mind20240430

Lease term and discount rate

April 30, 2024

January 31, 2024

Weighted average remaining lease term (years)

Operating leases

Weighted average discount rate:

Operating leases

mind20240430_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 April 30, 2024

☐	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 June 10, 2024.

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of April 30, 2024 and January 31, 2024	1
	Condensed Consolidated Statements of Operations for the Three Months Ended April 30, 2024 and 2023	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended April 30, 2024 and 2023	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 30, 2024 and 2023	4
	Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended April 30, 2024 and 2023	5
	Notes to Condensed Consolidated Financial Statements	7
	Cautionary Statement about Forward-Looking Statements	16

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22

Item 4.	Controls and Procedures	23

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	23

Item 1A.	Risk Factors	23

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 3.	Defaults Upon Senior Securities	23

Item 4.	Mine Safety Disclosures	23

Item 5.	Other Information	23

Item 6.	Exhibits	24

	Exhibit Index	24

	Signatures	25

	*April 30, 2024*			*January 31, 2024*
*ASSETS*
Current assets:
Cash and cash equivalents	$	924		$	5,289
Accounts receivable, net of allowance for credit losses of $332 at each of April 30, 2024 and January 31, 2024		9,412			6,566
Inventories, net		16,161			13,371
Prepaid expenses and other current assets		3,014			3,113
Total current assets		29,511			28,339
Property and equipment, net		791			818
Operating lease right-of-use assets		1,725			1,324
Intangible assets, net		2,714			2,888
Deferred tax asset		122			122
Total assets	$	34,863		$	33,491
*LIABILITIES AND STOCKHOLDERS’ EQUITY*
Current liabilities:
Accounts payable	$	1,703		$	1,623
Deferred revenue		561			203
Accrued expenses and other current liabilities		5,303			5,586
Income taxes payable		1,928			2,114
Operating lease liabilities - current		728			751
Total current liabilities		10,223			10,277
Operating lease liabilities - non-current		997			573
Total liabilities		11,220			10,850
Stockholders’ equity:
Preferred stock, $1.00 par value; 2,000 shares authorized; 1,683 shares issued and outstanding at each of April 30, 2024 and January 31, 2024		37,779			37,779
Common stock, $0.01 par value; 40,000 shares authorized; 1,406 shares issued at April 30, 2024 and January 31, 2024		14			14
Additional paid-in capital		113,169			113,121
Accumulated deficit		(127,353	)		(128,307	)
Accumulated other comprehensive gain		34			34
Total stockholders’ equity		23,643			22,641
Total liabilities and stockholders’ equity	$	34,863		$	33,491

	*For the Three Months Ended April 30,*
	*2024*			*2023*
Revenues:
Sales of marine technology products	$	9,678		$	10,597
Cost of sales:
Sales of marine technology products		5,460			6,061
Gross profit		4,218			4,536
Operating expenses:
Selling, general and administrative		2,759			3,306
Research and development		462			478
Depreciation and amortization		267			333
Total operating expenses		3,488			4,117
Operating income		730			419
Other income (expense):
Interest expense		—			(204	)
Other, net		469			72
Total other income (expense)		469			(132	)
Income from continuing operations before income taxes		1,199			287
Provision for income taxes		(245	)		(411	)
Net income (loss) from continuing operations		954			(124	)
Loss from discontinued operations, net of income taxes		—			(116	)
Net income (loss)	$	954		$	(240	)
Preferred stock dividends - declared		—			—
Preferred stock dividends - undeclared		(947	)		(947	)
Net income (loss) attributable to common stockholders	$	7		$	(1,187	)
Net income (loss) per common share - Basic and Diluted
Continuing operations	$	—		$	(0.76	)
Discontinued operations	$	—		$	(0.08	)
Net income (loss)	$	—		$	(0.84	)
Shares used in computing net income (loss) per common share:
Basic and diluted		1,406			1,406

	*Common Stock*				*Preferred Stock*											*Accumulated*
										Additional							Other
									*Paid-In*		*Treasury*		*Accumulated*			*Comprehensive*
	*Shares*		*Amount*		*Shares*		*Amount*		*Capital*		*Stock*		*Deficit*			*Gain*		*Total*
Balances, January 31, 2024		1,406	$	14		1,683	$	37,779	$	113,121	$	—	$	(128,307	)	$	34	$	22,641
Net income		—		—		—		—		—		—		954			—		954
Stock-based compensation		—		—		—		—		48		—		—			—		48
Balances, April 30, 2024		1,406	$	14		1,683	$	37,779	$	113,169	$	—	$	(127,353	)	$	34	$	23,643

	Common Stock				Preferred Stock												Accumulated
	As adjusted		See Note 14						Additional								Other
									Paid-In		Treasury			Accumulated			Comprehensive
	Shares		Amount		Shares		Amount		Capital		Stock			Deficit			Loss		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

	*Three Months Ended April 30,*
	*2024*		*2023*
Revenue recognized at a point in time:	(in thousands)
Total revenue recognized at a point in time	$	9,377	$	10,512
Revenue recognized over time:
Total revenue recognized over time		301		85
Total revenue from contracts with customers	$	9,678	$	10,597

	*April 30, 2024*		*January 31, 2024*
Contract Assets:	(in thousands)
Unbilled revenue - current	$	16	$	26
Total unbilled revenue	$	16	$	26
Contract Liabilities:
Deferred revenue & customer deposits - current	$	3,529	$	3,649
Total deferred revenue & customer deposits	$	3,529	$	3,649

	*April 30, 2024*			*January 31, 2024*
	(in thousands)
Inventories:
Raw materials	$	9,949		$	8,730
Finished goods		2,657			2,463
Work in progress		5,089			3,709
Cost of inventories		17,695			14,902
Less allowance for obsolescence		(1,534	)		(1,531	)
Total inventories, net	$	16,161		$	13,371

Lease	*April 30, 2024*		*January 31, 2024*
Assets	(in thousands)
Operating lease assets	$	1,725	$	1,324

Liabilities
Operating lease liabilities	$	1,725	$	1,324

Classification of lease liabilities
Current liabilities	$	728	$	751
Non-current liabilities		997		573
Total Operating lease liabilities	$	1,725	$	1,324

	*April 30, 2024*
	(in thousands)
2025	$	705
2026		595
2027		487
2028		275
2029		35
Thereafter		—
Total payments under lease agreements	$	2,097

Less: imputed interest		(372	)
Total lease liabilities	$	1,725

			*April 30, 2024*							*January 31, 2024*
	*Weighted*
	*Average Life at*		*Gross Carrying*		*Accumulated*			*Net Carrying*		*Gross Carrying*		*Accumulated*			*Net Carrying*
	*April 30, 2024*		*Amount*		*Amortization*			*Amount*		*Amount*		*Amortization*			*Amount*
			(in thousands)							(in thousands)
Proprietary rights		4.6		7,473		(5,168	)		2,305		7,473		(5,053	)		2,420
Customer relationships		0.1		4,884		(4,876	)		8		4,884		(4,852	)		32
Patents		1.2		2,540		(2,216	)		324		2,540		(2,190	)		350
Trade name		2.1		134		(111	)		23		134		(108	)		26
Other		0.2		416		(362	)		54		426		(366	)		60
Intangible assets			$	15,447	$	(12,733	)	$	2,714	$	15,457	$	(12,569	)	$	2,888

For fiscal years ending January 31,		(in thousands)
2025	$	442
2026		520
2027		381
2028		315
2029		213
Thereafter		843
Total	$	2,714

	•	risks associated with our manufacturing operations including availability and reliability of materials and components as well the reliability of the products that we manufacture and sell;
	•	loss of significant customers;

	•	the impact of disruptions in global supply chains due to various factors, including certain components and materials becoming unavailable, increased lead times for components and materials, as well as increased costs for such items;
	•	demands from suppliers for advance payments could increase our need for working capital; inability to access such working capital could impede our ability to complete orders;

	•	inability to obtain funding or to obtain funding under acceptable terms;
	•	changes in government spending, including efforts by the U.S. and other governments to decrease spending for defense contracts, or as a result of U.S. or other administration transition;
	•	efforts by U.S. Congress and other U.S. government bodies to reduce U.S. government spending and address budgetary constraints and the U.S. deficit, as well as associated uncertainty around the timing, extent, nature and effect of such efforts;

	•	fluctuations in demand for seismic data, which is dependent on the level of spending by oil and gas companies for exploration, production and development activities, and may potentially negatively impact the value of our assets held for sale;
	•	inflation and price volatility in the global economy could negatively impact our business and results of operations;
	•	the consequences of future geopolitical events, which we cannot predict but which may adversely affect the markets in which we operate, our operations, or our results of operations; and
	•	negative impacts to our business from security threats, including cybersecurity threats, and other disruptions.

	For the Three Months Ended April 30,
	2024			2023
Reconciliation of Net income (loss) to EBITDA and Adjusted EBITDA from continuing operations	(in thousands)
Net income (loss)	$	954		$	(240	)
Interest expense, net		—			204
Depreciation and amortization		267			481
Provision for income taxes		245			411
EBITDA (1)		1,466			856
Stock-based compensation		48			50
Income from discontinued operations net of depreciation and amortization		—			(32	)
Adjusted EBITDA from continuing operations (1)	$	1,514		$	874
Reconciliation of Net Cash Used in Operating Activities to EBITDA
Net cash used in operating activities	$	(4,753	)	$	(2,987	)
Stock-based compensation		(48	)		(50	)
Provision for inventory obsolescence		(23	)		—
Changes in accounts receivable (current and long-term)		2,847			3,451
Interest paid, net		—			204
Taxes paid, net of refunds		430			189
Gross profit from sale of other equipment		457			138
Changes in inventory		2,812			(979	)
Changes in accounts payable, accrued expenses and other current liabilities and deferred revenue		(157	)		2,182
Changes in prepaid expenses and other current and long-term assets		(100	)		(1,308	)
Other		1			16
EBITDA (1)	$	1,466		$	856

	Three Months Ended
	April 30,
	2024			2023
	(in thousands)
Revenues:
Seamap	$	9,678		$	10,597
Cost of sales:
Seamap		5,460			6,061
Gross profit	$	4,218		$	4,536
Gross profit margin		44	%		43	%

	•	In recent years, the Company has raised capital through the sale of Common Stock and Preferred Stock pursuant to the at-the-market program (the "ATM Offering Program") and underwritten offerings on Form S-1. Currently, the Company is not eligible to issue securities pursuant to Form S-3 and accordingly cannot sell securities pursuant to the ATM Offering Program. However, the Company may sell securities pursuant to Form S-1 or in private transactions. Management expects to be able to raise further capital through these available means should the need arise.

	•	The Company owns unencumbered real estate near Huntsville, Texas which could be used to generate capital if needed through a mortgage or sale lease transaction. The Company demonstrated its ability to do this through a secured lending transaction in early fiscal 2024, which was repaid from the proceeds from the sale of Klein. The appraised value of this property is approximately $5.0 million.

	For the Three Months Ended
	April 30,
	2024			2023
	(in thousands)
Net cash used in operating activities	$	(4,753	)	$	(2,987	)
Net cash provided by investing activities		391			81
Net cash provided by financing activities		—			2,945
Effect of changes in foreign exchange rates on cash and cash equivalents		(3	)		(2	)
Net (decrease) increase in cash and cash equivalents	$	(4,365	)	$	37

Exhibit	Document Description	Form	Exhibit
Number			Reference
2.1	Agreement and Plan of Merger dated as of August 3, 2020, by and between Mitcham Industries, Inc. and MIND Technology, Inc.	Current Report on Form 8-K, filed with the SEC on August 7, 2020.	2.1
3.1	Amended and Restated Certificate of Incorporation of MIND Technology, Inc.	Current Report on Form 8-K, filed with the SEC on August 7, 2020.	3.3
3.2	Certificate of Amendment of Certificate of Incorporation of MIND Technology, Inc., effective as of October 12, 2023.	Current Report on Form 8-K, filed with the SEC on October 13, 2023.	3.1
3.3	Amended and Restated Bylaws of MIND Technology, Inc.	Current Report on Form 8-K, filed with the SEC on August 7, 2020.	3.4
3.4	Certificate of Designations, Preferences and Rights of MIND Technology, Inc. 9.00% Series A Cumulative Preferred Stock	Current Report on Form 8-K, filed with the SEC on August 7, 2020.	3.5
3.5	Certificate of Amendment of Certificate of Designations, Preferences and Rights of MIND Technology, Inc. 9.00% Series A Cumulative Preferred Stock	Form 8-K filed with the SEC on September 25, 2020.	3.1
3.6	Second Certificate of Amendment of Certificate of Designations, Preferences and Rights of MIND Technology, Inc. 9.00% Series A Cumulative Preferred Stock	Registration Statement on Form S-1 filed with the SEC on October 25, 2021.	3.5
3.7	Third Certificate of Amendment of Certificate of Designations, Preferences and Rights of MIND Technology, Inc. 9.00% Series A Cumulative Preferred Stock	Form 8-K filed with the SEC on November 4, 2021.	3.3
3.8	Fourth Certificate of Amen dment of Certificate of Designations, Preferences and Rights of MIND Technology, Inc. 9.00% Series A Cumulative Preferred Stock	Form 8-K filed with the SEC on October 13, 2023.	3.2
3.9	Texas Certificate of Merger, effective as of August 3, 2020	Current Report on Form 8-K, filed with the SEC on August 7, 2020.	3.1
3.10	Delaware Certificate of Merger, effective as of August 3, 2020	Current Report on Form 8-K, filed with the SEC on August 7, 2020.	3.2

31.1†	Certification of Robert P. Capps, Chief Executive Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended

31.2†	Certification of Mark A. Cox, Chief Financial Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended

32.1†	Certification of Robert P. Capps, Chief Executive Officer, and Mark A. Cox, Chief Financial Officer, under Section 906 of the Sarbanes Oxley Act of 2002, 18 U.S.C. § 1350

101.INS†	Inline XBRL Instance Document

101.SCH†	Inline XBRL Taxonomy Extension Schema Document

101.CAL†	Inline XBRL Taxonomy Extension Calculation of Linkbase Document

101.DEF†	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB†	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE†	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104†	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).