Q1 2026 MIND Technology Inc Earnings Call

Breathing stuck to mine technologies first quarter fiscal 'twenty 'twenty six earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Operator: Greetings.

Operator: Welcome to Mind Technology First Quarter Fiscal 2026 Earnings Conference Call.

Operator: At this time, all participants are in a listen-only mode.

Operator: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Speaker Change: Any once you require operator assistance during the conference. Please press Star zero on your telephone keypad. As a reminder, this conference is being recorded its now my pleasure to introduce your host Zach fun. Thank you Sir you may begin.

Operator: As a reminder, this conference is being recorded.

Zach Vaughan: It is now my pleasure to introduce your host, Zach Vaughan. Thank you, sir. You may begin. Thank you, operator.

Zach: Thank you operator, good morning, and welcome to the main technology fiscal 2026 first quarter earnings Conference call.

Zach Vaughan: Good morning and welcome to the Mine Technology Fiscal 2026 First Quarter Earnings Conference. We appreciate all of you joining us today. With me are Rob Capps, President and Chief Executive Officer, and Mark Cox, Vice President and Chief Financial Officer.

We appreciate all of you joining us today.

Zach: With me are Rob Capps, President and Chief Executive Officer, and Mark Cox, Vice President and Chief Financial Officer.

Speaker Change: Before I turn the call over to Rob I have a few items to cover.

Zach Vaughan: Before I turn the call over to Rob, I have a few items to cover.

Zach Vaughan: If you'd like to listen to a replay of today's call, it will be available for 90 days via webcast by going to the Investor Relations section of the company's website at mind-technology.com, or via a recorded instant replay until June 8. Information on how to access the replay was provided in yesterday's earnings.

Speaker Change: If you'd like to listen to a replay of today's call. It will be available for 90 days via webcast by going to the Investor Relations section of the company's website at mind Dash technology Dot com or via a recorded instant replay until June 18.

Zach: Information on how to access the replay was provided in yesterday's earnings release.

Zach: Information reported on this call speaks only as of today Wednesday June 11, 2025, and therefore, you're advised the time sensitive information may no longer be accurate as of the time of any replay listening or transcript reading.

Zach Vaughan: Information reported on this call speaks only as of today, Wednesday, June 11th, 2025. And therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening or transcript reading.

Zach: Before we begin let me remind you that certain statements made by management. During this call may constitute forward looking statements within the meaning of the private Securities Litigation Reform Act back to 95.

Zach Vaughan: Before we begin, let me remind you that certain statements made by management during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties, and other factors, many of which the company is unable to predict or control, that may cause the company's actual future results or performance to materially differ from any future results or performance expressed or implied by those statements. These risks and uncertainties include the risk factors disclosed by the company from time to time in its filings with the SEC, including in its annual report on Form 10-K for the year ended January 31st, 2025.

Zach: These forward looking statements are based on management's current expectations and include known and unknown risks uncertainties and other factors.

Zach: Many of which the company is unable to predict or control that may cause the company's actual future results or performance to materially differ from any future results or performance expressed or implied by those statements.

Zach: These risks and uncertainties include the risk factors disclosed by the company from time to time in its filings with the SEC, including in its annual report on Form 10-K for the year ended January 31 2025.

Speaker Change: Furthermore, as we start this call. Please also refer to the statement regarding forward looking statements incorporated in our press release issued yesterday. Please note that the contents of our conference call. This morning are covered by these statements now I'd like to turn the call over to Rob Capps.

Zach Vaughan: Furthermore, as we start this call, please also refer to the statement regarding forward-looking statements incorporated in our press release issued yesterday. And please note that the contents of our conference call this morning are covered by these statements.

Rob Capps: Now I'd like to turn the call over to Rob Capps. Okay, thanks Zach, and thank all of you for joining us today. Today I will discuss some highlights from the quarter.

Rob Capps: Hey, Thanks, Zach and thank all of you for joining us today.

Rob Capps: Today I will discuss some highlights from the quarter Mark will then provide a more detailed update on our financials, then I'll return to wrap things up with some remarks about our outlook.

Rob Capps: Mark will then provide a more detailed update on our financials.

Rob Capps: Then I'll return to wrap things up with some remarks about our outlook. As expected, mine's results for the first quarter were down sequentially after a record fourth quarter. However, the decline was greater than initially anticipated after several customers were unable to take delivery of approximately 5.5 million of orders prior to quarter end. These delays are due either to late delivery of certain third-party components or difficulty in arranging shipping. So these are timing issues, not lost business. As I've reminded you repeatedly, a slippage of a few weeks or days for a large order can have a significant impact on a particular period.

Rob Capps: As expected <unk> results for the first quarter were down sequentially after a record fourth quarter.

Rob Capps: The decline was greater than initially anticipated and for several customers who are unable to take delivery of approximately $5 5 million of orders prior to quarter end.

Rob Capps: These delays are due either too light delivery of certain third party components or difficulty in arranging shipping.

Rob Capps: These are timing issues not lost business.

Rob Capps: I remind you repeatedly a slippage of a few weeks or days for large order can have a significant impact on a particular period.

Rob Capps: We expect to deliver these orders in the second quarter.

Rob Capps: We expect to deliver these orders in the second quarter. Despite these delays, cash flow from operations again grew during the quarter to about $4.1 million. which is an indication of our improved liquidity. We remain bullish on the balance of this fiscal year, despite the shortfall in the first quarter, and expect a much improved second quarter. Mine has established a more resilient business with greater order visibility, a strong demand environment, and a much improved balance sheet and capital structure. We will almost certainly encounter other timing issues at some point in the future, but to the extent possible, We work to mitigate the potential impacts on our financial results.

Rob Capps: Despite these delays cash flow from operations again grew during the quarter to about $4 $1 million.

Rob Capps: Which is an indication of our improved liquidity.

Rob Capps: We remain bullish on the balance of this fiscal year. Despite the shortfall in the first quarter and expect a much improved second quarter.

Rob Capps: Mind has established a more resilient business with greater order visibility, a strong demand environment and a much improved balance sheet and capital structure.

Rob Capps: We will almost certainly encounter other timing issues at some point in the future, but to the extent possible.

Rob Capps: We are working to mitigate the potential impacts on our financial results.

Rob Capps: We're doing everything in our power to control what we can control. We're focused on optimizing our supply chain to manage lead times on components to meet the delivery requirements of our customers. Our inventory levels over the past six months have been a great evidence of this as we're now using our improved visibility to draw down our inventory balance.

Rob Capps: We're doing everything in our power to control what we can control.

Rob Capps: We're focused on optimizing our supply chain to manage lead times all components to meet the delivery requirements of our customers.

Rob Capps: Our inventory levels over the past six months had been a great evidence of this as we're now you said our improved visibility to draw down our inventory balances.

Rob Capps: As a result, we believe MINE remains strategically positioned for growth, improved financial results, and profitability in the coming period. Our backlog of firm orders as of April 30, 2025, was approximately $21 million, compared to $16.2 million as of January 31, 2025, and approximately $31 million as of April 30, 2024. Beyond this backlog, we have an active pipeline of pending and highly confident orders and prospects that are well in excess of our current backlog of received orders. The order of our Gunlink 4000 system that we announced yesterday morning, which is not included in the above amounts, is a great example of these processes.

Rob Capps: As a result, we believe mind remains strategically positioned for growth improved financial results and profitability in coming periods.

Rob Capps: Our backlog of firm orders as of April 32025.

Rob Capps: It was approximately $21 million compared to 16 2 million as of January 31, 2025.

Rob Capps: And approximately $31 million as of April 32024.

Rob Capps: Beyond this backlog, we have an active pipeline of pending a highly confident orders and prospects, but are well in excess of our current backlog of received orders.

Rob Capps: The order for a drilling 4000 system that we announced yesterday morning, which was not included in the above amounts is a great example of these prospects.

Rob Capps: The combination of our existing backlog and is active pipeline bode well for strong financial performance as we progress through fiscal 'twenty to 'twenty six and beyond.

Rob Capps: The combination of our existing backlog and this active pipeline bode well for strong finesse performance as we progress through FY20-26 and beyond.

Rob Capps: Now as we approach the summer months I want to remind you the orders new orders don't always arrive at a constant rate throughout the year and order flow was often spread.

Rob Capps: As we approach the summer months, I want to remind you that orders, new orders, don't always arrive at a constant rate throughout the year, and order flow is often sporadic. The variance in order flow is commonplace and not cause for concern. We also believe that recent uncertainty in the global economic environment has caused some delays in purchase commitments. Despite this, in recent weeks we have identified new opportunities. We think this bodes well for the balance of this fiscal year and beyond. We continue to benefit from three main product lines. GunLink Source Controllers, BuoyLink Positioning Systems, and C-Link Streamer Systems. All three of these are meaningful contributors to our backlog and will continue to drive improvements and financial results going forward.

Rob Capps: The variance between an order flow is commonplace and not cause for concern.

Rob Capps: We also believe that recent uncertainty in the global economic environment has caused some delays in purchase commitments. Despite this in recent weeks, we have identified new opportunities. We think this bodes well for the balance of this fiscal year and beyond.

Rob Capps: We continued to benefit from three main product lines.

Rob Capps: Again like source controllers.

Rob Capps: What do you think positioning systems and C link streamer systems. All three of these are meaningful contributors to our backlog continued to drive improvements in financial results going forward.

Rob Capps: As a whole, our CMAQ business enjoys a strong market position with each of its products, even a dominant position in some cases. Our backlog and pipeline of orders are almost entirely comprised of these products, and I'm confident that the favorable market dynamics will enable us to generate many new orders in the future.

Rob Capps: As a whole our cement business enjoys enjoys a strong market position with each of its products, even though its dominant position in some cases.

Rob Capps: Our backlog and pipeline of orders are almost entirely comprised of these products and I'm confident that the favorable market dynamics will enable us to generate many new orders.

Rob Capps: Future.

Rob Capps: We're also seeing a number of new promising opportunities related to our products, but I hope to be able to update you on later this year.

Rob Capps: We're also seeing a number of new promising opportunities related to our products that I hope to be able to update you on later this year.

Rob Capps: Another component that has meaningfully contributed to the sustainability of our improved financial results as our aftermarket business.

Rob Capps: Another component that has meaningfully contributed to the sustainability of our improved financial results is our aftermarket. Historically, approximately 40% of our revenue comes from this aftermarket activity. However, in the first quarter of this year, the aftermarket activity represented approximately 71% of our revenue. Now, this was expected due to the deferral of some system sales, as I discussed a moment ago. As our install base of CMAQ products continues to expand, with it comes the chance for aftermarket opportunities such as spare parts, repairs, and support services. And a quick reminder, our products are deployed in a very harsh environment and damage is common and often ineffable.

Rob Capps: Historically, approximately 40% of our revenue come from this aftermarket activity.

Rob Capps: However, in the first quarter of this year the aftermarket activity represented approximately 71% of our revenues now.

Rob Capps: Now this was expected due to the deferral of some system sales as I discussed a moment ago.

Rob Capps: As our installed base of C met products continues to expand with it comes the chance for aftermarket opportunities such as spare parts repairs and support services.

Rob Capps: As a reminder, our products are deployed in a very harsh environment and damages common and often inevitable.

Rob Capps: Okay.

Rob Capps: We are in the final stages of an expansion of our facility in Huntsville, Texas, which will enable us to provide additional repair and manufacturing services from that location. During the expansion, which has been in progress for the last couple quarters, our revenue-producing activities have been impaired. However, with the completion of these modifications, we expect the contribution from this location to build during the balance of this year and beyond. We anticipate this becoming a meaningful part of our revenue stream.

Rob Capps: We are in the final stages of an expansion of our facility in Huntsville, Texas.

Rob Capps: Which will enable us to provide additional repair and manufacturing services from that location.

Rob Capps: During the expansion, which has been in progress for the last couple of quarters, a revenue producing activities have been impaired.

Rob Capps: However, with the completion of these modifications we expect the contribution from this location to build during the balance of this year and beyond.

Rob Capps: We anticipate this becoming a meaningful part of our revenue stream.

Rob Capps: Now turning to our results.

Rob Capps: Now, turning to our results. Marine Technology Product Revenues for the First Quarter of Fiscal 2026 were $7.9 million. As I mentioned, we expected a natural sequential contraction in revenue after an exceptional fourth quarter. However, we saw approximately 5.5 million of orders slide to the right. We will continue to capitalize on macro tailwinds and customer engagement to stimulate order flow and generate improved results. We have deliberately worked to improve our execution, efficiency, and cost structure. We expect these efforts to deliver favorable results in future periods.

Rob Capps: Marine technology product revenues for the first quarter of fiscal 2026 or $7 9 million.

Rob Capps: As I mentioned, we expected a natural sequential contraction in revenue after an exceptional fourth quarter. However, we saw approximately $5 $5 million of orders slipped to the right.

Rob Capps: We will continue to capitalize on macro tailwind and customer engagement to stimulate order flow and generate improved results.

Rob Capps: We have deliberately worked to improve our execution efficiency and cost structure.

Rob Capps: We expect these efforts to efforts to deliver favorable results in future periods.

Rob Capps: Despite broad-based macro uncertainties in recent months, general market conditions within the marine technology space continue to be strong. We see a number of opportunities and continue to field inquiries and respond to requests for quotations. As a result, we are making additional investments to further develop and advance our next generation of marine technology products to meet the evolving needs of our customers. I'm confident that our differentiated approach, best-in-class suite of products will continue to give us the competitive advantage to address the demand we see within the marine technology industry.

Rob Capps: Despite broad based macro uncertainties in recent months general market conditions within the Marine technology space continued to be strong.

Rob Capps: We see a number of opportunities and continue to field inquiries and respond to requests for quotations.

Rob Capps: As a result, we are making additional investments to further develop and advance our next generation of marine technology products to meet the evolving needs of our customers.

Rob Capps: I am confident that our differentiated approach best in class suite of products will continue to give us the competitive advantage to address the demand we see within the marine technology industry.

Rob Capps: Now I'll, let Mark walk you through our first quarter financial results in a bit more detail.

Mark Cox: Now I'll let Mark walk you through our first quarter financial results in a bit more detail.

Mark: Thanks, Rob and good morning, everyone.

Mark Cox: Thanks, Rob, and good morning, everyone. As Rob mentioned earlier, revenues from marine technology product sales totaled $7.9 million for the quarter. which was down approximately 18% from the same period a year ago. Revenue was impacted by the timing of 5.5 million of orders that were unable to be delivered prior to quarter end. We expect these orders to be delivered in the second quarter. We're continuing to see strength in all our key markets. The favorable customer demand environment gives us confidence for improved results over the balance of fiscal 2026. and beyond. First quarter gross profit was $3.3 million.

Mark: As Rob mentioned earlier revenues for Marine technology product sales totaled $7 9 million for the quarter.

Mark: Which was down approximately 18% from the same period a year ago.

Mark: Revenue was impacted by the timing of $5 5 million of orders that were unable to be delivered prior to quarter end.

Mark: We expect these orders to be delivered in the second quarter.

Mark: We're continuing to see strength in all our key markets and the favorable customer demand environment gives us confidence for improved results over the balance of fiscal 2026.

Mark: And beyond.

Mark: First quarter gross profit was $3 3 million. This represents a gross profit margin of 42% for the quarter.

Mark Cox: This represents a gross profit margin of 42% for the quarter. Both of these metrics were impacted by lower revenue during the quarter, stemming from the delivery delay. addressed in Rob's opening comments. The lower revenue resulted in less cost absorption. and drove the year-over-year decline. As revenue increases in the second quarter, and our cost structure continues to benefit from greater production efficiency. We expect these metrics to improve.

Mark: Both of these metrics were impacted by lower revenue during the quarter stemming from the delivery delays.

Mark: Dressed in Rob's opening comments.

Mark: The lower revenue resulted in less cost absorption.

Mark: And drove the year over year declines.

Mark: As revenue increases in the second quarter and our cost structure continues to benefit from greater production efficiencies we.

Mark: We expect these metrics to improve.

Mark: Our general and administrative expenses were approximately $3 4 million for the first quarter of fiscal 2026.

Mark Cox: Our general and administrative expenses were approximately $3.4 million for the first quarter of fiscal 2026. This was up both sequentially and compared to the same quarter a year ago. The sequential increase is partially expected due to normal seasonality of certain costs. However, our first quarter expense included non-recurring costs related to a restructuring of our UK operation and tax analysis surrounding the preferred stock conversion last year. I think it worth noting that the tax analysis confirmed our understanding that the preferred stock conversion did not limit or impair our U.S. tax attributes, primarily tax loss carryover. Our research and development expense for the first quarter was $380,000, which was down compared to the same quarter a year.

Mark: This was up both sequentially and compared to the same quarter a year ago.

Mark: The sequential increase is partially expected due to normal seasonality of certain costs.

Mark: However, our first quarter expense included nonrecurring costs related to a restructuring of our UK operation and tax analysis surrounding the preferred stock conversion last year.

Mark: I think it worth noting that the tax analysis confirmed our understanding that the preferred stock conversion did not limit or impair our U S tax attributes primarily tax loss carryforwards.

Mark: Our research and development expense for the first quarter was $380000, which was down compared to the same quarter a year ago.

Mark: Consistent with prior periods. These costs were largely directed towards the development of our next generation streamer system.

Mark Cox: Consistent with prior periods, these costs were largely directed towards the development of our next generation streamer system.

Mark: Operating loss for the first quarter was approximately 658000 compared to operating income of 730000 in the same quarter a year ago.

Mark Cox: Operating loss for the first quarter was approximately $658,000 compared to operating income of $730,000. same quarter a year ago. First quarter adjusted EBITDA was a loss of approximately $179,000. compared to adjusted EBITDA of $1.5 million in the first quarter.

Mark: First quarter adjusted EBITDA was a loss of approximately 179000 compared to adjusted EBITDA of $1 5 million in the first quarter a year ago.

Mark Cox: As I mentioned earlier, the first quarter was impacted by approximately $250,000 of non-recurring expenses related to restructuring and tax-related professionals. that would have otherwise resulted in positive adjusted EBITDA for the quarter. Net loss for the first quarter was approximately $970,000 compared to net income of $954,000 in the same quarter a year ago.

Mark: As I mentioned earlier, the first quarter was impacted by approximately 250000 of nonrecurring expenses related to restructuring and tax related professional fees that would have otherwise resulted in positive adjusted EBITDA for the quarter.

Mark: Net loss for the first quarter was approximately 970000 compared to net income of 954000 in the same quarter a year ago.

Mark: As our April 30th 2025.

Mark Cox: as of April 30th, 2025. We had working capital of approximately $22.8 million. including $9.2 million of cash. The liquidity continues to be impacted by our operational requirements, such as acquiring inventory and executing on our backlog of orders. However, we did generate approximately $4.1 million of cash flow from operations in the first quarter. This was an improvement of approximately 98% sequential.

Mark: We had working capital of approximately $22 8 million.

Mark: Including $9 2 million of cash on hand.

Mark: Liquidity continues to be impacted by our operational requirements, such as acquiring inventory and executing on our backlog of orders.

Mark: We did generate approximately $4 1 million of cash flow from operations in the first quarter.

Mark: This was an improvement of approximately 98% sequentially.

Mark: Company continues to maintain a clean.

Mark Cox: Company continues to maintain a clean, debt-free balance sheet with a simplified capital structure following the conversion of the preferred stock to common stock.

Mark: Debt free balance sheet with a simplified capital structure. Following the conversion of the preferred stock to common stock in the third quarter of fiscal 2025.

Mark Cox: This is the third quarter of fiscal 2025. We believe our solid footing and flexibility will further enhance stockholder value in future.

Mark: We believe our solid footing and flexibility will further enhance stockholder value in future periods.

Rob Capps: I'll now pass it back over to Rob for some concluding comments.

Rob Capps: I'll now pass it back over to Rob for some concluding comments. Thanks, Mark. Our efforts to transform the company in recent years have positioned mine for long-term success. The strength of our balance sheet has made mine more resilient, financially flexible, and has opened the door for us to pursue value-enhancing strategic opportunities as we strive for growth. We also continue to benefit from significant customer interest and engagement related to our CMAP product. Our current visibility, strong backlog, and robust pipeline also give us optimism for favorable financial performance for the balance of this year. Additionally, we are continuously exploring innovative ways to expand and repurpose our existing technology for new applications.

Rob Capps: Thanks Mark.

Rob Capps: Our efforts to transform the company in recent years have positioned <unk> for long term success.

Rob Capps: The strength of our balance sheet has made mind more resilient and agile flexible and has opened the door for us to pursue value enhancing strategic opportunities as we strive for growth.

Rob Capps: We also continued to benefit from significant customer interest and engagement related to our <unk> product lines.

Rob Capps: Our current visibility strong backlog and robust pipeline also gives us optimism for favorable financial performance for the balance of this year.

Rob Capps: <unk>, we are continuously exploring innovative ways to expand and repurpose our existing technology for new applications IMAX.

Rob Capps: I'm excited for us to actively chase these new initiatives and opportunities in the coming period.

Rob Capps: I am excited for us to actively chase these new initiatives and opportunities in the coming periods.

Rob Capps: Given we spoke with you only a little over a month ago, not much has meaningfully changed in the political and economic landscape. There is still a moderate level of uncertainty present in the market related to tariffs and other trade restrictions. I remind everyone that the vast majority of our revenues are generated from our Singapore subsidiary. A similar proportion of our production activity takes place either in our Singapore or Malaysia facility. Furthermore, in fiscal 2025, almost 95% of our revenue was derived from customers outside the United States. So, accordingly, our import and export activity through the United States is quite limited.

Rob Capps: I gave when we spoke with you only a little over a month ago not much has meaningfully changed in the political and economic landscape.

Rob Capps: There is still a moderate level of uncertainty prison in the market related to tariffs and other trade restrictions.

Rob Capps: I'll remind everyone that the vast majority of our revenues are generated from our Singapore subsidiary.

Rob Capps: In a similar proportion of our production activity takes place either or Singapore or Malaysia facilities.

Rob Capps: Furthermore, and physical 2025, almost 95% of our revenue was derived from customers outside the United States.

Rob Capps: So accordingly, our import and export activity through the United States is quite limited.

Rob Capps: Due to this, we do not currently anticipate a material direct impact on our business from the imposition of additional tariffs, trade tariffs, by the United States or other countries. As noted earlier, uncertainty in the global economic environment can cause our customers to delay purchasing decisions. Of course, this is a fluid situation and we continue to monitor the evolving dynamics.

Rob Capps: Due to this we do not do not currently anticipate a material direct impact on our business from the imposition of additional tariffs trade tariffs by the United States or other countries.

Rob Capps: As noted earlier uncertainty in the global economic environment can cause our customers to delay purchasing decisions.

Rob Capps: Of course this is a fluid situation and we'll continue to monitor monitor the evolving dynamics.

Rob Capps: As we touched on last quarter, we recognized no matter how compelling our recent momentum has been mined is still a small company with that kind of inherent challenges.

Rob Capps: As we touched on last quarter, we recognize that no matter how compelling our recent momentum has been, MIND is still a small company, and with that comes inherent challenges. We've taken necessary steps to strategically position ourselves to realize our full potential and enhance shareholder value. We intend to evaluate all opportunities that present themselves with a focus on adding scale, expanding our offerings, and growing existing product liabilities. This approach should enable us to strengthen mind and improve its standing within the market for the benefit of all shareholders. The macroenvironment remains advantageous for mine, which gives us optimism for the future.

Rob Capps: We have taken necessary steps to strategically position ourselves to realize our full potential and enhance shareholder value.

Rob Capps: We intend to evaluate all opportunities that present themselves with a focus on adding scale, expanding our offerings and growing existing product lines.

Rob Capps: This approach should enable us to strengthen mine and improve its standing within the market for the benefit of all shareholders.

Rob Capps: The macro environment remains advantageous relied which gives us optimism for the future.

Rob Capps: and Marine Technology Products continue to penetrate a variety of industries and markets. We believe our backlog of firm orders and pipeline of pending orders and other prospects are reflected as a significant demand and market adoption of our product. As a result, we expect a meaningful increase in revenue in the current quarter. This will enable us to achieve positive adjusted EBITDA in return of profitability in the second quarter. Barring any unforeseen circumstances, this is a standard we expect to meet for the remainder of the year. Looking forward, we will continue to control what we can control.

Rob Capps: Our marine technology products continue to penetrate a variety of industries and markets.

Rob Capps: We believe our backlog of firm orders and pipeline of pending orders and other prospects are reflective of the significant demand and market adoption of our product lines.

Rob Capps: As a result, we expect a meaningful increase in revenue in the current quarter.

Rob Capps: This will enable us to achieve positive adjusted EBITDA and returned to profitability in the second quarter.

Rob Capps: Barring any unforeseen circumstances. This is a standard we expect of each for the remainder of the year.

Rob Capps: Looking forward, we will continue to control what we can control.

Rob Capps: Customer delivery requirements and other factors may impact future periods. However, we expect the general trend will be one of improved results in fiscal 2026 and beyond. We have a solid backlog and significant pipeline of pending and highly confident orders. Both are supported by the robust customer interest and engagement that we are seeing within our key market. We are also pursuing several new opportunities within our existing and future markets. which I'm confident will bear fruit in the near future. We have a different differentiated and market leading suite of products. I'm confident we will deliver another great year in fiscal 2026 as we strive to enhance stockholder value.

Rob Capps: Customer delivery requirements and other factors may impact future periods. However, we expect the general trend will be one of improved results in fiscal 2026 and beyond.

Rob Capps: We have a solid backlog and significant pipeline of pending that highly confident orders.

Rob Capps: Both are supported by the robust customer interest and engagement, we are seeing within our key markets.

Rob Capps: We are also pursuing several new opportunities within our existing and future markets, which I'm confident will bear fruit in the near future.

Rob Capps: We have a differentiated and market, leading switch products, a favorable market environment and clean capital structure.

Rob Capps: Confident we will deliver another great year in fiscal 2026, as we strive to enhance stockholder value.

Rob Capps: And operator, we can now open the call for some questions.

Operator: And with that, Operator, we can now open the call for some questions. Thank you.

Rob Capps: Thank you.

Operator: If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker Change: I'd like to ask a question. Please press star one on your telephone keypad confirmation tone will indicate your line is in the question killed.

Speaker Change: May press star kill it seemed that they dream of a question for Mike you and.

Operator: And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Rob Capps: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Tyson Bauer: Our first question is from Tyson Bauer with Casey Capital. Please proceed. Good morning, gentlemen. Hey, Tyson.

Tyson Bauer: Our first question is from Tyson Bauer with KC capital. Please proceed.

Tyson Bauer: Good morning, gentlemen.

Speaker Change: Okay Tyson.

Rob Capps: On the 5.5 delay delivery, have those been delivered as of yet, and are they mainly comprised of one or two systems? partially delivered there was a large one large system and then a few other orders okay so it's a little bit of both so the partially delivered but not completely yet So those will be, will be soon, though. On an accounting practice, those remain in backlog, finished goods. You're expecting those deliveries to take place in the second quarter. So that full cash cycle should be complete by the time you end Q2. Yes, from a billing standpoint, yes.

Speaker Change: On the $5 five delayed delivery has been delivered as of yet and as they mainly comprised of one or two systems.

Speaker Change: Partially delivered there's a large one large system and then a few other orders.

Speaker Change: So it's a little bit.

Speaker Change: So the parser liver, but not completely yet.

Speaker Change: So those will be what it will be soon though.

Speaker Change: Amount accounting practice those remain in backlog finished goods.

Speaker Change: You're expecting those deliveries take place in the second quarter, so that full cash cycle should be complete by the time you end Q2.

Speaker Change: Yes from a billing standpoint, yet from a cash cycle collections may or may not happen at that time, but yes.

Rob Capps: From a cash cycle, you know, collections may or may not have happened at that time, but yes. From a broker standpoint, absolutely. Okay.

Speaker Change: Like retro standpoint.

Speaker Change: Okay.

Speaker Change: On the.

Tyson Bauer: On the tax loss carry forwards, after you did your analysis, what did you determine as the amount that you reasonably have that could be used in the future? About $80 million U.S. dollars that NOL carried forward, roughly. Now, the problem with that is you have to generate in the U.S. You just commented 95% is out of Singapore.

Speaker Change: Tax loss carryforwards. After you did your analysis, what or what did you determine as the amount that you are reasonably have that could be used in the future.

Speaker Change: About $80 million U S dollars.

Speaker Change: Carry forward roughly.

Speaker Change: Now the problem with that is you have to generate in the U S. You. Just commented 95% is out of our Singapore. So how do you as a management team unlock that value.

Rob Capps: So how do you as a management team unlock that value? And either that comes from U.S. generated business or partnering with somebody who has U.S.

Speaker Change: And either that comes from U S generated business or partnering with somebody who has U S businesses that can utilize your tax carryforward and isn't typically in a.

Rob Capps: business that can utilize your tax carry forward and isn't typically in a, that kind of activity, a business combination, that value on a standalone about 25% of what the listed value is. Yeah, you hear all sorts of numbers about that. It really depends on the circumstances, Tyson. I mean, you have to be careful about subsequent ownership changes, which we can limit that. But there certainly are ways to take advantage of that and try to shift more income into the U.S. There are, you know, you understand that under the U.S. tax laws now, you know, we're taxed on worldwide income with the offsets for what you pay overseas.

Speaker Change: That kind of activity or business combination that that value on a standalone about 25% of what the list of values.

Tyson Bauer: You hear all sorts of numbers about that it really depends on the circumstances Tyson I mean, you have to be careful about.

Tyson Bauer: Subsequent ownership changes, which we can limit that.

Tyson Bauer: But there certainly are.

Rob Capps: Ways to take advantage of that and you have to try to shift more income into the U S.

Rob Capps: There are.

Rob Capps: We understand it under the new U S tax laws now were taxed on worldwide income.

Rob Capps: But offsets for once you pay overseas. So there is some benefit there. So there are ways to utilize that so I think there is value there to us.

Rob Capps: So there is some benefit there. So there are ways to utilize that. So I think there is value there to us.

Rob Capps: You know, is it 25% of face value? I'm not going to speculate on that, but there is certainly value there.

Rob Capps: 25% of face value I'm, not going to speculate on that but theres certainly valued everything.

Tyson Bauer: I mean, if it was, that's literally half your enterprise value is just in something that's in an accounting treatment.

Rob Capps: I mean, if it was that's literally half your <unk>.

Rob Capps: Enterprise value is just something that's an accounting treatment.

Rob Capps: But that's the way the numbers work out yeah, that's a really untapped value that's gone unrecognized by the marketplace.

Tyson Bauer: Yeah, that's really untapped value that's gone unrecognized by the marketplace.

Rob Capps: A couple of days after you reported last quarter or the fiscal year end.

Rob Capps: A couple days after you reported last quarter or the fiscal year-end, we see Trump do an executive order for deep-sea offshore resources, China is in the news for increasing their activity for deep-sea mining and rare-earth elements. Those things may be further down the line, but there seems to be a lot more attention and activity in regards to those industries that could potentially utilize your technology in finding these things. Are you seeing that on your customer base, that that is an area and an opportunity that could develop in the years coming? I think so. What we're seeing is, you know, are some of our existing customers and potentially new customers are, you know, looking to, you know, go farther afield in what they've done historically and, you know, use some of their expertise in that sort of survey type work, exploration survey work, and you know our products, especially the ceiling product line, is you know right in the wheelhouse for that sort of thing.

Rob Capps: We see Trump do an executive order for deep sea offshore offshore resources, China is in the news for increasing their activity for deep sea mining in rare Earth elements.

Rob Capps: Those things may be further down the line, but there seems to be a lot more attention and activity in regards to those industries that could potentially utilize your technology and finding these things.

Speaker Change: Are you seeing that on your customer base that that is an area or an opportunity that could develop in the years coming.

Rob Capps: I think so what we're seeing is some of our existing customers and potential new customers are looking to.

Rob Capps: Go farther afield and what they've done historically and we'll use some of their expertise and that sort of a.

Rob Capps: Survey type work exploration survey work and now our products, especially the sealing product line is right in our wheelhouse for that sort of thing. So that's very encouraging for us.

Rob Capps: So that's very encouraging for us.

Rob Capps: Now in the past you've done some master supply agreements with some of the bigger our worldwide customers, especially those out of Norway Scandinavian countries do.

Rob Capps: Now in the past you've done some master supply agreements with some of the bigger worldwide customers especially those out of Norway, Scandinavian countries. Do you have any currently active and is that an approach that you see as favorable for mine as you go forward to either renew or to develop those master supply type agreements? We certainly have those type of agreements with some of our larger customers, which is again a framework for general terms, you know, it doesn't address specific orders, but it does give us a framework. So we certainly have those in place today and are looking to put others like that in place.

Rob Capps: Do you have any currently active in or is that an approach that you see as favorable for mine as you go forward to either renew or to develop those master supply type care agreements.

Rob Capps: We certainly have those type of agreements with some of our larger customers, which is again a framework for general terms doesn't address specific orders, but it does gives us a framework. So we certainly have those in place today.

Rob Capps: And are looking to put others like that in place okay.

Rob Capps: When you- That's what that does. It just facilitates new business, is what it does. Is it not just an accordion feature that, okay, this is going to be a cost-plus type contractor, otherwise- So we can expedite the process on getting orders and getting production out to those customers. That's correct. So you've agreed to standard terms and conditions. You may have agreed to some pricing parameters as well. So it certainly facilitates, makes it much quicker for a new order to come through. That's definitely been our experience.

Rob Capps: When you go and what that does to.

Rob Capps: If the sell what types of new business just wanted to us.

Rob Capps: Is it not just from the accordion feature that okay. This is going to be a cost plus type contract or otherwise.

Rob Capps: So we can expedite the process on getting orders and getting production out to those customers.

Speaker Change: That's correct, so you've agreed to standard terms and conditions.

Speaker Change: Hey.

Speaker Change: I agreed to some pricing parameters as well so it certainly facilitates makes up much quicker.

Speaker Change: Yeah, new orders come through.

Speaker Change: That's definitely been our experience okay.

Rob Capps: Okay.

Rob Capps: New streamer system coming on later this year.

Speaker Change: New stream our system coming on later this year.

Tyson Bauer: The interest you've garnered so far, have you been able to go out and demonstrate this to your customers? And what causes the customer to...

Rob Capps: The interest you've garnered so far have you been able to go out and demonstrate this to your customers and what causes the customer to <unk>.

Tyson Bauer: go with the older technology as opposed to the new technology that's coming or the new system that's coming and will we start to see pre-orders for that as we get toward the back half of the year?

Rob Capps: Joe with the older technology as opposed to the new technology, that's coming out of the new system, that's coming and when we start to see preorders for that as we get towards the back half of the year.

Rob Capps:

Rob Capps: I don't want to get too deep into that for some competitive reasons, but I would say it's more of enhancement of what we have. It's not like a totally new technology. It's more of an enhancement and allows us to address some additional markets.

Rob Capps: I don't want to get too deep into that for some competitive reasons.

Rob Capps: But I'd say, it's more of enhancement of what we have it's not like a totally new technology, it's more of an enhancement.

Rob Capps: And allows us to address some additional markets.

Rob Capps: And let me just leave it at that at this point and not get too detailed about that. Okay.

Rob Capps: And let me just leave it at that at this point and not get too detail about them.

Tyson Bauer: And are you seeing bid margin trends favorable? as we're going forward, or are they pretty stable? I'd say they're fairly stable. I mean, we have some ability to expand those, but it's fairly stable overall, I'd say.

Rob Capps: And are you seeing them bid margin trends are favorable.

Rob Capps: As we're going forward or are they.

Rob Capps: Pretty stable.

Rob Capps: Let's say they are fairly stable I mean, we have some ability to to.

Rob Capps: Expand those that it's fairly stable overall, let's say.

Rob Capps: Outside of the last question for me, outside of the... normal course of marine seismic activity that were renewable energy, offshore wind, rare earth elements, oil, gas, all those things. You mentioned new opportunities and expanding kind of your addressable market. Any additional color you want to throw on that? Well, I think we've talked a bit about this. You know, in the past, we looked at taking some of our technology into a more maritime security application, you know, military type application. We've pulled back on that as we tried to refocus the company to become profitable, which we've done.

Rob Capps: Outside of a last question for me outside of the.

Rob Capps: Normal course of our marine seismic activity that were renewable energy offshore win.

Rob Capps: Rare earth elements oil and gas all of those things you mentioned, new opportunities and expanding kind of your addressable market any additional color you want to throw on that.

Rob Capps: Well I think we've talked a bit about this in the past we look at taking some of our technology into more of Maritime security application.

Rob Capps: Military type application.

Rob Capps: We pulled back on that as we tried to refocus the company to become profitable, which we've done. So that's an area that we are reexamining today as to how we might.

Rob Capps: So that's an area that we were reexamining today as to how we might, you know, we think that basic concept is still very valid. And so we were just looking at how we best address that and maybe re-enter that marketplace. Okay, and that goes beyond your AI spectrum and your oceans agreement that you have? Yes, yes. This is your core product? Completely different. Okay. Absolutely.

Rob Capps: We think that basic concept is still very valid.

Rob Capps: So we are just looking at how do we best address that and maybe re enter that marketplace.

Speaker Change: Okay and that goes beyond your AI spectrum in your oceans agreement that you have.

Rob Capps: Yes, yes, the core product.

Rob Capps: Yes, absolutely.

Rob Capps: That sounds wonderful.

Rob Capps: That sounds wonderful thank you.

Rob Capps: Yep.

Speaker Change: Our next question is from Ross Sandler with E. R. S investment partners. Please proceed.

Russ Taylor: Our next question is from Russ Taylor with ARS Investment Partners. Please proceed. Thank you.

Ross Sandler: Thank you first congratulations on the real improvement on the balance sheet and picking up on Tyson's line of reasoning, 20% to 25% value of the tax losses add to your cash you really have a company selling at three bucks or less a share in the marketplace with a lot of earnings power It seems that the.

Russ Taylor: First, congratulations on the real improvement on the balance sheet. In picking up on Tyson's line of reasoning, 20-25 percent value of the tax losses add to your cash. You really have a company selling at three bucks or less a share in the marketplace with a lot of earnings power. It seems that the market still hasn't quite picked up on that, but eventually they will. So thank you.

Ross Sandler: Market.

Speaker Change: You'll have some quite hooked up on them, but eventually they will but you guys have done.

Ross Sandler: So.

Rob Capps: Can you give us an idea of what's going on with, on the $5.5 million, what impact did that have on your, you know, unrecovered costs? You obviously, at this point, you, you've built out, it sounds like you've built out a lot of that, had much of it ready to go, weren't able to ship it out. How did that impact earnings in the quarter? Oh, well, it would have been another, you know, five and a half million dollars of revenue at, you know, at least at the margin that we demonstrated. So there's another two million dollars of property and profit or gross profit.

Ross Sandler: Can you give us an idea of what's gone on with on the $5 5 million what impact did that have on your.

Ross Sandler: Recovered costs, you'll obviously at this point you you built out it sounds like you've built out a lot of that had you been ready to go we weren't able to ship it out how did that impact earnings in the quarter.

Ross Sandler: Oh, well it would have been another five and a half million dollars of revenue.

Ross Sandler: At least at the margin that we demonstrated so theres another about $2 million of operating profit our gross profit.

Rob Capps: So yeah, have a good day. Yeah, it would have been on the gross profit level, something like 25 cents a share or something of that. That sounds about right, yeah. Yeah, which once again goes to the power, and as I said, congratulations on that.

Ross Sandler: So yeah.

Ross Sandler: Yeah, It would have been.

Ross Sandler: On the gross profit level, something like 25 cents, a share or something of that nature.

Ross Sandler: Yeah that sounds about right yeah.

Ross Sandler: Once again goes to the power and as I said, congratulations on that and you announced an order yesterday can you give us an idea how has the.

Rob Capps: You announced an order yesterday, can you give us an idea, how has the backlog moved since the end of the quarter you're reporting? Oh gosh, I want to be careful what I say there. It's, you know, because we add and subtract things every day. So there's things going in and out all the time. And, you know, that certainly is an add to the backlog.

Ross Sandler: The backlog move since the end of the quarter you're reporting today.

Speaker Change: Oh, gosh, I don't want to be careful what I say, there is because we add and subtract things everyday. So there is things going in and out all the time.

Ross Sandler: That certainly is an add to the backlog.

Rob Capps: What's interesting about that, Ross, is, you know, that's a prospect that, frankly, if we're having this discussion 2 months ago, that wasn't on our radar. So that's really interesting to me that that's a new opportunity that's arisen recently. And there's been some others that we've now had visibility on. Don't have the order yet, but we have visibility of prospects that we didn't have. two, three months ago, which that's really encouraging me.

Speaker Change: What's interesting about that Ross as you know that's a.

Ross Sandler: The prospect of frankly, if we're having this discussion two months ago that wasn't on our radar.

Ross Sandler: So that is really interesting to me that that's a.

Ross Sandler: A new opportunity that's arisen recently there has been some others that we now have visibility on they'll have the order yet.

Ross Sandler: We have visibility of prospects that we didn't have.

Ross Sandler: Two or three months ago, which that's really encouragingly some of that is that <unk>.

Rob Capps: Some of that, you know, is. next fiscal year, I can be for sure, but that's still good news.

Ross Sandler: Next fiscal year activity for sure, but that's still good news I think.

Ross Sandler: So when you when you say as a new customer or is this a situation where they are.

Rob Capps: So when you say it's a new customer, is this a situation where they are, is it a new use or is it someone in one of your, you know, areas that you're currently operating that you had not been doing business with that is now doing business? I wouldn't say it's a new customer, it's someone we've done business with in the past and so they were an existing customer, but it's a new need for them. Okay, interesting, interesting.

Ross Sandler: Is it a new use or is it someone in one of your areas that you're currently operating that you had not been doing business with that is now doing business with you.

Ross Sandler: It's a.

Ross Sandler: I wouldn't say, it's a new customer is someone who we've done business within the past and so they were an existing customer, but its a new need for them.

Ross Sandler: Okay interesting.

Ross Sandler: Hum.

Ross Sandler: We're talking about obviously with your tax losses, you talked about you've put been building up your text.

Russ Taylor: We're talking about, obviously, with your tax losses, you talked about you've been building up your Texas repair refurbishment capability. A couple things. One is how much money have you put into that facility and how does that coming to, you know, being brought online impact your income statement and the cash flow? So, we've sent roughly a couple of a half million dollars to expand that. That's in rough terms over the past, you know, nine months or so, something like that. Just about done with that. We think the activities here will then start to ramp up. We won't turn it on completely, but we think this can be several million dollars a year.

Ross Sandler: Texas repair refurbishment capability a couple of things one is how much money have you put into that facility and.

Ross Sandler: How does that I mean, two being brought online impact.

Ross Sandler: Your income statement.

Ross Sandler: Cash flow.

Ross Sandler: So we've sent roughly call it a half million dollars looks to expand their that's in rough terms over the past.

Ross Sandler: Nine months or so something like that.

Ross Sandler: Just about done with that.

Ross Sandler: We think the activity its air will then start to ramp up we'll turn it off completely but we think this can be several million dollars a year of additional revenue for us.

Russ Taylor: Of additional revenue for us again. Starting here soon, and then kind of ramping up to the balance of this year and into next year. And, you know, to your point, that's a nice piece of business for us. And then it's more recurring, more predictable. And also, it's US based, so it helps us utilize those tax losses. That's what, just where I was going with that, the fact that it's actually going to start to help build that up and therefore that income will have a significant, will be tax advantaged here in the U.S. That's right. Okay.

Ross Sandler: Again star.

Ross Sandler: <unk> here soon and then kind of ramping up now.

Ross Sandler: Balance of this year and into next year.

Ross Sandler: And to your point.

Ross Sandler: Thats, a nice piece of business for us.

Ross Sandler: And then it's more recurring more predictable.

Ross Sandler: And also it's U S based so it helps us utilize those tax losses.

Speaker Change: Yeah, that's what just what I was going with that the fact that it's actually going to start to help build that up and therefore does that encumber other significant will be tax advantaged here in the U S.

Speaker Change: Correct that's right.

Speaker Change: Okay.

Speaker Change: So in looking at this whole situation also I noticed that you guys have an arrangement.

Russ Taylor: So in looking at this whole situation also, I noticed with Botsman & Hatton, you guys have an arrangement or announced an arrangement, or you guys actually didn't necessarily, with a, I think it's a German company, GWL. Could you give any background? What is that tied into? So again, I think we'll have more to say about that later, but that is a company that has a new product concept they're working on and we're looking to partner with them to bring that to market and kind of jointly promote that. But we'll have more to say about that in the near future.

Speaker Change: <unk> announced an arrangement or are you guys actually did with a I think it's a German company E. W. L.

Speaker Change: Could you give any background what is that tied into.

Speaker Change:

Speaker Change: So again.

Speaker Change: We'll have more to say about that later.

Speaker Change: But that is a company that has a new product.

Speaker Change: Concept they are working on and we're looking to partner with them.

Speaker Change: To bring that to market and kind of jointly promote that but we'll have more to say about that in the near future.

Speaker Change: Okay and then just.

Rob Capps: Okay. I mean, it is interesting because you've been talking, Tyson asked you about this, your comments even on your release talked about new opportunities. And it sounds like new opportunities is both new customers, but also new business lines. Is that correct? Oh, absolutely. I mean, one of our objectives is to expand our offerings. So we have more kit to offer our existing customers and new customers. So yeah, most definitely that's part of the strategy. Most definitely.

Speaker Change: It is interesting because you've been talking Nathan asked you about this you your comments even on your release talked about new opportunities and it sounds like new opportunities is both new customers, but also new business lines is that absolutely I mean, one of our objectives is to expand our offering.

Speaker Change: So we have you know more kit to offer our existing customers and new customers. So yeah, most definitely thats part of the strategy most definitely.

Speaker Change: Okay.

Russ Taylor: Okay, um... I think Tyson pretty much got everything else that I was looking at. My long list of questions tends to become very short once he's spoken. But no, I think, as I said, I congratulate you guys on what you've been doing. It looks like, you know, Tyson brought out the fact is that the financial assets of this company are worth, you know, basically, you know, well over half or half of the value of this business right now. And, you know, it seems to me that you guys. Is it safe to assume that, you know, when we're trying to look at you for a model for a year instead of a quarter, is that $48 to $50 million revenue for a year or something?

Tyson Bauer: I think Tyson pretty much got everything else that I was looking.

Tyson Bauer: I was looking at my long list of questions tends to become very short months Ive spoken.

Tyson Bauer: But no I think as I said I congratulate you guys on what you've been doing it looks like you know.

Speaker Change: Tyson brought up the fact is that the financial assets of this company are worth.

Speaker Change: Basically well over half or half of the value of this business right now.

Speaker Change: It seems to me that you guys.

Speaker Change: Is it safe to assume that you know one would find it but look at you from a model where a year instead of a quarter is that $48 million to $50 million revenue or.

Speaker Change: A year or something and then I look at this number and this would have been over it.

Rob Capps: I mean, I look at this number, this would have been over, if we had done, if we'd gotten everything shipped, this would have been a $13 plus million. You had a strong fourth quarter. You know, honestly, this is a stronger quarter than I thought it was going to be at the inability to ship. You know, is that the type of thing we should be looking at when you're talking about numbers, seeing that we should be able to be pushing up towards that $50 million annual run rate? Yeah, roughly. I think we'd be real happy with that if we got to that point this year.

Speaker Change: If we had done if he'd gotten everything shipped this would have been a 13 plus million you had a strong fourth quarter.

Speaker Change: Honestly this is a stronger quarter than I thought it was going to be at the.

Speaker Change: Inability to ship you know.

Speaker Change: Is that the type of thing we should be looking at when you were talking about numbers that we should be able to be pushing up towards that $50 million annual run rate.

Speaker Change: Roughly.

Speaker Change: Roughly I think we'd be real happy with that if we got to that point. This year that is two.

Rob Capps: That's a, you know, two years in a row going in that direction. But I mean, that's order of magnitude. That's where we are. Okay, and your margins should be in line to perhaps a little bit better as we push forward. Yeah, I think that's right.

Speaker Change: Two years in a row going in that direction, but I mean, that's my order.

Tyson Bauer: Order of magnitude, that's where we are I think.

Tyson Bauer: Okay, and your margin should be in line to perhaps a little bit better as well.

Tyson Bauer: We pushed forward.

Tyson Bauer: I think that's right.

Russ Taylor: Martin. Yeah, you guys have done a great job. Company's worth a lot more than it's trading at. So thanks and keep back, keep executing. Yeah, Ross, appreciate it.

Tyson Bauer: Martin.

Speaker Change: Yeah, you guys have done a great job companies worth a lot more than its trading at the thanks and keep that keep it with you.

Ross Sandler: Yeah, Ross I appreciate it.

Speaker Change: As a reminder, this star one on your telephone keypad, if he would like to ask a question. Our next question is from Gregg Hillman.

Operator: As a reminder to star one on your telephone keypad, if you would like to ask a question, our next question is from Greg Hillman, private investor. Please proceed. Yeah, hi Rob. Hey Greg. Hey, I wanted to ask you about the sale of Climb Marine Systems. I think it went for like two times revenue, roughly, something like that, and I was wondering if You know, in terms of metrics for what the value of your companies now, would that fall into that area? Oh wow, Greg, that's a... That's a tough one. I mean, I guess you could you could make that assumption, but, you know, there's kind of different markets, kind of a different situation, different buyers.

Speaker Change: Private Investor. Please proceed.

Speaker Change: Yes, Hi, Rob.

Tyson Bauer: Hey, Greg.

Rob Capps: Hey, I wanted to ask you about the the sale or Brian Klein Marine systems.

Rob Capps: I think it went for like a two times revenue roughly something like that and I was wondering if.

Rob Capps: You know in terms of metrics for what the value of your company is now wood.

Rob Capps: That fall in to that area.

Speaker Change: Oh Wow Greg.

Rob Capps: That's a tough one I guess you could you could make that assumption that you know there's kind of different markets kind of a different situation different buyer. So I think.

Greg Hillman: So, I think that's not necessarily a metric that would apply, but, you know, it is one data point for sure. Uh, okay.

Tyson Bauer: That's not necessarily.

Tyson Bauer: A metric that would apply but it is one data point for sure.

Tyson Bauer: Uh huh.

Tyson Bauer: Okay.

Tyson Bauer: And.

Tyson Bauer: The.

Rob Capps: The, just in terms of the sale, did you have an investment bank line up strategic buyers and financial buyers and bid that out or was that sold in some other way? And did your need for cash at the time affect the price? We did have a banker assist in the process, but I would say it's more we identify potential buyers and approach potential buyers. They're all industry partners for people that we knew. So it wasn't like an auction, the typical investment banker process. certainly were in a different financial position then. And so we had a need, we think, to make that transaction.

Tyson Bauer: Just in terms of the sale did you.

Tyson Bauer:

Speaker Change: Did you have an investment banker in your lineup strategic buyers and financial buyers and did that out or was that sold in some other way.

Speaker Change: And did your niche need for cash at the time. The fact you know.

Speaker Change: The price.

Speaker Change: We did have a banker assist in the process.

Speaker Change: I would say its more we identify potential buyers and approach to potential buyers there.

Speaker Change: The old industry partners, so even though we knew so it wasn't like an auction.

Speaker Change: Typical investment banker process.

Speaker Change: We.

Speaker Change: Certainly we're in a different financial position then.

Speaker Change: And so we we had a need we think to make the transaction. So I think that's certainly did have some impact on our our motivation so did it impact the ultimate price.

Rob Capps: So I think that certainly did have some impact on our motivation. So did it impact the ultimate price? Who knows? that certainly we were motivated to sell.

Speaker Change: Notes.

Speaker Change: But certainly we were motivated to sell.

Speaker Change: Ah Okay and.

Greg Hillman: Okay and just another thing Basically, is offshore drilling more environmentally friendly than fracking onshore? Gosh. I'm not sure how to answer that. That's a huge question. I think they're... There are opinions on both sides of those arguments for both things. So I'm not sure you can kind of compare the two. I think, you know, there are. You know, there are issues for both to be addressed or to be aware of, but I think they both are, you know, overall very safe and very effective, and so I think the concerns are, in my opinion at least, are over-proportional.

Speaker Change: It's another thing.

Speaker Change: Basically is it.

Speaker Change: Is offshore drilling more environmentally friendly than cracking onshore.

Speaker Change: Oh gosh.

Speaker Change: I'm not sure how to answer that.

Speaker Change: That's a huge question I think.

Speaker Change: There are opinions on both sides of those arguments for both things.

Speaker Change: So I'm not sure you can kind of compare the two.

Speaker Change: I think there are.

Speaker Change: There are issues for both to be a drag or be concerns.

Speaker Change: Be aware of that I think they both are.

Speaker Change: Overall, very safe and very effective and so.

Speaker Change: The concerns are in my opinion at least are over.

Speaker Change: Over talked about.

Greg Hillman: overtalked about.

Speaker Change: Okay.

Greg Hillman: Okay, and just another kind of a macro thing. I think 37% of world oil production comes from offshore. How's that, you know, trending over time? Or where do you see that going? Well, I think that trend continues probably to increase. I think what we're seeing is the general know attitude or general trend in offshore exploration is positive from a long-term standpoint any other short-term disruptions and you know that the price of oil today really in my opinion doesn't impact what people are doing from an exploration standpoint because it's much longer term horizon so I think the general trend is one of being pretty bullish about offshore exploration and offshore production Okay, and You know those companies that have databases of mapping and sell out the databases, do you have any like valuable data that you sell?

Speaker Change: And just another kind of a macro thing I think 37% of world oil production comes from our offshore.

Speaker Change: How is that are you know trending overtime or where do you see that going.

Speaker Change: Well I think as that trend continues probably to increase.

Speaker Change: What we're seeing is the general.

Speaker Change: Attitude or general trend in offshore exploration is positive from a long term standpoint, any other short term disruptions in that.

Speaker Change: The price of oil today really in my opinion doesn't impact while people are doing from an exploration standpoint, because it's much longer term horizon. So I think the general trend is one of the.

Speaker Change: I mean pretty bullish about offshore exploration offshore production.

Speaker Change: Okay.

Speaker Change: And.

Speaker Change: You know there's companies that have databases of mapping and sell off the databases do you have any like valuable data that you sell.

Speaker Change: So we all were doing Greg is providing equipment that people used to gather data we don't gather the data we don't have the data at all.

Rob Capps: All we're doing, Greg, is providing equipment that people use to gather data. We don't gather the data. We don't have the data at all. That's not what we do.

Speaker Change: I Hope you do.

Speaker Change: And then what is that the software.

Rob Capps: Then what's that software business that you have to, I didn't quite get, what does that do, you know, like, don't you have like a software suite? It was something we actually retained from the Klein sale with our Spectral AI, but that's really limited to side scan sonar, and we actually are promoting that through the company that bought Klein, General Oceans. So that has not produced significant revenue at all to us. It's been de minimis so far. So I wouldn't put a lot of value on that on a go-forward basis. I think it's interesting. That might be able to generate some things in the future, but it's not really our focus right now.

Speaker Change: The business that you have to I didnt quite get what what does that do you know what don't you have like a software suite.

Speaker Change: It was something we actually retained from declines sale with our special AI, but that's really limited to side scan sonar and we actually are promoting that through the company that bought Klein general oceans.

Speaker Change: So that that is not produced significant revenue at all to us it's been de Minimis so far so.

Speaker Change: I wouldn't.

Speaker Change: A lot of value on that on a go forward basis, I think its something thats interesting.

Speaker Change: They might be able to generate some things in future, but it's not really our focus right now.

Speaker Change: Okay.

Rob Capps: Okay. And then finally, could you say something on the human resource side of the company, what you're doing to develop people, and also whether you have really like superstar engineers that can come up with the patentable stuff. So, you know, we're a company of 150 people or so roughly around the world. We have really smart engineers, you know, of all sorts that help develop new things. We've got really smart production people. We have really smart admin people. So we, you know, try to give these guys. You know, the tools I need to do those jobs, you know, give them a good career path.

Speaker Change: And then and then finally could.

Speaker Change: Could you say.

Speaker Change: Say something on the the human resource size of the company.

Speaker Change: No what you're doing to develop people and also whether you have really like.

Speaker Change: Superstar engineers that can come up with patentable stuff.

Speaker Change: So we're a company of 150 people or so roughly around the world.

Speaker Change: We have really smart engineers.

Speaker Change: Of all sorts that helped develop new things, we've got really smart production people.

Speaker Change: We've got real as far as admin people so.

Speaker Change: We tried to give these guys.

Speaker Change: The tools they need to do those jobs give them a good career path.

Speaker Change: Most of our employees are outside the U S. As you might imagine.

Rob Capps: Most of our employees are outside the U.S., as you might imagine. So a little different environment in some cases. But, you know, I wouldn't say there's one or two superstars that we keep locked in the closet to come develop new things. I think we have a broad bench of really good people that do those sort of things.

Speaker Change: It's a little different environment in some cases.

Speaker Change: I Wouldnt say theres, one or two superstars, we keep locked in the closet to come development things like waiver.

Speaker Change: Broad bench of really good people to do those sort of things for us.

Speaker Change: Okay great.

Greg Hillman: Okay. And Greg. And then... I appreciate it, Greg. Thanks a lot.

Speaker Change: Greg.

Speaker Change: Thanks, a lot.

Speaker Change: That will conclude our question and answer session I would like to turn the conference back over to management for closing remarks.

Operator: That will conclude our question and answer session.

Rob Capps: I would like to turn the conference back over to management for closing remarks. Okay. Just like to thank everyone for joining us today and look forward to talking to you again here in a few weeks, months after our second quarter. Thanks very much. Thank you. This will conclude today's conference.

Speaker Change: Okay, just like to thank everyone for joining us today and look forward to talking to you again here in a few weeks months after our second quarter. Thanks very much.

Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Operator: You may disconnect your lines at this time and thank you for your participation.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].