Other comprehensive (loss)/income     ( 3,345 )     183                     Comprehensive income   $ 2,600     $ 6,245     See accompanying Notes to Consolidated Financial Statements.   23 Table of Contents     PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share data)       January 31,       2023     2022   ASSETS                 Current assets                 Cash and cash equivalents   $ 5,773     $ 8,214   Restricted cash     1,020       1,557   Trade accounts receivable, less allowance for doubtful accounts of $ 612 at January 31, 2023 and $ 486 at January 31, 2022     42,010       44,449   Inventories, net     14,738       13,760   Prepaid expenses and other current assets     7,357       5,444   Unbilled accounts receivable     11,634       2,656   Costs and estimated earnings in excess of billings on uncompleted contracts     3,126       2,309   Total current assets     85,658       78,389   Long-term assets                 Property, plant and equipment, net of accumulated depreciation     26,518       24,756   Operating lease right-of-use asset     4,527       11,213   Deferred tax assets     696       811   Goodwill     2,227       2,342   Other long-term assets     3,340       5,890   Total long-term assets     37,308       45,012   Total assets   $ 122,966     $ 123,401   LIABILITIES AND STOCKHOLDERS' EQUITY                 Current liabilities                 Trade accounts payable   $ 14,754     $ 13,618   Accrued compensation and payroll taxes     1,179       1,612   Commissions and management incentives payable     2,735       2,047   Revolving line - North America     4,387       634   Current maturities of long-term debt     6,227       6,750   Customers' deposits     1,951       3,072   Outside commission liability     2,029       1,255   Operating lease liability short-term     912       1,496   Other accrued liabilities     5,549       4,616   Billings in excess of costs and estimated earnings on uncompleted contracts     1,743       1,277   Income taxes payable     2,324       2,020   Total current liabilities     43,790       38,397   Long-term liabilities                 Long-term debt, less current maturities     4,389       5,059   Long-term finance obligation     9,215       9,327   Deferred compensation liabilities     1,608       3,379   Deferred tax liabilities     909       712   Operating lease liability long-term     4,252       11,270   Other long-term liabilities     1,019       800   Total long-term liabilities     21,392       30,547   Stockholders' equity                 Common stock, $ .01 par value, authorized 50,000 shares; 8,004 issued and outstanding at January 31, 2023 and 8,152 issued and outstanding at January 31, 2022     80       82   Additional paid-in capital     62,562       61,766   Treasury stock, 3 shares at January 31, 2023 and 234 shares at January 31, 2022     ( 26 )     ( 1,992 ) Retained earnings/(accumulated deficit)     1,617       ( 2,295 ) Accumulated other comprehensive loss     ( 6,449 )     ( 3,104 ) Total stockholders' equity     57,784       54,457   Total liabilities and stockholders' equity   $ 122,966     $ 123,401                       See accompanying Notes to Consolidated Financial Statements.   24 Table of Contents     PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands)       Common Stock     Additional Paid-in Capital     (Accumulated Deficit)/Retained Earnings     Treasury Stock     Accumulated Other Comprehensive Loss     Total Stockholders' Equity   Total stockholders' equity on January 31, 2021   $ 82     $ 60,875     $ ( 8,357 )   $ -     $ ( 3,287 )   $ 49,313                                                     Net income     -       -       6,062       -       -       6,062   Common stock issued under stock plans, net of shares used for tax withholding     -       ( 210 )     -       -       -       ( 210 ) Repurchase of common stock     -       -       -       ( 1,992 )     -       ( 1,992 ) Stock-based compensation expense     -       1,101       -       -       -       1,101   Pension liability adjustment     -       -       -       -       540       540   Foreign currency translation adjustment     -       -       -       -       ( 357 )     ( 357 ) Total stockholders' equity on January 31, 2022   $ 82     $ 61,766     $ ( 2,295 )   $ ( 1,992 )   $ ( 3,104 )   $ 54,457                                                     Net income     -       -       5,945       -       -       5,945   Common stock issued under stock plans, net of shares used for tax withholding     -       ( 206 )     -       -       -       ( 206 ) Repurchase of common stock     -       -       -       ( 69 )     -       ( 69 ) Retirement of treasury stock     ( 2 )     -       ( 2,033 )     2,035       -       -   Stock-based compensation expense     -       1,002       -       -       -       1,002   Pension liability adjustment     -       -       -       -       1,247       1,247   Foreign currency translation adjustment     -       -       -       -       ( 4,592 )     ( 4,592 ) Total stockholders' equity on January 31, 2023   $ 80     $ 62,562     $ 1,617     $ ( 26 )   $ ( 6,449 )   $ 57,784     Common stock shares   2022     2021   Balances at beginning of year     8,151,754       8,164,989   Treasury stock purchased     ( 7,935 )     ( 234,281 ) Shares issued, net of shares used for tax withholding     94,416       221,046   Prior year adjustments     ( 234,281 )     -   Balance end of year     8,003,954       8,151,754     See accompanying Notes to Consolidated Financial Statements.   25 Table of Contents     PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)       Year ended January 31,       2023     2022   Operating activities                 Net income   $ 5,945     $ 6,062   Adjustments to reconcile net income to net cash used in operating activities                 Depreciation and amortization     3,646       4,324   Deferred tax expense/(benefit)     479       ( 195 ) Stock-based compensation expense     1,002       1,101   Non-cash pension termination     826       -   Provision on uncollectible accounts     142       20   Loss on disposal of fixed assets     43       41   Gain from insurance recovery     ( 565 )     -   Changes in operating assets and liabilities                 Accounts payable     1,094       3,196   Accrued compensation and payroll taxes     65       2,094   Inventories     ( 1,505 )     ( 1,618 ) Proceeds from insurance recovery for inventory     539       -   Customers' deposits     ( 336 )     990   Income taxes receivable and payable     450       955   Prepaid expenses and other current assets     ( 123 )     ( 2,205 ) Accounts receivable     ( 3,232 )     ( 21,331 ) Costs and estimated earnings in excess of billings on uncompleted contracts     ( 351 )     2,213   Unbilled accounts receivable     ( 9,814 )     ( 351 ) Other assets and liabilities     454       2,130   Net cash used in operating activities     ( 1,241 )     ( 2,574 ) Investing activities                 Capital expenditures     ( 6,975 )     ( 2,262 ) Proceeds from insurance recovery for property and equipment     499       -   Proceeds from sales of property and equipment     94       9   Net cash used in investing activities     ( 6,382 )     ( 2,253 ) Financing activities                 Proceeds from revolving lines     96,903       23,106   Payments of debt on revolving lines     ( 91,438 )     ( 22,639 ) Proceeds from term loan     -       23   Payments of debt on mortgage     -       ( 892 ) Proceeds from finance obligation, net of issuance costs     -       9,538   Payments of principal on finance obligation     ( 88 )     ( 124 ) Payments of other debt     ( 263 )     ( 260 ) Decrease in drafts payable     42       58   Payments on finance lease obligations, net     ( 338 )     ( 375 ) Repurchase of common stock     ( 69 )     ( 1,992 ) Stock options exercised and taxes paid related to restricted shares vested     ( 206 )     ( 210 ) Net cash provided by financing activities     4,543       6,233   Effect of exchange rate changes on cash, cash equivalents and restricted cash     102       ( 10 ) Net (decrease)/increase in cash, cash equivalents and restricted cash     ( 2,978 )     1,396   Cash, cash equivalents and restricted cash - beginning of period     9,771       8,375   Cash, cash equivalents and restricted cash - end of period   $ 6,793     $ 9,771   Supplemental cash flow information                 Interest paid   $ 2,045     $ 791   Income taxes paid     2,480       1,346                       See accompanying Notes to Consolidated Financial Statements.   26 Table of Contents   PERMA-PIPE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JANUARY 31,  2023 AND  2022 (Tabular amounts presented in thousands, except per share data)   Note 1 - Business information   Perma-Pipe International Holdings, Inc. ("PPIH", the "Company", or the "Registrant") was incorporated in Delaware on October  12, 1993. The Company is engaged in the manufacture and sale of products in one distinct segment: Piping Systems.   Fiscal year. The Company's fiscal year ends on January 31. Years, results and balances described as  2022  and  2021  are for the fiscal  years ended January 31, 2023 and 2022 , respectively.   Nature of business. The Company engineers, designs, manufactures and sells specialty piping systems, and leak detection systems. Specialty piping systems include: (i) insulated and jacketed district heating and cooling ("DHC") piping systems for efficient energy distribution from central energy plants to multiple locations, (ii) primary and secondary containment piping systems for transporting chemicals, hazardous fluids and petroleum products, and (iii) the coating and/or insulation of oil and gas gathering and transmission pipelines. The Company's leak detection systems are sold with its piping systems or on a stand-alone basis, to monitor areas where fluid intrusion may contaminate the environment, endanger personal safety, cause a fire hazard, impair essential services or damage equipment or property.   Geographic information. Net sales attributed to a geographic area are based on the destination of the product shipment. Sales to foreign customers were 63.8 %  in  2022 compared to  66.2 % in  2021 . Long-lived assets are based on the physical location of the assets and consist of property, plant and equipment.   (In thousands)   2022     2021   Net sales                 United States   $ 51,557     $ 46,770   Canada     36,482       28,302   Middle East/North Africa     50,432       51,543   India     3,311       11,101   Europe     456       194   Other     331       642   Total net sales   $ 142,569     $ 138,552                     Property, plant and equipment, net of accumulated depreciation                 United States   $ 5,920     $ 6,415   Canada     9,290       9,750   Middle East/North Africa     10,677       7,595   India     631       996   Total property, plant and equipment, net of accumulated depreciation   $ 26,518     $ 24,756     27 Table of Contents     Note 2 - Significant accounting policies   Use of estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.   Revenue recognition.  During  2022  and  2021 and in accordance with Accounting Standards Codification ("ASC")  606, Revenue from Contracts with Customers , the Company recognizes revenue for certain contracts when a customer obtains control of promised goods or services.  Other contracts recognize revenues using periodic recognition of income. For these contracts, the Company uses the "over time" accounting method. Under this approach, income is recognized in each reporting period based on the status of the uncompleted contracts and the current estimates of costs to complete. The amount of revenue recognized is determined by the relationship of costs incurred to the total estimated costs of the contract. Provisions are made for estimated losses on uncompleted contracts in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income. Such revisions are recognized in the period in which they are determined. Claims for additional compensation due to the Company are recognized in contract revenues when realization is probable, the amount can be reliably estimated and the amount is not subject to reversal. See Note 4 - Revenue recognition for more detail.   Shipping and handling. Shipping and handling costs are included in cost of sales, and the amounts invoiced to customers relating to shipping and handling are included in net sales.   Sales tax. Sales tax is reported on a net basis in the consolidated financial statements.   Operating cycle. The length of contracts vary but are typically less than one year. The Company includes in current assets and liabilities amounts realizable and payable in the normal course of contract completion unless completion of such contracts extends significantly beyond one year.   Consolidation. The consolidated financial statements include the accounts of the Company and its domestic and foreign subsidiaries, all of which are wholly owned. All intercompany balances and transactions have been eliminated.   Translation of foreign currency. Assets and liabilities of consolidated foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at year-end. Revenues and expenses are translated at weighted average exchange rates prevailing during the year. The resulting translation adjustments are included in stockholders' equity as part of accumulated other comprehensive income (loss). Gains or losses on foreign currency transactions and the related tax effects are reflected in net income. The aggregated foreign exchange transaction loss recognized in the income statement was $ 0.3 million and $ 0.1 million in 2022 and 2021, respectively.   Contingencies. The Company is subject to various legal proceedings and claims that arise in the ordinary course of business, including those involving environmental, tax, product liability and general liability claims. The Company accrues for such liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Such accruals are based on developments to date, the Company's estimates of the outcomes of these matters, and its experience in contesting, litigating and settling other similar matters. The Company does not currently anticipate the amount of any ultimate liability with respect to these matters will materially affect the Company's financial position, liquidity or future operations.   Cash and cash equivalents. All highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. Cash and cash equivalents were $ 5.8  million and $ 8.2  million as of January 31, 2023  and  2022 , respectively. On January 31, 2023 , $ 0.1  million was held in the United States and $ 5.7 million was held by foreign subsidiaries. On January 31, 2022 , less than $ 0.1  million was held in the United States and $ 8.2 million was held by foreign subsidiaries.   Accounts payable included drafts payable o f $ 0.2  million on January 31, 2023  and  2022 .    28 Table of Contents   Restricted cash.  There was no restricted cash held in the United States on January 31, 2023  or  2022 . Restricted cash held by foreign subsidiaries was $ 1.0 million and $ 1.6 million as of January 31, 2023  and  2022 , respectively. Restricted cash held by foreign subsidiaries related to fixed deposits that also serve as security deposits and guarantees.   (In thousands)   2022     2021   Cash and cash equivalents   $ 5,773     $ 8,214   Restricted cash     1,020       1,557   Cash, cash equivalents and restricted cash shown in the statement of cash flows   $ 6,793     $ 9,771     Accounts receivable. The majority of the Company's accounts receivable are due from geographically dispersed contractors and manufacturing companies. Credit is extended based on an evaluation of a customer's financial condition. In the United States, collateral is not generally required. In the United Arab Emirates ("U.A.E."), Saudi Arabia, Egypt and India letters of credit are usually obtained for significant orders. Accounts receivable are due within various time periods specified in the terms applicable to the specific customer and are stated at amounts due from customers net of an allowance for claims and doubtful accounts. Standard payment terms are net 30 days. The allowance for doubtful accounts is based on specifically identified amounts in customers' accounts, where future collectability is deemed uncertain. Management may exercise its judgment in adjusting the provision as a consequence of known items, such as current economic factors and credit trends. Past due trade accounts receivable balances are written off when the Company's collection efforts have been unsuccessful in collecting the amount due and the amount is deemed uncollectible. The write off is recorded against the allowance for doubtful accounts.    In 2015, the Company completed a project in the Middle East with billings in the aggregate amount of approximately $ 41.9 million. The system has not yet been commissioned by the customer. Nevertheless, the Company has settled approximately $ 39.1 million as of January 31, 2023 , with a remaining balance due in the amount of $ 2.7 million, all of which pertains to retention clauses within the agreements with the Company's customer, and which become payable by the customer when this project is fully tested and commissioned. Of this retention amount, $ 2.5 million is classified in a long-term receivable account.   The Company has been engaged in ongoing active efforts to collect this outstanding amount. The Company continues to engage with the customer to ensure full payment of open balances, and during June  2022  received a partial payment to settle $ 0.9 million of the customer's outstanding balances. Further, the Company has been engaged by the customer to perform additional work in 2023  under customary trade terms that supports the continued cooperation between the Company and the customer. As a result, the Company did not reserve any allowance against the remaining outstanding balances as of January 31, 2023 . However, if the Company’s efforts to collect on this account are not successful, the Company may recognize an allowance for all, or substantially all, of any such then uncollected amounts.   For the years ended  January 31, 2023  and 2022 , respectively, no one customer accounted for greater than 10% of the Company's consolidated net sales.   As of January 31, 2023 ,  no one  customer accounted for greater than  10%  of accounts receivable. As of January 31, 2022 ,  one  customer accounted for  11.9 %  of accounts receivable.   Concentration of credit risk. The Company maintains its U.S. cash in bank deposit accounts at financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC"). Cash balances are below FDIC limits. The Company has not experienced any losses in such accounts. The Company's foreign cash is held in accounts at multiple institutions in the various countries in which the Company operates, limiting the concentration of risk internationally. The Company has a broad customer base doing business in all regions of the United States as well as other areas in the world.   29 Table of Contents   Accumulated other comprehensive loss. Accumulated other comprehensive loss represents the change in equity from non-owner transactions and consisted of foreign currency translation and minimum pension liability.   (In thousands)   2022     2021   Equity adjustment foreign currency, gross   $ ( 6,707 )   $ ( 1,947 ) Minimum pension liability, gross     -       ( 1,362 ) Subtotal excluding tax effect     ( 6,707 )     ( 3,309 ) Tax effect of equity adjustment foreign currency     258       91   Tax effect of minimum pension liability     -       114   Total accumulated other comprehensive loss   $ ( 6,449 )   $ ( 3,104 )   Inventories. Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first -in, first -out method for all inventories.   (In thousands)   2022     2021   Raw materials   $ 14,992     $ 13,909   Work in process     750       426   Finished goods     203       527   Subtotal     15,945       14,862   Less allowance     1,207       1,102   Inventories, net   $ 14,738     $ 13,760     Long-lived assets. Property, plant and equipment are stated at cost. Interest is capitalized in connection with the construction of facilities and amortized over the estimated useful life of the asset. Long-lived assets are reviewed for possible impairment whenever events indicate that the carrying amount of such assets may not be recoverable. If such a review indicates impairment, the carrying amount of such assets is reduced to an estimated fair value.   Depreciation is computed using the straight-line method over the estimated useful lives of assets, which range from three to 30 years. Leasehold improvements are depreciated over the remaining life of the lease or its useful life, whichever is shorter. Amortization of assets under capital leases is included in depreciation. Depreciation expense was approximately $ 3.7  million and $ 4.1 million in the years ended  January 31, 2023  and 2022 , respectively.   (In thousands)   2022     2021   Land, buildings and improvements   $ 22,276     $ 22,748   Machinery and equipment     54,200       50,534   Furniture, office equipment and computer systems     3,727       3,941   Transportation equipment     2,727       2,000   Subtotal     82,930       79,223   Less accumulated depreciation     56,412       54,467   Property, plant and equipment, net of accumulated depreciation   $ 26,518     $ 24,756     Impairment of long-lived assets. The Company's assessment of long-lived assets, and other identifiable intangibles is based upon factors that market participants would use in accordance with the accounting guidance for the fair value measurement of assets. At  January 31, 2023 , the Company performed a qualitative analysis assessment to determine if it was more likely than not that the fair values of the Company's long-lived assets exceeded their carrying values. The Company assessed three asset groups as part of this analysis: United States, Canada and Middle East. The qualitative assessment indicated that it was more likely than not that the fair values of the Company's long-lived assets exceeded their carrying values for all three  asset groups. Therefore, it was determined that there was  no  impairment of the Company's long-lived assets for the year ended January 31, 2023 . The Company will continue testing for potential impairment at least annually or as otherwise required by applicable accounting standards.   30 Table of Contents   Goodwill. The purchase price of an acquired company is allocated between intangible assets and the net tangible assets of the acquired business with the residual of the purchase price recorded as goodwill. All identifiable goodwill as of January 31, 2023  and 2022 , is attributable to the purchase of the remaining 50% interest in Perma-Pipe Canada, Ltd., which occurred in 2016.     The movement of the goodwill for the years ended  January 31, 2023  and 2022  are as follows:   (In thousands)   2022     2021   Balance at beginning of year   $ 2,342     $ 2,332   Foreign exchange adjustment     ( 115 )     10   Balance at end of year   $ 2,227     $ 2,342     The Company performs an impairment assessment of goodwill annually as of January 31, or more frequently if triggering events occur, based on the estimated fair value of the related reporting unit or intangible asset. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. At  January 31, 2023 , the Company elected to perform a qualitative analysis assessment to determine if it was more likely than  not  that the fair value of the Company's Canadian reporting unit exceeded its carrying value, including goodwill. The qualitative assessment did  not  identify any triggering events that would indicate potential impairment of the Company's Canadian reporting unit. Therefore, it was determined that the fair value of the reporting unit exceeded its carrying value, resulting in  no  impairment for the year ended  January 31, 2023 . The Company will continue testing for potential impairment at least annually or as otherwise required by applicable accounting standards.   Other intangible assets with definite lives. The Company owns several patents including those covering features of its piping and electronic leak detection systems. Patents are capitalized and amortized on a straight-line basis over a period not to exceed the legal lives of the patents. The Company expenses costs incurred to renew or extend the term of intangible assets. Gross patents were $ 2.7  million as of January 31, 2023  and 2022 . Accumulated amortization was approximately $ 2.6  million as of  January 31, 2023  and 2022 . Amortization over the next five fiscal years will be less than $ 0.1 million and less than $0.1 million thereafter. Amortization expense is expected to be recognized over the weighted-average period of 8.0 years.   Research and development . Research and development expenses consist of materials, salaries and related expenses of engineering personnel and outside services for product development projects. Research and development costs are expensed as incurred. Research and development expense was approximately $ 0.7 million and $ 0.4 million in the years ended  January 31, 2023  and 2022 , respectively.   Income taxes. Deferred income taxes have been provided for temporary differences arising from differences in the basis of assets and liabilities for tax and financial reporting purposes. Deferred income taxes on temporary differences have been recorded at the current tax rate. The Company assesses its deferred tax assets and liabilities for realizability at each reporting period.   The Company recognizes a tax position in its consolidated financial statements only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. For further information, see Note 7  - Income taxes.   One of the base broadening provisions of the U.S. Tax Cuts and Jobs Act of 2017 ("Tax Act") is the Global Intangible Low-Taxed Income provisions ("GILTI"). In accordance with guidance issued by the Financial Accounting Standards Board ("FASB") staff, the Company has adopted an accounting policy to treat any GILTI inclusions as a period cost if and when incurred. Thus, for the years ended  January 31, 2023  and 2022 , deferred taxes were computed without consideration of the possible future impact of the GILTI provisions, and any current year impact was recorded as a part of the current portion of income tax expense.    The Inflation Reduction Act ("IRA") was signed into law in August 2022. The Company has evaluated the provisions of the IRA and does not expect any material impact to its consolidated provision for income taxes.    Fair value of financial instruments .  The carrying values of cash and cash equivalents, accounts receivable and accounts payable are based upon reasonable estimates of their fair value due to their short-term nature. The carrying amount of the Company's short-term debt, revolving line of credit and long-term debt approximate fair value because the majority of the amounts outstanding accrue interest at variable rates.   31 Table of Contents   Net income per common share. Earnings per share ("EPS") is computed by dividing net income by the weighted average number of common shares outstanding (basic). The Company reported net income in 2022  and  2021 . Therefore, the Company adjusted for dilutive shares in 2022  and  2021 , assuming conversion, exercise, or contingent issuance of securities that would have an anti-dilutive effect on earnings per share. The dilutive shares are in the following table:   Basic weighted average number of common shares outstanding (in thousands)   2022     2021   Basic weighted average number of common shares outstanding     7,976       8,110   Dilutive effect of stock options and restricted stock units     140       285   Weighted average number of common shares outstanding assuming full dilution     8,116       8,395                     Restricted stock and stock options not included in the computation of diluted EPS of common stock because the option exercise prices exceeded the average market prices     105       39   Canceled options during the year     ( 11 )     ( 33 ) Restricted stock and stock options with an exercise price below the average stock price     140       285     Equity-based compensation. The Company issues or has issued various types of stock-based awards to employees and directors: restricted stock, deferred stock and stock options. Non-cash compensation expense associated with restricted stock is based on the fair value of the common stock at the date of grant, and amortized using the straight line method over the vesting period. Compensation expense associated with deferred stock which has been awarded to the Board of Directors (non-employee) is based upon the fair value of the common stock at the date of grant, and since the grant vests immediately it is expensed on the date of the grant. Stock compensation expense for stock options is recognized ratably over the requisite service period of the award. The Black-Scholes option-pricing model is utilized to estimate the fair value of option awards.   Treasury Stock.   In accordance with ASC  505, Equity , the Company accounted for share repurchases pursuant to its repurchase program under the cost method. This resulted in recognizing the shares as treasury stock, a reduction of stockholders' equity on the Company's consolidated balance sheets and on the Company's consolidated statements of stockholders' equity. These amounts included costs associated with the acquisition of the shares. On July 26, 2022, the Company retired  239,168  shares of treasury stock previously repurchased under the stock repurchase program. The retirement was recorded as a reduction to common stock based on the par value of the shares, and the excess over par value was recorded as a decrease to retained earnings in accordance with ASC 505 - 30, Equity - Treasury Stock .   Segments.  Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker ("CODM") in making decisions regarding resource allocation and assessing performance the Company’s Chief Executive Officer is the CODM, and he uses a combination of several management reports, including the Company's financial information in determining how to allocate resources and assess performance. The Company has determined that it operates in one segment.   Recent accounting pronouncements . In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020 - 04,   Reference Rate Reform  (Topic 848 ), which provides guidance designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements necessitated by the scheduled discontinuation of the London Inter-Bank Offered Rate ("LIBOR") on December 31, 2021. It also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by reference rate reform. The ASU provides the option to account for and present a modification that meets the scope of the standard as an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination required under the relevant topic or subtopic. This ASU is effective for all entities; however, application of the guidance is optional, is only available in certain situations and is only available for companies to apply from March 12, 2020 until December 31, 2022.  The Company's Renewed Senior Credit Facility which matures on September 20, 2026,  bears interest at a rate equal to an alternate base rate, the LIBOR or a LIBOR successor rate index, plus, in each case, an applicable margin. Based on the inclusion of the LIBOR successor rate index in the Renewed Senior Credit Facility, there was no  material impact on the Company's financial statements from the adoption of this standard.   In June 2016, the FASB issued ASU No. 2016 - 13, Financial Instruments-Credit Losses (Topic 326 ): Measurement of Credit Losses on Financial Instruments. The new guidance affects loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. A recently adopted amendment has delayed the effective date until fiscal years beginning after December 15, 2022.  The Company is currently evaluating this standard and does not expect a material impact to the financial statements of the Company.    The Company evaluated other recent accounting pronouncements and does not expect them to have a material impact on its consolidated financial statements.   32 Table of Contents   Note 3 - Retention   A retention receivable is a portion of an outstanding receivable balance amount withheld by a customer until a contract is fully completed as specified in the contract. Retention receivables of $ 2.4  million and $ 2.8  million were included in the balance of trade accounts receivable as of January 31, 2023  and 2022 , respectively. A retention receivable of $ 2.9  million and $ 4.3  million was included in the balance of other long-term assets as of  January 31, 2023  and 2022 , respectively, due to the long-term nature of the receivables. See Note 2 - Accounts receivable for further information regarding the future realization of these long-term balances.     Note 4 - Revenue recognition    The Company accounts for its revenues under ASC 606, Revenue from Contracts with Customers .   Revenue from contracts with customers   The Company defines a contract as an agreement that has approval and commitment from both parties, defined rights and identifiable payment terms, which ensures the contract has commercial substance and that collectability is reasonably assured.   The Company’s standard revenue transactions are classified into two main categories:     1 ) Systems and Coating - which include all bundled products in which Perma-Pipe engineers, and manufactures pre-insulated specialty piping systems, insulates subsea flowline pipe, subsea oil production equipment, and land-lines. Additionally, this systems classification also includes coating applied to pipes and structures.      2 ) Products - which include cables, leak detection products, heat trace products, material/goods not bundled with piping or flowline systems, and field services not bundled into a project contract.   In accordance with ASC 606 - 10 - 25 - 27 through 29, the Company recognizes specialty piping and coating systems revenue over time as the manufacturing process progresses because one of the following conditions exist:     1 ) the customer owns the material that is being insulated or coated, so the customer controls the asset and thus the work-in-process; or     2 ) the customer controls the work-in-process due to the custom nature of the pre-insulated, fabricated system being manufactured as evidenced by the Company’s right to payment for work performed to date plus profit margin for products that have no alternative use to the Company.   Products revenue is recognized when goods are shipped or services are performed (ASC 606 - 10 - 25 - 30 ).   33 Table of Contents   A breakdown of the Company's revenues by revenue class for the years ended January 31, 2023  and 2022  are as follows (in thousands):       2022     2021       Sales     % to Total     Sales     % to Total   Products   $ 14,626       10 %   $ 13,575       10 %                                   Specialty Piping Systems and Coating                                 Revenue recognized under input method     44,648       31 %     44,778       32 % Revenue recognized under output method     83,295       59 %     80,199       58 % Total   $ 142,569       100 %   $ 138,552       100 %   The input method as noted in ASC 606 - 10 - 55 - 20 is used by certain U.S. operating entities to measure revenue by the costs incurred to date relative to the estimated costs to satisfy the contract over time. Generally, these contracts are considered a single performance obligation satisfied over time and due to the custom nature of the goods and services, the "over time" method is the most faithful depiction of the Company’s performance as it measures the value of the goods and services transferred to the customer. Costs include all material, labor, and direct costs incurred to satisfy the performance obligations of the contract. Revenue recognition begins when projects costs are incurred.   The output method as noted in ASC 606 - 10 - 55 - 17 is used by all other operating entities to measure revenue by the direct measurement of the outputs produced relative to the remaining goods promised under the contract. Due to the types of end customers, generally these contracts require formal inspection protocols or specific export documentation for units produced, or produced and shipped, therefore, the output method is the most faithful depiction of the Company’s performance. Depending on the conditions of the contract, revenue may be recognized based on units produced, inspected and held by the Company prior to shipment or on units produced, inspected and shipped.    Some of the Company’s operating entities invoice and collect milestones or other contractual obligations prior to the transfer of goods and services, but do  not recognize revenue until the performance obligations are satisfied under the methods discussed above.   Contract modifications that occur prior to the start of the manufacturing process will supersede the original contract and revenue is recognized using the modified contract value. Contract modifications that occur during the manufacturing process (changes in scope of work, job performance, material costs, and/or final contract settlements) are recognized in the period in which the revisions are known. Provisions are made for estimated losses on uncompleted contracts in the contract liabilities account in the period in which such losses are determined.   Contract assets and liabilities   Contract assets represent revenue recognized in excess of amounts billed for contract work in progress for which the Company has a valid contract and an enforceable right to payment for work completed. Contract liabilities represent billings in excess of costs for contract work in progress for which the Company has a valid contract and an enforceable right to payment for work completed. Both customer billings and the satisfaction (or partial satisfaction) of the performance obligation(s) occur throughout the manufacturing process and impact the period end balances in these accounts.   34 Table of Contents   The Company anticipates that substantially all costs incurred for uncompleted contracts as of  January 31, 2023  will be billed and collected within one year.   The following table shows the reconciliation of the cost in excess of billings:   (In thousands)   2022     2021   Costs incurred on uncompleted contracts   $ 18,342     $ 20,021   Estimated earnings     9,370       12,030   Earned revenue     27,712       32,051   Less billings to date     26,329       31,019   Costs in excess of billings, net   $ 1,383     $ 1,032   Balance sheet classification                 Contract assets: Costs and estimated earnings in excess of billings on uncompleted contracts   $ 3,126     $ 2,309   Contract liabilities: Billings in excess of costs and estimated earnings on uncompleted contracts     ( 1,743 )     ( 1,277 ) Costs in excess of billings, net   $ 1,383     $ 1,032     Substantially all of the $ 1.3 million and $ 0.8 million contract liabilities balances at  January 31, 2022 and 2021 , respectively, were recognized in revenues during  2022 and 2021 , respectively.   Unbilled accounts receivable:   The Company has recorded $ 11.6 million and $ 2.7 million of unbilled accounts receivable on the consolidated balance sheets as of  January 31, 2023  and 2022 , respectively, from revenues generated by its subsidiaries in the Middle East and North Africa. The Company has fulfilled all performance obligations and has recorded revenue under the respective contracts. The deliverables under these contracts have been accepted by the customer and billings will be made once the customer takes possession of or arranges shipping for the products. The Company anticipates that substantially all of the amounts included in unbilled accounts receivable as of  January 31, 2023  will be billed within one year.    Practical expedients:   Costs to obtain a contract are not considered project costs as they are not usually incremental, nor does job duration span more than one year. The Company applies the practical expedient for these types of costs and as such are expensed in the period incurred.   As the Company's contracts are less than one year, the Company has applied the practical expedient regarding disclosure of the aggregate amount and future timing of performance obligations that are unsatisfied or partially satisfied as of the end of the reporting period.   35 Table of Contents     Note 5 - Debt   (In thousands)   2022     2021   Revolving line - North America   $ 4,387     $ 634   Mortgage note     4,772       5,257   Revolving lines - foreign     5,714       6,049   Term loan - foreign     5       33   Finance lease obligations     9,472       9,944   Total debt     24,350       21,917   Unamortized debt issuance costs     ( 132 )     ( 147 ) Less current maturities     10,614       7,384   Total long-term debt   $ 13,604     $ 14,386     The following table summarizes the Company's scheduled maturities on January 31:   (In thousands)   Total     2024     2025     2026     2027     2028     Thereafter   Revolving line - North America   $ 4,387     $ 4,387     $ -     $ -     $ -     $ -       -   Mortgage note     4,772       251       251       251       251       251       3,517   Revolving lines - foreign     5,714       5,714       -       -       -       -       -   Long-term finance obligation     9,327       112       137       168       201       -       8,709   Term loan - foreign     5       5       -       -       -       -       -   Finance lease obligations     145       145       -       -       -       -       -   Total   $ 24,350     $ 10,614     $ 388     $ 419     $ 452     $ 251     $ 12,226     Revolving lines -   North America .  On September 20, 2018, the Company and certain of its U.S. and Canadian subsidiaries (collectively, together with the Company, the “North American Loan Parties”) entered into a Revolving Credit and Security Agreement (the “Credit Agreement”) with PNC Bank, National Association ("PNC"), as administrative agent and lender, providing for a three -year $ 18  million Senior Secured Revolving Credit Facility, subject to a borrowing base including various reserves (the “Senior Credit Facility”).   On September 17, 2021,  the North American Loan Parties executed an extension of the Credit Agreement with PNC, providing for a new five -year $ 18  million senior secured revolving credit facility, subject to a borrowing base including various reserves (the “Renewed Senior Credit Facility”). The Company's obligations under the Renewed Senior Credit Facility are currently guaranteed by Perma-Pipe Canada, Inc. Each of the North American Loan Parties other than Perma-Pipe Canada, Inc. is a borrower under the Renewed Senior Credit Facility (collectively, the “Borrowers”).   The Borrowers have used and will continue to use borrowings under the Renewed Senior Credit Facility (i) to fund future capital expenditures; (ii) to fund ongoing working capital needs; and (iii) for other corporate purposes, including potentially additional stock repurchases. Borrowings under the Renewed Senior Credit Facility bear interest at a rate equal to an alternate base rate, LIBOR or a LIBOR successor rate index, plus, in each case, an applicable margin. The applicable margin is based on a fixed charge coverage ratio ("FCCR") range. Interest on alternate base rate borrowings is the alternate base rate (as defined in the Renewed Senior Credit Facility) plus an applicable margin ranging from 1.00 % to 1.50 %, based on the FCCR in the most recently reported period. Interest on LIBOR or LIBOR successor rate borrowings is the LIBOR rate (as defined in the Renewed Senior Credit Facility) plus an applicable margin ranging from 2.00 % to 2.50 %, based on the FCCR in the most recently reported period. Additionally, the Borrowers pay a 0.25 % per annum facility fee on the unused portion of the Renewed Senior Credit Facility.    Subject to certain exceptions, borrowings under the Renewed Senior Credit Facility are secured by substantially all of the North American Loan Parties’ assets. The Renewed Senior Credit Facility matures on September 20, 2026. Subject to certain qualifications and exceptions, the Renewed Senior Credit Facility contains covenants that, among other things, restrict the North American Loan Parties’ ability to create liens, merge or consolidate, consummate acquisitions, make investments, dispose of assets, incur debt, and pay dividends and other distributions. In addition, the North American Loan Parties may not make capital expenditures in excess of $ 5.0 million annually, plus a limited carryover of unused amounts. Further, the North American Loan Parties may not make repurchases of the Company's common stock in excess of $ 3.0 million.    36 Table of Contents   The Renewed Senior Credit Facility also contains a free cash flow financial covenant (the "FCF covenant") requiring the North American Loan Parties to achieve a ratio of its EBITDA to the sum of scheduled cash principal payments on indebtedness for borrowed money and interest payments on the advances under the Renewed Senior Credit Facility to be not less than 1.10 to 1.00 for any five consecutive days in which the undrawn availability is less than $ 3.0 million or any day in which the undrawn availability is less than $ 2.0 million. As of January 31, 2023 , the calculated ratio was greater than 1.10 to 1.00. In order to cure any future breach of the FCF covenant by the North American Loan Parties, the Company may repatriate cash from any of its foreign subsidiaries that are otherwise not a party to the Renewed Senior Credit Facility in an amount which, when added to the amount of the Company’s Consolidated EBITDA, would result in pro forma compliance with the FCF covenant. The Company was in compliance with these covenants as of January 31, 2023 .   The Renewed Senior Credit Facility contains customary events of default. If an event of default occurs and is continuing, then PNC may terminate all commitments to extend further credit and declare all amounts outstanding under the Renewed Senior Credit Facility due and payable immediately. In addition, if any of the North American Loan Parties or certain of their subsidiaries become the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency or similar law, then any outstanding obligations under the Renewed Senior Credit Facility will automatically become immediately due and payable. Loans outstanding under the Renewed Senior Credit Facility will bear interest at a rate of 2.00 % per annum in excess of the otherwise applicable rate (i) while a bankruptcy event of default exists or (ii) upon the lender's request, during the continuance of any other event of default.   As of January 31, 2023 , the Company had borrowed an aggregate of $ 4.4 million at a rate of  8.50 % and had $ 9.9 million available under the Renewed Senior Credit Facility. As of January 31, 2022 , the Company had borrowed an aggregate of $ 0.6 million and had $ 8.5 million available under the Renewed Senior Credit Facility.   Finance obligation - buildings and land.  On  April 14, 2021,  the Company entered into a purchase and sale agreement (the "Purchase and Sale Agreement"). Pursuant to the terms of the Purchase and Sale Agreement, the Company sold the Property for $ 10.4  million. The transaction generated net cash proceeds of $ 9.1  million. Concurrently with the sale of the Property, the Company paid off the approximately $ 0.9  million remaining on the mortgage note on the Property to its lender.  The Company used the remaining proceeds to repay its borrowings under the Senior Credit Facility, for strategic investments, and for general corporate needs. Concurrent with the sale of the Property, the Company entered into a  15 -year lease agreement (the “Lease Agreement”), whereby the Company is leasing back the Property at an annual rental rate of approximately $ 0.8  million, subject to annual rent increases of  2.00 %. Under the Lease Agreement, the Company has  four  consecutive options to extend the term of the lease by  five  years for each such option.     In accordance with ASC  842,   Leases , this transaction was recorded as a failed sale and leaseback as the present value of lease payments exceeded substantially all of the fair value of the underlying asset. The Company utilized an incremental borrowing rate of  8.00 % to determine the finance obligation to record for the amounts received and will continue to depreciate the assets. The current portion of the finance obligation of $ 0.1 1  million is recognized in current maturities of long-term debt and the long-term portion of $ 9.2 million is recognized in long-term finance obligation on the Company's consolidated balance sheets as of  January 31, 2023 . The net carrying amount of the financial liability and remaining assets will be  zero  at the end of the lease term.   Revolving lines -   foreign .  The Company also has credit arrangements used by its Middle Eastern subsidiaries in the U.A.E., Egypt, and Saudi Arabia as discussed further below. The Company has a revolving line for 8.0  million U.A.E. Dirhams (approximately $ 2.2 million at January 31, 2023 ) from a bank in the U.A.E. The facility has an interest rate of approximately  8.38 % . The facility was renewed in July 2022 and is now set to expire in July 2025.   The Company has a revolving line for  17.5 million U.A.E. Dirhams (approximately $ 4.8 million at January 31, 2023 ) from a bank in the U.A.E. The facility has an interest rate of approximately  8.38 %  and expired  in  January 2023, however the Company is in the process of renewing it. T he Company is in regular communication with the bank throughout the renewal process and the facility has continued without interruption or penalty.   The Company has a credit agreement for project financing with a bank in the U.A.E. for  1.0 million U.A.E. Dirhams (approximately $ 0.3 million at January 31, 2023 ). This credit arrangement is in the form of project financing at rates competitive in the U.A.E. The line is secured by the contract for a project being financed by the Company's U.A.E. subsidiary. The facility has an interest rate of approximately  8.38 % and is expected to expire in  June 2023 in connection with the completion of the project.   The Company has a credit agreement for project financing with a bank in the U.A.E. for  2.0 million U.A.E. Dirhams (approximately $ 0.5 million at January 31, 2023 ). This credit arrangement is in the form of project financing at rates competitive in the U.A.E. The line is secured by the contract for a project being financed by the Company's U.A.E. subsidiary. The facility has an interest rate of approxi mately  8.38 % and is expected t o expire in  May 2024 in connection with the completion of the project.   37 Table of Contents   In June 2021, the Company's Egyptian subsidiary entered into a credit arrangement with a bank in Egypt for a revolving line of  100.0 million Egyptian Pounds (approximately $ 3.3 million at January 31, 2023 ). This credit arrangement is in the form of project financing at rates competitive in Egypt. The line is secured by certain assets (such as accounts receivable) of the Company's Egyptian subsidiary. Among other covenants, the credit arra ngement established a maximum leverage ratio allowable and restricted the Company's Egyptian subsidiary's ability to undertake any additional debt. The facility has an interest rate of approximately  8.00 % and expired in June 2022, however the Company has started the renewal process for this credit arrangement. T he Company is in regular communication with the bank throughout the renewal process and the facility has continued without interruption or penalty.   In December 2021, the Company entered into a credit arrangement for project financing with a bank in Egypt for 28.2  million Egyptian Pounds. As this project has progressed and the Company has made collections, the facility has decreased to a current amount of  11.2 million Egyptian Pounds (approximately $ 0.4 million at January 31, 2023 ). This credit arrangement is in the form of project financing at rates competitive in Egypt. The line is secured by the contract for a project being financed by the Company's Egyptian subsidiary. The facility has an interest rate of approximately  8.00 % and expired in  November 2022, however, the Company is in the process of extending it in connection with the completion of the project. T he Company is in regular communication with the bank throughout the process and the facility has continued without interruption or penalty.   In August 2022, the Company's Egyptian subsidiary entered into a credit arrangement with a bank in Egypt for a revolving line of  100.0  million Egyptian Pounds (approximately $ 3.3 million at January 31, 2023 ). This credit arrangement is in the form of project financing at rates competitive in Egypt. The line is secured by certain assets (such as accounts receivable) of the Company's Egyptian subsidiary. Among other covenants, the credit arrangement established a maximum leverage ratio allowable, to be tested annually at fiscal year-end. The facility has an interest rate of approximately  18.25 % and is set to expire in August 2023.   In March 2022, the Company's Saudi Arabian subsidiary entered into a credit arrangement with a bank in Saudi Arabia for a revolving line of  25.0 million Saudi Riyal (approximately $ 6.7 million at January 31, 2023 ) This credit arrangement is in the form of project financing at rates competitive in Saudi Arabia. The line is secured by certain assets (such as accounts receivable) of the Company's Saudi Arabian subsidiary. The facility has an interest rate of approximately  9.15 % and is set to expire in April 2023.   These credit arrangements are in the form of overdraft facilities and project financing at rates competitive in the countries in which the Company operates. The lines are secured by certain equipment, certain assets (such as accounts receivable and inventory), and a guarantee by the Company. Some credit arrangement covenants require a minimum tangible net worth to be maintained, including maintaining certain levels of intercompany subordinated debt. In addition, some of the revolving credit facilities restrict payment of dividends or undertaking of additional debt. The Company guarantees only a portion of the subsidiaries' debt, including foreign debt. As of January 31, 2023 , the amount of foreign subsidiary debt guaranteed by the Company was approximately $ 0.5  million.  The Company was in compliance with the covenants under the credit arrangements in the U.A.E., Egypt and Saudi Arabia as of January 31, 2023 ,  with the exception of those arrangements that have expired and have not yet been renewed. Although certain of the arrangements have expired and the borrowings could be required to be repaid immediately by the banks, the Company is in regular communication with the respective banks throughout the renewal process and all of the arrangements have continued without interruption or penalty.  On January 31, 2023 , interest rates were based on the Emirates Inter Bank Offered Rate plus 3.0 % to 3.5 % per annum for the U.A.E. credit arrangements, two  of which have a minimum interest rate of 4.5 % per annum, based on the stated interest rate in the agreement for the Egypt credit arrangement, and based on the Saudi Inter Bank Offered Rate plus 3.5 % for the Saudi Arabia credit arrangement. Based on these base rates, as of January 31, 2023 , the Company's interest rates ranged from  8.00 % to 18.25 % , with a weighted average rate of 10.72 % , and the Company had facility limits totaling $ 21.5 million under these credit arrangements. As of January 31, 2023 , $ 5.6 million of availability was used to support letters of credit to guarantee amounts committed for inventory purchases and for performance guarantees. Additionally, as of January 31, 2023 , the Company had borrowed $ 5.7 million and had an additional $ 10.2 million of borrowing remaining available under the foreign revolving credit arrangements. The foreign revolving lines balances as of January 31, 2023 and 2022 , were included as current maturities of long-term debt in the Company's consolidated balance sheets.    Mortgages.  On July  28, 2016, the Company entered into a mortgage agreement secured by the Company's manufacturing facility located in Alberta, Canada that matures on December  23, 2042. As of  January 31, 2023 , the remaining balance on the mortgage in Canada is approximately  6.4 million Canadian Dollars ("CAD") (approximately $ 4.8 million at  January 31, 2023 ). The interest rate is variable, and was  8.30 % at  January 31, 2023 . Principal payments began in January 2018.   On June  19, 2012, the Company borrowed $ 1.8 million under a mortgage note secured by its manufacturing facility in Lebanon, Tennessee. The proceeds were used for repayment of amounts borrowed. On April 14, 2021, the Company entered into the Purchase and Sale Agreement discussed above. Concurrently with the sale, the Company paid off the approximately $ 0.9 million remaining on the mortgage note on the Property to its lender.   38 Table of Contents   Note 6 - Leases   The Company accounts for its leases under ASC 842, Leases . Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the consolidated balance sheet. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities short-term, and operating lease liabilities long-term in the Company's consolidated balance sheets. Finance leases are included in property, plant and equipment, current maturities of long-term debt, and long-term debt less current maturities in the Company's consolidated balance sheets.    ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate.  Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term.  For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term.  For finance leases, interest on the lease liability and the amortization of the ROU asset results in front-loaded expense over the lease term.  Variable lease expenses are recorded when incurred. ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term.   As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment.   In calculating the ROU asset and lease liability, the Company elects to combine lease and non-lease components.  The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term.   Operating Leases. In August 2020, the Company entered into a new lease in Abu Dhabi for land upon which the Company has built a production facility. The annual payments are approximately 1.2  million U.A.E. Dirhams (approximately $ 0.3  million at  January 31, 2023 ), inclusive of rent and common charges, with escalation clauses in the agreement. Rent payments were deferred until August 2022 and have now commenced. The lease expires in August 2050.    In March and December 2022, the Company served Notices of Termination to its lessor for the Company's lease of the land and buildings in Fujairah in the U.A.E. The Company served the Notices of Termination in connection with the Company's intended relocation to a different facility in Abu Dhabi. The Company vacated portions of the leased space in December 2022 and is expected to vacate the remaining space in April 2023. The first Notice of Termination required that the Company pay an additional amount equal to three months' rent after that termination to enable the lessor to prepare the assets for lease by another party. As a result of the termination, the Company has recognized adjustments to the amounts recorded in the consolidated financial statements as of  January 31, 2023 . The termination resulted in decreases of $ 0.4 million, $ 6.0 million and $ 5.5 million to operating lease liability short-term, operating lease liability long-term and operating lease right-of-use asset, respectively, in the consolidated balance sheets as of  January 31, 2023 . The termination also resulted in a decrease in rent expense of $ 1.1 million in the consolidated statement of operations for the year ended  January 31, 2023 .   Finance Leases.  In  2019,  the Company obtained  two  finance leases for a total of CAD  1.1  million (approximately $ 0.8  million at the prevailing exchange rates on the transaction dates) to finance vehicle equipment. The interest rates for these finance leases were  8.0 % per annum with monthly principal and interest payments of less than $ 0.1  million. These leases mature in  August 2023.  The Company has several significant operating lease agreements, with lease terms of one to 30 years, which consist of real estate, vehicles and office equipment leases. These leases do not require any contingent rental payments, impose any financial restrictions or contain any residual value guarantees.  Certain of the Company’s leases include renewal options and escalation clauses; renewal options have not been included in the calculation of the lease liabilities and ROU assets as the Company is not reasonably certain to exercise the options.  Variable expenses generally represent the Company’s share of the landlord’s operating expenses.  The Company does not have any arrangements where it acts as a lessor, other than one sub-lease arrangement.    At  January 31, 2023 , the Company had total operating lease liabilities of $ 5.2 million and operating ROU assets of $ 4.5 million, which are reflected in the consolidated balance sheet. At  January 31, 2023 , the  Company also had finance lease liabilities of $ 0.2 million included in current maturities of long-term debt and long-term debt less current maturities, and finance ROU assets of $ 0.5 million which were included in property plant and equipment, net of accumulated depreciation in the consolidated balance sheet.   39 Table of Contents   Supplemental balance sheet information related to leases follows (in thousands):   Operating and Finance leases:   January 31, 2023     January 31, 2022   Finance leases assets:                 Property and Equipment - gross   $ 1,161     $ 1,221   Accumulated depreciation and amortization     ( 700 )     ( 490 ) Property and Equipment - net   $ 461     $ 731                     Finance lease liabilities:                 Finance lease liability short-term   $ 164     $ 357   Finance lease liability long-term     -       173   Total finance lease liabilities   $ 164     $ 530                     Operating lease assets:                 Operating lease ROU assets   $ 4,527     $ 11,213                     Operating lease liabilities:                 Operating lease liability short-term   $ 912     $ 1,496   Operating lease liability long-term     4,252       11,270   Total operating lease liabilities   $ 5,164     $ 12,766     Total lease costs consist of the following (in thousands):   Lease costs Consolidated Statements of Operations Classification   Three Months Ended January 31, 2023     Year Ended January 31, 2023     Year Ended January 31, 2022                               Finance Lease Costs                           Amortization of ROU assets Cost of sales   $ 53     $ 233     $ 214   Interest on lease liabilities Interest expense     22       28       69   Operating lease costs Cost of sales, SG&A expenses     610       1,388       2,570   Short-term lease costs (1) Cost of sales, SG&A expenses     24       421       398   Sub-lease income SG&A expenses     ( 20 )     ( 81 )     ( 81 ) Total Lease costs   $ 689     $ 1,989     $ 3,170     ( 1 ) Includes variable lease costs, which are immaterial   Supplemental cash flow information related to leases is as follows (in thousands):       Year Ended January 31,       2023     2022   Cash paid for amounts included in the measurement of lease liabilities:                 Financing cash flows from finance leases   $ 338     $ 375   Operating cash flows from finance leases     28       69   Operating cash flows from operating leases     1,839       3,097                     ROU Assets obtained in exchange for new lease obligations:                 Operating leases liabilities   $ 143     $ 121     40 Table of Contents   Weighted-average lease terms discount rates are as follows:       January 31, 2023     January 31, 2022                     Weighted-average remaining lease terms (in years):                 Finance leases     0.5       1.5   Operating leases   19.6       13.5                     Weighted-average discount rates:                 Finance leases     12.0 %     9.1 % Operating leases     8.2 %     7.4 %   On January 31, 2023 , future minimum annual rental commitments under non-cancelable lease obligations were as follows (in thousands):   Year:   Operating Leases     Finance Leases   For the year ended January 31, 2024   $ 1,533     $ 168   For the year ended January 31, 2025     650       -   For the year ended January 31, 2026     443       -   For the year ended January 31, 2027     442       -   For the year ended January 31, 2028     404       -   Thereafter     7,523       -   Total lease payments     10,995       168   Less: amount representing interest     ( 5,831 )     ( 4 ) Total lease liabilities at January 31, 2023   $ 5,164     $ 164     Rental expense for operating leas es was $ 1.7 million and $ 3.0 millio n for the years ended  January 31, 2023 and  2022 , respectively.   The Company has several significant operating lease agreements as follows:     • Office space of approximately 31,650 square feet in Niles, IL is leased until October 2023.   • Production facilities and office space of approximately 139,000 square feet in Lebanon, Tennessee is leased until December 31, 2035.   • Five acres of land in Louisiana is leased thro ugh March 2027.   • Twenty acres of land in Canada leased through December 2022 which was extended to April 2023.   • Nine acres of land in the Kingdom of Saudi Arabia is leased through April 2030.   • Production facilities in the U.A.E. of approximately 80,200 square feet on approximately 107,600 square feet of land is leased until June 2030.   • Office space of approximately 21,500 square feet and land for production facilities of approximately 423,000 square feet in the U.A.E. is leased until July 2032.   • Production facilities in the U.A.E. of approximately 78,100 square feet is leased until December 2032.   • Approximately fourteen acres of land in the U.A.E. is leased through August 2050.   41 Table of Contents   Note 7 - Income taxes   Income/(loss) from continuing operations before income taxes (in thousands)   2022     2021   Domestic (1)   $ ( 5,392 )   $ ( 3,357 ) Foreign     14,950       11,684   Total   $ 9,558     $ 8,327     ( 1 ) The domestic loss from continuing operations before income taxes includes corporate overhead costs.   Components of income tax expense/(benefit) (in thousands)   2022     2021   Current                 Federal   $ ( 3 )   $ 1   Foreign     2,971       2,317   State and other     166       144   Total current income tax expense     3,134       2,462   Deferred                 Federal     -       -   Foreign     479       ( 197 ) State and other     -       -   Total deferred income tax expense/(benefit)     479       ( 197 ) Total income tax expense   $ 3,613     $ 2,265     As a result of the onetime transition tax from the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Act”), the Company estimates that distributions from foreign subsidiaries will no longer be subject to incremental U.S. tax as they will either be remittances of previously taxed earnings and profits or eligible for a full dividends received deduction. Current and future earnings in the Company's subsidiaries in Canada and Egypt are not permanently reinvested. Earnings from these subsidiaries are subject to tax in their local jurisdiction, and withholding taxes in these jurisdictions are considered. The Company's liability was $ 0.6  million and $ 0.2  million as of January 31, 2023 and 2022 , respectively, related to these taxes.   U.S. income and foreign withholding taxes have not been recognized on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that is indefinitely reinvested outside the United States. The Company intends to permanently reinvest the undistributed earnings of its Middle Eastern and Indian subsidiaries. The Middle Eastern and Indian subsidiaries have unremitted earnings of $ 28.2  million and $ 8.4  million, respectively, as of January 31, 2023 , all of which has been subject to the transition tax in the United States. Unremitted earnings of $ 22.8  million in the United Arab Emirates would not be subject to withholding tax in the event of a distribution, and $ 5.4 million of unremitted earnings in Saudi Arabia would be subject to withholding tax of $ 0.3 million. The Company has not recorded a deferred tax liability related to any financial reporting basis over tax basis related to the investment in these foreign subsidiaries as it is not practical to estimate.   The Inflation Reduction Act ("IRA") was signed into law in August 2022. The Company has evaluated the provisions of the IRA and does not expect any material impact to its consolidated provision for income taxes.    42 Table of Contents   The difference between the provision for income taxes and the amount computed by applying the U.S. Federal statutory rate of 21%  was as follows:   (In thousands)   2022     2021   Tax expense at federal statutory rate   $ 2,007     $ 1,749   State expense, net of federal income tax effect     110       148   Deferred compensation adjustment     ( 32 )     456   Domestic valuation allowance     ( 590 )     ( 636 ) Domestic return to provision     390       ( 6 ) Global Intangible Low-Taxed Income inclusion     1,206       742   Valuation allowance for state NOLs     133       ( 29 ) Differences in foreign tax rate     ( 410 )     ( 430 ) Deferred tax on unremitted earnings     438       ( 55 ) Foreign withholding taxes     304       178   Research tax credit     220       80   Pension Settlement     ( 115 )     -   All other, net expense     ( 48 )     68   Total income tax expense/(benefit)   $ 3,613     $ 2,265     The Company's worldwide effective tax rates ("ETR") were 37.8 %  and 27.2 %  in the years ended January 31, 2023 and 2022 , respectively. The change in the ETR was primarily due to additional tax expense for the Global Intangible Low-Taxed Income inclusion, the absence of recognizing tax benefits on losses in the United States due to a full valuation allowance and changes in the mix of income and loss in the various tax jurisdictions.   Components of deferred income tax assets (in thousands)   2022     2021   U.S. Federal NOL carryforward   $ 7,197     $ 8,424   Deferred compensation     276       350   Research tax credit     2,258       2,573   Foreign NOL carryforward     318       448   Foreign tax credit     2,580       2,580   Stock compensation     43       62   Other accruals not yet deducted     305       276   State NOL carryforward     2,744       2,730   Accrued commissions and incentives     851       483   Inventory valuation allowance     107       116   Lease liability     278       418   Other     165       17   Deferred tax assets, gross     17,122       18,477   Valuation allowance     ( 15,993 )     ( 16,905 ) Total deferred tax assets, net of valuation allowances   $ 1,129     $ 1,572                     Components of the deferred income tax liability                 Depreciation   $ ( 415 )   $ ( 643 ) Foreign subsidiaries unremitted earnings     ( 591 )     ( 231 ) Prepaid     ( 70 )     ( 54 ) Accrued pension     -       ( 159 ) Right of use asset     ( 266 )     ( 386 ) Total deferred tax liabilities   $ ( 1,342 )   $ ( 1,473 )                   Deferred tax (liability)/asset, net   $ ( 213 )   $ 99                     Balance sheet classification                 Long-term assets   $ 696     $ 811   Long-term liability     ( 909 )     ( 712 ) Total deferred tax assets/(liabilities), net of valuation allowances   $ ( 213 )   $ 99     43 Table of Contents   As of January 31, 2023  the Company had a deferred tax asset of $ 7.2 million related to gross U.S. Federal net operating loss ("NOL") carryforwards of $ 34.3 million, of which $ 26.9 million will expire between tax years  2033 and  2038 , with the remainder not subject to expiration. As of January 31, 2023  the Company had a deferred tax asset of $ 2.7  million related to gross state NOLs of $ 45.5  million that expire between  2023  and  2032  As of January 31, 2023  the Company had a deferred tax asset of $ 0.3 million related to gross foreign NOLs of $ 1.6 million for its subsidiary in Saudi Arabia, which can be carried forward indefinitely and does not have a valuation allowance recorded against it. The ultimate realization of the tax benefit is dependent upon the future generation of operating income in the respective tax jurisdictions.    The Company periodically reviews the adequacy of its valuation allowance in all of the tax jurisdictions in which it operates, evaluates future sources of taxable income and tax planning strategies and may make further adjustments based on management's outlook for continued profits in each jurisdiction.    Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of the existing deferred tax assets.  A significant piece of objective negative evidence evaluated was the domestic cumulative loss incurred over the three -year period ended January 31, 2023 . Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.   On the basis of this evaluation, as of January 31, 2023 , a full valuation allowance was recorded against the domestic deferred tax assets.  The amount of the domestic deferred tax assets considered realizable, however, could be increased if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for future growth.   The Company has a deferred tax asset of $ 2.6 million for U.S. foreign tax credits after considering the impact of the repatriated foreign earnings and the one -time transition tax. The foreign tax credit deferred tax asset is fully offset with a valuation allowance. The excess foreign tax credits are subject to a ten -year carryforward and will begin to expire on January 31, 2026 .   The following table summarizes uncertain tax position ("UTP") activity, excluding the related accrual for interest and penalties:   (In thousands)   2022     2021   Balance at beginning of year   $ 1,611     $ 1,591   Decreases in positions taken in a prior period     -       ( 4 ) Increases in positions taken in a current period     159       66   Decreases due to lapse of statute of limitations     ( 3 )     ( 8 ) Decreases due to settlements     ( 94 )     ( 34 ) Balance at end of year   $ 1,673     $ 1,611     Included in the total UTP liability were estimated accrued interest and penalties of $ 0.3  million and $ 0.2  million as of  January 31, 2023  and 2022 , respectively. These non-current income tax liabilities are recorded in other long-term liabilities in the consolidated balance sheet and recognized as an expense during the period. The Company's policy is to include interest and penalties in income tax expense. On January 31, 2023 , the Company did  not anticipate any significant adjustments to its unrecognized tax benefits within the next twelve months. Included in the balance on January 31, 2023  were amounts offset by deferred taxes (i.e. temporary differences) or amounts that could be offset by refunds in other taxing jurisdictions (i.e., corollary adjustments). Upon reversal, $ 0.9 million of the amount accrued on  January 31, 2023 would impact the future ETR.   The Company is subject to income taxes in the U.S. federal jurisdiction, and various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. Tax years related to January 31, 2019, 2020, 2021  and 2022  are open for federal and state tax purposes. In addition, federal and state tax years January 31,  2004  through January 31, 2010 , are subject to adjustment on audit, up to the amount of research tax credit generated in those years. Any NOL carryover can still be adjusted by the Internal Revenue Service in future year audits.   The Company's management periodically estimates the probable tax obligations of the Company using historical experience in tax jurisdictions and informed judgments. There are inherent uncertainties related to the interpretation of tax regulations in the jurisdictions in which the Company transacts business. The judgments and estimates made at a point in time may change based on the outcome of tax audits, as well as changes to or further interpretations of regulations. If such changes take place, there is a risk that the tax rate may increase or decrease in any period. Tax accruals for tax liabilities related to potential changes in judgments and estimates for federal, foreign and state tax issues are included in other long-term liabilities on the consolidated balance sheet.   44 Table of Contents   Note 8 - Retirement plans   Pension plan   The defined benefit plan (the "Pension Plan") that covered the hourly rate employees of a non-operating filtration business unit, previously located in Winchester, Virginia, was frozen on June  30, 2013 per the third Amendment to the Pension Plan dated May 15, 2013. The accrued benefit of each participant was frozen as of the freeze date, and no further benefits accrued with respect to any service or hours of service after the freeze date. The benefits were based on fixed amounts multiplied by years of service of participants. The Company engaged outside actuaries to calculate its obligations and costs.    During the year ended January 31, 2023 , the Company’s Board of Directors approved the termination of the Pension Plan. The Company provided participants of the Pension Plan an option to elect either a lump sum distribution or an annuity. A group annuity contract was purchased with an insurance company for all participants who did not elect a lump sum distribution. That insurance company became responsible for administering and paying pension benefit payments effective December 1, 2022.   During the year ended January 31, 2023 , the Company recognized a non-cash pre-tax settlement charge of $ 0.9 million, within other income/(expense) in the consolidated statements of operations in connection with the Pension Plan termination process, which represents the acceleration of deferred charges previously included within accumulated other comprehensive loss and the impact of remeasuring the Pension Plan assets and obligations at termination. In addition, the Company recorded an income tax benefit of $ 0.1 million for the year ended January 31, 2023 , to reclassify the tax effects in accumulated other comprehensive loss upon completion of the termination of the Pension Plan. The Pension Plan termination did not require a cash outlay by the Company. Upon completion of the termination and settlement processes, the Company expects a remaining pension surplus investment balance of approximately $ 0.9 million.   Asset allocation   The Pension Plan holds no securities of Perma-Pipe International Holdings, Inc.; 100 % of the assets are held for benefits under the Pension Plan. The fair value of the major categories of the Pension Plan's investments are presented below. The FASB has established a fair value hierarchy that distinguishes between ( 1 ) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and ( 2 ) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 ) and the lowest priority to unobservable inputs (Level 3 ). The three levels of the fair value hierarchy are described below:   Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.   Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.   Level 3 - Inputs that are both significant to the fair value measurement and unobservable.   (In thousands)   2022     2021   Level 1 market value of plan assets                 Equity securities   $ -     $ 4,119   U.S. bond market     -       1,544   Real estate securities     -       322   Subtotal     -       5,985   Level 2 significant other observable inputs                 Money market fund   $ 895     $ 321   Subtotal     895       321   Investments measured at net asset value*   $ 22     $ 829   Total   $ 917     $ 7,135     * Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the reconciliation of benefit obligations, plan assets and funded status of the Pension Plan.   45 Table of Contents   On January 31, 2023 , the Pension Plan assets were held 100 % in cash.    Investment market conditions in  2022  resulted in $ 0.5 million  loss on plan assets, computed as the actual return as presented below less the expected return, which decreased the fair value of plan assets at year end.    Reconciliation of benefit obligations, plan assets and funded status of plan (in thousands)   2022     2021   Accumulated benefit obligations                 Vested benefits   $ -     $ 6,448   Accumulated benefits   $ -     $ 6,448                     Change in benefit obligation                 Benefit obligation - beginning of year   $ 6,448     $ 7,090   Interest cost     141       173   Actuarial gain     ( 220 )     ( 511 ) Benefits paid     ( 259 )     ( 304 ) Lump sum benefits paid     ( 5,531 )     -   Reimbursement of premiums     112       -   Effect of settlement/curtailment     ( 691 )     -   Benefit obligation - end of year   $ -     $ 6,448                     Change in plan assets                 Fair value of plan assets - beginning of year   $ 7,135     $ 7,016   Actual (loss) gain on plan assets     ( 540 )     423   Benefits paid     ( 259 )     ( 304 ) Lump sum benefits paid     ( 5,531 )     -   Reimbursement of premiums     112       -   Fair value of plan assets - end of year   $ 917     $ 7,135                     Over-funded/(unfunded) status   $ 917     $ 688                     Balance sheet classification                 Prepaid expenses and other current assets   $ 917     $ 322   Other assets     -       2,050   Deferred compensation liabilities     -       ( 1,684 ) Net amount recognized   $ 917     $ 688                     Amounts recognized in accumulated other comprehensive loss                 Unrecognized actuarial loss   $ -     $ 1,362   Net amount recognized   $ -     $ 1,362     Weighted-average assumptions used to determine net cost and benefit obligations   2022     2021   End of year benefit obligation discount rate     N/A       3.00 % End of year net periodic benefit cost discount rate     N/A       2.50 % Expected return on plan assets     N/A       7.50 %   In connection with the termination of the Pension Plan, participants elected either a lump sum payment or annuity. For those electing lump sum payouts, the benefit obligation was based on rates determined as of the beginning of the plan year, in accordance with the plan document. For those electing annuity payouts, the benefit obligation was determined by the annuity provider.    46 Table of Contents   Components of net periodic benefit cost (in thousands)   2022     2021   Interest cost   $ 141     $ 173   Expected return on plan assets     -       ( 514 ) Recognized actuarial loss     49       119   Net periodic benefit expense/(income)   $ 190     $ ( 222 )                   Amounts recognized in other comprehensive income (in thousands)             Actuarial gain/(loss) on obligation   $ 220     $ 511   Settlement/plan termination     1,518       -   Actual gain/(loss) on plan assets     ( 540 )     ( 90 ) Amounts recognized in current year     49       119   Total in other comprehensive income   $ 1,247     $ 540     Other comprehensive income is also affected by the tax effect of the valuation allowance recorded on the domestic deferred tax assets. During the year ended January 31, 2023 , there was an actuarial  loss of $ 0.3 million. This actuarial  loss is comprised of an asset  loss of $ 0.5 million and liability  gain of $ 0.2 million. The liability gain is primarily the result of demographic gains. During the year ended January 31, 2022 , there was an actuarial  gain of $ 0.4  million. This actuarial  gain is comprised of an asset  loss of $ 0.1 million and liability  gain of $ 0.5 million. The liability gain is the combination of: (i) a gain due to a 50 basis point increase in the discount rate, (ii) a loss resulting from an update to the mortality improvement assumption and (iii) other demographic gains.    Due to the termination of the Pension Plan there are no expected employer contributions.   401 (k) plan   The domestic employees of the Company participate in the PPIH 401 (k) Employee Savings Plan, which is applicable to all employees except employees covered by collective bargaining agreement benefits. The plan allows employee pretax payroll contributions from 1 % to 16 % of total compensation. The Company matches 100 % of each participant's payroll deferral contributions up to 1 % of their compensation, plus 50 % of each participant's payroll deferral contributions on the next 5 % of compensation.   Contributions to the 401 (k) plan were $ 0.3   million each in the years ended January 31, 2023 and 2022 .   Multi-employer plans   The Company contributes to a multi-employer plan for certain collective bargaining U.S. employees. The risks of participating in this multi-employer plan are different from a single employer plan in the following aspects:     • Assets contributed to the multi-employer plans by one employer may be used to provide benefits to employees of other participating employers.   • If a participating employer ceases contributing to the plan, the unfunded obligations of the plan may be inherited by the remaining participating employers.   • If the Company chooses to stop participating in the multi-employer plan, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.   47 Table of Contents   The Company has assessed and determined that the multi-employer plans to which it contributes are not significant to the Company's consolidated financial statements. The Company does not expect to incur a withdrawal liability or expect to significantly increase its contribution over the remainder of the contract period. The Company made contributions to the bargaining unit supported multi-employer pension plans (in thousands):                                                                 FIP/RP Status   2022     2021   Surcharge   Plan Name   EIN     Plan #   Funded Zone Status Pending/Implemented   Contribution     Contribution   Imposed Collective Bargaining Expiration Date Plumbers & Pipefitters Local 572 Pension Fund   62 - 6102837     001   Yellow No   $ 178     $ 172   No 3/31/2025     Note 9 - Stock-based compensation   The Company’s 2017 Omnibus Stock Incentive Plan dated June 13, 2017, as amended, which the Company's stockholders approved in June 2017 ( "2017 Plan"), expired in June 2020.    The Company has prior incentive plans under which previously granted awards remain outstanding, including the 2017 Plan, but under which no new awards may be granted. At January 31, 2023 , the Company had reserved a total of 307,475  shares for grants and issuances under these incentive stock plans, which includes a reserve for issuances pursuant to unvested or unexercised prior awards.   While the 2017 Plan provided for the grant of deferred shares, non-qualified stock options, incentive stock options, restricted shares, restricted stock units, and performance-based restricted stock units intended to qualify under section 422 of the Internal Revenue Code, the Company issued only restricted shares and restricted stock units under the 2017 Plan. The 2017 Plan authorized awards to officers, employees, consultants, and independent directors.   The Company's  2021  Omnibus Stock Incentive Plan dated  May 26, 2021  was approved by the Company's stockholders in  May 2021 ( "2021  Plan"). The  2021  Plan will expire in  May 2024.  The  2021  Plan authorizes awards to officers, employees, consultants and independent directors. Grants were made to the Company's employees, officers and independent directors under the  2021  Plan, as described below.   Stock compensation expense   The Company has granted stock-based compensation awards to eligible employees, officers or independent directors. The Company recognized the following stock-based compensation expense for the periods presented:   (In thousands)   2022     2021   Restricted stock based compensation expense   $ 1,002     $ 1,101   Total stock-based compensation expense   $ 1,002     $ 1,101     48 Table of Contents   Stock options   The Company did not grant any stock options during the years ended January 31, 2023  or 2022 . The following tables summarizes the Company's stock option activity:   (Shares in thousands)   Options     Weighted average exercise price     Weighted average remaining contractual term     Aggregate intrinsic value   Outstanding on January 31, 2021     107     $ 9.24       2.5     $ 5                                     Exercised     ( 7 )     6.16                 Expired or forfeited     ( 33 )     9.36                   Outstanding on January 31, 2022     67       9.51       1.7       63                                     Options exercisable on January 31, 2022     67     $ 9.51       1.7       63                                     Exercised     ( 16 )     6.66                 Expired or forfeited     ( 11 )     10.85                   Outstanding on January 31, 2023     40       10.85       1.1       19                                     Options exercisable on January 31, 2023     40     $ 10.85       1.1     $ 19     There was  no  vesting, expiration or forfeiture of previously unvested stock options during the year ended  January 31, 2023 . As of  January 31, 2023 , there were no remaining unvested stock options outstanding, and therefore no unrecognized compensation expense related to unvested stock options.   Deferred stock   As part of their compensation, in previous years the Company granted deferred stock units to each non-employee director, equal to the result of dividing the award amount by the fair market value of the common stock on the date of grant. The stock vests on the date of grant; however, it is distributed to the directors only upon their separation from service. During the year ended  January 31, 2023 ,  34,873 deferred stock units were distributed.  There were approximately  62,926 and  97,799 deferred stock units outstanding included in the restricted stock activity shown below as of  January 31, 2023 and 2022 , respectively.   Restricted stock   The Company has granted restricted stock to executive officers, independent directors, and employees. The restricted stock vests ratably over  one to four years. The Company calculates restricted stock compensation expense based on the grant date fair value and recognizes expense on a straight-line basis over the vesting period. The following table summarizes restricted stock activity for the years ended  January 31, 2023  and  2022 , respectively:   (Shares in thousands)   Restricted shares     Weighted average price     Aggregate intrinsic value   Outstanding on January 31, 2021     372     $ 7.62     $ 2,843   Granted     137       7.14           Issued     ( 113 )                 Forfeited     ( 43 )     7.47           Outstanding on January 31, 2022     353     $ 7.48     $ 2,652   Granted     103       10.96           Issued     ( 147 )                 Forfeited     ( 42 )     6.87           Outstanding on January 31, 2023     267     $ 8.55     $ 2,286     The fair value of vested restricted stock was $ 1.2  million and $ 1.1  million in the  year ended January 31, 2023  and 2022  respectively. As of January 31, 2023 , there was $ 1.1 million of unrecognized compensation cost related to unvested restricted stock granted under the plans. That cost is expected to be recognized over the weighted-average period of  2.0 years.   49 Table of Contents   Note 10 - Interest expense, net     (In thousands)   2022     2021   Interest expense     2,243       918   Interest income     124       90   Interest expense, net     2,119       828       Note 11  - Treasury stock   On December 7, 2022 the Board of Directors authorized the use of $ 1.0 million remaining under the share repurchase program previously approved on October 4, 2021 that expired on October 3, 2022. Share repurchases may be executed through open market or in privately negotiated transactions over the course of the 12 months following the Board of Directors authorization. The repurchase program approved on October 4, 2021 authorized the Company to use up to $ 3.0  million for the purchase of its outstanding shares of common stock. Stock repurchases were permitted to be executed through open market or privately negotiated transactions, depending upon current market conditions and other factors. In total, the Company used $ 2.0 million of the $ 3.0 million authorized to repurchase its outstanding shares of common stock under the program.    On July 26, 2022, the Company retired  239,168  shares of treasury stock previously repurchased under the stock repurchase program. The retirement was recorded as a reduction to common stock based on the par value of the shares, and the excess over par value was recorded as a decrease to retained earnings in accordance with ASC 505 - 30, Equity - Treasury Stock .   The following table sets forth information with respect to repurchases by the Company of its shares of common stock during  2021 and  2022  (In thousands, except per share data) :     Period   Total number of shares purchased     Average price paid per share     Total number of shares purchased as part of publicly announced plans or programs     Approximate dollar value of shares that may yet be purchased under the plans or programs   October 1, 2021 - October 31, 2021     59     $ 8.45       59     $ 2,505   November 1, 2021 - November 30, 2021     21       8.55       21       2,323   December 1, 2021 - December 31, 2021     56       7.99       56       1,872   January 1, 2022 - January 31, 2022     98       8.81       98       1,008   July 1, 2022 - July 31, 2022     5       8.85       5       964   December 1, 2022 - December 31, 2022     3       8.61       3       939   Total     242               242               50 Table of Contents   Schedule II Perma-Pipe International Holdings, Inc. and Subsidiaries VALUATION AND QUALIFYING ACCOUNTS For the Years Ended  January 31, 2023 and 2022   (In thousands)   Balance at beginning of period     Charges to expenses     Write-offs (1)     Other charges (2)     Balance at end of period   Year Ended January 31, 2023                                         Valuation allowance for deferred tax assets   $ 16,905     $ ( 585 )   $ -     $ ( 327 )   $ 15,993   Allowance for possible losses in collection of trade receivables     486       140       ( 14 )     -       612                                             Year Ended January 31, 2022                                         Valuation allowance for deferred tax assets   $ 17,746     $ ( 717 )   $ -     $ ( 124 )   $ 16,905   Allowance for possible losses in collection of trade receivables     474       32       -       ( 20 )     486     ( 1 ) Uncollectible accounts charged off.   ( 2 ) Trade receivable allowances primarily related to recoveries from accounts previously written off and currency translation. Deferred tax asset valuation allowance primarily related to amounts charged to other comprehensive income.   51 Table of Contents     EXHIBIT INDEX   The exhibits listed below are filed herewith except the exhibits described below as incorporated by reference. Exhibits not filed herewith are incorporated by reference to such exhibits filed by the Company under the location set forth under the caption "Description and Location" below. The Commission file number for the Company's Exchange Act filings referenced below is 001-32530. Exhibit No.   Description and Location 3.1   Certificate of Incorporation of Perma-Pipe International Holdings, Inc. [Incorporated by reference to Exhibit 3.3 to Registration Statement No. 33-70298] 3.2   Certificate of Amendment to Certificate of Incorporation of Perma-Pipe International Holdings, Inc. [Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on March 20, 2017] 3.3   Fifth Amended and Restated By-Laws of Perma-Pipe International Holdings, Inc. [Incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on May 6, 2019] 4   Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 [Incorporated by reference to Exhibit 4(d) to the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2020 filed on April 21, 2020] 10.1   Form of Directors and Officers Indemnification Agreement [Incorporated by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2006 filed on May 15, 2006] * 10.2   2013 Omnibus Stock Incentive Plan as Amended June 14, 2013 [Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 17, 2013] * 10.3   Executive Employment Agreement with David J. Mansfield dated October 19, 2016 [Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on December 13, 2016]* 10.4   2017 Omnibus Stock Incentive Plan as Amended June 13, 2017 [Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on September 19, 2017] * 10.5   Form of Restricted Stock Unit Agreement under the 2017 Omnibus Stock Incentive Plan as Amended June 13, 2017 [Incorporated by reference to Exhibit 10(b) to the Company ’ s Quarterly Report on Form 10-Q filed on September 11, 2018]* 10.6   Revolving Credit and Security Agreement, dated September 20, 2018, by and among the Company, PNC Bank, National Association, and the other parties thereto [Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on September 24, 2018] 10.7   Second Amendment and Waiver to Revolving Credit and Security Agreement, dated September 17, 2021, by and among the Company, PNC Bank, National Association, and other parties thereto [Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on September 21, 2021] 10.8   Executive Employment Agreement, dated October 1, 2018, by and between the Company and D. Bryan Norwood [Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on October 1, 2018]* 10.9   Form of Restricted Stock Agreement under the 2017 Omnibus Stock Incentive Plan as Amended June 13, 2017 [Incorporated by reference to Exhibit 10(z) to the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2020 filed on April 21, 2020] * 10.10   Executive Employment Agreement, dated January 31, 2020 by and between the Company and Wayne Bosch [Incorporated by reference to Exhibit 10(aa) to the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2020 filed on April 21, 2020] * 10.11   Form of Restricted Stock and Performance Award Agreement under the 2017 Omnibus Stock Incentive Plan as Amended June 13, 2017 [Incorporated by reference to Exhibit 10.L to the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2021 filed on April 15, 2021] * 10.12   Perma-Pipe International Holdings, Inc. 2021 Omnibus Stock Incentive Plan [Incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A filed on April 16, 2021]* 10.13   Lease dated March 15, 2021, between the Company and Nash88 [Incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K/A filed on April 22, 2021] 10.14   Executive Employment Agreement, dated July 26, 2021, by and between the Company and Grant Dewbre [Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended July 31, 2021 filed on September 8, 2021]* 10.15   Form of Restricted Stock and Performance Award Agreement under the 2021 Omnibus Stock Incentive Plan [Incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2022 filed on April 19, 2022] * 10.16   Form of Non-Employee Director Restricted Stock Unit Agreement under the 2021 Omnibus Stock Incentive Plan  [Incorporated by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2022 filed on April 19, 2022] * 10.17   Form of Employee Restricted Stock Unit Agreement under the 2021 Omnibus Stock Incentive Plan [Incorporated by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2022 filed on April 19, 2022] * 14   Code of Conduct [Incorporated by reference to Exhibit 14 of the Company's Annual Report on Form 10-K/A for the fiscal year ended January 31, 2004 filed on June 1, 2004] 21   Subsidiaries of Perma-Pipe International Holdings, Inc. 23   Consent of Independent Registered Public Accounting Firm - Grant Thornton LLP 24   Power of Attorney executed by directors and officers of the Company 31   Rule 13a - 14(a)/15d - 14(a) Certifications (1) Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (2) Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32   Section 1350 Certifications(1) Chief Executive Officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(2) Chief Financial Officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS   Inline XBRL Instance 101.SCH   Inline XBRL Taxonomy Extension Schema 101.CAL   Inline XBRL Taxonomy Extension Calculation 101.DEF   Inline XBRL Taxonomy Extension Definition 101.LAB   Inline XBRL Taxonomy Extension Labels 101.PRE   Inline XBRL Taxonomy Extension Presentation 104   Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) *Management contracts and compensatory plans or agreements    52 Table of Contents   Item 16. FORM 10-K SUMMARY - None.   53 Table of Contents   SIGNATURES   Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.       Perma-Pipe International Holdings, Inc.         Date:   April 27, 2023 /s/  David J. Mansfield     David J. Mansfield     Director, President and Chief Executive Officer     (Principal Executive Officer)     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.   DAVID J. MANSFIELD   Director, President and Chief Executive Officer (Principal Executive Officer) )         )   D. BRYAN NORWOOD*   Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) ) April 27, 2023       )   CYNTHIA BOITER*    Director )             DAVID B. BROWN*    Director )             ROBERT MCNALLY*   Director )             JEROME T. WALKER*   Director and Chairman of the Board of Directors                 *By: /s/ David J. Mansfield   Individually and as Attorney in Fact       David J. Mansfield           54