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Subsequent Events and Liquidity | 12 Months Ended
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Jan. 31, 2020
Subsequent Events [Abstract] |
Subsequent Events and Liquidity | Subsequent Events and Liquidity The COVID-19 pandemic has created significant uncertainty in the global economy which could have a material adverse effect on the Company’s business, financial position, results of operations and liquidity. The time frame for which disruptions related to the pandemic will continue is uncertain as is the magnitude of any adverse impacts. We were required to temporarily shut-down our facilities in Malaysia and Singapore on March 17 and April 7, respectively. Although both locations have now reopened for limited operations, they are not yet operating at full capacity. Our other facilities have been allowed to operate, although at reduced efficiencies as certain employees have worked remotely. Management believes that any negative impacts will be temporary, but there can be no assurance of that. Additionally, oil prices have declined sharply during the first quarter of 2020 and continuing in the second quarter in response to the economic effects of the COVID-19 pandemic and the recent announcement of Saudi Arabia’s abandonment of output restraints. This decline could have an adverse effect on our customers in the energy industry, which could in turn cause them to cancel or delay projects and orders with us and could impair their ability to make payments to us. The Company has a history of losses, has had negative cash from operating activities in each of the last two years and its cash balance as of January 31, 2020 is significantly lower than at January 31, 2019. For the past three years, the Company has generated significant cash from the sale of preferred stock pursuant to an “at the market” program. That program has been completed and no further preferred shares can be sold pursuant to it. Furthermore, the amount of authorized preferred stock available for other financing transactions is limited. While the Company has plans to increase the authorized shares, such increase requires shareholder approval and there can be no assurance such approval will be obtained. The above factors create substantial uncertainty regarding the Company’s future financial results and liquidity. Management has identified the following mitigating factors regarding adequate liquidity and capital resources to meet its obligations.:
• | The Company has no funded debt or other outstanding obligations, outside of normal trade obligations.
• | The Company has no obligations or agreements containing “maintenance type” financial covenants.
• | The Company has working capital of approximately $22.2 million as of January 31, 2020, including cash of approximately $3.2 million.
• | Should revenues be less than projected, the Company believes it is able, and has plans, to reduce costs proportionately in order to maintain positive cash flow.
• | The majority of the Company’s costs are variable in nature, such as raw materials and personnel related costs. The Company has already terminated or furloughed certain employees and contractors.
• | Despite the temporary suspension of operations in Malaysia and Singapore, operations have continued uninterrupted at other locations. Certain of these operations have been deemed “essential businesses” by authorities. There can be no assurance that there will not be further suspensions in the future.
• | The Company has a backlog of orders of approximately $8.9 million as of January 31, 2020 that is primarily related to customers not engaged in the energy industry. Production for certain of these orders was in process and included in inventory as of January 31, 2020, thereby reducing the liquidity needed to complete the orders.
• | There are various government sponsored grant or loan programs, both in the United States and in certain foreign locations which are available to the Company and for which the Company has applied. Although the initial funding for one such program has been depleted, the Company has pending applications for approximately $1.6 million in government sponsored loans. Management believes additional funding will become available for these programs.
• | Despite the present difficulties in world energy markets, Management believes there are opportunities sell assets such as lease pool equipment and have completed such transactions recently.
• | The Company has declared the quarterly dividend on the its Series A Preferred Stock for the quarter ending April 30, 2020, but such quarterly dividends could be suspended in the future.
• | Based on publicized transactions and inquiries received from potential funding sources, Management believes that other sources of debt and equity financing are available should the need arise.
Notwithstanding the mitigating factors identified by management, there remains substantial uncertainty regarding the Company's ability to meet its obligations as they arise over the next twelve months.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -URI http://asc.fasb.org/topic&trid=2122774 + Details
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