MIND TECHNOLOGY, INC 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officers and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-K. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Our principal executive officer and principal financial officer have concluded that our current disclosure controls and procedures were effective as of January 31, 2025, at the reasonable assurance level. Management ’ s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our disclosure controls and procedures are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness in future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. As disclosed in Part II Item 9A Controls and Procedures in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024, we had a material weakness in our controls over financial reporting because the Company performed less-than-complete physical inventory at year-end because it placed reliance on other compensating controls during the year, including cycle counts and controls involving receipt and disbursement of inventory. However, due to the material value of inventory items not counted at yearend, management determined that reliance on other compensating controls was insufficient to ensure there is not a reasonable possibility that a material misstatement of our annual or interim financial statements would not be prevented or detected in a timely manner. 32 Table of Contents Remediation of the Prior Year Material Weakness in Internal Control over Financial Reporting During fiscal 2025, management implemented our previously disclosed remediation plan that included conducting a complete, wall to wall, inventory count to ensure the existence of inventory as of January 31, 2025. In connection with its assessment of the effectiveness of our internal control over financial reporting as of January 31, 2025, our management, including our principal executive officer and principal financial officer, concluded that the material weakness involving the Company’s control over the existence of inventory at its subsidiary location in Singapore has been remediated as of January 31, 2025. Changes in Internal Control over Financial Reporting Except for the changes in connection with our implementation of the remediation plan discussed above, there was no change in our system of internal control over financial reporting during the fiscal year ended January 31, 2025, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None . Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection Not Applicable. 33 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance Pursuant to General Instruction G to Form 10-K, we incorporate by reference into this Item the information to be disclosed in our definitive proxy statement for our 2025 Annual Meeting of Stockholders, which will be filed with the SEC within 120 business days of January 31, 2025. We have adopted a Code of Business Conduct and Ethics, which covers a wide range of business practices and procedures. The Code of Business Conduct and Ethics represents the code of ethics applicable to our principal executive officer, principal financial officer, and principal accounting officer or controller and persons performing similar functions (“senior financial officers”). A copy of the Code of Business Conduct and Ethics is available on our website, https://www.mind-technology.com , and a copy will be mailed without charge, upon written request, to MIND Technology, Inc., 2002 Timberloch Place, Suite 550, The Woodlands, Texas, 77380, Attention: Robert P. Capps. We intend to disclose any amendments to or waivers of the Code of Business Conduct and Ethics on behalf of our senior financial officers on our website, at https://www.mind-technology.com promptly following the date of the amendment or waiver. Item 11. Executive Compensation Pursuant to General Instruction G to Form 10-K, we incorporate by reference into this Item the information to be disclosed in our definitive proxy statement for our 2025 Annual Meeting of Stockholders, which will be filed with the SEC within 120 business days of January 31, 2025. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Pursuant to General Instruction G to Form 10-K, we incorporate by reference into this Item the information to be disclosed in our definitive proxy statement for our 2025 Annual Meeting of Stockholders, which will be filed with the SEC within 120 business days of January 31, 2025. Item 13. Certain Relationships and Related Transactions and Director Independence Pursuant to General Instruction G to Form 10-K, we incorporate by reference into this Item the information to be disclosed in our definitive proxy statement for our 2025 Annual Meeting of Stockholders, which will be filed with the SEC within 120 business days of January 31, 2025. Item 14. Principal Accountant Fees and Services Pursuant to General Instruction G to Form 10-K, we incorporate by reference into this Item the information to be disclosed in our definitive proxy statement for our 2025 Annual Meeting of Stockholders, which will be filed with the SEC within 120 business days of January 31, 2025. 34 Table of Contents PART IV Item 15. Exhibit and Financial Statement Schedules (a) List of Documents Filed (i) Financial Statements The financial statements filed as part of this Form 10-K are listed in “Index to Consolidated Financial Statements” on page F-1. (ii) Financial Statement Schedules Schedule II - Valuation and Qualifying Accounts (iii) Exhibits The exhibits required by Item 601 of Regulation S-K are listed in subparagraph (b) below. (b) Exhibits The exhibits marked with the cross symbol (†) are filed (or furnished in the case of Exhibits 32.1 and 32.2) with this Form 10-K. The exhibits marked with the asterisk symbol (*) are management contracts or compensatory plans or arrangements filed pursuant to Item 601(b)(10)(iii) of Regulation S-K. Exhibit Number Document Description Form Exhibit Reference 2.1 Agreement and Plan of Merger dated as of August 3, 2020, by and between Mitcham Industries, Inc. and MIND Technology, Inc. Current Report on Form 8-K, filed with the SEC on August 7, 2020. 2.1 3.1 Amended and Restated Certificate of Incorporation of MIND Technology, Inc. Current Report on Form 8-K, filed with the SEC on August 7, 2020. 3.3 3.2 Certificate of Amendment of Certificate of Incorporation of MIND Technology, Inc., effective as of October 12, 2023. Current Report on Form 8-K, filed with the SEC on October 13, 2023. 3.1 3.3 Amended and Restated Bylaws of MIND Technology, Inc. Current Report on Form 8-K, filed with the SEC on August 7, 2020. 3.4 3.4 Texas Certificate of Merger, effective as of August 3, 2020 Current Report on Form 8-K, filed with the SEC on August 7, 2020. 3.1 3.5 Delaware Certificate of Merger, effective as of August 3, 2020 Current Report on Form 8-K, filed with the SEC on August 7, 2020 3.2 4.1† Description of Securities 35 Table of Contents Exhibit Number Document Description Form Exhibit Reference 10.1* Mitcham Industries, Inc. Amended and Restated Stock Awards Plan Definitive Proxy Statement on Schedule 14A filed with the SEC on May 31, 2013. Appendix A 10.2* First Amendment to the Mitcham Industries, Inc. Amended and Restated Stock Awards Plan Definitive Proxy Statement on Schedule 14A filed with the SEC on May 16, 2016. Appendix A 10.3* Second Amendment to the Mitcham Industries, Inc. Amended and Restated Stock Awards Plan Form S-8 filed with the SEC on September 5, 2019. 4.5 10.4* Third Amendment to the Mitcham Industries, Inc. Amended and Restated Stock Awards Plan Definitive Proxy Statement on Schedule 14A filed with the SEC on May 28, 2021. Appendix A 10.5* Form of Nonqualified Stock Option Agreement under the Mitcham Industries, Inc. Stock Awards Plan Report on Form 10-Q for the quarter ended July 31, 2006, filed with the SEC on September 12, 2006. 10.3 10.6* Form of Restricted Stock Agreement under the Mitcham Industries, Inc. Stock Awards Plan Report on Form 10-Q for the quarter ended July 31, 2006, filed with the SEC on September 12, 2006. 10.4 10.7* Form of Incentive Stock Option Agreement under the Mitcham Industries, Inc. Stock Awards Plan Report on Form 10-Q for the quarter ended July 31, 2006, filed with the SEC on September 12, 2006. 10.5 10.8* Form of Restricted Stock Agreement (Stock Awards Plan) Current Report on Form 8-K, filed with the SEC on September 8, 2004. 10.1 10.9* Form of Nonqualified Stock Option Agreement (Stock Awards Plan) Current Report on Form 8-K, filed with the SEC on September 8, 2004. 10.2 10.10* Form of Incentive Stock Option Agreement (Stock Awards Plan) Current Report on Form 8-K, filed with the SEC on September 8, 2004. 10.4 10.11* Form of Phantom Stock Award Agreement (Stock Awards Plan) Current Report on Form 8-K, filed with the SEC on September 8, 2004. 10.5 36 Table of Contents Exhibit Number Document Description Form Exhibit Reference 10.12* Form of Stock Appreciation Rights Agreement (Stock Awards Plan) Current Report on Form 8-K, filed with the SEC on September 8, 2004. 10.6 10.13* Form of Incentive Stock Option Agreement (2000 Stock Option Plan) Current Report on Form 8-K, filed with the SEC on September 8, 2004. 10.7 10.14* Form of Nonqualified Stock Option Agreement (2000 Stock Option Plan) Current Report on Form 8-K, filed with the SEC on September 8, 2004. 10.8 10.15* Summary of Non-Employee Director Compensation Annual Report on Form 10-K for the year ended January 31, 2022, filed with the SEC on April 29, 2022 10.15 10.16* Employment Agreement between the Company and Robert P. Capps, dated September 11, 2017 Current Report on Form 8-K, filed with the SEC on September 15, 2017. 10.1 10.17* Employment Agreement between the Company and Mark A Cox, dated January 24, 2025 Current Report on Form 8-K, filed with the SEC on January 24, 2025. 10.1 14.1† Code of Ethics. 19.1† Insider Trading Policy 21.1† Subsidiaries of MIND Technology, Inc. 23.1† Consent of Moss Adams LLP 31.1† Certification of Robert P. Capps, Chief Executive Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended 31.2† Certification of Mark A. Cox, Chief Financial Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended 32.1† Certification of Robert P. Capps, Chief Executive Officer, under Section 906 of the Sarbanes Oxley Act of 2002, 18 U.S.C. § 1350 32.2† Certification of Mark A. Cox, Chief Financial Officer, under Section 906 of the Sarbanes Oxley Act of 2002, 18 U.S.C. § 1350 97.1† Clawback Policy 37 Table of Contents Exhibit Number Document Description Form Exhibit Reference 101.INS† Inline XBRL Instance Document 101.SCH† Inline XBRL Taxonomy Extension Schema Document 101.CAL† Inline XBRL Taxonomy Extension Calculation of Linkbase Document 101.DEF† Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB† Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE† Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) Item 16. Form 10-K Summary Not applicable. 38 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 24th day of April 2025. MIND TECHNOLOGY, INC. By: /s/ ROBERT P. CAPPS Robert P. Capps President, Chief Executive Officer and Director (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. Signature Title/Capacity Date /s/ ROBERT P. CAPPS President, Chief Executive Officer and Director April 25, 2025 Robert P. Capps (Principal Executive Officer) /s/ MARK A. COX Vice President and Chief Financial Officer April 25, 2025 Mark A. Cox (Principal Financial Officer and Principal Accounting Officer) /s/ PETER H. BLUM Non-Executive Chairman of the Board of Directors April 25, 2025 Peter H. Blum /s/ THOMAS S. GLANVILLE Director April 25, 2025 Thomas S. Glanville /s/ WILLIAM H. HILARIDES Director April 25, 2025 William H. Hilarides /s/ ALAN P. BADEN Director April 25, 2025 Alan P. Baden 39 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (Moss Adams LLP, Houston, Texas, PCAOB ID: 659 ) 2 Consolidated Balance Sheets as of January 31, 2025 and 2024 4 Consolidated Statements of Operations for the Years Ended January 31, 2025 and 2024 5 Consolidated Statements of Comprehensive Income for the Years Ended January 31, 2025 and 2024 6 Consolidated Statements of Changes in Stockholders ’ Equity for the Years Ended January 31, 2025 and 2024 7 Consolidated Statements of Cash Flows for the Years Ended January 31, 2025 and 2024 8 Notes to Consolidated Financial Statements 9 F-1 Table of Contents Report of Independent Registered Public Accounting Firm The Stockholders and the Board of Directors MIND Technology, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of MIND Technology, Inc. (the “Company”), as of January 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes and schedule (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of January 31, 2025 and 2024, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. F-2 Table of Contents Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements, and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ Moss Adams LLP Houston, Texas April 25, 2025 We have served as the Company’s auditor since 2017. F-3 Table of Contents MIND TECHNOLOGY, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) January 31, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 5,336 $ 5,289 Accounts receivable, net of allowance for credit losses of $ 332 at January 31, 2025 and 2024 11,817 6,566 Inventories, net 13,745 13,371 Prepaid expenses and other current assets 1,217 3,113 Total current assets 32,115 28,339 Property and equipment, net 890 818 Operating lease right-of-use assets 1,320 1,324 Intangible assets, net 2,308 2,888 Deferred tax asset 87 122 Total assets $ 36,720 $ 33,491 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 2,558 $ 1,623 Deferred revenue 189 203 Customer deposits 1,603 3,446 Accrued expenses and other current liabilities 1,245 2,140 Income taxes payable 2,473 2,114 Operating lease liabilities - current 577 751 Total current liabilities 8,645 10,277 Operating lease liabilities - non-current 743 573 Total liabilities 9,388 10,850 Stockholders’ equity: Preferred stock, $ 1.00 par value; 2,000 shares authorized; no shares issued and outstanding at January 31, 2025 and 1,683 shares issued and outstanding at January 31, 2024 — 37,779 Common stock $ 0.01 par value; 40,000 shares authorized; 7,969 and 1,406 shares issued at January 31, 2025 and 2024, respectively 80 14 Additional paid-in capital 135,666 113,121 Accumulated deficit ( 108,448 ) ( 128,307 ) Accumulated other comprehensive gain 34 34 Total stockholders’ equity 27,332 22,641 Total liabilities and stockholders’ equity $ 36,720 $ 33,491 The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents MIND TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Year Ended January 31, 2025 2024 Revenues: Sale of marine technology products $ 46,863 $ 36,510 Cost of sales: Sale of marine technology products 25,896 20,539 Gross profit 20,967 15,971 Operating expenses: Selling, general and administrative 11,291 12,142 Research and development 1,914 2,133 Depreciation and amortization 944 1,178 Total operating expenses 14,149 15,453 Operating income 6,818 518 Other income (expense) 240 ( 280 ) Income from continuing operations before income taxes 7,058 238 Provision for income taxes ( 1,984 ) ( 1,338 ) Income (loss) from continuing operations 5,074 ( 1,100 ) Income from discontinued operations, net of income taxes — 1,374 Net income $ 5,074 $ 274 Gain on Preferred Stock conversion $ 14,785 $ — Preferred stock dividends - declared — ( 946 ) Preferred stock dividends - undeclared ( 2,256 ) ( 2,842 ) Net income (loss) attributable to common stockholders $ 17,603 $ ( 3,514 ) Net (loss) income per common share - Basic and diluted Continuing operations $ 4.32 $ ( 3.48 ) Discontinued operations $ — $ 0.98 Net income (loss) attributable to common stockholders $ 4.32 $ ( 2.50 ) Basic 4,078 1,406 Diluted 4,078 1,406 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents MIND TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Year Ended January 31, 2025 2024 Net income $ 5,074 $ 274 Comprehensive income $ 5,074 $ 274 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents MIND TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY (In thousands) Year Ended January 31, 2024 and 2025 Common Stock Preferred Stock Retained Accumulated Additional Earnings Other Paid-In Treasury (Accumulated Comprehensive Shares Amount Shares Amount Capital Stock Deficit) Income (Loss) Total Balances, January 31, 2023 1,599 16 1,683 37,779 129,721 ( 16,863 ) ( 127,635 ) 34 23,052 Net income — — — — 274 — 274 Preferred stock dividends — — — — — — ( 946 ) — ( 946 ) Retirement of treasury stock ( 193 ) ( 2 ) — — ( 16,861 ) 16,863 — — — Stock-based compensation — — — — 261 — — — 261 Balances, January 31, 2024 1,406 14 1,683 37,779 113,121 — ( 128,307 ) 34 22,641 Net income — — — — — — 5,074 — 5,074 Preferred stock conversion 6,563 66 ( 1,683 ) ( 37,779 ) 22,310 — 14,785 — ( 618 ) Stock-based compensation — — — — 235 — — — 235 Balances, January 31, 2025 7,969 80 — — 135,666 — ( 108,448 ) 34 $ 27,332 The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents MIND TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended January 31, 2025 2024 Cash flows from operating activities: Net income $ 5,074 $ 274 Depreciation and amortization 944 1,516 Stock-based compensation 235 261 Gain on sale of Klein — ( 2,343 ) Provision for inventory obsolescence 68 341 Gross profit from sale of other equipment ( 457 ) ( 476 ) Deferred tax expense (benefit) 35 ( 153 ) Changes in: Accounts receivable ( 5,246 ) ( 3,343 ) Unbilled revenue ( 7 ) 25 Inventories ( 441 ) ( 3,601 ) Income taxes receivable and payable 360 635 Accounts payable, accrued expenses and other current liabilities 45 ( 334 ) Prepaid expenses and other current and long-term assets 1,897 ( 847 ) Deferred revenue ( 1,856 ) 3,078 Net cash provided by (used in) operating activities 651 ( 4,967 ) Cash flows from investing activities: Purchases of property and equipment ( 437 ) ( 290 ) Sale of other assets 457 476 Proceeds from the sale of Klein, net — 10,832 Net cash provided by investing activities 20 11,018 Cash flows from financing activities: Net proceeds from short-term loan — 2,947 Payment on short-term loan — ( 3,750 ) Refund of prepaid interest on short-term loan — 214 Preferred stock conversion transaction costs ( 619 ) — Preferred stock dividends — ( 946 ) Net cash used in financing activities ( 619 ) ( 1,535 ) Effect of changes in foreign exchange rates on cash and cash equivalents ( 5 ) ( 5 ) Net increase in cash and cash equivalents 47 4,511 Cash and cash equivalents, beginning of period 5,289 778 Cash and cash equivalents, end of period $ 5,336 $ 5,289 The accompanying notes are an integral part of these consolidated financial statements. F-8 Table of Contents 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 in 1987. 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 oceanographic, hydrographic and marine seismic 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 oceanographic, hydrographic, defense and maritime security industries from its facility in the state of New Hampshire. Effective August 21, 2023, the Company sold Klein and presented the financial results reported as discontinued operations (see Note 2 – “Sale of a Subsidiary and Discontinued Operations” for additional details). As of January 31, 2025 , the Company had working capital of approximately $ 23.5 million, including cash and cash equivalents of approximately $ 5.3 million, compared to working capital of approximately $ 18.1 million, including cash and cash equivalents of approximately $ 5.3 million, as of January 31, 2024 . The Company does not 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 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 of 12 months. The Company recognizes revenue from these contracts ratably over the term of the contract. The Company may also 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 to 12 months at no additional charge. Any amounts attributable to these support obligations are immaterial. Revenues from service contracts for fiscal 2025 and 2024 were not material and as a result are not 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 will not 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 may have 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 does not charge interest on past due accounts. Cash and Cash Equivalents —The Company considers all highly liquid investments with an original maturity of three 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 Table of Contents 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 to seven 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 is not 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 an eight -year period. Patents are amortized over an eight to ten -year period. Impairment —The Company reviews its long-lived 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 are not 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. Product Warranties —Seamap provides its customers warranties against defects in materials and workmanship generally for a period of three months after delivery of the product. For fiscal 2025 and 2024 , warranty expense was approximately $ 900,000 and $ 400,000 , respectively. 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: • projected taxable income in future years; • our history of taxable income within a particular jurisdiction; • any history of deferred tax assets expiring prior to realization; • whether the carry forward period is so brief that it would limit realization of tax benefits; • other limitations on the utilization of tax benefits; • future sales and operating cost projections that will produce more than enough taxable income to realize the deferred tax asset based on existing sales prices and cost structures; • our earnings history exclusive of the loss that created the future deductible amount coupled with evidence indicating that the loss is an aberration rather than a continuing condition; and • tax planning strategies that will create additional taxable income. 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, but not 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, assessment of warranty reserve balances 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 Table of Contents Substantial judgment is necessary in the determination of the appropriate levels for the Company’s inventory reserve because the Company must make assumptions about the future use and fit for purposefulness of certain inventory items. As a result, the Company’s inventory reserves 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 cash and cash equivalents, 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: • Level 1: Defined as observable inputs such as quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. • Level 2: Defined as pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current and contractual prices for the underlying instruments, as well as other relevant economic measures. • Level 3: Defined as pricing inputs that are unobservable form objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The Company does not have any assets or liabilities that it measures at fair value on a recurring basis. 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 years 2025 and 2024 . 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 has not 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 do not 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 fiscal 2025 and 2024 , 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. Year Ended January 31, 2025 2024 (in thousands) Stock options — — Restricted stock — — Total dilutive shares — — For fiscal 2025 and 2024 , respectively, potentially dilutive common shares, were immaterial and did not change the calculation of diluted income (loss) per share for those periods. F- 11 Table of Contents 2. Sale of a Subsidiary and Discontinued Operations 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 $ 2.3 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 Note 11 - "Notes Payable" for additional details). As a result of the sale, there are no assets or liabilities and the results of operations are reported as discontinued operations for the years ended January 31, 2024 . The results of operations from discontinued operations for the twelve months ended January 31, 2025 and 2024 , consist of the following: Twelve Months Ended January 31, 2025 2024 Revenues: (in thousands) Revenue from discontinued operations $ — $ 3,315 Cost of sales: Cost of discontinued operations — 1,979 Operating expenses: Selling, general and administrative — 2,022 Depreciation and amortization — 338 Total operating expenses — 2,360 Operating loss — ( 1,024 ) Other income, including $ 2.3 million gain on sale of Klein — 2,415 Income before income taxes from discontinued operations — 1,391 Provision for income taxes from discontinued operations — ( 17 ) Net income from discontinued operations — 1,374 F- 12 Table of Contents The significant operating and investing noncash items and capital expenditures related to discontinued operations are summarized below: Twelve Months Ended January 31, 2025 2024 (in thousands) Depreciation and amortization $ — $ 338 Gain on sale of Klein $ — $ 2,343 3. New Accounting Pronouncements In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023 - 07, Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures ("ASU 2023 - 07" ), 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. ASU 2023 - 07 is effective for our annual periods beginning February 1, 2024 and interim periods within fiscal years beginning February 1, 2025. The adoption of this standard only impacted our disclosures. See Note 17 - "Segment Reporting" for additional details. In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures (“ASU 2023 - 09” ). ASU 2023 - 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. In November 2024, the FASB issued ASU No. 2024 - 03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220 - 40 ) ("ASU 2024 - 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. ASU 2024 - 03 is effective for our annual periods beginning February 1, 2027 and 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. 4. Revenue from Contracts with Customers The following table presents revenue from contracts with customers disaggregated by timing of revenue recognition: Twelve Months Ended January 31, 2025 2024 (in thousands) Total revenue recognized at a point in time $ 45,189 $ 35,556 Total revenue recognized over time $ 1,674 $ 954 Total revenue from contracts with customers $ 46,863 $ 36,510 The following table presents revenue from contracts with customers disaggregated by geography, based on the location of our customers: Twelve Months Ended January 31, 2025 2024 Revenue from contracts with customers: (in thousands) United States $ 2,478 $ 1,086 China 17,720 7,668 Norway 21,956 14,385 Turkey 634 5,216 Singapore 366 2,192 Canada — 1,882 Other 3,709 4,081 Total revenue from contracts with customers $ 46,863 $ 36,510 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, 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 duration of SMA contracts is one year or less. We do not have elements of variable consideration within these contracts. As of January 31, 2025 and January 31, 2024, there were no significant outstanding liability balances for refunds or returns due to the nature of our contracts and the services and products we provide. Our warranties are limited to assurance warranties that are of a standard length and are not considered to be material rights. For fiscal 2025 and fiscal 2024, we did not recognize revenue from performance obligations satisfied in a prior periods. F- 13 Table of Contents 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 a three to six -month period. We do not 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. At January 31, 2023, our trade accounts receivable was approximately $ 3.2 million net of approximately $ 332,000 of allowance for credit losses. Contract liabilities decreased by approximately $ 1.9 million during fiscal 2025 due primarily to recognition of revenue during the year. As of January 31, 2025 and 2024 contract assets and liabilities consisted of the following: January 31, 2025 January 31, 2024 Contract Assets: (in thousands) Contract assets, beginning balance $ 26 $ 2 Revenue accrued $ 20 $ 26 Amounts billed ( 26 ) ( 2 ) Total unbilled revenue $ 20 $ 26 Contract Liabilities: Contract liabilities, beginning balance $ 3,649 $ 359 Deferred revenue and customer deposits $ 1,526 $ 3,614 Revenue recognized ( 3,383 ) ( 324 ) Total deferred revenue & customer deposits $ 1,792 $ 3,649 With respect to the disclosures above, sales and transaction-based taxes are excluded from revenue. Also, we expense costs incurred to obtain contracts because the amortization period would be one 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 fiscal 2025 and 2024 were as follows (in thousands): Year Ended January 31, 2025 2024 Interest paid $ — $ 634 Income taxes paid, net 1,654 847 6. Inventories Inventories consisted of the following (in thousands): As of January 31, 2025 2024 Raw materials $ 8,485 $ 8,730 Finished goods 3,980 2,463 Work in progress 2,817 3,709 Cost of inventories 15,282 14,902 Less allowance for obsolescence ( 1,537 ) ( 1,531 ) Net inventories $ 13,745 $ 13,371 F- 14 Table of Contents 7. Property and Equipment Property and equipment consisted of the following (in thousands): As of January 31, 2025 2024 Furniture and fixtures 9,246 8,868 Autos and trucks 227 287 Land and buildings 997 997 Cost of property and equipment 10,470 10,152 Less accumulated depreciation ( 9,580 ) ( 9,334 ) Net book value of property and equipment $ 890 $ 818 Depreciation expense on property, plant and equipment was approximately $ 306,000 for fiscal 2025 , and approximately $ 383,000 for fiscal 2024 . Location of property and equipment (in thousands): As of January 31, 2025 2024 United States $ 384 $ 199 United Kingdom 104 60 Singapore 92 147 Malaysia 310 412 Net book value of property and equipment $ 890 $ 818 8. Leases The Company has certain non-cancelable operating lease agreements for office, production and warehouse space in Texas, Singapore, Malaysia and The United Kingdom. F- 15 Table of Contents Lease expense for the twelve months ended January 31, 2025 and 2024 was approximately $ 860,000 and $ 831,000 , respectively, and was recorded as a component of operating income. Included in these costs was short-term lease expense of approximately $ 26,000 and $ 8,000 for the twelve months ended January 31, 2025 and 2024 , respectively. Supplemental balance sheet information related to leases as of January 31, 2025 and 2024 was as follows (in thousands): As of January 31, Lease 2025 2024 Assets Operating lease right-of-use assets $ 1,320 $ 1,324 Liabilities Operating lease liabilities $ 1,320 $ 1,324 Classification of lease liabilities Current liabilities $ 577 $ 751 Non-current liabilities 743 573 Total Operating lease liabilities $ 1,320 $ 1,324 Lease-term and discount rate details as of January 31, 2025 and 2024 were as follows: As of January 31, Lease term and discount rate 2025 2024 Weighted average remaining lease term (years) Operating leases 1.39 1.40 Weighted average discount rate: Operating leases 14 % 13 % Supplemental cash flow information related to leases on January 31, 2025 and 2024 was as follows (in thousands): As of January 31, Lease 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ ( 987 ) $ ( 831 ) Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 834 $ 409 Maturities of lease liabilities on January 31, 2025 and 2024 were as follows (in thousands): As of January 31, 2025 2024 2026 $ 718 $ 753 2027 526 343 2028 275 235 2029 35 232 2030 — 34 Thereafter — — Total payments under lease agreements $ 1,554 $ 1,597 Less: imputed interest ( 234 ) ( 273 ) Total lease liabilities $ 1,320 $ 1,324 F- 16 Table of Contents 9. Intangible Assets Intangible assets consisted of the following: January 31, 2025 January 31, 2024 Weighted Average Gross Net Gross Net Life at Carrying Accumulated Carrying Carrying Accumulated Carrying 1/31/2025 Amount Amortization Amount Amount Amortization Amount (in thousands) (in thousands) Proprietary rights 3.9 $ 7,472 $ ( 5,501 ) 1,971 $ 7,473 $ ( 5,053 ) 2,420 Customer relationships — 4,884 ( 4,884 ) — 4,884 ( 4,852 ) 32 Patents 0.9 2,540 ( 2,269 ) 271 2,540 ( 2,190 ) 350 Trade name 1.3 134 ( 121 ) 13 134 ( 108 ) 26 Other 0.1 481 ( 428 ) 53 426 ( 366 ) 60 Amortizable intangible assets $ 15,511 $ ( 13,203 ) $ 2,308 $ 15,457 $ ( 12,569 ) $ 2,888 The Company did not record impairment of intangible assets during fiscal years 2025 and 2024 . Aggregate amortization expense was approximately $ 638,000 and $ 795,000 for fiscal 2025 and fiscal 2024 , respectively. As of January 31, 2025 , future estimated amortization expense related to amortizable intangible assets is estimated to be (in thousands): For fiscal year ending January 31: 2026 $ 565 2027 379 2028 315 2029 213 2030 213 Thereafter 623 Total $ 2,308 F- 17 Table of Contents 10. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): As of January 31, 2025 2024 Wages and benefits 255 686 Accrued commissions and professional fees 295 537 Accrued inventory 103 651 Accrued warranty costs 360 6 Other 232 260 Accrued Expenses and Other Liabilities $ 1,245 $ 2,140 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 the twelve months ended January 31, 2024. On August 22, 2023, in connection with the Sale of Klein, the Loan was repaid in full (see Note 2 - "Sale of a Subsidiary and Discontinued Operations" for additional details). 12. Stockholders ’ Equity At the virtual Special Meeting of Preferred Stockholders held on August 29, 2024, our preferred stockholders approved an amendment to our Certificate of Designations, Preferences and Rights of 9.00 % Series A Cumulative preferred stock, to provide that each share of 9.00% Series A Cumulative Preferred Stock, $ 1.00 par value per share (the “Preferred Stock”) shall be converted into 3.9 shares of common stock, $ 0.01 par value per share (the “common stock”) upon the election of our Board of Directors. 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 Company no 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. 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 of one -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, every ten shares of issued and outstanding Common Stock were combined into one 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 were not issued in connection with the Reverse Stock Split. Stockholders who would otherwise be entitled to receive a fractional share were entitled to receive one 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 did not 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 7,969,421 and 1,405,779 were issued as of January 31, 2025 and 2024 , respectively. F- 18 Table of Contents 13. Related Party Transaction Ladenburg Thalmann & Co. Inc. (“Ladenburg”) provided advisor and arrangement services for the Loan (See Note 11 - "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 former Co-Chief Executive Officer and Co-President of Ladenburg is the Non-Executive Chairman of our Board. Our Non-Executive Chairman of the Board received no portion of the above-mentioned compensation. 14. Income Taxes Year Ended January 31, 2025 2024 (in thousands) Income (loss) from continuing operations before income taxes is attributable to the following jurisdictions: Domestic $ ( 6,049 ) $ ( 8,075 ) Foreign 13,107 8,313 Total $ 7,058 $ 238 The components of income tax expense (benefit) for continuing operations were as follows: Current: Domestic $ 2 $ — Foreign 1,947 1,489 1,949 1,489 Deferred: Domestic — — Foreign 35 ( 151 ) 35 ( 151 ) Income tax expense $ 1,984 $ 1,338 F- 19 Table of Contents The following is a reconciliation of expected to actual income tax expense for continuing operations: Year Ended January 31, 2025 2024 (in thousands) Federal income tax at 21 % $ 1,482 $ 50 Taxes created by return to provision adjustments to prior year temporary differences 110 146 Global intangible low tax income ("GILTI") inclusion 2,449 1,653 Permanent differences 61 90 Foreign effective tax rate differential ( 429 ) ( 218 ) Valuation allowance on deferred tax assets ( 1,903 ) ( 528 ) Excess tax deficiency for share-based payments under ASU 2016-09 149 150 Other 65 ( 5 ) $ 1,984 $ 1,338 The components of the Company’s deferred taxes consisted of the following: As of January 31, 2025 2024 (in thousands) Deferred tax assets: Net operating losses $ 24,613 $ 26,895 Tax credit carry forwards 334 944 Stock option book expense 581 766 Allowance for credit losses 98 107 Inventory 475 594 Accruals not yet deductible for tax purposes 113 130 Fixed assets 63 80 Intangible assets 948 523 Disallowed interest expense 98 227 Other 945 1,033 Gross deferred tax assets 28,268 31,299 Valuation allowance ( 28,181 ) ( 31,177 ) Deferred tax assets 87 122 Deferred tax liabilities: Other — — Deferred tax liabilities — — Unrecognized tax benefits — — Total deferred tax liabilities, net — $ — 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, 2025 , are not 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 has not recorded a deferred tax liability associated with the undistributed foreign earnings as of January 31, 2025 . Included in deferred tax assets is approximately $ 581,000 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, 2025 . 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 ASC 718 - 740 - 10, a valuation allowance has not been computed based on the decline in stock price. F- 20 Table of Contents As of January 31, 2025 , the Company has recorded valuation allowances of approximately $ 28.2 million related to deferred tax assets . 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 would not be realized. The judgment was based on an evaluation of available evidence, both positive and negative. On January 31, 2025 , the Company had tax credit carry forwards of approximately $ 334,000 , which amounts can be carried forward through at least 2027. As of January 31, 2025 , and 2024 the company had no 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 January 31, 2019, through 2025 . The Company’s tax returns may also be subject to examination by state and local revenue authorities for fiscal years ended January 31, 2017, through 2025 . The Company’s Singapore income tax returns are subject to examination by the Singapore tax authorities for fiscal years ended January 31, 2017, through 2025 . The Company’s tax returns in other foreign jurisdictions are generally subject to examination for the fiscal years ended January 31, 2018 through January 31, 2025 . 15. Commitments and Contingencies Purchase Obligations —On January 31, 2025 and January 31, 2024, the Company had approximately $ 4.7 million and $ 11.7 million in purchase orders outstanding, respectively. 16. Stock Option Plans At January 31, 2025 , 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 fiscal 2025 and 2024 was approximately $ 235,000 and $ 261,000 , 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 was not considered in the option pricing formula since the Company does not pay dividends and has not paid any dividends since its incorporation. The weighted average grant-date fair value of options granted during fiscal 2025 was $ 4.24 . There were no options granted during fiscal 2024 . The assumptions for the periods indicated are noted in the following table. Weighted average Black-Scholes-Merton fair value assumptions Year Ended January 31, 2025 Risk free interest rate 3.54 %- 4.47 % Expected life (in years) 5.52 - 6.87 Expected volatility 66% -82% Expected dividend yield 0.00 % 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 had no excess tax benefits during fiscal 2025 and 2024 . 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, 2025 , there were approximately 30,000 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 Table of Contents Stock Based Compensation Activity The following table presents a summary of the Company’s stock option activity for the fiscal year ended January 31, 2025 : Weighted Average Weighted Remaining Aggregate Number of Average Contractual Intrinsic Shares Exercise Term Value (in thousands) Price (in years) (in thousands) Outstanding, January 31, 2024 358 $ 27.99 5.07 $ — Granted 418 5.90 Exercised — — Forfeited ( 7 ) 13.14 Expired ( 148 ) 33.76 Outstanding, January 31, 2025 621 $ 11.93 7.93 $ — Exercisable at January 31, 2025 183 $ 26.13 3.66 $ — Nonvested at January 31, 2025 438 $ 6.00 9.72 $ — 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 the fourth quarter of fiscal 2025 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, 2025 . This amount changes based upon the market value of the Company’s Common Stock. No options were exercised during fiscal 2025 and 2024 . The fair value of options that vested during the fiscal years ended January 31, 2025 and 2024 was approximately $ 695,000 and $ 517,000 , respectively. For fiscal 2025 and fiscal 2024 approximately 160,000 and 75,000 options vested, respectively. As of January 31, 2025 , there was approximately $ 1.6 million 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 1.9 years. As of January 31, 2025 , and January 31, 2024, there was no unvested restricted stock. F- 22 Table of Contents 17. Segment Reporting Prior to August 22, 2023, the Company operated in two segments, Seamap and Klein. On August 21, 2023, the Company completed the Sale of Klein. (see Note 2 -"Sale of a Subsidiary and Discontinued Operations" for additional details). As a result, at January 31, 2025 , Seamap is the Company’s sole reporting segment. Seamap Marine Products - Our Seamap Marine Products segment provides the following: • GunLink seismic source acquisition and control systems • BuoyLink relative global navigation satellite positioning systems • SeaLink marine sensors and solid streamer systems 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 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 uses revenue and operating income in the annual budgeting and forecasting process and considers 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): Year Ended January 31, 2025 2024 Seamap Marine Products Corporate Expenses Consolidated Seamap Marine Products Corporate Expenses Consolidated Revenues $ 46,863 $ - $ 46,863 $ 36,510 $ - $ 36,510 Cost of sales 25,896 - 25,896 20,539 - 20,539 Selling, general and administrative 6,293 4,998 11,291 5,807 6,335 12,142 Research and development 1,610 304 1,914 1,595 538 2,133 Depreciation and amortization expense 926 18 944 1,160 18 1,178 Operating income (loss) 12,138 ( 5,320 ) 6,818 7,409 ( 6,891 ) 518 Capital expenditures 416 21 437 287 3 290 Corporate selling, general and administrative expense primarily includes payroll of corporate personnel, directors fees, professional services, rental expense, and certain insurance expense. The following table presents a reconciliation of operating income (loss) to income from continuing operations before income taxes (in thousands): As of January 31, 2025 2024 Seamap Marine Products 12,138 7,409 Corporate Expenses ( 5,320 ) ( 6,891 ) Operating income 6,818 518 Interest income (expense) 4 ( 634 ) Other income 236 354 Income from continuing operations before income taxes 7,058 238 Total assets by business segment is set forth below (in thousands): Year Ended January 31, Assets 2025 2024 Seamap Marine Products $ 35,740 $ 32,526 Corporate 980 965 Total Assets $ 36,720 $ 33,491 Revenue During the fiscal year ended January 31, 2025, two Seamap Marine Products customers individually exceeded 10% of total revenue in the amounts of approximately $ 16.9 million and $ 10.1 million. During the fiscal year ended January 31, 2024, three Seamap Marine Products customers individually exceeded 10% of total revenue, in the amounts of approximately $ 7.6 million, $ 7.1 million and $ 5.1 million. Depreciation and Amortization Expense Depreciation expense on property, plant and equipment, reflected in the table above, was approximately $ 306,000 for fiscal 2025 and approximately $ 383,000 for fiscal 2024. Amortization expense primarily relating to intangible assets, reflected in the table above was approximately $ 638,000 in fiscal 2025 and approximately $ 795,000 in fiscal 2024. Essentially all depreciation and amortization relate to the Seamap Marine Products segment. Amortization in Corporate Expenses relate to software for the corporate ERP. Assets All property, plant and equipment are allocated to the Seamap Marine Products segment. Corporate assets primarily consist of cash, right of use assets for an operating lease, and some prepaid corporate expenses. Geographic Operating Areas For fiscal 2025 and fiscal 2024, $ 1.3 million of right-of-use operating lease assets are included in the following table which summarizes Property and Equipment, Net and Right-of-Use Operating Lease Assets by geographic area: Year Ended January 31, 2025 2024 Property and Equipment, Net and Right-of-Use Operating Lease Assets Foreign: The United Kingdom $ 245 $ 260 Singapore 711 338 Malaysia 391 735 Total Foreign 1,347 1,333 United States 863 809 Total PP&E net and ROU Assets $ 2,210 $ 2,142 Revenue is based on the location of our customers. See Note 4 -"Revenue from Contracts with Customers" for disclosure of revenue by geographic area. 18. Concentrations Credit Risk — As of January 31, 2025 , we had two customers that individually exceeded 10 % of consolidated accounts receivable. As of January 31, 2024 , we had four customers that individually exceeded 10 % of consolidated accounts receivable. Revenue Risk — In fiscal 2025 and 2024 , our single largest customer accounted for approximately 36 % and 21 %, respectively, of our consolidated revenues, with these revenues being generated from the Seamap Marine Products segment. Together, our five largest customers accounted for approximately 73 % and 67 % of our consolidated revenues in fiscal 2025 and fiscal 2024 , respectively. Cash Risk —The Company maintains deposits and certificates of deposit with banks which may exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limit and money market accounts which are not FDIC insured. In addition, deposits aggregating approximately $ 4.8 million and $ 4.9 million at January 31, 2025 and January 31, 2024, respectively, 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. F-23 Table of Contents SCHEDULE II MIND TECHNOLOGY, INC. VALUATION AND QUALIFYING ACCOUNTS (in thousands) Col. A Col. B Col. C(1) Col. C(2) Col. D Col. E Balance at Charged to Charged Beginning Costs and to Other Deductions Balance at End Description of Period Expenses Accounts Describe of Period Allowance for credit losses January 31, 2025 $ 332 — — (a) — (b) $ 332 January 31, 2024 $ 332 — — (a) — (b) $ 332 Allowance for obsolete inventory January 31, 2025 $ 1,531 68 — (a) ( 62 ) (c) $ 1,537 January 31, 2024 $ 1,215 341 — (a) ( 25 ) (c) $ 1,531 (a) Represents translation differences. (b) Represents recoveries and uncollectible accounts written off. (c) Represents sale or scrap of inventory and obsolete equipment. F-24