Walter Ramsley: Okay. And the R&D credit that is part of the U.S. tax code, is that going to change or is that going to be the same?
Annmarie Gayle: The R&D credits that we have are in relation to our foreign entity, our Scottish business, and not our U.S. businesses actually.
Walter Ramsley: Oh, I see. Okay. Well, thanks again. Appreciate your answering the questions.
Annmarie Gayle: Thank you, Walter. Thank you very much.
Operator: [Operator Instructions] Our next question is from Fernando Canto, Private Investor. Please proceed.
Unidentified Analyst: Good morning, everybody. I think in relation to the previous question, the reduction in the stockholder equity, I think it was due to the loss that the company had in the fourth quarter, right?
John Price: The other element to think about here is the FX rate. And so, we’ve seen that the FX actually positive over the course of — excuse me, ’23. There’s really no write-offs of inventory or accounts receivable that run through equity. That’s just going to be a component of overall net income.
Unidentified Analyst: Right. But for operation, did you lose money on the fourth quarter?
John Price: No. And there were no material write-offs over the course of the year.
Unidentified Analyst: Okay. Now, I noticed you have about $24 million worth of cash, and the stock is getting very close to the book value. Are you considering buying some shares in the market now that it’s getting so close to the book value?
Annmarie Gayle: Can I take that, Fernando? So, I mean, as you know, we do have the stock liquidity problem. So, buying back shares in the market will be very, very problematic for our liquidity profile. We are always discussing different options for returning value to shareholders. And that’s one of the things we discuss on an ongoing basis with our Board. But I do believe that there’s a fundamental problem with a share buyback program, because it takes out further stock out of the market, which is already thinly traded because of the unavailability of stock in the market.
Unidentified Analyst: All right. Now you almost complete the first quarter. How does the first quarter looks like?
Annmarie Gayle: Well, I think — Fernando, thanks for that question again. As I said, one of the areas where we were hit last year, we saw weak demand in key strategic markets, such as offshore renewables. What I have just said that, in the first quarter, we saw increased contracting, that means order take, also the number of projects, rental projects that are ongoing, we’ve seen an increase in those. So, they’re very, very positive signs, and I hope we can sustain those signs throughout the year. So, I think I see rentals in the core market, and let me repeat what they are, offshore renewables and underwater construction, we’re really seeing good traction there at the moment. Also, other things that are not contracted but really which I think is exciting for business, for example, we have one major offshore service provider who is developing an island in the Middle East.
On that project alone, we’re quoting six Echoscopes outright sale with ongoing support. That is a first, because in the commercial market, the profile of sale is typically a maximum of two systems. So, we haven’t got the order yet, but I’m saying I think we have some good exciting conversations. We see underwater construction coming back. We see some rentals ongoing. Also, one of the things I am personally excited about, and I know it’s taken longer than we all wanted, but having adoption of the DAVD outside of the U.S. Navy, and I have a high level of confidence, in 2024, we will see this. Last year, what we did, we had significant business development activities, lots of one-to-one trials. All of those trials were successful. It’s now a process for these customers to think about how they’re going to adopt the DAVD, getting their own infrastructure ready for the DAVD.
Some of the problems there will be customers not having a digital interface to talk to our solution. So, they’re working on that. So, it was slower than we wanted, but I have a high level of confidence that we will see adoption for the DAVD solution outside of the U.S. Navy into the commercial field and also with foreign navies. And, another thing that I really want to emphasize on the biggest market opportunity for the DAVD system, it’s the customization program that we have with the U.S. Navy. But note, this is not just the U.S. Navy that’s funding the customization program, it’s a major NATO country. This is the first time we’ve had joint funding for the DAVD. And that’s a good indication that we’re talking about adoption outside of the U.S. Navy.
We also know that the U.S. Navy is also diving the DAVD with foreign navies when they do some of their trials that they themselves, when they work together with the foreign navies, are coming and showing the system and diving the system. So, we’re really optimistic about having adoption for the DAVD in fiscal 2024. So, I’m generally still very, very excited about the prospects for our business and our growth strategy around our key pillars.
Unidentified Analyst: All right. But in other words, we can expect the first quarter to be more or less similar to the first quarter of last year, right? And then going forward, we will see some light at the end of the tunnel, right?
