I hadn't really bothered til now. However a friend of mine gave me some very lovely gear that I really should hang onto (purple quality penetrating plasma torps.) I don't want to ever get rid of those, so I would like to be pointed at a resource for how upgrades happen and what i should go do to make that work.
I like how my T'varo refit is now a gunboat of flaming death and pain.
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Since you're looking at a torpedo, you'll be after "Projectile" upgrades. You can get green, blue, and purple qualities of upgrades, each giving you more points toward the total amount of points you'll need to make it to the next Mark.
There are also "Experimental" Purple versions that have double the chance of increasing the quality of the item, but that's a story for later on.
Using an upgrade, in almost all cases, costs dilithium, and takes several upgrades to take an item from MK XII to MK XIII, and then a larger amount to go from XIII to XIV. By comparison, one Purple quality upgrade is enough to take a weapon from Mk II to Mk VII. It takes more upgrades every time you go up in Mark.
Now, each time you actually increase in Mark (once the points bar is filled) you have a chance to increase the quality of the item. Most often this is a pretty rare thing 1-5% chance. And it resets to 0% after it ranks up. However... once you get to Mk XIV, you can keep completing that bar of points over and over and keep building your chance to proc to the next Quality.
There are a lot of other items that can increase points or quality upgrade chance, but I'd look into a more detailed guide for that if you need to.