Greetings. And welcome to MIND Technology’s Third Quarter 2021 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce, Mr. Ken Dennard. Thank you, you may begin.

Thank you, Operator, and good morning, everyone. And welcome to the MIND Technology fiscal 2021 third quarter conference call. We appreciate all of you joining us today. Your hosts are Rob Capps, Co-Chief Executive Officer and Chief Financial Officer; and Guy Malden, Co-Chief Executive Officer and Executive Vice President of Marine Systems. Before I turn the call over to management, I have the normal housekeeping details to run through. If you’d 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 a recorded instant replay will be available until December 11th. Information on how to access the replay features was provided in yesterday’s earnings release. Information reported on this call speaks only as of today, Friday, December 4, 2020, 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 its annual report on Form 10-K for the year ended January 31, 2020. 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. With that behind me now, I’d like to turn the call over to Guy Malden. Guy?

Thanks, Ken, and good morning, everyone. We would like to thank you for joining us today for our fiscal 2021 third quarter conference call. Conditions in the global marine industry remain challenging due to the lingering impacts of COVID-19 and the growing number of restrictions and regulations that have emerged as a result. However, we continue to make progress and build momentum in both our day-to-day operations as well as our longer-term strategic growth initiatives. With that in mind, let me begin by making some general comments about the third quarter. I will then take the opportunity to outline what we consider to be important market trends emerging in the marine industry, how they fit into our future growth plans and what we are doing to capitalize on them. Turning now to the third quarter. While COVID-19 negatively impacted our operations due to lingering uncertainty and travel restrictions, the quarter progressed a bit better than we had anticipated. As we mentioned during our second quarter call, our expectation had been that third quarter revenues would be roughly flat quarter. However, we managed to achieve nearly a 29% sequential improvement in revenues, despite the restrictive macroeconomic environment. As I stated in our previous call, we believe the pandemic and its consequences have weighed heavily on our customers and hampered their willingness to commit to expenditures. Despite that, there still is a healthy level of inquiry and bid activity in the marketplace. Now, we feel that now is an ideal time to highlight and review our approach to the global marine market since we have recently completed our comprehensive reincorporation and rebranding, and are also in the midst of exiting our legacy seismic land leasing business. With these actions either completed or in progress, it’s helpful to review our vision and outline our longer-term initiatives for the company, and how we plan to build on the momentum we have established to pursue our identified growth opportunities. So, let me start by outlining our target markets before I review the trends that we see developing in those markets and how we plan on leveraging our capabilities to take advantage of the opportunities that these trends provide. Now looking at the marine industry, based on our target markets, we provide our technology to three major segments. First, the exploration market, which includes marine seismic exploration and survey activities conducted to support decision making on engineering and renewable energy projects, as well as oil and gas and other mineral exploration. We estimate its serviceable market size, which is the portion of the market that we can serve with our current and planned products to be roughly $440 million per year. Second, the survey market, which is made up of search and recovery activities, as well as hydrographic and construction surveys is estimated to have an annual serviceable market size of about $150 million. And third, the defense market, which is made up of applications such as mine countermeasures and anti-submarine warfare and maritime security is estimated to have a serviceable market size of about $750 million per year. So all told, these three market segments yield a combined estimated serviceable market size of about $1.3 billion a year. Now given the size of the opportunities available to us, our goal over the next five years is to grow our annual revenue to $140 million, with EBITDA margins in excess of 20%. We anticipate that most of the growth will be driven organically with the help of our strategic initiatives, which I will address shortly. The remaining balance will be driven by strategic partnerships and acquisitions. Now within those three market segments there are certain developing market trends that represent significant growth opportunities for MIND. As we now see it, those trends include the following; first, the proliferation of unmanned or uncrewed marine vehicles, be they surface or underwater vehicles for the commercial and military markets. These are often referred to as unmanned surface vehicles or USVs and autonomous underwater vehicles or AUVs; second, growing customer demand for higher resolution sonar images; and third, the need for alternative technology solutions for anti-submarine warfare and maritime security to counter the growing maritime security concerns such as the rapid acquisition of conventional submarines in regions such as Southeast Asia. In order to address these trends and better exploit the opportunities, we have established certain strategic initiatives. For instance, to address the growing market need for uncrewed and/or unmanned vehicles, we have focused on providing sensor packages tailored specifically to these vehicles, enabling customers to obtain a more complete solution and easier integration into their platforms. Similarly, to address the growing customer need for greater resolution sonar imaging, we have recently partnered with a major European defense contractor in a mutually beneficial arrangement to produce Synthetic Aperture Sonar, a type of side scan sonar that can yield much higher resolution images. And finally, in the area of maritime security, we are applying existing commercially developed technology, such as our solid streamer product to provide more cost-effective practical solutions to this developing market. Furthermore, our substantial existing production capacity enables us to eliminate a significant barrier to entry and produce these items quickly and economically versus more traditional solutions. Now initiatives like these play a critical part in the development of our company as we look to expand and add new technology and applications to the marine market. We feel that they are in very natural progression from our existing sonar and seismic capabilities. It’s my hope that this discussion has enhanced your understanding of how we plan to leverage our core competencies and utilize existing technologies in new, unique and innovative solutions to expand into new markets. Let me now turn the call over to Rob, who will discuss our financial results in more detail and add some closing comments before turning the call over for Q&A.

Okay. Thanks, Guy. And I will begin by giving a more detailed review of the third quarter financial results. But first let me remind you that our legacy leased operations are classified as discontinued operations and our continuing operations are composed entirely of our Marine Technology Products. Revenues from our continuing operations totaled $6.5 million in this quarter, up nearly 29% sequentially from $5.1 million in the second quarter of fiscal 2021. You may recall that during the second quarter, we completed a $1.8 million SeaLink related order, but the customer was unable to take delivery at that time due to COVID related transportation issues. As we anticipated, this order was successfully completed during the third quarter. Third quarter gross profit from continuing operations was $2.3 million, up from $2 million in Q2. This represents a margin of 35%, which was down from the 40% achieved in the prior quarter. So the decrease in margins resulted from higher product testing and sustaining engineering activities during this period. Our general and administrative expenses were $3 million for the third quarter of fiscal 2021, which is essentially flat sequentially. Our research and development expense was $912,000, up 21% from the second quarter of this year. This increase was mostly due to activity related to our passive sonar array strategic initiative and included costs associated with the deployment of the test system. Our overall operating loss from continuing operations for the third quarter of this year was $2.3 million. This compared to an operating loss of $2.4 million in the sequential quarter of this year. Our third quarter adjusted EBITDA from continuing operations was a loss of $1.5 million, which was about flat with Q2 of this year. We are making progress on the sale of our land leasing business, despite the impact of COVID on that business. We sold assets totaling over $700,000 during the quarter. This process will continue through the balance of this year and likely in the first half of fiscal 2022. MIND’s capital structure and liquidity remains solid. At the end of the quarter, we had over $21 million of working capital that included cash and cash equivalents of over $2.6 million. With no funded debt other than two governmental assistance loans, our lean flexible cost structure and the pending sale of our land leasing business, we are well-positioned for the current environment and for an eventual recovery. Despite all the continuing COVID driven volatility in the market, we are still seeing healthy levels of customer interest. There has been an uptick in inquiries with clearer quotes and orders recently. The most recent example of this will be the recent orders for organic systems and upgrades to be delivered in Q4 and in the first quarter of next year. We believe that the increased interest that we have seen from numerous customers and our source control technology is indicative of improving activity within the seismic exploration market. Our firm order backlog now stands at $8.2 million at the end of this third quarter, up sequentially from $7.6 million at the end of the second quarter. Now although the effects of COVID on market fundamentals can wreak havoc on the timing and pace of our orders, we have nonetheless seen improvement in the global marine markets. As we have emphasized before, heightened logistical hurdles and uncertainty surrounding customer spending will continue to be a factor in our short-term visibility, but we currently expect fourth quarter results from our Marine Technology Products business to show improvement from third quarter levels and that this trend will continue into fiscal 2022. Our more hopeful outlook does not mean that we can now return to our normal operating procedure. We remain guarded and watchful of market conditions and should conditions take a turn for the worst, we stand ready to make further adjustments to our operations and cost structure, as our balance sheet affords us a good measure of flexibility towards raising additional capital should that need arise. Our focus on operational execution and implementation of our strategic initiatives will remain foremost in our minds. We look to build on our strengths and add innovative new technologies to our portfolio, while also harnessing and adapting proven technologies into novel new solutions that can economically address the needs of the global marine marketplace. Adhering to these principles will take us a long way towards the completion of our transformation and the ultimate realization of our long-term strategic goals. That concludes our formal comments, and at this time, we will be happy to open up the lines for your questions.

Thank you. Our first question is from Tyson Bauer with KC Capital. Please proceed.

Yeah. Good morning, gentlemen.

Hey, Tyson.

Good morning, Tyson.

In the third quarter, you made the comment that that somewhat beat your expectations going into the quarter. You knew the source controller was going to hit or you had a thought that was going to happen. What part of the Q3 results were you pleasantly surprised by that you achieved that you do not expect going into the quarter?

It’s mainly related to the exploration market, specifically seismic exploration, along with other source controller activities, repair activities, and spare parts. We are also seeing a general increase in activity in that area right now, which contributed to that.

Okay. So it has more to do with the outlook and the activity on bidding possible orders in the future. That was the unexpected pleasant surprise for you?

Yeah. That’s right. I mean there was no one single order that contributed to that; it is a number of smaller ones that kind of ended up coming together. So, again, just a general uptick in activity.

And the new order that you announced a couple of days ago…

Yeah.

… probably in the range of what we have seen in the past between that $1.5 million, $2 million range that would be added into that backlog you had at the end of October?

Yeah. Those are upgrades. The last few things are upgrade systems. So those can vary but they are typically north of $1 million.

Okay.

It can be a bit more. It can be a bit less. But that’s just to give you a sense of magnitude.

R&D was up due to testing. I am guessing that was more so with the military for some of those tests you are completing. Should we anticipate staying at that level or higher R&D spend as you try to get that new product launch with your partner in Europe and additional activities with that partnership?

We have a bit of a spike in the third quarter as we put out this test system for passing array. It was deployed on the East Coast in the ocean. So that contributed to some of that. Like R&D activity in general, it will start at the same general level we have seen recently. But there was a bit of a spike, I think.

Okay. So we will return back to kind of that $0.75 million range?

Yeah. Roughly, again, any given quarter you could see some activity pick that up, especially for that test systems and things like that.

Okay. And the cash flow statement, you have $1.6 million from PPP. So is that then officially been forgiven? You do not have to pay that back? And what additional foreign reimbursement did you get on payroll expenses and other initiatives by those countries?

Well, the PPP has been officially forgiven. Yeah. We have made application that’s going through the process. We anticipate most if not all to be forgiven. There’s a few hundred thousand from foreign programs, Singapore, U.K., things of that nature. I don’t have the exact number in front of me. But it’s a few hundred thousand.

Okay. So if…

Yeah. Not so much in the quarter. That was really earlier in the year.

Right. So if I go through those numbers, you had $2.7 million in asset sales, I want to call it, roughly about $2 million in reimbursements by various government activities, PPP and the other ones you just mentioned, and a $1.3 million inflow from common stock sale. That’s about $6 million bringing in the door to help up the balance sheet. That’s hard to replicate. Well, obviously, you have the asset sales that you still have to complete next year.

Right.

But at some point we are going to have to get the cash flow from operations to get those going. Are we really…

Yeah. Yeah. Yeah.

Okay. Go ahead.

Well, so, absolutely. I mean, of course, you look at the year-to-date numbers, of course, not quarterly numbers, so year-to-date numbers you are looking at.

Yeah.

But you are right. COVID has definitely slowed down our timetable to put us where we are comfortably on a cash flow positive quarter-after-quarter. But we see the path there most clearly. There is some uncertainty given the environment but we definitely see the path to it.

Okay. And what was related to those common stock proceeds?

We have an ATM we have put in place. We tested the market a bit to see what the market looked like on average and that wasn’t much, that’s what it was.

Okay. And was that done to just institutional or in the general market or was that specific to insiders?

No. It’s in general in the markets.

Okay. And you talked about asset sales being completed by the first half of next year. Should we see any activity there in this next quarter and the quarter we are currently in that would give you some cushion?

I think we will definitely some activity this quarter, mostly in fall.

Okay. What was the thought process behind putting out such large numbers in that five-year target, considering the challenges the company has faced in achieving those financial results or making progress? What was the trigger or tipping point that led to the confidence to announce a $1.3 billion addressable market that we can pursue or $140 million in five years with a 20% margin?

It doesn’t start all at once. We have been working towards this, Tyson. We rebranded and decided to exit the land business, and we started to see some of the strategic initiatives develop as mentioned by Guy. We felt that it was the right time to evaluate the market and share our potential with our shareholders. While we haven’t reached our goals yet, we see the market opportunities and a path to that level. These are significant new markets for us, leveraging existing technology in new applications. There isn’t just one factor; it’s a combination of things that are coming together through our strategic initiatives, including our partnership in Europe. That’s one aspect, but not the only one. The confidence we gained from applying our streamer technology into passive arrays is notable. We also see positive reception for our MA-X Technology and our gas turbine technology, which we believe will enhance the acceptance of our overall side scan sonar products, particularly in unmanned vehicles. All of these elements converged, leading us to conclude it was the right time to share this information.

And is it more of a stair-step effect in, let’s say, year one pending X contract. We could materially improve ourselves and our position and work off that base for a step two or is this more of a hockey stick where in year three or whatever or four, all of a sudden we will see an exponential type growth scenario?

Yeah. I mean that’s tough to predict, Tyson. And I think we see it is building gradually. But given the nature of some of these markets we are pursuing, you continue to get a bit of a stair step from time to time. But those are difficult to predict. So we are looking at more of a gradual increase but there certainly is opportunity for the big step.

Okay. Thank you, gentlemen.

Yeah. You bet.

Thanks, Tyson.

Our next question is from Ross Taylor with ARS. Please proceed.

Thank you. It’s always exhausting following Tyson. Can you give us a little bit more color on where you specifically see your technologies bringing advantages to the market versus current technologies and an example in towed array how old is the current technology and why do you see what you are doing being a significant improvement in that area?

Yeah. So, Ross, I think you have to think about this in context of some of the other developments in the marketplace, specifically the unmanned vehicles. That’s changing that marketplace and changing the applications. So that example, the towed streamer example, we are applying commercially developed technology to our sonar streamer, reconfiguring that to be applied in maritime security or ASW type applications. While we think we bring to the table is a robust economical solution that doesn’t cost multi-million dollars and having the production capacity to bring to market very quickly is a big advantage. So it’s a combination of taking what we already have making it into new application plus that the changes in the marketplace.

That technology that we are bringing from the streamer exploration side, the seismic exploration side is a newer technology than some of the traditional passive array technology that’s out there for a number of years, as Rob said, certainly, more economical and more robust. So there are some differences.

Okay. And with the unmanned vehicles, the Air Force is putting a lot of effort into what might be called the loyal wingman problem, the idea of working with drones, effectively force multiplying manned aircraft. The Navy is supposedly, I have been told, doing the same type of thing, looking at the ability to turn submarines into manned submarines into effectively almost controllers of armed and capable unmanned vehicles often smaller. Is some of the market you see tied into that type of program where the Navy would be able to? And the Chinese, as you mentioned, have a substantial submarine fleet. The U.S. is actually significantly under-peering and is falling behind even our prior expectations of what we needed it to be. It seems that there’s going to be a lot of energy and a lot of money put into this idea of underwater loyal wingman and is your technology involved in that?

Absolutely. Yes. That’s exactly what we are looking at.

And multiple products both sonar side and then the passive array side.

Okay. And with regard to your European partner, what markets outside the U.S. are you guys working on at this point in time or what markets do you see as offering significant opportunities. I know the Australians, for example, have been sinking a lot of money into anti-submarine warfare and submarine capabilities and the like. But where in the world do you see these opportunities coming up?

Well, I think, all over the world other than obvious places such as Korea, China, Iran, look, places like that. But I think there are opportunities in Europe, most definitely. There are other opportunities in the Pacific Rim, without a doubt.

Correct.

So it’s wide-ranging.

Okay.

And we don’t preclude the U.S. Navy as well.

Oh! Yeah. Yeah. Yeah.

Yeah. I wasn’t precluding it, I was just looking at it seems that there are a lot of opportunities elsewhere. So basically this could fall under U.S. technology. So therefore do you need U.S. approval to sell your technology?

Well, it is subject to certain export controls as our stuff is today. That’s definitely new for us. And which export controls…

Right.

It really depends on the product and its components. So, the short answer is yes, but that’s not new for us.

Right. Okay. Well, this is very exciting. It looks like we have been waiting for Gudope for some time. We might finally be getting off the beach. That’s pretty exciting. Thanks.

We are working hard.

I appreciate it. Thanks, guys.

You bet.

Thanks, Ross.

This does conclude the question-and-answer portion of the call. I would now like to turn the call back over to management for final comments.

Okay. Thank you, Operator. Thank you for joining us today. Taking your time to talk to us and we look forward to talking to you again at the end of our fourth quarter. Thanks very much.

Thank you. This does conclude today’s program. You may disconnect your lines at this time and thank you for your participation.