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Item 1A. Risk Factors

2026-04-16 compared with 2025-05-01 · 37 added, 29 removed, 120 unchanged (35% of the section changed)

11 unchanged sentences

This volatility may negatively impact market conditions thus reducing project activity and the Company's results of operations.

If the United States or other countries in which the Company operates impose tariffs on imports of raw materials, including steel, used in the Company's operations, could have an adverse impact on the Company's business.

If the United States or other countries in which the Company operates impose tariffs on imports of raw materials, including steel, used in the Company's operations, this could have an adverse impact on the Company's business.

The Company regularly updates its quoting system for the movements in raw material prices and seeks to recover price differentials through increases in the selling price of the Company's products;

1 unchanged sentence

In addition, if the Company is unable to acquire timely raw material supplies, it may need to decline opportunities, which could also have an adverse effect on the Company's business, results of operations, financial position and cash flows.

Due to the current inflationary environment, raw material supply shortages and transportation delays, the Company could experience delays and increased prices for raw materials used in production processes.

To mitigate these impacts, the Company has implemented several strategies, including purchasing from alternative suppliers and planning for material purchases farther in advance to ensure the Company has materials when needed.

Due to volatile economic conditions, supply chain disruptions, tariff uncertainties, and transportation delays, the Company has experienced, and may in the future experience, delays and increased prices for raw materials used in its production processes.

To mitigate these impacts, the Company has implemented several strategies, including purchasing larger volumes from existing suppliers to reduce near- and medium-term supply risk, actively seeking alternative suppliers, and planning material purchases further in advance to ensure availability when needed.

The Company also adjusts its pricing to customers to offset the impacts of the raw material price increases.

5 unchanged sentences

The Company may be unable to maintain compliance with existing debt covenants, repay its debt or renew its expiring international credit facilities.

There is a risk that the Company may not be able to remain in compliance with its credit agreement covenants.

If there were an event of default under the Company's current revolving credit facilities, the lenders could cause all amounts outstanding with respect to that debt to be due and payable immediately.

There is a risk that the Company may not be able to remain in compliance with covenants in connection with its credit agreements.

If there were an event of default under the Company's current credit facilities, the lenders could cause all amounts outstanding with respect to that debt to be due and payable immediately.

The Company cannot assure that its cash flow will be sufficient to fully repay amounts due under any of the financing arrangements, if accelerated upon an event of default, or, that the Company would be able to repay, refinance or restructure the payments under any such arrangements.

Complying with the covenants under the Company's domestic and/or foreign revolving credit facilities may limit management's discretion by restricting options such as:

Complying with the covenants under the Company's domestic and/or foreign credit facilities may limit management's discretion by restricting options such as:

incurring additional debt;

3 unchanged sentences

creating liens.

The Company has approximately $2.0 million becoming due in the year ending January 31, 2026 under its various foreign revolving lines of credit.

The Company’s credit arrangements used by its Middle Eastern subsidiaries are renewed on an annual basis.

In addition to these credit arrangements, the Company also obtains financing in the Middle East on a project-by-project basis.

The Company has insignificant borrowings becoming due in the year ending January 31, 2026 under its project financing agreements.

While the Company believes that it will be able to renew its Middle East credit arrangements and will have continued access to individual project financing, there is no assurance that such arrangements will be renewed or made available in similar amounts or on similar terms and conditions as the current arrangements, or that such individual project financing will be available for projects that the Company is interested in pursuing in the future.

The Company has approximately $5.5 million of borrowings under foreign revolving lines of credit that are scheduled to mature in the year ending January 31, 2027.

Credit arrangements used by the Company’s Middle Eastern subsidiaries are typically renewed on an annual basis.

In addition, the Company has obtained project-specific financing in the Middle East, with $ 0.2 million of borrowings under such arrangements becoming due in the year ending January 31, 2027.

While the Company expects to renew its Middle Eastern credit arrangements and maintain access to project financing, there can be no assurance that such arrangements will be renewed on similar terms or amounts, or that project-specific financing will be available for future projects.

For additional information regarding the Company’s foreign debt, refer to Note 5 – Debt

Any replacement credit arrangements outside of the United States may further limit the Company’s ability to repatriate funds from abroad.

5 unchanged sentences

The Company’s inability to successfully maintain profitability and positive cash flows may result in it experiencing a serious liquidity deficiency resulting in material adverse consequences that could threaten its viability.

The Company extended credit to a customer for a project in the Middle East in 2013 and, if the Company is unable to collect this account receivable, its future profitability could be adversely impacted.

One of the Company’s accounts receivable in the total amount of $1.8 million and $2.2 million as of January 31, 2025 and 2024, respectively, has been outstanding for several years.

As of January 31, 2025, the entire balance represents a retention asset that is payable upon the commissioning of the system.

Due to the long-term nature of the receivable, $1.2 million and $1.4 million were included in other long-term assets as of January 31, 2025 and 2024, respectively.

The Company completed all of its deliverables in 2015 under the related contract, but the system has not yet been commissioned by the customer as additional activities must be completed prior to the overall system completion and commissioning.

Nevertheless, the Company continues to actively engage in ongoing collection efforts with the customer to ensure full payment of open balances , and at various times throughout 2024 and 2023, the Company received a partial payment to settle $ 0.4 million and $0.6 million of the customer's outstanding balances, respectively, including an additional $0.5 million that was received subsequent to the end of the year.

Additionally, the Company has been engaged by the customer to perform additional work in 2025 under customary trade credit terms that support the continued cooperation between the Company and the customer.

As a result, the Company did not reserve any allowance against this outstanding receivable as of January 31, 2025 .

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 uncollected amounts.

The Company extended credit to a customer for a project in the Middle East in 2013 and, if the Company is unable to collect this outstanding balance, its future profitability could be adversely impacted.

One of the Company’s accounts receivable, totaling $1.2 million and $1.8 million as of January 31, 2026 and 2025, respectively, has been outstanding for several years.

As of January 31, 2026, the entire balance represents a retention asset payable upon the commissioning of the system.

Due to the long-term nature of the receivable, $1.2 million was included in other long-term assets as of both January 31, 2026 and 2025.

The Company completed all deliverables under the related contract in 2015;

however, the system has not yet been commissioned by the customer, as additional activities must be completed prior to overall system completion and commissioning.

The Company continues to actively engage in collection efforts to ensure full payment of the outstanding balance.

At various times throughout 2024 and 2025, the Company received partial payments of $0.4 million and $0.6 million, respectively.

Additionally, the Company has been engaged by the customer to perform additional work in 2026 under customary trade credit terms, supporting the continued cooperation between the Company and the customer.

As a result, the Company did not record an allowance for this receivable as of January 31, 2026.

However, if collection efforts are unsuccessful, the Company may recognize an allowance for all, or substantially all, of the uncollected amount.

The Company may be impacted by interpretations and changes in tax regulations and legislation which could adversely affect the Company's results of operations.

3 unchanged sentences

The Company ’ s ability to use its net operating loss carryforwards and certain other tax attributes may be limited.

The Company’s net operating loss carryforwards (“NOLs”) in the U.S.

The Company’s net operating loss (“NOL”) carryforwards in the U.S.

could expire unused and be unavailable to offset future income tax liabilities because of their limited duration or because of restrictions under U.S.

1 unchanged sentence

Of the gross federal NOL amount, $9.3 million will begin to expire between tax years 2036 and 2037 and the remainder has an indefinite carryforward.

The state NOLs expire at various dates from 2025 to 2044.

State NOLs expire at various dates from 2026 to 2045.

In addition, the Company’s ability to use its NOLs may be limited in the event of future changes in its stock ownership.

1 unchanged sentence

federal taxable income may be subject to limitations, which could potentially result in a future tax liability of the Company.

In addition, at the state level, there may be periods in the future during which the use of NOLs is suspended or otherwise limited, which could result in a state tax liability which would otherwise not arise.

In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could result in a state tax liability which would otherwise not arise.

The Company’s inability to establish and maintain effective internal control over financial reporting could harm its business and financial results.

13 unchanged sentences

Business Condition Risks

Delays in the timing of order receipt, execution, delivery and acceptance for the Company’s products generally negatively impact the Company’s operating results.

Delays in the timing of order receipt, execution, delivery and acceptance of the Company’s products generally negatively impact the Company’s operating results.

The Company's operating results in any reporting period could be negatively impacted as a result of delays in the timing of project execution.

The Company may not be able to successfully negotiate progress-billing arrangements for its large contracts, which could adversely impact the Company’s working capital needs, cash flows and credit risk.

The Company sells systems and products under contracts that allow the Company to either bill upon the completion of certain agreed upon milestones, or upon actual shipment of the system or product.

The Company may not be able to successfully negotiate progress-billing arrangements on its large-scale contracts, which could adversely impact the Company’s working capital needs, cash flows and credit risk.

The Company sells systems and products under contracts that allow the Company to either bill upon the completion of certain agreed milestones, or upon actual shipment of the system or product.

The Company attempts to negotiate progress-billing milestones on large contracts to help manage its working capital and cash flows, and to reduce the credit risk associated with these large contracts.

5 unchanged sentences

In periods of declining demand, the Company's fixed cost structure may limit its ability to cut costs, which may be a competitive disadvantage compared to companies with more flexible cost structures, or may result in reduced operating margins, operating losses and negative cash flows.

The Company may be subject to claims for damages for defective products.

The Company may be subject to claims for damages from defective products.

The Company warrants its products to be free of certain defects.

2 unchanged sentences

While the Company currently has product liability insurance that it believes to be sufficient, the Company cannot be certain that its product liability insurance coverage will be adequate for liabilities that may be incurred in the future or that such coverage will continue to be available to the Company on commercially reasonable terms.

Any claims relating to defective products that result in liabilities exceeding the Company's insurance coverage could have a material adverse effect on the Company's business, results of operations, financial position and cash flows.

Any claim relating to defective products that result in liabilities exceeding the Company's insurance coverage could have a material adverse effect on the Company's business, results of operations, financial position and cash flows.

The Company may not be able to recover costs and damages from vendors that supply defective materials .

22 unchanged sentences

If the activities of these entities do not comply with U.S.

laws or business practices or the Company’s Code of Business Conduct, then violations of these laws may result in severe criminal or civil sanctions, which could disrupt the Company’s business, and result in an adverse effect on the Company’s reputation, business and results of operations or financial condition.

laws or business practices or the Company’s Code of Business Conduct, then violations of these laws or practices may result in severe criminal or civil sanctions, which could disrupt the Company’s business, and result in an adverse effect on the Company’s reputation, business and results of operations or financial condition.

The Company cannot predict the nature, scope, or effect of future regulatory requirements to which its operations might be subject or the manner in which existing laws might be administered or interpreted.

Geopolitical Risks, Including Tensions Involving Iran, May Adversely Affect Our Business .

Our operations in certain international markets expose us to geopolitical risks, including regional conflicts, political instability, and evolving government policies.

Recent tensions involving Iran have increased uncertainty in parts of the regions in which we operate.

Escalation of such tensions could disrupt our operations, delay project execution, restrict access to key markets, or adversely affect the security of our personnel and assets.

In addition, geopolitical developments may lead to broader economic or regulatory consequences, including sanctions, trade restrictions, or limitations on the movement of goods, services, and capital.

While we have not experienced material adverse impacts to date, further escalation or prolonged instability could have a material adverse effect on our business, financial condition, and results of operations.

General Risks

21 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors