MIND

Welcome to the MIND Technology second-quarter fiscal 2027 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Zach Vaughan, Investor Relations. Thank you. You may begin.

Thank you, operator. Good morning, and welcome to the MIND Technology fiscal 2027 second quarter earnings conference call. We appreciate all of you joining us today. With me are Rob Capps, President and Chief Executive Officer, and Mark Cox, Vice President and Chief Financial Officer. Before I turn the call over to Rob, I have a few items to cover. If you would like to listen to a replay of today's call, it will be available for 90 days via webcast by going to the Investor Relations section of the company's website at mind-technology.com, or via a recorded instant replay until September 16th. Information on how to access the replay was provided in yesterday's earnings release.

Information reported on this call speaks only as of today, Wednesday, September 9th, 2026, and therefore you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening or transcript reading. Before we begin, let me remind you that certain statements made by management during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the company is unable to predict or control, that may cause the company's actual future results or performance to materially differ from any future results or performance expressed or implied by those statements.

These risks and uncertainties include the risk factors disclosed by the company from time to time in its filings with the SEC, including in its annual report on Form 10-K for the year ended January 31st, 2026. Furthermore, as we start this call, please also refer to the statement regarding forward-looking statements incorporated in our press release issued yesterday, and please note that the contents of our conference call this morning are covered by these statements. Now I'd like to turn the call over to Rob Capps.

Thanks, Zach, and thank you all for joining us today. As usual, I'll touch on the results for the second quarter and provide an update on the current market environment. Mark Cox will then provide a more detailed review of our financials, and I'll return to wrap things up with some remarks about our outlook. Our second-quarter results reflect the ongoing market softness, offset to some extent by the resilience of our aftermarket business. Order flow continues to be constrained, and customers are maintaining their wait-and-see approach amid a very unsettled geopolitical and commodity price environment. Our results reflect this. Despite these headwinds, our aftermarket business continues to provide a recurring stream of revenue. This gives us a durable base through a period when new system orders are difficult to predict. This allows us to remain patient and opportunistic rather than reactive.

The last quarter, I laid out two dynamics in the broader energy landscape with the potential to drive increased activity and order flow. There's a growing need for energy security following a significant supply disruption, and a favorable oil pricing backdrop is expected to support a resurgence in exploration activity. We believe both dynamics remain intact, but they have yet to result in firm orders. The war with Iran has had a significant impact on our recent results. Certain ongoing projects in the Middle East have been temporarily interrupted. Additionally, and perhaps more importantly, the award and commencement of additional projects in the region have been delayed. These factors have caused customers to delay spending plans. They also, in some cases, have interrupted our customers' anticipated cash flow. This, in turn, caused certain customers to delay payments to us.

We are confident these amounts will be received, just not within the time frames we originally anticipated. We continue to believe energy independence is top of mind for governments and operators alike, and there's a real need to replenish lost production and secure reliable supply. We expect that to drive exploration investment over time. However, at present, the stops and starts of the war with Iran have created such volatility within the energy markets that customers are hesitant to commit to project timing. While oil prices remain elevated relative to historical standards, it's the durability of these prices, not the level, that drives investment decisions.

Futures market does not expect today's prices to last. What matters more to our customers and to their customers is certainty. An end to the conflict would remove much of that uncertainty impacting projects today. We would then expect these programs to move forward.

We see a resolution to the war as good for our business. Our backlog of firm orders as of July 31st, 2026, was approximately $4.8 million, compared to $7.6 million as of April 30, 2026, and $12.8 million as of July 31st, 2025. Protracted customer decision-making regarding new system orders and the execution of our existing backlog during the quarter were the drivers of the decline. As our backlog continues to illustrate, there is considerable variability in the pace and timing of new orders. This has been magnified by the ongoing macro uncertainty. I'll remind you that even in a normal market, new orders don't always arrive at a constant rate throughout the year.

Importantly, we continue to view these as temporary pauses as customers iron out their operational plans and evaluate market conditions. Despite the near-term softness, the longer-term outlook for the marine exploration and the survey industry, and more specifically our business, remains very positive in our opinion. We have begun to see early signs of recovery and feel that an uptick in activity is inevitable. I will talk a bit more about this later. Outside of our backlog, which is defined as orders for which we have a purchase order or a signed contract in hand, the pipeline of potential orders remains solid and is several times greater than our firm backlog. We are continuing to pursue certain significant projects, including some worth $10 million or more each. We have taken actions in recent months to strengthen our positioning and make ourselves more competitive bidders.

This provides us with optimism as we work to convert these opportunities into firm orders in coming periods. Turning to our results, marine technology product revenues for the second quarter of fiscal 2027 were approximately $5.6 million. The majority of this revenue, roughly 87%, came from aftermarket activity, consisting of spare parts, repairs, service, and other support activities. We have talked at length in recent quarters about this component of our business and its critical role within our overall results. This has become increasingly important as system orders have slowed.

While the aftermarket business is influenced by the general activity level within the industry, it is more recurring in nature than orders for new systems. Customers might be slow to purchase new systems, but their existing equipment will need maintenance to keep operating. This benefits MIND since expenditures for aftermarket activity are generally operating costs as opposed to capital expenditures.

As our installed base of Seamap products expands, so does the potential for increased aftermarket activity. The second quarter was a difficult one, and our results reflect that. Our aftermarket activity held up and continued to generate meaningful revenue at a time when system orders were effectively on hold. It allows us to manage through a period of disruption and position the company for when activity improves. I remain confident in the opportunities ahead of us, and I believe it is just a matter of time until order flow returns. Now, I will let Mark walk you through our second quarter financial results in a bit more detail.

Thanks, Rob, and good morning, everyone. Revenues for marine technology product sales totaled approximately $5.6 million for the quarter. As Rob mentioned, our second-quarter results continued to be impacted by general market softness and our customers taking a more cautious approach to the decision-making process. Despite these headwinds, we are benefiting from aftermarket activity that provides a solid foundation of recurring revenue. This activity supports our overall results and serves as a buffer in times of reduced large system order volume. Second quarter gross profit was approximately $2.1 million. This represents a gross profit margin of 37% for the quarter. Although a significant portion of our second quarter revenue came from aftermarket activity, which typically generates higher margins than larger system orders, lower overall revenue in the quarter resulted in less fixed-cost absorption, impacting our gross margin.

As revenue returns to more normalized levels, we expect our cost optimization efforts and improved production efficiencies to support stronger margins. Our G&A expenses were approximately $3.3 million for the second quarter of fiscal 2027. This was down both sequentially and when compared to the same quarter a year ago. Our Research and Development expense for the second quarter was approximately $470,000, which was up sequentially and compared to the second quarter of fiscal 2026. This increase was due to the timing of cost recognition for component purchases. Consistent with prior periods, these costs were largely directed toward the development enhancement of our streamer systems and source controller offerings. Operating loss for the second quarter of fiscal 2027 was approximately $1.8 million, compared to operating income of approximately $2.7 million in the second quarter of fiscal 2026.

Second-quarter adjusted EBITDA loss was approximately $949,000 compared to adjusted EBITDA of $3.1 million in the same quarter a year ago. Net loss for the second quarter was approximately $1.7 million compared to net income of $1.9 million in the second quarter of fiscal 2026. As of July 31st, 2026, we had working capital of approximately $36.7 million, including $15.8 million of cash on hand. This compares to approximately $19 million of cash at the beginning of the fiscal year. I would caution against reading that change as a reflection of our cash burn rate. Movement in cash reflects the timing of receivable collections as much as it does operating performance. As Rob mentioned a moment ago, collections in the first half of fiscal 2027 were slower than we anticipated due to circumstances impacting certain of our customers' markets.

For a more accurate measure of our operating performance, we would point to our adjusted EBITDA. The company continues to maintain a clean, debt-free balance sheet with a simplified capital structure. We also maintain operational flexibility to pursue strategic opportunities should they arise. I'll now pass it back over to Rob for some concluding comments.

Okay, thanks, Mark. We are operating in a challenging macro environment, and our customers' wait-and-see approach reflects that. Customers continue to delay order commitments regardless of industry or end use, which limits our visibility and will likely pressure results for another quarter or two. Much of that timing depends on conditions in the Middle East, which remain unsettled. We're not going to predict when that will change. However, I want to emphasize that we believe demand has not gone away. Although the timing remains uncertain, customers are actively evaluating several sizable projects, which we view as an encouraging sign for future activity.

As conditions stabilize, we expect customers will reactivate their capital programs, and we're positioning the business to respond quickly when they do. Customer interest and engagement remain solid, but they're not converting into firm orders at the rate we expected at this point in the year.

As a result, our expectations are that our fiscal 2027 results will be below fiscal 2026. Despite this view, two things give us confidence in our ability to manage through this period. Our aftermarket business provides a steady stream of recurring revenue that supports our results, and we have meaningful working capital, including cash on hand. This gives us the flexibility to invest in the business and act on opportunities as they arise. Our conviction regarding the longer-term prospects has not changed. The underlying dynamics within the marine technology industry remain intact, and we are seeing opportunities to capitalize on new areas of focus within the market. Rather than pull back during this slowdown, we have continued to invest in our technology that is beginning to open doors. As an example, we have started gaining traction with our passive array technology in maritime security applications.

Still early days, but we believe this technology provides a cost-effective solution to a real operational need. We are encouraged by the interest we have received and look forward to providing updates as things develop. We are also pursuing upgrades and improvements to our source controller and towed streamer products, which we believe will generate new opportunities. In recent quarters, I have discussed our capital allocation strategy. We have a simple capital structure and a debt-free balance sheet, and we ended the quarter with $15.8 million in cash.

This liquidity gives us flexibility that not all small public companies possess. We are constantly evaluating opportunities to create meaningful long-term value for our stockholders. Our first priority is always to preserve the strength of the company. This includes funding operations through a period of reduced order flow and lower revenue while continuing to invest in technology that positions us for the recovery we expect.

Beyond that, we see a real need to add scale, and we are actively pursuing opportunities to do so. As we have said previously, there are several paths available to us. We can execute organic growth initiatives that we have identified. We can acquire assets or businesses adjacent to what we already do. We can combine with another organization. What we will not do is jeopardize the progress that we have made at MIND by chasing something that does not fit what we do. That being said, we continue to actively seek out transformative transactions. We also recognize that another attractive use of capital is stock repurchases, especially at current price levels. We believe that recent prices for our stock do not accurately reflect the true value of the company.

I would point out that as of the end of the most recent quarter, we had working capital of approximately $36.7 million, which equates to more than $4 per common share. Despite these apparently attractive economics, we did not purchase any of our common stock during the second quarter. I understand how many of you are frustrated by this lack of activity. We do believe our stock at current levels represents a good investment. However, there are often limitations on when we can be active in the market. We are precluded from buying or selling, for that matter, our stock during blackout periods pending the release of periodic financial results. Additionally, we cannot buy or sell our stock when in possession of material information that has not yet been disseminated to the market. These situations could include ongoing preliminary discussions regarding new business or for strategic transactions.

We will continue to assess the appropriate time to enter the market against our other capital priorities. Going forward, preserving and enhancing value remains our primary focus, and we will allocate capital to the areas where we see the greatest return. In closing, the market remains soft, but I am confident about where this business is headed. The projects our customers have deferred have not gone away, and the underlying demand fundamentals are only growing. When activity returns, we intend to be ready for it. We have no debt, real liquidity, and an aftermarket business generating recurring revenue and technology that is expanding our addressable markets. We are using this period to improve our positioning and sharpen our competitive edge. We are focused on innovating, adding scale, and partnering with customers that appreciate the value we deliver.

I look forward to executing on these priorities, which we believe will drive improved stockholder value. With that, operator, I think we can now open the call up for some questions.

Thank you. We will now be conducting a question-and-answer session. We ask that you please limit yourself to one question and one follow-up. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. If you are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Thank you. Our first question comes from the line of Tyson Bauer with KC Capital. Please proceed with your question.

Good morning, gentlemen.

Hello, Tyson.

I'm just going to follow up quickly on your last comment, and that is, given the Middle East conflict on-and-off situation and no resolution seemingly coming quickly, how does that sway your capital-use decisions for MIND? Does that accelerate some of these things you've talked about as far as improving shareholder value and growing the business? Or do you hang on to that cash a little tighter, and you see how things kind of play out? The follow-up to that, as you talked about these blackout periods and a lot of things, irons in the fire you have going, would you anticipate that most, if not all of Q3 may be in those blackout periods?

Let me address the last one first. Not necessarily. Again, I don't want to telegraph when we may or may not be in the market. But I wouldn't say that's necessarily the case. I think that the situation in the Middle East is something we have to contemplate when we look at capital allocation. Surely we see a lesser opportunity in the very near term for new business that might steer us in a different direction as far as where we might allocate capital, maybe be more inclined to buy back stock at that point or something more strategic. Again, I just don't want to telegraph what we're going to do, but it's something we do have to contemplate. But for sure, the Middle East situation has gone on much longer than I think any of us anticipated, and certainly has had a bigger impact than we originally anticipated.

Now, you do obviously have business that should not be impacted by the Middle East, such as scientific activity in Asia, South Asian Sea, your Scandinavian customers that have been big in the past, critical mineral exploration off the coast of Africa, and some of those areas. When we look at this pipeline being frozen, is it more at the government level for these types of projects, or is it in addition to the corporate budgeting level, or is it kind of a combination at this point?

Yeah. So that's a really good question, Tyson Bauer. There are projects in the Middle East that have been impacted. Also, I think the general economic macro situation has caused people to be cautious elsewhere in the world. Our customers, whether they're located in the Middle East, in Dubai, or in Norway or the U.S., operate on a worldwide basis. So just because they aren't in the Middle East doesn't mean they're not impacted by the macroeconomic situation that happens overall. So I think that's really the bigger driving factor for the slowdown in activity. You are definitely correct. We do see activity and are actively chasing projects that are non-energy related, especially in Southeast Asia. There's a lot going on there and in other parts of the world. So we aren't totally energy dependent. And we are seeing activity there.

But again, part of that problem is just the budget cycles, and those are driven by governmental issues and government budget cycles, not in the U.S. necessarily, but elsewhere in the world. And they just move very slowly sometimes. But those are some of the larger projects that I alluded to earlier.

And if we use this analogy of a frozen pipeline, obviously, you've got two solutions. One, a slow thaw that creates a trickle of orders that come on the backside of this. Or if it thaws quickly, you end up with possibly a pipe bursting, which I think we would not treat that as unwelcome, even though you may have a working capital requirement there. How do you see that playing out? Is it more likely a trickle or more likely the pig in the python or the burst orders?

Yeah, that's a tough one to answer. I personally think it's more of closer to a trickle. Trickle is maybe not the right word I would use, but I don't see things just bursting loose. I think because of the uncertainty that this has created, and companies tend to be much more cautious now than they might have been in the past, just because of this uncertainty. That's my read on it, but take it what it's worth.

Last couple of quarters, you've thrown out the carrot out there: these $10 million project possibilities. What, if anything, you can add color to, what are they contingent upon that we can watch in the marketplace that makes it more likely or less likely they could occur?

I think the particular instances I have in mind are more related to budget cycles and the process working its way through rather than anything from the macro environment. I don't think the Middle East situation necessarily has a big impact on those particular projects.

Government budgets, government agencies, those things.

They move at the pace they move.

Right. A couple of quick financials. It appears that Q3, Q4, more likely than less likely to resemble Q2 or within that ballpark of that $5 million-$8 million that you've experienced in the past on repair sales and what you've talked about that reoccurring revenue base. Even if we have orders materialize, it's likely that this fiscal year is kind of more or less in what we should expect, and all the focus then becomes: Can you grow backlog before the end of the year? What does that imply for fiscal 2028? Is that correct?

Yeah. There's definitely truth to what you're saying there. I would, I guess, modify that in that certainly there are orders that are, or prospects that were in the pipeline that we could turn around and deliver in this year. Now, obviously, as time goes by, the closer you get to the year, that likelihood reduces. I wouldn't write off the back end of the year completely at this point. I think that's from a standpoint of large system orders.

Okay, and last one. Last one from me. Obviously, cash level $15 million. You said that it was an abnormal cash-use quarter. Don't expect that to continue. What kind of cash management and projection are you looking at for the next quarter or two?

Well, again, I think the issue with the cash situation that Mark alluded to or addressed was we actually had three customers which had their cash flow impacted by the Middle East situation directly. Excuse me. Two of those have been resolved. They have been collected as of now. There is just a third that is still an issue, which is a substantial amount. Again, we are very confident about the collection, given who it is. But we are just working through the logistics of getting that resolved. If that is resolved by the end of the year, as we expect it would be, then I think you will see a significant increase in cash balance at that point.

Today's cash balance is greater than the $15.7 million you recorded at the end of July?

Yeah. Roughly. Not dramatically, but roughly.

Okay. Thank you.

Our next question comes from the line of Ross Taylor with ARS Investment Partners. Please proceed with your question.

Thank you. Tyson Bauer covered a lot of ground that I'd wanted to address, but I think getting down to it, since it sounds like you expect to be in this situation for a quarter or two longer, what steps are you taking to reduce the operating cash burn to a more acceptable level?

Sure. We're looking at things on the production side, production cost, people primarily on the production side, what we can do there without hurting the longer-term prospects. Same thing on the R&D side. I think we've really already done a lot on the G&A side, although there are a few tweaks here and there, but those aren't the big dollars. So we're definitely actively looking at those things right now, Ross.

Okay. What are your public company costs?

Oh, gosh. Since I look at it's probably $2 million-$3 million anyway on an annual basis.

Okay. So it's not meaningless as a-

Oh, no, definitely not. Definitely not.

Okay. It strikes me from the-

Ross, let me point you to something. If you look at our 10-Q and our financial reports and our segment disclosures, that gives you some idea of what the corporate costs are.

Yeah.

They are substantial. They are not all public company costs, but they give you some idea of what that is.

Okay. I appreciate that. It does strike me as the situation in the Middle East and also in the Black Sea, actually, in many ways should be driving increased demand for exploration away from those regions. Is that something that you are seeing? Obviously, no matter what the outcome of the war with Iran is, it is going to lead to lessened interest demand, less confidence in that as an energy source. I would think that we would be seeing your customers accelerating a desire to explore elsewhere for oil, gas, and other things. Is that something you are seeing?

Absolutely correct. Absolutely. Just how quickly does that happen? These projects have long lead times, so how quickly do we see them come to fruition and therefore filter down to our business? That is the uncertainty in our mind right now. There is no doubt in my mind, and I think most people's minds, that what you say is absolutely correct.

Okay. To sum with your answer to Tyson Bauer's question about cash, currently, you've got just under $16, so you would expect to be measurably higher than that level of cash at the end of the fiscal year?

That's correct.

Okay.

Again, based on the collections from this one customer.

Okay. You've talked a lot about the idea of doing potentially something strategic. Given the situation, it strikes me as MIND lacks the size and the stability of revenues, or at least stability of earnings, at this stage to do a lot to leverage your balance sheet. I think you'd be really reticent to make an acquisition that would involve a great deal of debt. However, at the same time, your stock is selling well under book value. I think book value coming into the quarter was what? North of $4.50 a share.

Correct. Okay.

You are selling well under book, which makes it very difficult to use your stock unless a deal is really attractive. What kind of size are you looking at for a deal? You talked about transformative. To me, that means a company that is more than its current size, bigger than it is. Is that a correct read?

I mean,

Stability of profitability.

Yeah. Obviously, those deals don't come along every day. But if we can find that sort of situation, or if we can find the tuck-ins that we can do on a reasonable basis to gradually increase scale. At some point, I think a more transformative transaction that you allude to makes some sense. But again, those are hard to come by, and if you can do it on a relative basis, perhaps it makes some sense. But those are the sort of things we are open to. As we've said before, we have a blank sheet of paper there, so we are open to lots of different ideas. But we recognize we need to change the scale of this operation in order to bring more stability to it.

Right. And changing the scale, you, in many ways, also mean you need to create a business that generates a consistent level of cash flow, earnings, revenues, so that we can put a higher multiple on the overall business, correct?

Sure.

It's not just make it bigger. It's really making-

No, absolutely.

Yeah.

No, you are exactly right.

Okay. I will say, while you talk about the idea that it seems that you are in a lot of blackout periods, it would be nice to find an open period that would allow your insiders to buy stock. Right now, I think I can probably buy a couple of shares of stock for a latte. It would strike me as it might be worthwhile to see some insider buying. There has not been insider buying in this company in a long time, and that would be a really nice vote of confidence.

I understand that 100%.

Okay.

Absolutely. I agree.

If we can get ourselves to where cash is higher, we are trading well under book value, the stock does strike me as a very attractive investment here for a patient investor.

Yeah.

Good luck pushing forward.

All right, man, I appreciate it.

Okay. Take care, sir.

You bet.

This now concludes our question-and-answer session. I would like to turn the floor back over to management for closing comments.

Just like to thank everyone for joining us today, and look forward to giving you ongoing updates about our progress and talking to you again after our third quarter. Thank you very much.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines and have a wonderful day.

Greetings, welcome to the MIND Technology first quarter 2027 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ken Dennard, Investor Relations. Thank you, sir. You may begin.

Operator, good morning, welcome to the MIND Technology Fiscal 2027 first quarter earnings conference call. We appreciate all of you joining us today. With me are Rob Capps, President and Chief Executive Officer, and Mark Cox, Vice President and Chief Financial Officer. Before I turn the call over to Rob, I have a few items to cover. If you'd like to listen to a replay of today's call, it'll be available via 90 days via webcast by going to the investor relations section of the company's website at mind-technology.com, or via instant replay feature until June 18th.

Information on how to access the replay was provided in yesterday's earnings release. Information on this call speaks only as of today, Thursday, June 11th, 2026. Therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening or transcript reading. Before we begin, let me remind you that certain statements made by management during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties, and other factors, many of which the company is unable to predict or control, that may cause the company's actual future results or performance to materially differ from any future results or performance expressed or implied by these statements. These risks and uncertainties include the risk factors disclosed by the company from time to time in its filings with the SEC, including the annual report on Form 10-K for the year ended January 31st, 2026.

Furthermore, as we start this call, please refer to the statement regarding forward-looking statements incorporated in our press release issued yesterday. Please note that the contents of our conference call this morning are covered by these statements. Now with that behind me, I'd like to turn the call over to Rob Capps. Rob.

Okay, thanks, Ken, and thank you all for joining us today. It's only been eight weeks since we last talked, and not much has fundamentally changed. There's not been a sea change in the market or our business. Much of what I say today will sound pretty familiar. Our results for the first quarter were essentially in line with our expectations and once again reflected positive adjusted EBITDA. During the quarter, we were able to deliver the remaining orders that had slipped past our fiscal year-end.

As usual, I'll touch on the results for the first quarter and provide an update on the current market environment. Mark will then provide a more detailed review of our financials, and I'll return to wrap things up with some remarks about our outlook. I think the near-term market can best be described as uncertain with less visibility than normal. There's a great deal of uncertainty in the world in terms of economics, politics, and security. As you'd expect, this causes companies and governments to be cautious in committing to exploration and survey projects.

As a result, our customers are reluctant to commit to equipment purchases, most notably larger system orders. The current conflict in the Middle East and the changing perceptions of its resolution exacerbate this uncertainty. The longer-term outlook, however, is much more positive, as there are definite signs of recovery. I'll talk more about this later. Our backlog of firm orders as of April 30th, 2026, was approximately $7.6 million, compared to $13.9 million as of January 31st, 2026, and $21 million as of April 30th, 2025.

As expected, we delivered certain orders that were unable to ship prior to the end of fiscal 2026. This, coupled with the protracted customer decision-making, contributed to the backlog decline. As we approach the summer months, I want to remind you that in a normal environment, new orders don't always arrive at a constant rate throughout the year. Variance in order flow is commonplace and not a cause for concern. Macro uncertainty has magnified these pauses as customers iron out their operational plans.

We maintain our belief that the long-term outlook in the marine exploration and survey industry is very positive, and an uptick in activity is inevitable. That's all of our backlog, which is defined as orders for which we have a purchase order or signed contract in hand. The pipeline of potential orders remains solid and is several times greater than our firm backlog. We are continuing to pursue certain significant projects, a few of which total $10 million or more each.

Some of these opportunities involve new vessels for governmental organizations and require successful bidders to provide security bonds, something we are now capable of doing. We've taken actions in recent months to strengthen our positioning and make our sales more competitive bidders. This provides us with optimism as we work to convert these opportunities into firm orders in coming periods. Turning to our results. MIND Technology product revenues for the first quarter fiscal 2027 were approximately $9.7 million.

Revenue was flat sequentially and improved from last year's first quarter. We once again produced positive adjusted EBITDA of approximately $811,000. Compared to $1.1 million in the fourth quarter and a loss of $179,000 in last year's first quarter. Our aftermarket activities are providing a stable and recurring revenue stream that is supporting our overall results. This component of our business is becoming increasingly important and represented about 50% of our revenues in the first quarter. As a reminder, this aftermarket activity consists of spare parts, repairs, service, and other support activities.

While this business is influenced to some degree by the general activity level within the industry, it is more recurring in nature than orders for new systems. Customers might be slow to purchase new systems, but their existing equipment will need maintenance to keep operating. This benefits MIND since expenditures for aftermarket activity are generally operating costs as opposed to capital expenditures. As our installed base of SeaMap products continues to expand, with it comes the prospect for increased aftermarket activity.

I'm pleased with the resilience of our results in the face of widespread uncertainty, and our aftermarket activity continues to be an important contributor to our consistency. I firmly believe MIND is well-positioned to capitalize on opportunities in future periods to stimulate order flow and generate sustainable results. I'll let Mark walk you through our first quarter financial results in a bit more detail.

Thanks, Rob, and good morning everyone. Revenues from Marine Technology product sales totaled approximately $9.7 million for the quarter. As Rob mentioned, our first quarter results benefited from approximately $4 million of orders that slipped out of fiscal 2026. We also continue to see strong aftermarket activity that provides a solid foundation of recurring revenue. This activity supports our overall results and serves as a buffer in times of reduced large system order volume. First quarter gross profit was approximately $4.1 million.

This represents a gross profit margin of 42% for the quarter, which was in line with the same period a year ago. The sustained margin strength was supported by product mix and reflects a greater contribution of spare parts and other aftermarket activity that generate favorable margins. We expect our cost structure optimization efforts and greater production efficiencies to help us maintain favorable margins in future periods. Our general and administrative expenses were approximately $3.5 million for the first quarter, fiscal 2027.

This was up both sequentially and when compared to the same quarter a year ago. Sequential and year-over-year increases are primarily due to higher incentive compensation and stock-based compensation, with the latter being a non-cash item. Our research and development expense for the first quarter was approximately $310,000, which was down both sequentially and compared to the first quarter of fiscal 2026. Consistent with prior periods, these costs were largely directed toward the development and enhancement of our streamer systems and source controller offerings.

Operating income for the first quarter was approximately $14,000, compared to an operating loss of approximately $658,000 in the first quarter of fiscal 2026. First quarter adjusted EBITDA was approximately $811,000, compared to an adjusted EBITDA loss of $179,000 in the same quarter a year ago. Net loss for the first quarter was approximately $411,000, after income tax expense of $476,000. As a reminder, our income tax expense results primarily from our operations in Singapore.

As of April 30th, 2026, we had significant working capital of approximately $37.8 million, including $17.7 million of cash on hand. The company continues to maintain a clean, debt-free balance sheet with a simplified capital structure. We expect our solid foundation, significant liquidity, and operational flexibility will allow us to pursue opportunities in the coming quarters to enhance stockholder value. I'll now pass it back over to Rob for some concluding comments.

Thanks, Mark. As I mentioned at the outset, macro uncertainty and geopolitical turbulence are causing customers to delay order commitments regardless of industry or end use. This is challenging our near-term visibility, and it is likely we will see some softness in our results. There are signs of recovery, and the longer-term outlook continues to be very positive. Conflict in the Middle East has served as a sobering reminder of how important energy security is for countries around the world.

As some have speculated, the Strait of Hormuz blockade triggered what may be the largest oil supply shock in history. We believe this bodes well for additional orders in future periods as geopolitical instability and long-term supply concerns will drive exploration activity in other parts of the world. There is an immediate need to replenish lost production and secure reliable energy supplies. Another near-term dynamic that has the potential to drive incremental activity is the rapid increase in oil prices.

This goes somewhat hand-in-hand with the need for energy security, but we find that customers are often more motivated to launch large programs when the economics are compelling. While we anticipate our customers ramping operations in the coming months to capture the benefits of an attractive pricing backdrop, we haven't yet seen the orders associated with this activity. Some of our customers have reported increasing backlogs, which is a very positive sign.

We also know that several industry commentators are predicting a resurgence in exploration and survey activity, something that we're monitoring very closely. The underlying dynamics within the marine technology industry remain intact, and our long-term pipeline of opportunities continues to be very positive. Our prospects are plentiful. There are emerging opportunities to capitalize on new areas of focus within the market. Uncertainty has clouded visibility for the past several months. We remain well-positioned for the future.

I'm confident that any near-term softness will dissipate in the coming months as markets stabilize and volatility becomes less severe. As a result of our efforts in recent years, MIND is nimble and operating efficiently. This positions us to more readily weather the storms that have historically challenged our business. Rather than sit idly by as customers hit pause, we've continued to innovate and expand our capabilities to address new opportunities. This gives us a competitive edge to capture orders and meet evolving needs in coming months.

Our customers are constantly looking to get ahead of the curve, operate more efficiently, and solve new problems. They want to partner with suppliers to do the same. Now turning to our outlook. Current visibility continues to indicate that our results for fiscal 2027 to be down when compared to fiscal 2026. Despite this view, we believe this will still be a positive year for MIND. As I noted on our last call, it will be difficult to replicate the system order volume that we've enjoyed over the past two years, given our recent customer discussions and the prevailing uncertainty.

However, we expect to be cash flow positive for the year, even with lower revenue. Our growing aftermarket business will provide us with a substantial stream of recurring revenue to buoy our results. We have meaningful cash on hand to make strategic moves and position the business for the future. As we've previously discussed, we continue to be aware of the challenges and limitations of being a small public company. Although we are uniquely positioned with a simple capital structure and a debt-free balance sheet, there is a need to add scale and enhance stockholder value.

We are actively pursuing opportunities. There are a few different ways we can achieve the desired scale. We can execute identified organic growth opportunities, we can acquire assets or businesses that are similar to our existing business, or we can combine with other organizations. We continue to identify and evaluate such opportunities. Fortunately, we have ample liquidity to carry out a transaction should the right opportunity arise. We will not jeopardize the immense progress that we've made at MIND to chase an opportunity that doesn't fit what we do.

Preserving and enhancing stockholder value will always be our primary focus. While we are motivated, we intend to be very disciplined in our approach to capital allocation, weighing the expected return with the cost of capital. Outside of strategic mergers and acquisitions, our capital allocation framework consists of investments in organic growth, such as expanding existing product lines and strategic alliances with industry partners. Each of these represents a tool we can use to generate or strengthen returns.

We can draw on any one of these or a combination thereof as market conditions permit and the return on investment meets our threshold for value creation. In summary, we have a differentiated approach, best-in-class suite of products, and a unique aftermarket business that will continue to support our financial results for years to come. We're focused on innovating, expanding our capabilities, adding scale, and partnering with customers that appreciate our technology.

As these customers prepare for increased activity, we plan to be ready to meet that demand. We're taking meaningful steps to strengthen the company, establishing a resilient platform on a solid foundation. Going forward, we will keep building on that foundation, improving our standing within the market, and sharpening our competitive advantage. All of which we believe will propel MIND into the next phase of growth. Our liquidity will prove advantageous as we expand. We intend to deploy this capital strategically to pursue new, attractive opportunities to meet the evolving needs of our customers.

As we execute these priorities, our focus remains, as it always has, on driving sustainable long-term value for our stockholders. With that, operator, I think we can open the call up for some questions.

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you.

Our first question comes from the line of Tyson Bauer with KC Capital. Please proceed with your question.

Good morning, gentlemen.

Tyson.

You ended with liquidity, let's talk about liquidity. You had an increase of $4 million on accounts receivable since the end of January to April. Given the pause button that you described for expectation for fiscal Q2, should we anticipate that your cash balance should be above $20 million by the time we have the next earnings call?

I'm not going to predict an exact amount, but I would expect us to start to convert receivables and inventory into cash. I would expect us to generate cash for the year. Where it hits, I'm not going to predict, but conceptually, you're in the right direction there.

Okay. We're in a solid position of more than $2 a share in cash by the time we get to the end of this quarter.

Yep, I think it's fair to say. Working capital, $37 million. That's a solid working capital number.

Which is $4 and you've got a $5 stock price. Your SG&A was up $250,000 year-over-year, primarily just due to incentive comp as all of that. Will that

Yeah. Primarily timing of that, actually. If you look year-over-year, the overall amount's not going to be that different, but just a matter of where it hit in the period is the bigger factor.

Okay. Should we expect SG&A ongoing level to recede, or are we going to maintain this level?

I think we'll see it come down some. Typically, the first quarter's been higher just because of year-end activities, audits, things like that. I'd expect to see that coming down a bit.

Are you willing to, at least in general, describe the composition of your backlog, the $7.6? Any large orders or systems within that, or are they all fairly small? Any timing or scheduled shipments?

It's a variety of things. There's no huge systems in there at this point. It's mostly smaller things. Some new orders, some new system activity, but some of the smaller size as well as after-market activity. Timing, I think we'll see most of that certainly this year. I can't tell you off the top of my head if it's all next quarter, some next. Obviously we have lots of book and build business as well. There's lots going on there. It's a mixed bag.

We walk into this fiscal second quarter with approximately $5 million recurring, some minor add-ons to there. We don't have the one system that landed in Q1. Q2 should be your low point, knock on wood, revenue-wise for this fiscal year.

That's probably right. That can change. We still have six weeks to go and lots of things can happen. That's probably right.

When do we get to a point of backlog or order recognition where if we don't start to see that materialize, that could have an impact on the second half of this fiscal year where we start slipping quarters to the right of the calendar?

Yeah. It's hard to say, Tyson. It kind of depends on the nature of the order. Some things, we have enough visibility, we can start building before we have the order in hand. We've done some of that in the past. Some things turn more quickly than others. It just depends what the orders are. I don't think we hit that situation till much later in the year. Probably not until we get into the fourth quarter, frankly, or going into the fourth quarter.

Okay. When we talk about, obviously you talk about pipeline projects you can build ahead even though you don't have the project in hand per se, couple $10 million each. Are there any timelines to those comments or catalyst events that allows those to be realized? Like is there a government budgetary passage or certain testing that needs to be completed by X date or an RFP? Any color on that side of it with the pipeline of projects?

Sure. The short answer is no. There's really no governmental deadlines, things of that nature. No hurdles we have to get over from a testing or a demonstration standpoint. It's more just going through the process. These are larger projects which involve more than just our equipment. They move at their own pace sometimes. Sometimes we're kind of the tail being wagged sometimes given the size of our kit compared to the overall project. It's just a matter of these things going through their process.

Okay. Are you then teamed up with Tier 1 suppliers, especially on the military side or government contracts? You're the secondary contractor?

There's not an easy answer to that. We are certainly partnered with others for other parts of the kit. Typically we are dealing directly with the principal, if you will, and not going through an integrator or another integrator. We typically are the integrator for these projects. As it relates to our equipment.

You somewhat control your own destiny in that regard.

Yeah. In that regard, yes. Again, these are larger projects, so there are other aspects to it that can have impact on schedule.

A lot of comments about the Middle East. You do a lot of business with European contractors, a lot of activity in Asia. Some of these are non-petroleum or non-gas type end use or whether surveying and exploration, whether it's scientific, hydrographic, deep sea mining, renewable offshore, not in the U.S. now, but in other places. Why has that slowed down? It doesn't seem like that should have a lot to do with the Strait of Hormuz and those things. That if China wants to do deep sea mapping or we're doing deep mineral exploration off the east coast of Africa and those areas to be independent of what's going on in the Middle East.

Why are we not seeing more activity in those regards?

Well, I think we are seeing activity there is the short answer. There is marginal activity that's in the Middle East area that's being impacted. I think the overall uncertainty, politically and economically, is causing people to be cautious in committing exploration dollars or capital dollars anywhere in the world. You don't know what the energy pricing environment's going to be. You don't know what the security environment's going to be. I think that just causes overall uncertainty and therefore overall caution all over the world, not just as it relates directly to the Middle East.

Okay. Typically in this timeframe, we see some activity coming out of some of your bigger customers in Europe, especially Scandinavia. Is that still percolating and still there, just not realized, but you do expect something before the end of the year? What's the status of some of those bigger customers that have been repeat customers in years past?

Well, they have been cautious, as everyone else has been, in making commitments this year, in the last several months. I think they are very encouraged about what they're seeing in the future. I don't see that they're quite ready to pull the trigger on things and start to expand capacity. That's something we hope to see. I think, as my remarks said, people have been cautious given the uncertainty. They all, I believe, are feeling fairly optimistic about the future based on what they're seeing from their customers, and what they're seeing from their backlogs.

Okay. Last question from me is, what are you hoping to accomplish or to see to show your shareholders before the next earnings call after Q2 is over and hopefully realize some of the stuff in your outlook that you're providing for the second half of the year? What are some things that shareholders can be watching for?

Sure. Obviously, we start to see order flow will be important, but I want to cautious everyone, timing is uncertain. Just because we don't get the order by a certain date doesn't mean things are fundamentally different. I think looking for order flow, we continue to look for opportunities to expand our offerings. That's something we are very actively pursuing right now. Those are the sort of things that we're looking at. Again, timing is uncertain on lots of these things.

All right. Thank you, gentlemen.

You bet.

Our next question comes from the line of Ross Taylor with ARS Investment Partners. Please proceed with your question.

Thank you. Ross. On these new areas, these $10 million+ potential contracts, what are the end markets that are being served?

Typically, these are quasi-governmental agencies who are building vessels or equipping vessels for a variety of scientific and exploration purposes. It's not directly energy-related necessarily, although there's an aspect of that. There are all sorts of other things they look to do. Deep sea mining, hydrographic survey work, things of that nature.

The customers are generally governments, not corporations, for these big contracts?

Yeah, at least quasi-governmental. That's correct.

Okay. Obviously, how many of them are ex-U.S., outside the U.S.?

I'd say all of them are.

All of them are. How many do you have, do you think? Is it two? Is it four?

It's a small handful. I don't want to get too specific for some competitive reasons, but it's a small handful.

Okay. You said, obviously, you indicated that it would be some draw on the balance sheet or the working capital side because of the need to provide security for these deals. How much is that going to end up being? If you have a $10 million deal, how much do you have to put up from your side because you're basically going to, I assume, buy some form of bond on that.

That's correct. Yeah. We put that facility in place with HSBC recently so we can do it in that manner. We don't have to post cash collateral at that point. It varies based on the contract, but you were talking about a couple million dollars maybe.

Okay. If you have two, three, four of these, obviously, would we see that as an impact on cash, or would it not be an impact?

Should not be an impact on cash. Under this new facility, it should not be.

Yeah. Okay. In looking at this situation, it does seem a little odd in many ways. The Chinese have aggressively been mapping pretty much everything inside every island chain they can find off their shores. It would seem that the U.S. and our allies need to do the same. Hopefully this will get going. When you see this, have you built inventory at this stage? Is there inventory on the balance sheet for any of these potential deals?

To some degree, yes, not a great deal. We haven't been building a large system to spec with our components that we tend to stock. Some of these components are also part of our aftermarket business. Things we sell as spare parts, we also are parts of new builds. We can kind of pursue both at the same time. It's not as though we've built a large system that's sitting on the shelf, there is some lead time involved.

Okay. You expanded your facility, I think physically, certainly down in what, Texas? How is demand for that at this stage?

That is starting to ramp up. That we're starting to see improved results there, improved activity, we think that will continue to increase. We're pretty optimistic about that. It's not going to be $30 million a year, it can be meaningful for us.

Okay. With that, as you see that move forward, would that change right now the $5.5 million per quarter you're doing on kind of maintenance and repair? Should we expect to see that? I think of that as a base and this new additional capacity being on top of that. Is that a correct way to see that?

That's a good way to see that. That's exactly right. That should be fairly recurring and fairly predictable. That's why we're encouraged by that.

Okay. What we can see is in here is that as we push forward, even if you're not getting new orders, that you should see the maintenance and repair part of your business move forward and grow.

That's correct.

Okay. You talked a lot about the various and sundry options you have to scale up the company. What kind of financial hurdles, benchmarks are you having in place for making that decision? Is it something that needs to be additive to earnings, additive to free cash flow, EBITDA needs to have a 20%, 15%, whatever? You talked about having a discipline with it. Have you laid down metrics? If so, what are some of those metrics?

Yeah, I don't want to get too specific at this point, but anything we do, we want to be accretive, without a doubt. There's some non-financial metrics that we want to look at as well, which really involve risk around a transaction. We want to make sure it's something that we understand and can manage well. Just because we see something that, on a spreadsheet, has some great metrics, great returns, that doesn't mean there's not risk involved in that. That's the other aspect we're trying to evaluate in these various opportunities.

Okay. When you're looking, what do you feel MIND's core competency is? Therefore, when you're looking at these deals, how are you seeing the reach of them?

Sure. Obviously we have some specific project, products rather, sorry, that are some unique technology that we can add other things to. The ability to, in a very economic way, add additional products, additional capability is a strength of ours. We have ability to build things very effectively and very efficiently, through our facilities, both here in the U.S. and in Asia. I think that gives us an advantage in taking in other additional products that perhaps we can build more efficiently and therefore garner more margin.

I think that's two our core competencies, and we do have some unique technology that we think we can build from as well. I think those are the key aspects of us.

Okay. I would be remiss if I didn't note that you issued stock at $11, and currently your stock is selling basically at $5. At some point in there, it would strike me as it would be hard to ignore the fact that you have a chance to actually buy back some of what you issued to reduce the dilution and still leave a fair amount of cash on the balance sheet.

Yeah. That's true. As we've said before, we put that in place, to give this opportunity, and if we think that's the best use of our capital at a certain point in time, that's what we'll do. Obviously, I'm not going to predict or indicate what our intentions are. That is an option for us.

Okay. Just generally, when you're looking at going back to your potential order book, how many of these are kind of new prospects or new uses, and how many of them are, as Tyson was referring to, kind of repeat buyers?

I'm thinking through. They are a combination. I'm pausing because I'm thinking through the list. There certainly are some new customers in this list, as well as some repeat customers who are expanding capacity.

Okay. Well, obviously we're in a period of struggle, as Tyson noted, that your current working capital at about $4 a share puts very little value on the business. Hopefully we'll be able to get some of this stuff turned around in the near future and get some value reattached to it.

Yeah.

Okay. Thank you very much. Good luck.

Thanks, Ross.

Our next question comes from the line of Howard Root with Fairhope Capital. Please proceed with your question.

Good morning. Thanks for taking my call.

Good, Howard.

A quick question on the income taxes. The $476,000 seemed like a huge number. I understand it's international. Is that an aberration? Is there a way of getting that down? What's the cause of that?

Well, again, we are profitable overseas, in Singapore primarily. We pay taxes in Singapore. We have losses in the U.S. that we can't apply against that. Basically you have taxable income that's not sheltered by an untaxable losses, if you will. That's the reason for that. There are some things that we are doing to try to mitigate that. Fundamentally, as long as we're making money there and not making money here, we're going to see that sort of aberration. Now, one thing we are doing is trying to generate more income in the U.S. through our repair activities in our Texas facility.

That will help reduce the appearance of that, because we will start to generate taxable income in the U.S. which we'll be able to shelter from our existing loss carry-forwards.

Wow. Obviously, there's a lot of ways to shelter that. When it's a controlled subsidiary, you shouldn't be having that much income in a subsidiary when the parent isn't making that much. Is there any action to kind of minimize that? Because that is a huge number based on last quarter. Is that going to continue at that level?

There are limitations on what you can do, your transfer pricing rules between all the countries. There are some limitations as to how aggressive you can be. We look at on a continuous basis.

Do we figure that's a going number? If we do the same number in revenue next quarter, it's going to be the same amount of income taxes?

It's hard to predict because it depends exactly what revenue hits in a particular quarter. That could be a bit more, it could be a bit less. It can vary because you're kind of on the margin right now. A small change can have a big percentage impact.

Okay. On backlog in prior quarters, you gave us an update if there were any material contracts since the quarter end. Has there been any new material orders added to the backlog since April 30th?

Not material, or we would've said so. No.

Okay.

A lot of orders.

The stock.

Nothing large.

Right. Can you give us any update on the backlog at the end of May or in the end of last week from that $7.6 million level?

Yeah, I really don't want to get into that. Again, if we have a significant change in backlog, we'll announce that. Other than that.

Okay.

I don't want to get too specific.

The stock repurchase plan. Obviously, you haven't filed your 10-Q, I would request that you do that at the same time you do your press release going forward so we can get all the details to be able to ask these questions. I'm assuming that you have not purchased any shares under the stock repurchase plan to date?

That's correct.

My last question then, and kind of last question I got to this. The $40 million net tangible book value and really the working capital primarily from really well timing the ATM stock sale, $4.40 per share. That leaves only at today's price, basically $0.50 or $0.60 per share of residual value on the market value. Is the company looking at the opposite? Because you're talking about maximizing stockholder value as in you guys acquiring something else. Why isn't it maximizing shareholder value, either buying your stock or having someone buying this and giving us the value for this business rather than basically one quarter of price to sales ratio?

That's an option. That certainly is an option that we're looking at, and that's the reason we put the buyback program in place, so we'd have that option. Again, I don't want to telegraph what our intentions are or what we may or may not do because it's a function of other factors as well. That is certainly an option for us.

Finally, at what point in time in the future do we look at this isn't working, we need to do something different, more of an aggressive change? Is it end of this year?

I think we've got a long runway there. I think there's enough progress and enough opportunity. I think we've got a long way to go on that.

Okay. Well, thanks for taking the questions.

You bet.

This concludes our question-and-answer session. I would now like to turn the floor back over to Mr. Capps for closing comments.

Okay. Thanks everyone for joining us this morning. I look forward to talking to you again in a few weeks, few months, for our second quarter results. Thanks.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.