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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-13490 
MIND TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 76-0210849
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
2002 Timberloch Place
Suite 400
The Woodlands, Texas 77380
(Address of principal executive offices, including Zip Code)
(281) 353-4475
(Registrant’s telephone number, including area code) 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock - $0.01 par value per shareMINDThe NASDAQ Stock Market LLC
Series A Preferred Stock - $1.00 par value per shareMINDPThe NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).       Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer 
  Accelerated filer 
Non-accelerated filer 
  Smaller reporting company 
Emerging growth company 
   
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 12,182,233 shares of common stock, $0.01 par value, were outstanding as of September 14, 2020.


Table of Contents
MIND TECHNOLOGY, INC.
Table of Contents
 
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 

ii

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MIND TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
July 31, 2020January 31, 2020
ASSETS
Current assets:
Cash and cash equivalents$2,638 $3,090 
Restricted cash 144 
Accounts receivable, net of allowance for doubtful accounts of $1,044 and $2,378
at July 31, 2020 and January 31, 2020, respectively
4,439 6,623 
Inventories, net13,309 12,656 
Prepaid expenses and other current assets1,646 1,987 
Assets held for sale6,650 14,913 
Total current assets28,682 39,413 
Property and equipment, net5,157 5,419 
Operating lease right-of-use assets 1,636 2,300 
Intangible assets, net7,241 8,136 
Goodwill 2,531 
Other assets776 429 
Total assets$43,492 $58,228 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$988 $1,767 
Deferred revenue370 731 
Accrued expenses and other current liabilities2,226 1,565 
Income taxes payable618 316 
Operating lease liabilities - current613 1,339 
Liabilities held for sale1,305 2,730 
Total current liabilities6,120 8,448 
Operating lease liabilities - non-current1,023 961 
Notes payable1,607  
Other non-current liabilities854 967 
Deferred tax liability200 200 
Total liabilities9,804 10,576 
Shareholders’ equity:
Preferred stock, $1.00 par value; 2,000 shares authorized; 994 and 994 shares issued and
outstanding at July 31, 2020 and January 31, 2020, respectively
22,104 22,104 
Common stock, $0.01 par value; 40,000 shares authorized; 14,097 and 14,097 shares issued at
July 31, 2020 and January 31, 2020, respectively
141 141 
Additional paid-in capital
124,413 123,964 
Treasury stock, at cost (1,929 shares at July 31, 2020 and January 31, 2020)
(16,860)(16,860)
Accumulated deficit(91,674)(77,310)
Accumulated other comprehensive loss(4,436)(4,387)
Total shareholders’ equity33,688 47,652 
Total liabilities and shareholders’ equity$43,492 $58,228 
The accompanying notes are an integral part of these condensed consolidated financial statements.
1

Table of Contents
MIND TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 For the Three Months Ended July 31,For the Six Months Ended July 31,
 2020201920202019
Revenues:
Sale of marine technology products$5,086 $6,820 $8,273 $12,864 
Total revenues5,086 6,820 8,273 12,864 
Cost of sales:
Sale of marine technology products3,069 4,013 5,772 7,618 
Total cost of sales3,069 4,013 5,772 7,618 
Gross profit
2,017 2,807 2,501 5,246 
Operating expenses:
Selling, general and administrative2,988 3,380 5,942 7,137 
Research and development755 498 1,165 813 
Impairment of intangible assets  2,531  
Depreciation and amortization700 605 1,430 1,206 
Total operating expenses4,443 4,483 11,068 9,156 
Operating loss(2,426)(1,676)(8,567)(3,910)
Other income (expense):
Other, net 136 56 176 
Total other income 136 56 176 
Loss from continuing operations before income taxes(2,426)(1,540)(8,511)(3,734)
Benefit for income taxes530 46 188 44 
Loss from continuing operations(1,896)(1,494)(8,323)(3,690)
Loss from discontinued operations, net of income taxes(4,708)(1,643)(4,923)(1,861)
Net loss$(6,604)$(3,137)$(13,246)$(5,551)
Preferred stock dividends(559)(499)(1,118)(970)
Net loss attributable to common shareholders$(7,163)$(3,636)$(14,364)$(6,521)
Net loss per common share - Basic
Continuing operations$(0.20)$(0.16)$(0.78)$(0.39)
Discontinued operations$(0.39)$(0.14)$(0.40)$(0.15)
Net loss$(0.59)$(0.30)$(1.18)$(0.54)
Net loss per common share - Diluted
Continuing operations$(0.20)$(0.16)$(0.78)$(0.39)
Discontinued operations$(0.39)$(0.14)$(0.40)$(0.15)
Net loss$(0.59)$(0.30)$(1.18)$(0.54)
Shares used in computing net loss per common share:
Basic12,182 12,128 12,177 12,124 
Diluted12,182 12,128 12,177 12,124 
The accompanying notes are an integral part of these condensed consolidated financial statements.

2

Table of Contents
MIND TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(unaudited)
 
 For the Three Months Ended July 31,For the Six Months Ended July 31,
 2020201920202019
Net loss attributable to common shareholders$(7,163)$(3,636)$(14,364)$(6,521)
Change in cumulative translation adjustment for sale of foreign entity   (331)
Other changes in cumulative translation adjustment 82 (41)(49)(160)
Comprehensive loss$(7,081)$(3,677)$(14,413)$(7,012)
The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Table of Contents
MIND TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 For the Six Months Ended July 31,
 20202019
Cash flows from operating activities:
Net loss$(13,246)$(5,551)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization3,210 3,960 
Stock-based compensation449 341 
Impairment of intangible assets2,531  
Loss on disposal of discontinued operations1,859  
Provision for doubtful accounts, net of charge offs470  
Provision for inventory obsolescence234  
Gross profit from sale of lease pool equipment(1,326)(780)
Deferred tax expense263 135 
Changes in:
Accounts receivable4,404 100 
Unbilled revenue(9)3 
Inventories(675)(2,372)
Prepaid expenses and other current and long-term assets766 (11)
Income taxes receivable and payable (47)
Accounts payable, accrued expenses and other current liabilities(1,583)632 
Deferred revenue87 (50)
Foreign exchange losses net of gains 137 
Net cash used in operating activities(2,566)(3,503)
Cash flows from investing activities:
Purchases of seismic equipment held for lease(110)(230)
Purchases of property and equipment(302)(573)
Sale of used lease pool equipment2,010 1,186 
Sale of business, net of cash sold 239 
Net cash provided by investing activities1,598 622 
Cash flows from financing activities:
Proceeds from exercise of stock options 26 
Net proceeds from preferred stock offering 1,980 
Preferred stock dividends(1,118)(970)
Proceed from PPP loans1,607  
Net cash provided by financing activities489 1,036 
Effect of changes in foreign exchange rates on cash, cash equivalents and restricted cash(117)(65)
Net decrease in cash, cash equivalents and restricted cash(596)(1,910)
Cash, cash equivalents and restricted cash, beginning of period3,234 9,549 
Cash, cash equivalents and restricted cash, end of period$2,638 $7,639 
Supplemental cash flow information:
Interest paid$23 $27 
Income taxes paid$246 $182 
Purchases of seismic equipment held for lease in accounts payable at end of period$ $ 
The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Table of Contents
MIND TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands)
(unaudited)
 Common StockPreferred StockAccumulated
Other
Comprehensive
Loss
 SharesAmountSharesAmountAdditional
Paid-In
Capital
Treasury
Stock

Accumulated
Deficit
Total
Balances, January 31, 202014,097 $141 994 $22,104 $123,964 $(16,860)$(77,310)$(4,387)$47,652 
Net loss      (6,642) (6,642)
Foreign currency translation       (131)(131)
Preferred stock dividends      (559) (559)
Stock-based compensation    230    230 
Balances, April 30, 202014,097 $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 
Equity Compensation         
Preferred stock offering         
Preferred stock dividends      (559) (559)
Stock-based compensation    219    219 
Balances, July 31, 202014,097 $141 994 $22,104 $124,413 $(16,860)$(91,674)$(4,436)$33,688 
Common StockPreferred StockAccumulated Other Comprehensive Loss
 SharesAmountSharesAmountAdditional
Paid-In
Capital
Treasury
Stock
Accumulated DeficitTotal
Balances, January 31, 201914,049 $140 830 $18,330 $123,085 $(16,860)$(63,973)$(4,044)$56,678 
Net loss      (2,415) (2,415)
Foreign currency translation       (450)(450)
Preferred stock offering  17 409     409 
Preferred stock dividends      (471) (471)
Stock-based compensation    172    172 
Balances, April 30, 201914,049 $140 847 $18,739 $123,257 $(16,860)$(66,859)$(4,494)$53,923 
Net loss      (3,137) (3,137)
Foreign currency translation       (41)(41)
Restricted stock issued         
Equity Compensation9 1   25    26 
Preferred stock offering  70 1,571     1,571 
Preferred stock dividends      (499) (499)
Stock-based compensation    170    170 
Balances, July 31, 201914,058 $141 917 $20,310 $123,452 $(16,860)$(70,495)$(4,535)$52,013 

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


5

Table of Contents
MIND TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Organization

MIND Technology, Inc., a Delaware corporation (the “Company”), formerly Mitcham Industries, Inc., a Texas corporation, was incorporated in 1987. Effective August 3, 2020 the Company effectuated a reincorporation to the state of Delaware, name change to MIND Technology, Inc. and increase in the number of shares of common stock and preferred stock authorized for issuance. See Note 16 to the condensed consolidated financial statements.
The Company, through its wholly owned subsidiary, Seamap International Holdings 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. (“MEL”); 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 to the condensed consolidated financial statements for more information. 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, 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 consolidated financial statements. See Note 3 to the consolidated condensed 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 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 six 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.
2. Basis of Presentation
The condensed consolidated balance sheet as of January 31, 2020 for the Company has been derived from audited consolidated financial statements. The unaudited interim condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information 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 July 31, 2020, the results of operations for the three and six months ended July 31, 2020 and 2019, the cash flows for the six months ended July 31, 2020 and 2019, and the statement of shareholders’ equity for the three and six months ended July 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.
3. Assets Held for Sale and Discontinued Operations
On July 27, 2020, the Board determined to exit the land seismic 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 July 31, 2020 and for all comparative periods presented in these condensed consolidated financial statements. The Company anticipates selling the discontinued operations within the next twelve months in a single transaction, or multiple transactions, which may involve the sale of legal entities or assets.



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The assets reported as held for sale consist of the following:
July 31, 2020January 31, 2020
Current assets of discontinued operations:
Accounts receivable, net
2,366 5,699 
Inventories, net388 605 
Prepaid expenses and other current assets221 227 
Seismic equipment lease pool and property and equipment, net3,675 8,382 
Total assets of discontinued operations$6,650 $14,913 

The liabilities reported as held for sale consist of the following:
July 31, 2020January 31, 2020
Current liabilities of discontinued operations:
Accounts payable$119 $884 
Deferred revenue 34 
Accrued expenses and other current liabilities1,186 1,886 
Income taxes payable (74)
Total liabilities of discontinued operations1,305 2,730 

The results of operations from discontinued operations for the three and six months ended July 31, 2020 and 2019, consist of the following:
 For the Three Months Ended July 31,For the Six Months Ended July 31,
 2020201920202019
Revenues:
Revenue from discontinued operations$1,230 $2,077 $5,418 $5,891 
Cost of sales:
Cost of discontinued operations1,642 2,002 4,126 4,514 
Operating expenses:
Selling, general and administrative1,476 1,415 3,176 2,890 
Provision for doubtful accounts470  470  
Depreciation and amortization41 46 85 95 
Total operating expenses1,987 1,461 3,731 2,985 
Operating loss(2,399)(1,386)(2,439)(1,608)
Other income (expenses)72 (163)75 (106)
Loss on disposal (including $2,745 of cumulative translation loss)
(1,859) (1,859) 
Loss before income taxes(4,186)(1,549)(4,223)(1,714)
Provision for income taxes(522)(94)(700)(147)
Net loss(4,708)(1,643)(4,923)(1,861)

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The significant operating and investing noncash items and capital expenditures related to discontinued operations are summarized below:
 For the Six Months Ended July 31,
 20202019
Depreciation and amortization$1,771 $2,519 
Gross profit from sale of lease pool equipment$(1,324)$