MIND TECHNOLOGY INC

MIND Technology, Inc.

Notes to Consolidated Financial Statements

1. Organization, Liquidity and Summary of Significant Accounting Policies

Organization—MIND Technology, Inc., a Delaware corporation (the “Company”), was incorporated in1987. The Company, through its wholly owned subsidiaries, Seamap Pte Ltd, MIND Maritime Acoustics, LLC, Seamap (Malaysia) Sdn Bhd and Seamap (UK) Ltd, collectively “Seamap”, designs, manufactures and sells a broad range of proprietary products for the seismic, hydrographic and offshore industries with product sales and support facilities based in Singapore, Malaysia, the United Kingdom and the state of Texas. Prior to* August 21, 2023,the Company, through its wholly owned subsidiary Klein Marine Systems, Inc. (“Klein”), designed, manufactured and sold a broad range of proprietary products for the seismic, hydrographic and offshore industries from its facility in the state of New Hampshire. Effective August 21, 2023,the Company sold Klein and retrospectively presented its prior periods balance sheet activity as assets and liabilities of discontinued operations and the financial results reported as discontinued operations (see Note2* – “Sale of a Subsidiary and Discontinued Operations” for additional details).

As of* January 31, 2024,the Company had working capital of approximately $18.1 million, including cash and cash equivalents of approximately $5.3 million, compared to working capital of approximately $13.3 million, including cash and cash equivalents of approximately $778,000, as of January 31, 2023.The Company doesnot* have a credit facility in place and depends on cash on hand and cash flows from operations to satisfy its liquidity needs. However, the Company believes it will have adequate liquidity to meet its future operating requirements through a combination of cash on hand, cash expected to be generated from operations, disciplined working capital management, potential financing secured by company owned real property, and potentially securing a credit facility or some other form of financing.

Revenue Recognition of Marine Product Sales—Revenues and cost of sales from the sale of marine products are recognized upon acceptance of terms and completion of our performance obligations, which is typically when delivery has occurred, or in the case of bill-and-hold arrangements, when control has been transferred.

Revenue Recognition of Long-term Projects—From time to time the Company enters into contracts whereby certain marine equipment is assembled or manufactured and sold, primarily to governmental entities. Performance under these contracts generally occurs over a period ofthree totwelve months. Revenue and costs related to these contracts are recognized “over time”, as each separately identified performance obligation is satisfied.

Revenue Recognition of Repair Services and Equipment Upgrades—Revenue and cost of sales from the provision of repair services and equipment upgrades are recognized “over time” pursuant to the practical expedient under which revenue is recognized when invoiced.

Revenue Recognition of Service Agreements—In some cases the Company provides on-going support services pursuant to contracts that generally have a term of12 months. The Company recognizes revenue from these contracts ratably over the term of the contract. The Company* mayalso provide support services on a time and material basis. Revenue from these arrangements is recognized as the services are provided. For certain new systems, the Company provides support services for up to12* months atno additional charge. Any amounts attributable to these support obligations are immaterial. Revenues from service contracts for fiscal2024 and2023 werenot material and as a result arenot presented separately in the financial statements.

Allowance for Credit Losses—Trade receivables are uncollateralized customer obligations due under normal trade terms. The carrying amount of trade receivables and contracts receivable is reduced by a valuation allowance that reflects management’s estimate of the amounts that willnot be collected, based on the age of the receivable, payment history of the customer, general industry conditions, general financial condition of the customer and any financial or operational leverage the Company* mayhave in a particular situation. Amounts are written-off when collection is deemed unlikely. Past due amounts are determined based on contractual terms. The Company generally doesnot* charge interest on past due accounts.

Cash and Cash Equivalents—The Company considers all highly liquid investments with an original maturity ofthree months or less at the date of purchase to be cash equivalents.

Inventories—Inventories are stated at the lower of cost or realizable value. The Company determines cost on the basis of Average or Standard Cost. An allowance for obsolescence is maintained to reduce the carrying value of any inventory items that* may*become obsolete. Inventories are periodically monitored to ensure that the allowance for obsolescence covers any obsolete items.

F-9

Property and Equipment—Property and equipment is carried at cost, net of accumulated depreciation. Depreciation is computed on the straight-line method over the related estimated useful lives. The estimated useful lives of equipment range from three toseven years. Buildings are depreciated over 30 years and property improvements are amortized over 10 years or the shorter of their useful life. Leasehold improvements are amortized over the shorter of the estimated useful life or the life of the respective leases.No salvage value is assigned to property and equipment. Significant improvements are capitalized while maintenance and repairs are charged to expense as incurred.

Intangible Assets—Intangible assets are carried at cost, net of accumulated amortization. Amortization is computed on the straight-line method (for customer relationships, the straight-line method isnot materially different from other methods that estimate run off of the underlying customer base) over the estimated life of the asset. Proprietary rights, developed technology and amortizable tradenames are amortized over a 10 to 15-year period. Customer relationships are amortized over aneight-year period. Patents are amortized over aneight toten-year period.

Impairment—The Company reviews its long-lived assets, including its amortizable intangible and non-amortizing assets, for impairment whenever events or changes in circumstances indicate that the carrying value* may**not* be recoverable*.* In reviewing for impairment, the carrying value of such assets is compared to the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition. If such cash flows arenot sufficient to support the asset’s recorded value, an impairment charge is recognized to reduce the carrying value of the long-lived asset to its estimated fair value. The determination of future cash flows as well as the estimated fair value of long-lived assets involves significant estimates on the part of management. The Company performs an impairment test on indefinite lived assets on an annual basis. The Company performs a qualitative review to determine if it is more likely thannot that the fair value of our indefinite lived assets is greater than their carrying value. If the Company is unable to conclude qualitatively that it is more likely thannot that an indefinite lived asset’s fair value exceeds its carrying value, then the Company performs a quantitative assessment of fair value of the indefinite lived asset. The quantitative reviews involve significant estimates on the part of management.

Product Warranties—Seamap provides its customers warranties against defects in materials and workmanship generally for a period ofthree months after delivery of the product. For fiscal2024 and2023, warranty expense wasnot material.

Income Taxes—The Company accounts for income taxes under the liability method, whereby the Company recognizes deferred tax assets and liabilities which represent differences between the financial and income tax reporting basis of its assets and liabilities. Deferred tax assets and liabilities are determined based on temporary differences between income and expenses reported for financial reporting and tax reporting. The Company has assessed, using all available positive and negative evidence, the likelihood that the deferred tax assets will be recovered from future taxable income.

The weight given to the potential effect of positive and negative evidence is commensurate with the extent to which it can be objectively verified. The preponderance of negative or positive evidence supports a conclusion regarding the need for a valuation allowance for some portion, or all, of the deferred tax asset. The more significant types of evidence considered include the following:

Use of Estimates—The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Estimates are used for, butnot limited to, the allowance for credit losses, inventory obsolescence, lease liabilities, valuation allowance on deferred tax assets, the evaluation of uncertain tax positions, estimated depreciable lives of fixed assets and intangible assets, impairment of fixed assets and intangible assets, valuation of assets acquired and liabilities assumed in business combinations and the valuation of stock options. Future events and their effects cannot be perceived with certainty. Accordingly, these accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Actual results could differ from these estimates.

F-10

Substantial judgment is necessary in the determination of the appropriate levels for the Company’s allowance for credit losses because of the extended payment terms the Company offers to its customers on occasion and the limited financial wherewithal of certain of these customers. As a result, the Company’s allowance for credit losses could change in the future, and such change could be material to the financial statements taken as a whole. The Company must also make judgments with respect to quantitative analysis prepared in conjunction with impairment analysis related to intangible assets.

Fair Value of Financial Instruments—The Company’s financial instruments consist of accounts and contracts receivable and accounts payable.

The Financial Accounting Standards Board (“FASB”) has issued guidance on the definition of fair value, the framework for using fair value to measure assets hierarchy, which prioritizes the inputs used to measure fair value. These tiers include:

The Company measures the fair values of intangibles and other long-lived assets on a non-recurring basis if required by impairment tests applicable to these assets. Based on the results of our qualitative reviews,no quantitative tests were applicable during fiscal years2024 and2023.

Foreign Currency Translation—All balance sheet accounts of the Canadian subsidiary for fiscal2024 and2023 have been translated at the current exchange rate as of the end of the accounting period. Statements of operations items have been translated at average currency exchange rates. The resulting translation adjustment is recorded as a separate component of comprehensive income within stockholders’ equity.

Leases—The Company determines if an arrangement is a lease at inception. Operating leases are recorded as right-of-use assets and operating lease liabilities. The Company hasnot entered into any financing leases.

Operating lease right-of-use assets represent a right to use an underlying asset for the lease term and operating lease right-of-use liabilities represent an obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term and use an implicit rate when readily available. Since most of the Company’s leases donot provide an implicit rate the Company utilizes the incremental borrowing rate to determine the present value of lease payments. The rate will take into consideration the underlying asset’s economic environment, including the length of the lease term and currency that the lease is payable in. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

Stock-Based Compensation—Stock-based compensation expense is recorded based on the grant date fair value of share-based awards. Restricted stock awards are valued at the closing price on the date of grant. Determining the grant date fair value for options requires management to make estimates regarding the variables used in the calculation of the grant date fair value. Those variables are the future volatility of our Common Stock price, the length of time an optionee will hold their options until exercising them (the “expected term”), and the number of options that will be forfeited before they are exercised (the “forfeiture rate”). We utilize various mathematical models in calculating the variables. Share-based compensation expense could be different if we used different models to calculate the variables. The fair value of stock-based compensation awards is amortized over the requisite service period of the award, which is the vesting period of the related awards.

Earnings Per Share—Net income (loss) per basic common share is computed using the weighted average number of common shares outstanding during the period. Net income (loss) per diluted common share is computed using the weighted average number of common shares and potential common shares outstanding during the period. Potential common shares result from the assumed exercise of outstanding Common Stock options having a dilutive effect using the treasury stock method, from unvested shares of restricted stock using the treasury stock method and from outstanding Common Stock warrants. For fiscal2024 and2023, the following table sets forth the number of potentially dilutive shares that* may*be issued pursuant to options, restricted stock and warrants outstanding used in the per share calculations.

For fiscal2024 and2023, respectively, potentially dilutive common shares, were immaterial and didnot change the calculation of diluted loss per share for those periods.

F-11

2. Sale of a Subsidiary and Discontinued Operations

On* July 27, 2020,the Board determined to exit the Leasing Business. As a result, the assets, excluding cash, and liabilities of the Leasing Business are considered held for sale and its results of operations are reported as discontinued operations as of January 31, 2023and for the year then ended. The Company originally anticipated selling the discontinued operations in multiple transactions, potentially involving the sale of legal entities, assets, or a combination of both, within thetwelve* months ending* July**31,* 2021. As of* January 31, 2023,*we have substantially completed the sale of discontinued operations related to the Leasing Business.

On* August 21, 2023,the Company sold Klein pursuant to a Stock Purchase Agreement (the “SPA”) with General Oceans AS (“the Buyer"). In connection with the SPA, the Company granted the Buyer a license to its Spectral Ai software suite (“Spectral Ai”). The license is exclusive to the Buyer as it relates to side scan sonar. The Company and the Buyer also entered into a collaboration agreement for the further development of Spectral Ai and potentially other software projects. The foregoing transactions contemplated by the SPA are referred to as the “Sale of Klein”. The aggregate consideration to the Company consisted of a cash payment of $10.8 million, resulting in a gain of approximately $2.4 million. The SPA contained customary representation and warranties. On August 22, 2023,following the closing of the Sale of Klein, all outstanding amounts due and owed, including principal, interest, and other charges, under the Loan were repaid in full and the Loan was terminated, and all liens and security interests granted thereunder were released and terminated (see Note11* - "Notes Payable" for additional details). As a result of the sale, the assets, and liabilities of Klein, are considered assets and liabilities of discontinued operations in prior periods and its results of operations are reported as discontinued operations for the years ended* January 31, 2024and2023.*

The assets reported as discontinued operations consist of the following:

The liabilities of discontinued operations consist of the following:

The results of operations from discontinued operations for thetwelve months ended* January 31, 2024and2023*, consist of the following:

F-12

The significant operating and investing noncash items and capital expenditures related to discontinued operations are summarized below:

In fiscal2023, our discontinued operations recognized a loss of approximately $1.6 million related to cumulative currency translation adjustments related to our subsidiary, Mitcham Canada, which was declared a discontinued entity. In addition, our discontinued operations recognized gains of approximately $939,000 related to the sales of lease pool equipment in fiscal2023.

3. New Accounting Pronouncements

In* June 2016,the FASB issued Accounting Standards Update (ASU)2016-13, Financial Instruments-Credit Losses (Topic326*), which changes the existing incurred loss impairment model for financial assets held at amortized cost. The new model uses a forward-looking expected loss method to calculate credit loss estimates. ASU2016-13 and its amendments are effective for fiscal years beginning after* December 15, 2022,including interim periods within those fiscal years, though early adoption was permitted. The Company adopted the requirements of ASU2016*-13 as of* February 1, 2023,on a modified retrospective basis. The adoption of this standard didnot* have a material impact on the Company’s consolidated financial statements.

In* November 2023,the FASB issued ASUNo.* 2023-07, Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures, to enhance the disclosures public entities provide regarding significant segment expenses so that investors can better understand an entity’s overall performance and assess potential future cash flows. ASU2023-07 will become effective* February 1, 2024.*The Company is currently evaluating the new guidance to determine the impact it will have on the disclosures to its consolidated financial statements.

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740): Improvements to Income Tax Disclosures (“ASU2023-09”). ASU2023-09 seeks to improve transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disclosures. The updated guidance is effective for the Company on* February 1, 2025.*The Company is currently evaluating the new guidance to determine the impact it will have on the disclosures to its consolidated financial statements.

4. Revenue from Contracts with Customers

The following table presents revenue from contracts with customers disaggregated by timing of revenue recognition:

The revenue from products manufactured and sold by our Seamap business, is generally recognized at a point in time, or when the customer takes possession of the product, based on the terms and conditions stipulated in our contracts with customers. However, from time to time our Seamap business provides repair and maintenance services, or performs upgrades, on customer owned equipment in which case revenue is recognized over time. In addition, our Seamap business provides annual Software Maintenance Agreements (“SMA”) to customers who have an active license for software embedded in Seamap products. The revenue from SMA is recognized over time, with the total value of the SMA amortized in equal monthly amounts over the life of the contract.

The following table presents revenue from contracts with customers disaggregated by geography, based on shipping location of our customers:

F-13

As of* January 31, 2024* and2023 contract assets and liabilities consisted of the following:

Considering the products manufactured and sold by our Seamap business and the Company’s standard contract terms and conditions, we expect our contract assets and liabilities to turn over, on average, within athree tosix-month period.

With respect to the disclosures above, sales and transaction-based taxes are excluded from revenue, and we donot disclose the value of unsatisfied performance obligations for contracts with an original expected duration ofone year or less. Also, we expense costs incurred to obtain contracts because the amortization period would beone year or less. These costs are recorded in selling, general and administrative expenses.

5. Supplemental Statements of Cash Flows Information

Supplemental disclosures of cash flows information for fiscal2024 and2023 were as follows (in thousands):

6. Inventories

Inventories from continuing operations consisted of the following (in thousands):

F-14

7. Property and Equipment

Property and equipment from continuing operations consisted of the following (in thousands)

Depreciation expense on property, plant and equipment was approximately $383,000 for fiscal2024, and approximately $471,000 for fiscal2023.

Location of property and equipment (in thousands):

8. Leases

The Company has certain non-cancelable operating lease agreements for office, production and warehouse space in Texas, Singapore, Malaysia and United Kingdom. Our lease obligation in Canada was terminated as of* March 31, 2022and our lease obligation in Hungary was terminated as of October 31, 2022.*

F-15

Lease expense for thetwelve months ended* January 31, 2024and2023* was approximately $831,000 and $858,000, respectively, and was recorded as a component of operating income (loss). Included in these costs was short-term lease expense of approximately $8,000 and $6,000 for thetwelve months ended* January 31, 2024and2023*, respectively.

Supplemental balance sheet information related to leases as of* January 31, 2024and2023* was as follows (in thousands):

Lease-term and discount rate details as of* January 31, 2024and2023* were as follows:

Supplemental cash flow information related to leases on* January 31, 2024and2023* was as follows (in thousands):

Maturities of lease liabilities on* January 31, 2024and2023* were as follows (in thousands):

F-16

9. Intangible Assets

Intangible assets from continuing operations consisted of the following:

The Company didnot record impairment of intangible assets during fiscal years2024 and2023.

Aggregate amortization expense was approximately $795,000 and $873,000 for fiscal2024 and fiscal2023, respectively. As of* January 31, 2024*, future estimated amortization expense related to amortizable intangible assets is estimated to be (in thousands):

F-17

10. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities from continuing operations consisted of the following (in thousands):

11. Notes Payable

On* February 2, 2023,we entered into a $3.75 million Loan and Security Agreement (“the Loan”). The Company had incurred approximately $814,000 of debt acquisition costs associated with the loan including approximately $254,000 in origination and other transaction fees and approximately $484,000 of prepaid interest, which was the total interest due through maturity. These costs were recorded as a reduction to the carrying value of our debt and are amortized to interest expense straight-line over the term of the Loan. Approximately $601,000 of amortization of debt acquisition costs were recorded as interest expense for thetwelve* months ended* January**31,* 2024. On* August 22, 2023,in connection with the Sale of Klein, the Loan was repaid in full (see Note2*- "Sale of a Subsidiary and Discontinued Operations" for additional details).

12. Stockholders’** Equity**

The Company has 2,000,000 shares of Preferred Stock authorized. The Preferred Stock* maybe issued in multiple series with various terms, as authorized by the Company’s Board of Directors. As of January 31, 2024* and2023, there were 1,682,985 shares of the Series A Preferred Stock outstanding. Dividends on the Series A Preferred Stock are cumulative from the date of original issue and payable quarterly on or about the last day of* January,** April,** Julyand Octoberof each year when, as and if, declared by the Company’s board of directors. Dividends are payable out of amounts legally available therefore at a rate equal to 9.00% per annum per $25.00 of stated liquidation preference per share, or $2.25 per share of Series A Preferred Stock per year. The Company mayredeem, at the Company’s option, the Series A Preferred Stock, in whole or in part, at a cash redemption price of $25.00 per share, plus all accrued and unpaid dividends to, butnot* including, the redemption date. If at any time a change of control occurs, the Company will have the option to redeem the Series A Preferred Stock, in whole or in part, within 120 days after the date on which the change of control occurred by paying $25.00 per share, plus any accrued and unpaid dividends to, butnot including, the date of redemption. As of* January 31, 2024,the aggregate liquidation preference on preferred shares was approximately $47.7 million, including $5.7 million of cumulative undeclared dividends. The Series A Preferred Stock hasno* stated maturity, isnot subject to any sinking fund or other mandatory redemption and will remain outstanding indefinitely unless repurchased or redeemed by the Company or converted into our Common Stock in connection with a change of control. Holders of the Series A Preferred Stock generally haveno voting rights except for limited voting rights if dividends payable on the outstanding Series A Preferred Stock are in arrears forsix or more consecutive or non-consecutive quarterly dividend periods, or if the Company fails to maintain the listing of the Series A Preferred Stock on a national securities exchange for a period continuing for more than 180 days. As of* January 31, 2024,preferred stock dividends havenot* been declared for a cumulative ofsix quarters.

On* September 28, 2023,the Board approved a reverse stock split (the "Reverse Stock Split") of the Company's shares of common stock at a ratio ofone*-for-ten. On* October 12, 2023,the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Charter Amendment to effect the Reverse Stock Split. The Charter Amendment became effective on October 13, 2023.*

As a result of the Charter Amendment and Reverse Stock Split, everyten shares of issued and outstanding Common Stock were combined intoone issued and outstanding share of Common Stock, without any change in par value per share. Proportionate adjustments were also made to any outstanding securities or rights convertible into, or exchangeable or exercisable for, shares of Common Stock. Fractional shares werenot issued in connection with the Reverse Stock Split. Stockholders who would otherwise be entitled to receive a fractional share were entitled to receiveone full share of post-Reverse Stock Split Common Stock, in lieu of receiving such fractional shares. The Reverse Stock Split affected all stockholders uniformly and didnot alter any stockholder’s relative interest in the Company’s equity securities. The Reverse Stock Split reduced the number of shares of issued and outstanding Common Stock from approximately 13,788,738 shares to approximately 1,405,779 shares. Common stock and treasury stock shares have been retroactively adjusted to reflect the Reverse Stock Split in all periods presented. In connection with the Reverse Stock Split, the Company retired all treasury stock.

The Company has 40,000,000 shares of Common Stock authorized, of which 1,405,779 and 1,599,053 were issued as of* January 31, 2024and2023*. Treasury shares as of* January 31, 2023*were 193,274.

During fiscal2023, approximately 220 shares were surrendered in exchange for payment of taxes due upon the vesting of restricted shares. The shares had an average fair value of $12.50.

F-18

13. Related Party Transaction

Ladenburg Thalmann & Co. Inc. (“Ladenburg”) provided advisor and arrangement services for the Loan (See Note11 - "Notes Payable" for additional details) and received $75,000 in fees for such services. Additionally, Ladenburg provided advisory services related to the Sale of Klein and received fees of $405,000 for such services. The Co-Chief Executive Officer and Co-President of Ladenburg is the Non-Executive Chairman of our Board. Our Non-Executive Chairman of the Board receivedno portion of the above-mentioned compensation.

14. Income Taxes

F-19

The following is a reconciliation of expected to actual income tax expense (benefit) for continuing operations:

The components of the Company’s deferred taxes for continuing operations consisted of the following:

On* August 16, 2022,the Inflation Reduction Act (IRA) was enacted. The IRA, among other things, establishes certain “green energy” tax credits, establishes a corporate alternative minimum tax, and requires a2%* excise tax on stock buybacks. The Company doesnot believe the IRA will have a material impact on the Company’s future income tax expense or the related tax assets and liabilities.

The Company has determined that, due to the potential requirement for additional investment and working capital to achieve its objectives, the undistributed earnings of foreign subsidiaries as of* January 31, 2024*, arenot deemed indefinitely reinvested outside of the United States. Furthermore, the Company has concluded that any deferred taxes with respect to the undistributed foreign earnings would be immaterial. Therefore, the Company hasnot recorded a deferred tax liability associated with the undistributed foreign earnings as of* January 31, 2024*.

Included in deferred tax assets is approximately $766,000 related to stock-based compensation, including non-qualified stock options. Recent market prices for the Company’s Common Stock remain below the exercise price of a number of options outstanding as of* January 31, 2024*. Should the market price of the Company’s Common Stock remain below the exercise price of the options, these stock options will expire without exercise. In accordance with the provisions of ASC718-740-10, a valuation allowance hasnot been computed based on the decline in stock price.

F-20

As of* January 31, 2024*, the Company has recorded valuation allowances of approximately $31.2 million related to deferred tax assets for continuing operations. These deferred tax assets relate primarily to net operating loss carryforwards in the United States and other jurisdictions. These net operating loss carry forwards are subject to limitation and future expiration. The valuation allowances were determined based on management’s judgment as to the likelihood that the deferred tax assets wouldnot be realized. The judgment was based on an evaluation of available evidence, both positive and negative.

On* January 31, 2024*, the Company had tax credit carry forwards for continuing operations of approximately $944,000, which amounts can be carried forward through at least2027.

As of* January 31, 2024*, and2023 the company hadno unrecognized tax benefits attributable to uncertain tax positions.

The Company recognizes interest and penalties related to income tax matters as a component of income tax expense.

The Company files U.S. federal income tax returns as well as separate returns for its foreign subsidiaries within their local jurisdictions. The Company’s U.S. federal tax returns are subject to examination by the IRS for fiscal years ended* January31,* 2019, through2024. The Company’s tax returns* mayalso be subject to examination by state and local revenue authorities for fiscal years ended January31,* 2017, through2024. The Company’s Singapore income tax returns are subject to examination by the Singapore tax authorities for fiscal years ended* January31,* 2017, through2024. The Company’s tax returns in other foreign jurisdictions are generally subject to examination for the fiscal years ended* January31,* 2018 through* January 31, 2024*.

15. Commitments and Contingencies

Purchase Obligations—On* January 31, 2024*, the Company had approximately $11.7 million in purchase orders outstanding.

16. Stock Option Plans

At* January 31, 2024*, the Company had stock-based compensation plans as described in more detail below. The total compensation expense related to stock-based awards granted under these plans during fiscal2024 and2023 was approximately $261,000 and $654,000, respectively. The Company recognizes stock-based compensation costs net of a forfeiture rate for only those awards expected to vest over the requisite service period of the award. The Company estimates the forfeiture rate based on its historical experience regarding employee terminations and forfeitures.

The fair value of each option award is estimated as of the date of grant using a Black-Scholes-Merton option pricing formula. Expected volatility is based on historical volatility of the Company’s stock over a preceding period commensurate with the expected term of the option. The expected term is based upon historical exercise patterns. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected dividend yield wasnot considered in the option pricing formula since the Company doesnot pay dividends and hasnot paid any dividends since its incorporation. There wereno options granted during fiscal2024. The weighted average grant-date fair value of options granted during fiscal2023 was $5.01. The assumptions for the periods indicated are noted in the following table.

Weighted average Black-Scholes-Merton fair value assumptions

Cash flows resulting from tax benefits attributable to tax deductions in excess of the compensation expense recognized for those options (excess tax benefits) are classified as financing out-flows and operating in-flows. The Company hadno excess tax benefits during fiscal2024 and2023.

The Company has share-based awards outstanding under the MIND Technology, Inc. Stock Awards Plan (“the Plan”). Stock options granted and outstanding under the Plan generally vest evenly over three years and have a 10-year contractual term. The exercise price of a stock option generally is equal to the fair market value of the Company’s Common Stock on the option grant date. As of* January 31, 2024*, there were approximately 68,000 shares available for grant under the Plan. The Plan provides for awards of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units and phantom stock. New shares are issued upon vesting for restricted stock and upon exercise for options.

F-21

Stock Based Compensation Activity

The following table presents a summary of the Company’s stock option activity for the fiscal year ended* January 31, 2024*:

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of thefourth quarter of fiscal2024 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on* January 31, 2024*. This amount changes based upon the market value of the Company’s Common Stock. No options were exercised during fiscal2024 and2023. The fair value of options that vested during the fiscal years ended* January 31, 2024and2023* was approximately $517,000 and $1.4 million, respectively. For fiscal2024 and fiscal2023 approximately 75,000 and 110,000 options vested, respectively.

As of* January 31, 2024*, there was approximately $243,000 of total unrecognized compensation expense related to unvested stock options granted under the Company’s share-based compensation plans. That expense is expected to be recognized over a weighted average period of 1.0 years.

Restricted stock as of* January 31, 2024*, and changes during fiscal2024 were as follows:

As of* January 31, 2024*, there wasno unrecognized stock-based compensation expense related to unvested restricted stock awards.

F-22

17. Segment Reporting

Prior to* August 22, 2023,the Company operated intwo segments, Seamap and Klein. On August 21, 2023,the Company completed the Sale of Klein. (see Note2*-"Sale of a Subsidiary and Discontinued Operations" for additional details). As a result, at* January 31, 2024,*Seamap is the Company’s sole reporting segment.

18. Concentrations

Credit Risk— As of* January 31, 2024*, we hadfour customers that individually exceeded 10% of consolidated accounts receivable. During fiscal2023, we hadtwo customers that individually exceeded 10% of consolidated accounts receivable.

Revenue Risk— In fiscal2024 and2023, our single largest customer accounted for approximately 21% and 17%, respectively, of our consolidated revenues, with these revenues being generated from the Seamap Marine Products segment. Together, ourfive largest customers accounted for approximately 67% and 47% of our consolidated revenues in fiscal2024 and fiscal2023, respectively.

The Company maintains deposits and certificates of deposit with banks which* mayexceed the Federal Deposit Insurance Corporation (“FDIC”) insured limit and money market accounts which arenot* FDIC insured. In addition, deposits aggregating approximately $4.9 million at* January 31, 2024* are held in foreign banks. Management believes the risk of loss in connection with these accounts is minimal.

Supplier Concentration—The Company has satisfactory relationships with its suppliers. However, should those relationships deteriorate, the Company* may*have difficulty in obtaining new technology requested by its customers and maintaining the existing equipment in accordance with manufacturers’ specifications.

19. Sales and Major Customers

A summary of the Company’s revenues, from continuing operations, from customers by geographic region, outside the U.S., is as follows (in thousands):

During the fiscal year ended* January 31, 2024*, Three Seamap Marine Products customers individually exceeded 10% of total revenue. During the fiscal year ended* January 31, 2023*, Two Seamap Marine Products customers individually exceeded 10% of total revenue.

F-23

SCHEDULE II

MIND TECHNOLOGY, INC.

VALUATION AND QUALIFYING ACCOUNTS

(in thousands)