MIND TECHNOLOGY INC

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.

Liquidity—As of* April 30, 2025*, the Company had working capital of approximately $22.8 million, including cash and cash equivalents of approximately $9.2 million, compared to working capital of approximately $23.5 million, including cash and cash equivalents of approximately $5.3 million as of* January 31, 2025*. 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.

Summary of Significant Accounting Policies—We describe our significant accounting policies in Note**1* of the Notes to Consolidated Financial Statements in our Annual Report on Form10*-K for the fiscal year ended* January 31, 2025*. During thethree months ended* April 30, 2025*, there wereno changes to those accounting policies.

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2. Basis of Presentation

The condensed consolidated balance sheet as of* January 31, 2025*, for the Company has been derived from audited consolidated financial statements. The unaudited interim condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presentednot misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s Annual Report on Form10-K for the year ended* January 31, 2025* (“fiscal2025”). In the opinion of the Company’s management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position as of* April 30, 2025*, the results of operations for thethree-months ended* April 30, 2025and2024*, the cash flows for thethree months ended* April 30, 2025and2024*, and the statement of stockholders’ equity for thethree-months ended* April 30, 2025and2024*, have been included in these condensed consolidated financial statements. The foregoing interim results arenot necessarily indicative of the results of operations to be expected for the full fiscal year ending* January**31,* 2026 (“fiscal2026”).

3. New Accounting Pronouncements

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 adoption of this accounting standard didnot* have an impact on the Company's consolidated financial statements.

In* November 2024,the FASB issued ASUNo.* 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic220-40) ("ASU2024-03"), to enhance the disclosures public entities provide regarding specified information about certain costs and expenses at each interim and annual reporting period so that investors can better understand an entity’s overall performance, including its cost structure, and assess potential future cash flows. ASU2024-03 is effective for the Company for annual periods beginning* February 1, 2027and interim periods within fiscal years beginning February 1, 2028.*The Company is evaluating the new guidance to determine the impact it will have on the disclosures to its consolidated financial statements.

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4. Revenue from Contracts with Customers

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

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

Performance Obligations

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, revenue is recognized over time when our Seamap business provides repair and maintenance services, or performs upgrades, on customer-owned equipment, which occurs periodically. In addition, our Seamap business provides annual Software Maintenance Agreements (“SMAs”) to customers who have an active license for software embedded in Seamap products. The revenue from SMAs is recognized over time, with the total value of the SMAs amortized in equal monthly amounts over the life of the contract. The duration of SMAs is typicallyone year or less. We donot have elements of variable consideration within these contracts.

As of* April 30, 2025and January 31, 2025,due to the nature of our contracts and the services and products we provide, there wereno* significant outstanding liability balances for refunds or returns. Our warranties are limited to assurance warranties that are of a standard length and arenot considered to be material rights. For thethree months ended* April 30,2025 and April 30, 2024,we didnot* recognize revenue from performance obligations satisfied in a prior period.

Contract Balances

Prepayments and deferred revenue on SMAs have a significant impact our contract liabilities. 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. We donot have any long-term service contracts or related long-term contract assets or liabilities. Costs to obtain and fulfill contracts are considered immaterial and are expensed during the period when incurred. Contract liabilities increased by approximately $529,000 during thethree months ended* April 30,*2025 due primarily to recognition of revenue during the year.

As of* April 30, 2025*, and* April 30, 2024,*contract assets and liabilities consisted of the following:

With respect to the presentation of contract assets and liabilities above, sales and transaction-based taxes are excluded from revenue. 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.

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5. Balance Sheet

As of* January 31, 2025*, the Company completed an annual review of property and equipment notingno indications that the recorded value of assets* may**not* be recoverable, andno impairment was recorded for fiscal2025. Since* January 31, 2025*, there have beenno changes to the market, economic or legal environment in which the Company operates or overall performance of the Company, that would, in the aggregate, indicate additional impairment analysis is necessary as of* April 30, 2025*. Depreciation expense on property and equipment for thethree months ended* April 30, 2025and April 30, 2024*was approximately $77,000 and $81,000, respectively.

6. Leases

The Company has certain non-cancelable operating lease agreements for office, production and warehouse space in Texas, Singapore, Malaysia, and the United Kingdom.

Lease expense for thethree months ended* April 30, 2025*, and* April 30, 2024*, was approximately $232,000 and $207,000, respectively, and was recorded as a component of operating income (loss). Included in these costs was short-term lease expense ofapproximately$7,000 and $1,000 for thethree months ended* April 30, 2025*, and* April 30, 2024*, respectively.

Supplemental balance sheet information related to leases as of* April 30, 2025* and* January 31, 2025* was as follows:

Lease-term and discount rate details as of* April 30, 2025* and* January 31, 2025* were as follows:

The weighted average discount rate was calculated using the Company's weighted average cost of capital.

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Supplemental cash flow information related to leases was as follows:

Maturities of lease liabilities as of* April 30, 2025* were as follows:

7. Intangible Assets

On* January 31, 2025*, the Company completed an annual review of amortizable intangible assets. Based on a review of qualitative factors, it was determined that there wereno events or changes in circumstances indicating that the carrying value of amortizable intangible assets wasnot recoverable. During thethree months ended* April 30, 2025*, there have beenno substantive indicators of impairment.

Aggregate amortization expense was approximately $148,000 and $185,000 for thethree months ended* April 30, 2025*, and* April 30, 2024*, respectively. As of* April 30, 2025*, future estimated amortization expense related to amortizable intangible assets was estimated to be:

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8. Income Taxes

For thethree-month period ended* April 30, 2025*, the income tax expense was approximately $294,000 on pre-tax loss of approximately $676,000. For thethree-month period ended* April 30, 2024*, the income tax expense was approximately $245,000, on pre-tax income of approximately $1.2 million. The variance between our actual provision and the expected provision when applying the U.S. statutory rate of 21% is due primarily to the impact of income taxes accrued in certain foreign jurisdictions, mainly Singapore, which donot have net operating losses available to offset taxable income, and because valuation allowances have been recorded against increases in our deferred tax assets. Valuation allowances have been provided against all deferred tax assets in the United States and certain foreign jurisdictions, including Malaysia and the United Kingdom.

The Company files U.S. federal and state 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 Internal Revenue Service for fiscal years ended* January 31, 2019through 2024. The Company’s tax returns mayalso be subject to examination by state and local tax authorities for fiscal years ending January 31, 2017through 2024. The Company's Singapore income tax returns are subject to examination by the Singapore tax authorities for the fiscal years ended January 31, 2017,through 2024. The Company’s tax returns in other foreign jurisdictions are generally subject to examination for the fiscal years ended January 31, 2018*through 2024.

The Company has determined that the undistributed earnings of foreign subsidiaries arenot deemed to be indefinitely reinvested outside of the United States as of* April 30, 2025*. 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* April 30, 2025*.

For thethree-month period ended* April 30, 2025and2024*, the Company didnot recognize any tax expense or benefit related to uncertain tax positions.

9. Earnings per Share

Net income per basic common share is computed using the weighted average number of common shares outstanding during the period, excluding unvested restricted stock. Net income per diluted common share is computed using the weighted average number of common shares and dilutive potential common shares outstanding during the period using the treasury stock method. Potential common shares result from the assumed exercise of outstanding common stock options having a dilutive effect and from the assumed vesting of unvested shares of restricted stock. For thethree months ended* April 30, 2025* and* April 30, 2024*, dilutive potential common shares outstanding hadno effect on the calculation of earnings per share because shares were anti-dilutive. The total basic weighted average common shares outstanding for thethree months ended* April 30, 2025*, and* April 30, 2024*, was approximately 8.0 and 1.4 million shares, respectively.

On* September 4, 2024,all outstanding shares of our9.00%* Series A Cumulative preferred stock (the “preferred stock”) were converted into common stock and retired. The Company issued approximately 6,600,000 shares of common stock in connection with the conversion (see Note11- "Equity and Stock Based Compensation" for additional details).

10. Related Party Transaction

In* February 2025,the Company retained Lucid Capital Markets, LLC. (“Lucid”) to provide advisor and arrangement services for investigation and analysis of opportunities for growth and additional scale. Lucid received $100,000 in retainer fees for such potential services. The Vice Chairman of Lucid is the Non-Executive Chairman of the Company's board of directors (the "Board"). Our Non-Executive Chairman of the Board receivedno* portion of the above-mentioned compensation.

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11. Equity and Stock-Based Compensation

At the virtual Special Meeting of Preferred Stockholders held on* August 29, 2024,our preferred stockholders approved an amendment (the “Amendment”) to our Certificate of Designations, Preferences and Rights of 9.00% Series A Cumulative Preferred Stock, to provide that, at the discretion of the Board deciding to file the Amendment with the Secretary of State of the State of Delaware at any time prior to October 31, 2024,each share of9.00%* Series A Cumulative preferred stock, $1.00 par value per share (the “preferred stock”) would be converted (the “Conversion”) into 3.9 shares of common stock upon the effective time of the Amendment. On* August**30,* 2024, the Board elected to proceed with the Conversion by filing the Amendment with the Delaware Secretary of State. Effective on* September 4, 2024,all outstanding shares of preferred stock were converted into common stock and retired. The Company issued approximately 6,600,000 shares of common stock in connection with the Conversion. Accordingly, the Companyno* longer has obligations regarding preferred stock dividends, including undeclared dividends from previous periods. The common stock issued was recorded at its market value at the date of issuance less transaction costs related to the conversion. The excess of the carrying value of the preferred stock over the market value of the common stock issued, which amounted to approximately $14.8 million, was credited directly to accumulated deficit and is reflected in the calculation of earnings per share attributable to common stockholders.

Total compensation expense recognized for stock-based awards granted under the Company’s equity incentive plan during thethree-month periods ended* April 30, 2025* and* April 30, 2024*, was approximately $272,000 and $48,000, respectively.

12. Segment Reporting

As of* April 30, 2025,*Seamap Marine Products is the Company’s sole reporting segment.

Our Seamap Marine Products segment provides the following:

Our Seamap Marine Products segment provides services and products, including engineering, repairs and software licensing, utilized in marine exploration, marine survey and maritime security for marine survey companies, seismic survey contractors, research institutes, non-military government organizations and operators of port facilities and other offshore installations.

Our chief operating decision maker ("CODM") is our chief executive officer. Our CODM analyzes each segment's performance using revenue and operating income. Inter-company revenue and expenses have been eliminated in the reported revenue and operating income. Our CODM considers revenue and operating income in the annual budgeting and forecasting process and analyzes these on a monthly basis when making determinations on the allocation of resources.

Financial information by business segment is set forth below net of any allocations (in thousands):

Corporate selling, general and administrative expense primarily includes salary and benefit costs of corporate personnel, directors’ fees, professional services, office rent, and insurance premiums.

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The following table presents a reconciliation of operating income (loss) to income (loss) before income taxes (in thousands):

Total assets by business segment is set forth below (in thousands):

Depreciation and Amortization Expense

Depreciation expense on property and equipment, reflected in the table above, was approximately $77,000 and $81,000 for thethree months ended* April 30, 2025and April 30,2024, respectively. Amortization expense primarily relating to intangible assets, reflected in the table above was approximately $148,000 for thethree months ended April 30, 2025and approximately $185,000 for thethree* months ended* April 30,*2024. Essentially all depreciation and amortization expense relates to the Seamap Marine Products segment. Amortization in Corporate expenses relates to enterprise resource planning software.

Assets

All property and equipment is allocated to the Seamap Marine Products segment. Corporate assets primarily consist of cash, right of use assets for an operating lease, and prepaid corporate expenses.

Geographic Operating Areas

Revenue is based on the location of our customers. See Note4-"Revenue from Contracts with Customers" for disclosure of revenue by geographic area.

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