MIND Technology, Inc.

Greetings, and welcome to the MIND Technology second quarter fiscal 2024 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's now my pleasure to introduce your host, Ken Denard. You may begin.

Thank you, Operator. Good morning and welcome to the MIND Technology Fiscal 2024 Second Quarter Earnings Conference Call. We appreciate 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 for 90 days via webcast by going to the investor relations section of the company's website at mind-technology.com or via telephonic recorded instant replay until September 21st. Information on how to access these replay features was provided in yesterday's earnings release. Information on this call speaks only as of today, Thursday, September 14th, 2023, and therefore you are advised that time-sensitive information may no longer be accurate at 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 risk, 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 SEC filings, including its annual report on Form 10-K for the year ended January 31, 2023. As we start this call, please also refer to the statement regarding forward-looking statements incorporated in our news release issued yesterday. And please note that the contents of our conference call this morning are covered by these statements. And now with that behind me, I'd like to turn the call over to Rob Capps. Rob. Okay, thanks, Ken.

Now, as I believe you all know, in August we took a significant step with the sale of our client unit. Today, I'd like to begin by discussing that transaction and the rationale for it before discussing our second quarter 2024 results, as well as our current view of market conditions. Mark will then provide a more detailed update on our financials. I'll then wrap things up with some remarks about our outlook. With a strengthening outlook for our CMAP unit that we'll discuss further in a moment, we thought it was important to streamline Mines operations and address the financial requirements associated with that growing business. When the opportunity to sell client arose, we saw an opportunity to achieve both those objectives. Our client business unit was responsible for approximately $3.1 million in revenue during the first six months of this fiscal year, but contributed an operating loss of about $911,000. On a pro forma basis, had the sale taken place at the beginning of the year, mine would have reported a positive pre-tax income as opposed to the $1.2 million loss we reported. This further demonstrates the basis for our decision to part ways with the client business unit and focus our attention on other operations. As we've previously disclosed, consideration from the sale was $11.5 million in cash. We used a portion of these proceeds to repay the $3.75 million term loan from earlier this year. After transaction cost and the loan repayment, the net proceeds available to us amounted to about $7.3 million. An added benefit from the sale is the licensing arrangement and collaboration agreement with the buyer, General Oceans. This provides an important opportunity to realize value from our Spectral AI software suite, which Mind retains. Through this arrangement, we hope to realize recurring licensing revenue while continuing to enhance Spectral AI imported to applications beyond Sidescan's seminar. Our second quarter results came in roughly in line with our expectations. Revenues drop off a bit sequentially due to the scheduling of deliveries, but that was largely anticipated. This activity is not unusual, and I'll remind you that revenues often fluctuate in our business from time to time for a variety of reasons that are often out of our control. We continue to believe that MIND is exceptionally well-positioned to capitalize on the favorable market dynamics to achieve a sustainable top-line improvement long-term. As of July 31st, our backlog of firm orders from CMAP stood at $17 million. Subsequent to quarter end, we received additional orders totaling approximately 5.4 million. And we also have confidence that in coming weeks, we'll be in a position to announce additional sizable orders that we feel are imminent. These booked and pending orders involve a variety of products, including GunLink source controllers, BlueLink positioning systems, and C-Link stringer systems. We believe this continued positive backlog trend is indicative of the favorable market conditions and the differentiation of our CMAP product lines. We remain confident that this momentum will carry throughout the remainder of fiscal 2024 and beyond. We believe the current market environment is advantageous for MIND. Each of our three key markets, exploration, defense, and survey, are loaded with opportunity. With our operations now streamlined and focused, we are better positioned than ever before to deploy our product lines into a variety of end markets. and our team continues to develop new and innovative ways to adapt and implement our technologies to meet the needs of our customers. In addition to traditional energy-related opportunities, we're seeing new alternative applications for our CMAP technologies, including offshore wind farms and other green energy projects. There's also a growing opportunity for mine to provide seismic streamer repair services, not only for ceiling streamers, but also for products manufactured by others. Within the maritime defense and security market, we continue to believe that our sea serpent passive array system, which is derived from our commercially developed ceiling system, is a significant and economical solution for a variety of demanding applications within the space. We intend to continue leveraging the favorable macroeconomic trends, the differentiation and versatility of our product lines, and the sustained customer demand and interest that we're seeing to drive robust order activity and growth in our book of business in the near term. Now, I know many of you are interested in our plans regarding dividends on our preferred stock. While our liquidity position is much improved, we are continuing to evaluate the working capital requirements associated with our growing backlog of business. Accordingly, at this point, we have not made a decision regarding accrued or ongoing dividends. We will, of course, update you once any decisions are made. As many of you are aware, we held our annual shareholder meeting on August 30th. Included on the agenda was a proposal for the approval of a reverse stock split that would enable us to regain compliance with the NASDAQ listing standards. Our shareholders approved this proposal. This was an important and necessary first step, and NASDAQ has granted us until November 15 to regain compliance with the minimum bid price requirement. We're now going through the internal mechanics of implementing the reverse split, and we'll provide an update on the specific framework as things evolve. Now, I'll let Mark walk you through our second quarter financial results in a bit more detail before I come back.