mind20231031

mind20231031_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-13490

MIND TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

Delaware

76-0210849

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

2002 Timberloch Place

Suite 550

The Woodlands, Texas 77380

(Address of principal executive offices, including Zip Code)

(281) 353-4475

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock - $0.01 par value per share	MIND	The NASDAQ Stock Market LLC
Series A Preferred Stock - $1.00 par value per share	MINDP	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 1,405,779 shares of common stock, $0.01 par value, were outstanding as of December 13, 2023.

Table of Contents

MIND TECHNOLOGY, INC.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of October 31, 2023 and January 31, 2023	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended October 31, 2023 and 2022	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended October 31, 2023 and 2022	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 31, 2023 and 2022	4
	Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended October 31, 2023 and 2022	5
	Notes to Condensed Consolidated Financial Statements	7
	Cautionary Statement about Forward-Looking Statements	15

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21

Item 4.	Controls and Procedures	22

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	22

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 3.	Defaults Upon Senior Securities	22

Item 4.	Mine Safety Disclosures	22

Item 5.	Other Information	22

Item 6.	Exhibits	23

	Exhibit Index	23

	Signatures	24

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MIND TECHNOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

	*October 31, 2023*			*January 31, 2023*
*ASSETS*
Current assets:
Cash and cash equivalents	$	5,569		$	778
Accounts receivable, net of allowance for doubtful accounts of $332 at each of October 31, 2023 and January 31, 2023		3,882			3,247
Inventories, net		13,263			11,026
Prepaid expenses and other current assets		1,701			1,400
Current assets of discontinued operations		—			5,783
Total current assets		24,415			22,234
Property and equipment, net		830			953
Operating lease right-of-use assets		1,517			1,749
Intangible assets, net		3,073			3,633
Long-term assets of discontinued operations		—			4,289
Total assets	$	29,835		$	32,858
*LIABILITIES AND STOCKHOLDERS’ EQUITY*
Current liabilities:
Accounts payable	$	1,127		$	2,494
Deferred revenue		130			144
Accrued expenses and other current liabilities		4,360			1,477
Income taxes payable		1,457			1,493
Operating lease liabilities - current		833			903
Current liabilities of discontinued operations		—			2,420
Total current liabilities		7,907			8,931
Operating lease liabilities - non-current		684			846
Deferred tax liability		41			29
Total liabilities		8,632			9,806
Stockholders’ equity:
Preferred stock, $1.00 par value; 2,000 shares authorized; 1,683 shares issued and outstanding at each of October 31, 2023 and January 31, 2023		37,779			37,779
Common stock, $0.01 par value; 40,000 shares authorized; 1,406 shares issued at October 31, 2023 and 1,599 shares at January 31, 2023 (as Adjusted, see Note 14)		14			16
Additional paid-in capital (as Adjusted, see Note 14)		113,124			129,721
Treasury stock, at cost (193 shares at January 31, 2023) (As Adjusted, see Note 14)		—			(16,863	)
Accumulated deficit		(129,748	)		(127,635	)
Accumulated other comprehensive gain		34			34
Total stockholders’ equity		21,203			23,052
Total liabilities and stockholders’ equity	$	29,835		$	32,858

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MIND TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	*For the Three Months Ended October 31,*						*For the Nine Months Ended October 31,*
	*2023*			*2022*			*2023*			*2022*
Revenues:
Sale of marine technology products	$	4,974		$	3,038		$	23,132		$	16,142
Total revenues		4,974			3,038			23,132			16,142
Cost of sales:
Sale of marine technology products		2,721			2,176			13,402			10,446
Total cost of sales		2,721			2,176			13,402			10,446
Gross profit		2,253			862			9,730			5,696
Operating expenses:
Selling, general and administrative		2,941			3,023			9,160			9,867
Research and development		508			412			1,479			1,063
Depreciation and amortization		257			331			892			1,011
Total operating expenses		3,706			3,766			11,531			11,941
Operating loss		(1,453	)		(2,904	)		(1,801	)		(6,245	)
Other (expense) income:
Interest expense		(169	)		—			(536	)		(4	)
Other, net		25			59			336			(186	)
Total other (expense) income		(144	)		59			(200	)		(190	)
Loss from continuing operations before income taxes		(1,597	)		(2,845	)		(2,001	)		(6,435	)
Provision for income taxes		(112	)		(38	)		(590	)		(380	)
Net loss from continuing operations		(1,709	)		(2,883	)		(2,591	)		(6,815	)
Income (loss) from discontinued operations, net of income taxes, (including a $2,393 gain on the sale of Klein for the three and nine months ended October 31, 2023)		2,277			(2,276	)		1,424			(2,683	)
Net income (loss)	$	568		$	(5,159	)	$	(1,167	)	$	(9,498	)
Preferred stock dividends - declared		(947	)		—			(947	)		(947	)
Preferred stock dividends - undeclared		—			(947	)		(1,894	)		(1,894	)
Net loss attributable to common stockholders	$	(379	)	$	(6,106	)	$	(4,008	)	$	(12,339	)
Net loss per common share - Basic and Diluted
Continuing operations	$	(1.89	)	$	(2.72	)	$	(3.86	)	$	(6.87	)
Discontinued operations	$	1.62		$	(1.62	)	$	1.01		$	(1.91	)
Net loss	$	(0.27	)	$	(4.34	)	$	(2.85	)	$	(8.78	)
Shares used in computing net loss per common share:
Basic		1,406			1,406			1,406			1,405
Diluted		1,406			1,406			1,406			1,405

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MIND TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	*For the Three Months Ended October 31,*					*For the Nine Months Ended October 31,*
	*2023*		*2022*			*2023*			*2022*
Net income (loss)	$	568	$	(5,159	)	$	(1,167	)	$	(9,498	)
Change in cumulative translation adjustment of entities held-for-sale		—		1,626			—			1,919
Other changes in cumulative translation adjustment		—		(9	)		—			(5	)
Comprehensive income (loss)	$	568	$	(3,542	)		(1,167	)		(7,584	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

MIND TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	*For the Nine Months Ended October 31,*
	*2023*			*2022*
Cash flows from operating activities:
Net loss	$	(1,167	)	$	(9,498	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,230			1,414
Stock-based compensation		264			524
Gain on sale of Klein		(2,393	)		—
Provision for inventory obsolescence		23			68
Gross profit from sale of other equipment		(385	)		(269	)
Non-cash cumulative translation adjustment for discontinued operations		—			1,626
Changes in:
Accounts receivable		(688	)		4,981
Unbilled revenue		51			1
Inventories		(3,174	)		(2,899	)
Prepaid expenses and other current and long-term assets		566			506
Income taxes receivable and payable		(21	)		(16	)
Accounts payable, accrued expenses and other current liabilities		(1,045	)		983
Deferred revenue and customer deposits		1,115			328
Net cash used in operating activities		(5,624	)		(2,251	)
Cash flows from investing activities:
Purchases of property and equipment		(199	)		(531	)
Proceeds from the sale of Klein, net		10,832			—
Sale of other equipment		385			382
Net cash provided by (used in) investing activities		11,018			(149	)
Cash flows from financing activities:
Purchase of treasury stock		—			(1	)
Net proceeds from short-term loan		2,947			—
Payment on short-term loan		(3,750	)		—
Refund of prepaid interest on short-term loan		214			—
Preferred stock dividends		—			(1,894	)
Net cash used in financing activities		(589	)		(1,895	)
Effect of changes in foreign exchange rates on cash and cash equivalents		(14	)		(7	)
Net change in cash and cash equivalents		4,791			(4,302	)
Cash and cash equivalents, beginning of period		778			5,114
Cash and cash equivalents, end of period	$	5,569		$	812
Supplemental cash flow information:
Interest paid	$	576		$	4
Income taxes paid	$	617		$	371

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MIND TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

	*Common Stock*				*Preferred Stock*												*Accumulated*
										Additional								Other
									*Paid-In*		*Treasury*			*Accumulated*			*Comprehensive*
	*Shares*		*Amount*		*Shares*		*Amount*		*Capital*		*Stock*			*Deficit*			*Gain*		*Total*
Balances, January 31, 2023		1,599	$	16		1,683	$	37,779	$	129,721	$	(16,863	)	$	(127,635	)	$	34	$	23,052
Net loss		—		—		—		—		—		—			(240	)		—		(240	)
Stock-based compensation		—		—		—		—		50		—			—			—		50
Balances, April 30, 2023		1,599	$	16		1,683	$	37,779	$	129,771	$	(16,863	)	$	(127,875	)	$	34	$	22,862
Net loss		—		—		—		—		—		—			(1,494	)

SEC Form 10-Q filed by MIND Technology Inc.