What changed in this filing

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Item 1. Financial Statements

2021-06-03 compared with 2020-12-04 · 118 added, 224 removed, 363 unchanged (49% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

October 31, 2020 January 31, 2020

April 30, 2021 January 31, 2021

Current assets:

Cash and cash equivalents $ 2,001 $ 4,611

Restricted cash — 144

Accounts receivable, net of allowance for doubtful accounts of $ 952 and $ 948

at October 31, 2020 and January 31, 2020, respectively

at April 30, 2021 and January 31, 2021, respectively

Inventories, net 12,169 11,453

5 unchanged sentences

Intangible assets, net 6,337 6,750

Goodwill — 2,531

Other assets 774 429

Total assets $ 35,521 $ 39,763

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

8 unchanged sentences

Notes payable — 850

Other non-current liabilities 797 967

Deferred tax liability 198 198

Total liabilities 8,953 9,347

Shareholders’ equity:

Stockholders’ equity:

Preferred stock, $ 1.00 par value;

2,000 shares authorized;

994 shares issued and

outstanding at October 31, 2020 and January 31, 2020

1,059 and 1,038 shares issued and

outstanding at April 30, 2021 and January 31, 2021, respectively

23,607 23,104

2 unchanged sentences

15,704 and 15,681 shares issued at

October 31, 2020 and January 31, 2020, respectively

April 30, 2021 and January 31, 2021, respectively

Additional paid-in capital

128,403 128,241

Treasury stock, at cost ( 1,929 shares at October 31, 2020 and January 31, 2020)

Treasury stock, at cost ( 1,931 and 1,929 shares at April 30, 2021 and January 31, 2021, respectively)

( 16,862 ) ( 16,860 )

1 unchanged sentence

Accumulated other comprehensive loss ( 4,299 ) ( 4,356 )

Total shareholders’ equity 30,954 47,652

Total liabilities and shareholders’ equity $ 40,793 $ 58,228

Total stockholders’ equity 26,568 30,416

Total liabilities and stockholders’ equity $ 35,521 $ 39,763

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

2 unchanged sentences

(in thousands, except per share data)

For the Three Months Ended October 31, For the Nine Months Ended October 31,

2020 2019 2020 2019

For the Three Months Ended April 30,

Sale of marine technology products

3 unchanged sentences

Sale of marine technology products

4,267 4,860 10,039 12,478

Total cost of sales 3,651 2,703

2,274 3,315 4,775 8,561

Operating expenses:

5 unchanged sentences

Operating loss ( 4,793 ) ( 6,141 )

Other income (expense):

Other income:

Other, net 947 56

Total other income (expense) 12 ( 31 ) 68 145

Total other income 947 56

Loss from continuing operations before income taxes ( 3,846 ) ( 6,085 )

(Provision) benefit for income taxes ( 109 ) 31 79 75

Benefit (provision) for income taxes 145 ( 342 )

Loss from continuing operations ( 3,701 ) ( 6,427 )

2 unchanged sentences

Preferred stock dividends ( 584 ) ( 559 )

Net loss attributable to common shareholders $ ( 4,149 ) $ ( 2,550 ) $ ( 18,513 ) $ ( 9,071 )

Net loss attributable to common stockholders $ ( 4,568 ) $ ( 7,201 )

Net loss per common share - Basic

13 unchanged sentences

(in thousands)

For the Three Months Ended October 31, For the Nine Months Ended October 31,

2020 2019 2020 2019

Net loss attributable to common shareholders $ ( 4,149 ) $ ( 2,550 ) $ ( 18,513 ) $ ( 9,071 )

Change in cumulative translation adjustment for sale of foreign entity — — — ( 331 )

Other changes in cumulative translation adjustment 11 115 ( 38 ) ( 45 )

For the Three Months Ended April 30,

Net loss attributable to common stockholders $ ( 4,568 ) $ ( 7,201 )

Changes in cumulative translation adjustment 57 ( 131 )

Comprehensive loss $ ( 4,511 ) $ ( 7,332 )

3 unchanged sentences

(in thousands)

For the Nine Months Ended October 31,

For the Three Months Ended April 30,

Cash flows from operating activities:

1 unchanged sentence

Adjustments to reconcile net loss to net cash used in operating activities:

PPP loan forgiveness ( 850 ) —

Depreciation and amortization 668 1,701

1 unchanged sentence

Impairment of intangible assets — 2,531

Loss on disposal of discontinued operations 1,859 —

Provision for doubtful accounts, net of charge offs 470 23

Recovery of doubtful accounts ( 453 ) —

Provision for inventory obsolescence 327 22

1 unchanged sentence

Gross profit from sale of other equipment ( 80 ) —

Deferred tax expense ( 32 ) 135

Non-current prepaid tax — ( 157 )

Accounts receivable 1,602 3,728

5 unchanged sentences

Deferred revenue ( 10 ) ( 153 )

Foreign exchange losses net of gains — 230

Net cash used in operating activities ( 4,803 ) ( 4,247 )

Net cash (used in) provided by operating activities ( 2,807 ) 929

Cash flows from investing activities:

2 unchanged sentences

Sale of used lease pool equipment — 1,414

Sale of assets held for sale 734 —

Sale of business, net of cash sold 187 —

Net cash provided by (used in) investing activities 2,570 ( 1,178 )

Net cash provided by investing activities 179 1,239

Cash flows from financing activities:

Proceeds from exercise of stock options — 25

Purchase of treasury stock ( 2 ) —

Net proceeds from preferred stock offering 503 —

1 unchanged sentence

Preferred stock dividends ( 576 ) ( 559 )

Proceeds from PPP loans 1,607 —

Net cash provided by financing activities 1,780 744

Net cash used in financing activities ( 33 ) ( 559 )

Effect of changes in foreign exchange rates on cash, cash equivalents and restricted cash 51 ( 138 )

Net decrease in cash, cash equivalents and restricted cash ( 570 ) ( 4,750 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 2,610 ) 1,471

Cash, cash equivalents and restricted cash, beginning of period 4,611 3,234

4 unchanged sentences

Purchases of seismic equipment held for lease in accounts payable at end of period $ — $ 702

Purchase of seismic equipment held for lease through settlement of accounts receivable $ — $ 826

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

MIND TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

7 unchanged sentences

Foreign currency translation — — — — — — — 57 57

Preferred stock dividends — — — — — — ( 559 ) — ( 559 )

Stock-based compensation — — — — 230 — — — 230

Balances, April 30, 2020 14,097 $ 141 994 $ 22,104 $ 124,194 $ ( 16,860 ) $ ( 84,511 ) $ ( 4,518 ) $ 40,550

Net loss — — — — — — ( 6,604 ) — ( 6,604 )

Foreign currency translation — — — — — — — 82 82

Preferred stock dividends — — — — — — ( 559 ) — ( 559 )

Stock-based compensation — — — — 219 — — — 219

Balances, July 31, 2020 14,097 $ 141 994 $ 22,104 $ 124,413 $ ( 16,860 ) $ ( 91,674 ) $ ( 4,436 ) $ 33,688

Net loss — — — — — — ( 3,590 ) — ( 3,590 )

Foreign currency translation — — — — — — — 11 11

Restricted stock issued 5 — — — 11 — — — 11

Restricted stock forfeited for taxes — — — — — ( 2 ) — — ( 2 )

Preferred stock offering — — 21 503 — — — — 503

Preferred stock dividends — — — — — — ( 584 ) — ( 584 )

1 unchanged sentence

Stock-based compensation — — — — 109 — — — 109

Balances, October 31, 2020 14,773 $ 148 994 $ 22,104 $ 125,810 $ ( 16,860 ) $ ( 95,823 ) $ ( 4,425 ) $ 30,954

Balances, April 30, 2021 15,704 $ 157 1,059 $ 23,607 $ 128,403 $ ( 16,862 ) $ ( 104,438 ) $ ( 4,299 ) $ 26,568

MIND TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

6 unchanged sentences

Foreign currency translation — — — — — — — ( 131 ) ( 131 )

Preferred stock offering — — 17 409 — — — — 409

Preferred stock dividends — — — — — — ( 559 ) — ( 559 )

1 unchanged sentence

Balances, April 30, 2020 14,097 $ 141 994 $ 22,104 $ 124,194 $ ( 16,860 ) $ ( 84,511 ) $ ( 4,518 ) $ 40,550

Net loss — — — — — — ( 3,137 ) — ( 3,137 )

Foreign currency translation — — — — — — — ( 41 ) ( 41 )

Equity Compensation 9 1 — — 25 — — — 26

Preferred stock offering — — 70 1,571 — — — — 1,571

Preferred stock dividends — — — — — — ( 499 ) — ( 499 )

Stock-based compensation — — — — 170 — — — 170

Balances, July 31, 2019 14,058 $ 141 917 $ 20,310 $ 123,452 $ ( 16,860 ) $ ( 70,495 ) $ ( 4,535 ) $ 52,013

Net loss — — — — — — ( 2,028 ) — ( 2,028 )

Foreign currency translation — — — — — — — 115 115

Restricted stock issued 39 — — — — — — — —

Preferred stock offering — — 11 230 — — — — 230

Preferred stock dividends — — — — — — ( 522 ) — ( 522 )

Stock-based compensation — — — — 270 — — — 270

Balances, October 31, 2019 14,097 $ 141 928 $ 20,540 123,722 $ ( 16,860 ) $ ( 73,045 ) $ ( 4,420 ) $ 50,078

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

6 unchanged sentences

See Note 15 - Corporate Restructuring, to the condensed consolidated financial statements.

The Company, through its wholly owned subsidiary, Seamap Pte, Ltd.

(“Seamap”), and its wholly owned subsidiary, Klein Marine Systems, Inc.

(“Klein”), 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 New Hampshire, Singapore, Malaysia, the United Kingdom and Texas.

Prior to July 31, 2020, the Company, together with its wholly owned Canadian subsidiary, Mitcham Canada, ULC (“MCL”);

its wholly owned Hungarian subsidiary, Mitcham Europe Ltd.

and its branch operations in Colombia, provided full-service equipment leasing, sales and service to the seismic industry worldwide.

In February 2019 the Company sold its wholly owned Australian subsidiary Seismic Asia Pacific Pty Ltd (“SAP”).

See Note 14 - Sale of Subsidiaries to the condensed consolidated financial statements for more information.

The Company, through its wholly owned subsidiaries, Seamap Pte Ltd, MIND Maritime Acoustics, LLC (formerly Seamap USA, LLC), Seamap (Malaysia) Sdn Bhd and Seamap (UK) Ltd (collectively “Seamap”), and its wholly owned subsidiary, Klein Marine Systems, Inc.

(“Klein”), 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 states of New Hampshire and Texas.

Prior to July 31, 2020, the Company, through its wholly owned Canadian subsidiary, Mitcham Canada, ULC (“MCL”), its wholly owned Hungarian subsidiary, Mitcham Europe Ltd.

(“MEL”), and its branch operations in Colombia, provided full-service equipment leasing, sales and service to the seismic industry worldwide (the “Leasing Business”).

Effective July 31, 2020, the Leasing Business has been classified as held for sale on the financial results reported as discontinued operations (see Note 3 – “Assets Held for Sale and Discontinued Operations” for additional details).

All intercompany transactions and balances have been eliminated in consolidation.

During the second quarter of the fiscal year ending January 31, 2021 (“fiscal 2021”), management and the board of directors (the “Board”) of the Company determined to exit the land seismic leasing business (the “Leasing Business”), which comprises essentially all operations of the Equipment Leasing segment.

Accordingly, the results of operations for this segment are excluded from the Company’s continuing operations for fiscal 2021 and all comparative periods and presented as discontinued operations in the Company’s condensed consolidated financial statements.

See Note 3 - Assets Held for Sale and Discontinued Operations to the condensed consolidated financial statements for further details.

These condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

The Company has a history of losses, has had negative cash from operating activities in the last two fiscal years and may not have access to sources of capital that were available in prior periods.

In addition, the COVID-19 pandemic and the decline in oil prices during the first nine months of fiscal 2021 have created substantial doubt and could have a material adverse effect on the Company’s business, financial position, results of operations and liquidity.

Accordingly, substantial doubt has arisen regarding the Company’s ability to continue as a going concern.

These condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result should the Company not be able to continue as a going concern.

The lingering impacts of the global pandemic and emerging supply chain disruptions have created uncertainty in the global economy which could have a material adverse effect on the Company’s business, financial position, results of operations and liquidity.

In addition, the Company has a history of operating losses and has had negative cash from operating activities.

However, the Company has no funded debt or obligations containing financial covenants, working capital of approximately $ 15.2 million, including cash of approximately $ 2.0 million, backlog of firm orders of approximately $ 11.0 million as of April 30, 2021, the ability, and plans, to reduce costs to maintain positive cash flow, additional equity available to raise further capital, and lease pool equipment being actively marketed for sale.

Based on these factors, Management expects the Company to continue to meet its obligations as they arise over the next twelve months.

Basis of Presentation

2 unchanged sentences

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 presented not 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 Form 10-K for the year ended January 31, 2020.

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 October 31, 2020, the results of operations for the three and nine months ended October 31, 2020 and 2019, the cash flows for the nine months ended October 31, 2020 and 2019, and the statement of shareholders’ equity for the three and nine months ended October 31, 2020 and 2019, have been included in these condensed consolidated financial statements.

The foregoing interim results are not necessarily indicative of the results of operations to be expected for the full fiscal year ending January 31, 2021.

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, 2021, the results of operations for the three months ended April 30, 2021 and 2020, the cash flows for the three months ended April 30, 2021 and 2020, and the statement of stockholders’ equity for the three months ended April 30, 2021 and 2020, have been included in these condensed consolidated financial statements.

The foregoing interim results are not necessarily indicative of the results of operations to be expected for the full fiscal year ending January 31, 2022 (“fiscal 2022”).

We have reclassified certain amounts in prior-period financial statements to conform to the current period’s presentation.

On the consolidated balance sheets, income taxes payable, not related to discontinued operations has been reclassified from “Current liabilities held for sale” to “Current income taxes payable.”

Assets Held for Sale and Discontinued Operations

On July 27, 2020, the Board determined to exit the Leasing Business, which comprises essentially all operations of the Equipment Leasing segment.

As a result, the assets, excluding cash, and liabilities of the Equipment Leasing segment are considered held for sale and the segment’s operations are reported as discontinued operations as of October 31, 2020 and for all comparative periods presented in these condensed consolidated financial statements.

The Company anticipates selling the discontinued operations within twelve months from July 27, 2020 in a single transaction, or multiple transactions, which may involve the sale of legal entities or assets.

As a result, the assets, excluding cash, and liabilities of the Equipment Leasing segment are considered held for sale and the segment’s operations are reported as discontinued operations as of April 30, 2021 and for all comparative periods presented in these condensed consolidated financial statements.

The Company originally anticipated selling the discontinued operations within twelve months from July 27, 2020, in multiple transactions, which may involve the sale of legal entities, assets, or a combination of both, but now anticipates completing the process within the next six months.

The assets reported as held for sale consist of the following:

October 31, 2020 January 31, 2020

April 30, 2021 January 31, 2021

Current assets of discontinued operations:

5 unchanged sentences

The liabilities reported as held for sale consist of the following:

October 31, 2020 January 31, 2020

April 30, 2021 January 31, 2021

Current liabilities of discontinued operations:

2 unchanged sentences

Accrued expenses and other current liabilities 915 831

Income taxes payable — ( 74 )

Income taxes payable (receivable) ( 29 ) —

Total liabilities of discontinued operations 972 963

The results of operations from discontinued operations for the three and nine months ended October 31, 2020 and 2019, consist of the following:

For the Three Months Ended October 31, For the Nine Months Ended October 31,

2020 2019 2020 2019

The results of operations from discontinued operations for the three months ended April 30, 2021 and 2020, consist of the following:

For the Three Months Ended April 30,

Revenue from discontinued operations $ 30 $ 4,188

3 unchanged sentences

Selling, general and administrative 342 1,700

Provision for doubtful accounts — — 470 —

Recovery of doubtful accounts ( 443 ) —

Depreciation and amortization 1 44

2 unchanged sentences

Other income (expenses) ( 39 ) 3

Loss on disposal (including $ 2,745 of cumulative translation loss)

— — ( 1,859 ) —

Loss before income taxes ( 282 ) ( 37 )

2 unchanged sentences

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

For the Nine Months Ended October 31,

For the Three Months Ended April 30,

Depreciation and amortization $ — $ 971

Gross profit from sale of lease pool equipment $ — $ ( 852 )

Provisions for doubtful accounts $ 470 $ —

Loss on disposal of discontinued operations $ 1,859 $ —

Recovery of doubtful accounts $ 443 $ —

Purchase of seismic equipment held for lease $ — $ ( 110 )

Sale of used lease pool equipment $ — $ 1,414

Sale of assets held for sale $ 187 $ —

Purchase of seismic equipment held for lease $ ( 110 ) $ ( 1,938 )

New Accounting Pronouncements

3 unchanged sentences

This ASU is effective for the annual period beginning after December 15, 2020, including interim periods within that annual period.

Certain amendments within this ASU are required to be applied on a retrospective basis for all periods presented;

others are to be applied using a modified retrospective approach with a cumulative-effect adjustment to retained earnings, if any, as of the beginning of the first reporting period in which the guidance is adopted;

and yet others are to be applied using either basis.

All other amendments not specified in the ASU should be applied on a prospective basis.

Early adoption is permitted.

An entity that elects to early adopt in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period.

Additionally, an entity that elects early adoption must adopt all the amendments in the same period.

The Company is currently evaluating the new guidance to determine the impact it will have on its condensed consolidated financial statements.

In August 2018, the SEC adopted amendments to simplify certain disclosure requirements, as set forth in Securities Act Release No.

33-10532, Disclosure Update and Simplification, which includes a requirement for entities to present the changes in shareholders’ equity in the interim financial statements in quarterly reports on Form 10-Q.

This amendment is effective for all filings made on or after November 5, 2018.

Considering the timing of effectiveness of the amendment and proximity to the filing date for most filers’ quarterly reports, the SEC has allowed for a filer’s first presentation of the changes in shareholders’ equity to be included in its Form 10-Q for the quarter that begins after the effective date.

The Company adopted the SEC’s amendment to interim disclosures in the first quarter of fiscal 2020 and has presented the changes in shareholders’ equity on an interim basis.

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) as modified by subsequently issued ASUs 2018-01, 2018-10, 2018-11 and 2018-20.

The Company adopted the standard effective February 1, 2019.

We have elected to apply the current period transition approach as introduced by ASU 2018-11 for our transition at February 1, 2019 and we have elected to apply several of the practical expedients in conjunction with accounting policy elections.

See Note 7 - Leases to our condensed consolidated financial statements for additional details.

The Company adopted this ASU effective February 1, 2021, and the adoption did not have a material impact on the Company’s condensed consolidated financial statements.

In August 2018, the FASB issued ASU No.

4 unchanged sentences

The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

In June 2018, the FASB issued ASU No.

2018-07, Compensation - Stock Compensation (“Topic 718”):

Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees except for certain circumstances.

The Company adopted this guidance in the first quarter of fiscal 2020.

The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

Revenue from Contracts with Customers

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

Three Months Ended October 31, Nine Months Ended October 31,

2020 2019 2020 2019

Three Months Ended April 30,

Revenue recognized at a point in time:

2 unchanged sentences

Klein 1,150 998

SAP — — — 101

Total revenue recognized at a point in time $ 4,063 $ 3,012

3 unchanged sentences

Total revenue from contracts with customers $ 4,194 $ 3,187

The revenue from products manufactured and sold by our Seamap and Klein businesses, as well as the revenue from products marketed and sold by our SAP 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.

The revenue from products manufactured and sold by our Seamap and Klein businesses 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.

Our Seamap business also provides Software Maintenance Agreements (“SMA”) to customers who have an active license for software embedded in Seamap products.

The revenue from SMA’s is recognized over time, with the total value of the SMA amortized in equal monthly amounts over the life of the contract, which is typically twelve months.

The Company sold SAP during the first quarter of fiscal 2020.

See Note 14 to our condensed consolidated financial statements for more information.

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

Three Months Ended October 31, Nine Months Ended October 31,

2020 2019 2020 2019

Three Months Ended April 30,

(in thousands)

5 unchanged sentences

Total revenue from contracts with customers $ 4,194 $ 3,187

As of October 31, 2020, and January 31, 2020, contract assets and liabilities consisted of the following:

October 31, 2020 January 31, 2020

As of April 30, 2021, and January 31, 2020, contract assets and liabilities consisted of the following:

April 30, 2021 January 31, 2021

Contract Assets:

6 unchanged sentences

Total deferred revenue & customer deposits $ 681 $ 691

Considering the products manufactured and sold by the businesses in our Marine Technology Products segment and the Company’s standard contract terms and conditions, we expect our contract assets and liabilities to turn over, on average, within a period of three to six months .

Pursuant to practical expedients and exemptions included in ASU 2014-09, Revenue from Contracts with Customers, sales and transaction-based taxes are excluded from revenue.

Considering the products manufactured and sold by our Seamap and Klein businesses and the Company’s standard contract terms and conditions, we expect our contract assets and liabilities to turn over, on average, within a period of three to nine months .

Pursuant to our accounting policies and procedures related to revenue from contracts with customers, sales and transaction-based taxes are excluded from revenue.

Also, we do not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less.

1 unchanged sentence

These costs are recorded in selling, general and administrative expenses.

Balance Sheet

As of October 31, 2020 As of January 31, 2020

Balance Sheet - Continuing Operations

As of April 30, 2021 As of January 31, 2021

Current Long-term Total Current Long-term Total

2 unchanged sentences

Accounts receivable net of allowance for doubtful accounts $ 3,649 $ — $ 3,649 $ 4,747 $ — $ 4,747

October 31, 2020 January 31, 2020

April 30, 2021 January 31, 2021

(in thousands)

5 unchanged sentences

Total inventories, net $ 12,169 $ 11,453

October 31, 2020 January 31, 2020

April 30, 2021 January 31, 2021

(in thousands)

8 unchanged sentences

As of January 31, 2021, the Company completed an annual review of long-lived assets noting that the undiscounted future cash flows exceeded their carrying value and no impairment has been recorded.

Subsequent to January 31, 2020, there was a significant deterioration in macroeconomic factors and a decline in the market value of the Company’s equity securities which indicated possible impairment of long-lived assets.

However, an analysis of the estimated recoverable value of these long-lived assets indicated that there was no impairment.

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) which was modified by subsequently issued ASUs 2018-01, 2018-10, 2018-11 and 2018-20 (collectively, the “New Lease Standard”).

The New Lease Standard requires organizations that lease assets ( “lessees”) to recognize the assets and liabilities of the rights and obligations created by leases with terms of more than 12 months.

The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee remains dependent on its classification as a finance or operating lease.

The New Lease Standard also requires additional disclosure of the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements.

The New Lease Standard was effective for financial statements issued for annual periods beginning after December 15, 2018, including interim periods within those fiscal years.

In July 2018, the FASB issued ASU No.

2018-11, Leases (Topic 842):

Targeted Improvements (“ASU 2018-11”).

ASU 2018-11 provided additional relief in the comparative reporting requirements for initial adoption of the New Lease Standard.

Prior to ASU 2018-11, a modified retrospective transition was required for financing or operating leases existing at or entered after the beginning of the earliest comparative period presented in the financial statements.

ASU 2018-11 provided an additional transition method allowing entities to initially apply the New Lease Standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without adjustment to the financial statements for periods prior to adoption.

The Company adopted the New Lease Standard effective February 1, 2019.

We elected to apply the current period transition approach as introduced by ASU 2018-11 and we elected a package of transition expedients, which must be elected together, that allowed us to forgo reassessing certain conclusions reached under ASC 840.

All expedients in this package were applied together for all leases that commenced before the effective date, February 1, 2019, of the adoption of the New Lease Standard.

As a result, in transitioning to the New Lease Standard, for existing leases as of February 1, 2019, we continued to use judgments made under ASC 840 related to embedded leases, lease classification and accounting for initial direct costs.

In addition, we have chosen, as an accounting policy election by class of underlying asset, not to separate non-lease components from the associated lease for all our leased asset classes, excluding for Real Estate related leases.

As a result, for classes

of Automobiles, Office Equipment and Manufacturing Equipment, we account for each separate lease component and the non-lease components associated with that lease as a single lease component.

Since January 31, 2021, there have been no significant changes to the market, economic or legal environment in which the Company operates that would indicate additional impairment analysis is necessary as of April 30, 2021.

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

Adoption of the New Lease Standard during first quarter of fiscal 2020 did have a material impact on our consolidated balance sheet as we recorded right-of-use assets and the corresponding lease liabilities related to our operating leases of approximately $ 3.0 million, each.

The Company determined to treat lease costs with an original maturity of less than one year as short-term lease costs and did not record a right-of-use asset or related lease liability for these leases.

The new standard did not have a material impact on our consolidated statements of operations or our statements of cash flows.

Lease expense for the three and nine months ended October 31, 2020 was approximately $ 313,000 and $ 828,000 , respectively, and was recorded as a component of operating loss.

Included in these costs was short-term lease expense of approximately $ 10,000 and $ 20,000 , respectively, for the three and nine months ended October 31, 2020.

Supplemental balance sheet information related to leases as of October 31, 2020 was as follows (in thousands):

Lease October 31, 2020 January 31, 2020

We negotiated the termination of our Colombia lease obligation during the current period.

Lease expense for the three months ended April 30, 2021 was approximately $ 309,000 and was recorded as a component of operating loss.

Included in these costs was short-term lease expense of approximately $ 10,000 for the three months ended April 30, 2021.

Supplemental balance sheet information related to leases as of April 30, 2021 and January 31, 2021 were as follows (in thousands):

Lease April 30, 2021 January 31, 2021

Operating lease assets

7 unchanged sentences

Total Operating lease liabilities $ 1,138 $ 1,471

Lease-term and discount rate details as of October 31, 2020 were as follows:

Lease term and discount rate October 31, 2020 January 31, 2020

Lease-term and discount rate details as of April 30, 2021 and January 31, 2021 were as follows:

Lease term and discount rate April 30, 2021 January 31, 2021

Weighted average remaining lease term (years)

2 unchanged sentences

Operating leases

9.27 % 9.27 %

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

Supplemental cash flow information related to leases was as follows (in thousands):

Lease Nine Months Ended October 31, 2020 Nine Months Ended October 31, 2019

Lease Three Months Ended April 30, 2021 Three Months Ended April 30, 2020

Cash paid for amounts included in the measurement of lease liabilities:

3 unchanged sentences

Operating leases

Maturities of lease liabilities at October 31, 2020 were as follows (in thousands):

October 31, 2020

Thereafter 20

Maturities of lease liabilities at April 30, 2021 were as follows (in thousands):

April 30, 2021

Total payments under lease agreements $ 1,246

2 unchanged sentences

Goodwill and Other Intangible Assets

Weighted Average Life at 10/31/2020 October 31, 2020 January 31, 2020

Weighted Average Life at 4/30/2021 April 30, 2021 January 31, 2021

Amount Accumulated

10 unchanged sentences

Amortizable intangible assets $ 18,256 $ ( 11,159 ) $ ( 760 ) $ 6,337 $ 18,253 $ ( 10,743 ) $ ( 760 ) $ 6,750

On January 31, 2020, the Company completed an annual review of goodwill and other intangible assets.

Based on a review of qualitative factors at that time, it was determined it was more likely than not that the fair value of our Seamap reporting unit was greater than its carrying value.

Based on a review of qualitative and quantitative factors at that time, it was determined it was more likely than not that the fair value of our Klein reporting unit was less than it's carrying value.

Accordingly, we recorded an impairment of approximately $ 760,000 related to indefinite lived intangible assets in the Klein reporting unit as of January 31, 2020.

Due to the economic impact of the COVID-19 pandemic, the decline in oil prices during the three months ended April 30, 2020 and a decline in the market value of the Company’s equity securities, the Company performed a quantitative review of the Seamap reporting unit and concluded that goodwill had been impaired.

As a result, the Company recorded an impairment expense of approximately $ 2.5 million related to goodwill in the Seamap reporting unit during the quarter ended April 30, 2020.

The impairment of goodwill indicated a possible impairment of other intangible assets.

Accordingly, the Company completed a quantitative analysis of the other intangible assets as of April 30, 2020, noting that the undiscounted future cash flows exceeded their carrying value and no related impairment was recorded.

Subsequent to April 30, 2020 there have been no substantive indicators of additional impairment.

Aggregate amortization expense was $ 1.3 million and $ 1.3 million for the nine months ended October 31, 2020 and 2019, respectively.

As of October 31, 2020, future estimated amortization expense related to amortizable intangible assets was estimated to be (in thousands):

As of January 31, 2021, the Company has recorded impairment expense equal to 100 % of the gross carrying amount of goodwill.

As a result, no further review of goodwill is required.

On January 31, 2021, the Company completed an annual review of intangible assets.

Based on a review of qualitative factors it was determined it was more likely than not that the carrying value of intangible assets was greater than its fair market value.

During the three months ended April 30, 2021 there have been no substantive indicators of impairment.

Aggregate amortization expense was $ 412,000 and $ 460,000 for the three months ended April 30, 2021 and 2020, respectively.

As of April 30, 2021, future estimated amortization expense related to amortizable intangible assets was estimated to be (in thousands):

For fiscal years ending January 31

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Under the terms of the PPP, funds from the Loans may only be used for payroll costs, rent, utilities and interest on other debt obligations incurred prior to February 15, 2020.

In addition, certain amounts of the Loan may be forgiven if the funds are used to pay qualifying expenses.

The Company believes it has used the proceeds from the Loans to pay qualifying expenses and that a significant portion of the Loans will be forgiven pursuant to the terms of the PPP.

The Company has submitted applications for the forgiveness of the Loans but cannot ensure that the Loans will be forgiven, in whole or in part.

For the nine months ended October 31, 2020, the benefit for income taxes from continuing operations was approximately $ 79,000 on a pre-tax net loss from continuing operations of $ 10.8 million.

For the nine months ended October 31, 2019, the benefit for income taxes from continuing operations was approximately $ 75,000 on a pre-tax net loss of $ 5.1 million.

In addition, certain amounts of the Loans may be forgiven if the funds are used to pay qualifying expenses.

In January 2021, the Loan granted to the Company in the amount of approximately $ 757,000 was forgiven resulting in other income of that amount.

In February 2021, the Loan granted to Klein in the amount of approximately $ 850,000 was also forgiven, resulting in other income of that amount.

As of April 30, 2021, the Company had no outstanding balance under the Loans.

For the three months ended April 30, 2021, the benefit for income taxes from continuing operations was approximately $ 145,000 on a pre-tax net loss from continuing operations of $ 3.8 million.

For the three months ended April 30, 2020, the expense for income taxes from continuing operations was approximately $ 342,000 on a pre-tax net loss from continuing operations of $ 6.1 million.

The variance between our actual provision and the expected provision based on the U.S.

statutory rate is due primarily to recording valuation allowances against the increase in our deferred tax assets in the respective periods, plus the effect of foreign withholding taxes.

statutory rate is due primarily to recording valuation allowances against the increase in our deferred tax assets in the respective periods, permanent differences between book income and taxable income, and the effect of foreign withholding taxes.

The Company files U.S.

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The Company's U.S.

federal and state income tax returns are subject to examination by the Internal Revenue Service and state tax authorities for fiscal years ended January 31, 2017 through 2020.

federal tax returns are subject to examination by the Internal Revenue Service for fiscal years ended January 31, 2017 through 2021.

The Company’s tax returns may also be subject to examination by state and local tax authorities for fiscal years ended

January 31, 2015 through 2021.

In addition, the Company's tax returns filed in foreign jurisdictions are generally subject to examination for the fiscal years ended January 31, 2015 through 2021.

The Company has determined that the undistributed earnings of foreign subsidiaries are not deemed to be indefinitely reinvested outside of the United States as of October 31, 2020.

The Company has determined that the undistributed earnings of foreign subsidiaries are not deemed to be indefinitely reinvested outside of the United States as of April 30, 2021.

Furthermore, the Company has concluded that any deferred taxes with respect to the undistributed foreign earnings would be immaterial.

Therefore, the Company has not recorded a deferred tax liability associated with the undistributed foreign earnings as of October 31, 2020.

For the nine months ended October 31, 2020 and 2019, the Company did not recognize any tax expense or benefit related to uncertain tax positions.

Therefore, the Company has no t recorded a deferred tax liability associated with the undistributed foreign earnings as of April 30, 2021.

For the three months ended April 30, 2021 and 2020, the Company did no t recognize any tax expense or benefit related to uncertain tax positions.

Earnings per Share

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The following table presents the calculation of basic and diluted weighted average common shares used in the earnings per share calculation:

Three Months Ended October 31, Nine Months Ended October 31,

2020 2019 2020 2019

(in thousands) (in thousands)

Three Months Ended April 30,

(in thousands)

Basic weighted average common shares outstanding 13,759 12,172

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Diluted weighted average common shares outstanding 13,880 12,176

For the three and nine months ended October 31, 2020 and 2019, potentially dilutive common shares, underlying stock options and unvested restricted stock were anti-dilutive and were therefore not considered in calculating diluted loss per share for those periods.

For the three and months ended April 30, 2021 and 2020, potentially dilutive common shares underlying stock options and unvested restricted stock were anti-dilutive and were therefore not considered in calculating diluted loss per share for those periods.

Related Party Transaction

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On December 18, 2019, the Company and Agent entered into an Amended and Restated equity distribution agreement (the “1 st Equity Distribution Agreement”).

Pursuant to the 1 st Equity Distribution Agreement, the Company may sell up to 500,000 shares of 9.00 % Series A Cumulative Preferred Stock (the “Preferred Stock”), par value $ 1.00 per share through an at-the-market (the “1 st ATM”) offering program administered by the Agent.

Pursuant to the 1 st Equity Distribution Agreement, the Company may sell up to 500,000 shares of 9.00 % Series A Cumulative Preferred Stock (the “Preferred Stock”), par value $ 1.00 per share through an at-the-market offering program (the “1 st ATM Offering Program”) administered by the Agent.

The Co-Chief Executive Officer and Co-President of the Agent is the Non-Executive Chairman of the Board.

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As of January 31, 2020, we had issued 994,046 shares which represent 100 % of the Series A Preferred Stock available for sale through the 1 st Equity Distribution Agreement.

For the three and nine months ended October 31, 2019, the Company issued 70,282 and 86,938 shares of Preferred Stock under the 1 st ATM offering program, respectively.

Gross proceeds from these sales for the three and nine months ended October 31, 2019 were approximately $ 1.7 million and $ 2.1 million, respectively, and the Agent received compensation of approximately $ 34,000 and $ 42,000 , respectively.

The Non-Executive Chairman of the Board received no portion of this compensation.

In September 2020 we entered into a new equity distribution agreement (the “2 nd Equity Distribution Agreement”) with the Agent with economic terms essentially identical to the initial agreement.

Pursuant to the 2 nd Equity Distribution Agreement, the Company may sell up to 500,000 shares of Preferred Stock and 5,000,000 shares of $ 0.01 par value common stock (“Common Stock”) through a new at-the-market (the “2 nd ATM”) offering program.

During the three months ended October 31, 2020 the Company sold 676,283 shares of Common Stock under the ATM program, resulting in net proceeds to the Company of approximately $ 1.3 million.

During the three months ended April 30, 2021, the Company sold 20,960 shares of Series A Preferred Stock under the 2 nd ATM Offering Program, resulting in net proceeds to the Company of approximately $ 503,000 .

Compensation to the Agent during this period was approximately $ 10,000 , none of which was received by the Non-Executive Chairman of the Board.

During the three months ended April 30, 2021, the Company sold 18,053 shares of Common Stock under the 2 nd ATM Offering Program, resulting in net proceeds to the Company of approximately $ 42,000 .

Compensation to the Agent during this period was approximately $ 1,000 , none of which was received by the Non-Executive Chairman of the Board.

Equity and Stock-Based Compensation

During the three months ended October 31, 2020, the Board declared quarterly dividends of $ 0.5625 per share for our Preferred Stock.

The Board also approved the grant of 70,000 non-qualified stock options during the third quarter of fiscal 2021 at an average option price of $ 2.27 per share.

Total compensation expense recognized for stock-based awards granted under the Company’s equity incentive plan during the three and nine months ended October 31, 2020 was approximately $ 113,000 and $ 562,000 , respectively, and during the three and nine months ended October 31, 2019 was approximately $ 270,000 and $ 612,000 , respectively.

Sale of Subsidiaries

In February 2019, the Company completed the sale of its wholly owned Australian subsidiary, Seismic Asia Pacific Pty Ltd.

for total contractual proceeds of approximately $ 660,000 U.S.

dollars of which the Company received approximately $ 240,000 in cash at closing and an unsecured, non-interest bearing two year note receivable in the amount of $ 420,000 .

The agreement also included a working capital adjustment of approximately $ 114,000 payable to the Company which was received in August of 2019.

The note receivable was recorded as other current assets as of October 31, 2020 and as other non-current assets as of January 31, 2020.

During the three months ended October 31, 2020 the Company received a prepayment of $ 125,000 related to the note.

During the three months ended April 30, 2021, the Board declared quarterly dividends of $ 0.5625 per share for our Preferred Stock.

See Note 12 to our condensed consolidated financial statements.

Total compensation expense recognized for stock-based awards granted under the

Company’s equity incentive plan during the three months ended April 30, 2021 and 2020 was approximately $ 109,000 and $ 230,000 , respectively.

Segment Reporting

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On August 3, 2020, the Company, formerly Mitcham Industries, Inc., completed the reincorporation from the State of Texas to the State of Delaware, including a name change to MIND Technology, Inc.

The change in legal domicile and company name were approved by the affirmative vote of the holders of more than two-thirds of the votes of the Company’s Common Stock and Preferred Stock, voting separately, at the Annual Meeting of Shareholders held on July 27, 2020.

As part of the reincorporation merger, the shareholders approved an increase in the number of authorized shares of capital stock from 21,000,000 shares to 42,000,000 shares, consisting of (i) 40,000,000 shares of Common Stock (up from 20,000,000 shares), and (ii) 2,000,000 shares of Preferred Stock(up from 1,000,000 shares).

As part of the reincorporation merger, the stockholders approved an increase in the number of authorized shares of capital stock from 21,000,000 shares to 42,000,000 shares, consisting of (i) 40,000,000 shares of Common Stock (up from 20,000,000 shares), and (ii) 2,000,000 shares of Preferred Stock (up from 1,000,000 shares).

Pursuant to the terms of the reincorporation merger, each outstanding share of Common Stock and each share of Preferred Stock of Mitcham Industries, Inc., the Texas corporation, automatically converted into one share of Common Stock and one share of Series A Preferred Stock, respectively, of MIND Technology, Inc., the Delaware corporation.

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The Company’s Common Stock was assigned a new CUSIP number of 602566 101 and the Company’s Preferred Stock was assigned a new CUSIP number of 602566 200.

No changes have been made to the Board, management, business or operations of the Company as a result of the reincorporation.

No changes were made to the Board, management, business or operations of the Company as a result of the reincorporation.

The Company’s corporate headquarters remains in Texas.

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• loss of significant customers;

• the impact of disruptions in global supply chains due to the COVID-19 pandemic, including increased lead times for components and materials, as well as increased costs for such items;

• increased competition;

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Risk Factors” of this Form 10-Q, (2) Part I, “Item 1A.

Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2020, (3) Part II,“Item 1A.

Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended July 31, 2020 and (4) the Company’s other filings filed with the SEC from time to time.

Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021, and (3) the Company’s other filings filed with the SEC from time to time.

There may be other factors of which the Company is not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ materially from those discussed.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements