MIND TECHNOLOGY, INC Income Taxes Disclosure

11. Income Taxes

 

		Year Ended January 31,
		2026				2025
		(in thousands)
Income (loss) before income taxes is attributable to the following jurisdictions:
Domestic		$	(8,333	)		$	(6,049	)
Foreign			11,234				13,107
Total		$	2,901			$	7,058
The components of income tax expense (benefit) were as follows:
Current:
Domestic		$	—			$	2
Foreign			2,366				1,947
			2,366				1,949
Deferred:
Domestic			—				—
Foreign			(215	)			35
			(215	)			35
Income tax expense		$	2,151			$	1,984

 

The following is a reconciliation of expected to actual income tax expense:

 

		Amount				Percentage
Federal income tax at 21%		$	609				21	%
Nontaxable or nondeductible Items
Global intangible low tax income ("GILTI") inclusion			2,040				70.32	%
Excess tax deficiency for share-based payments under ASU 2016-09			624				21.51	%
Other reconciling items			(12	)			(0.41	%)
Changes in Valuation Allowance			(903	)			(31.13	%)
Foreign Tax Effects
Canada
Nondeductible Fines and Penalties			98				3.38	%
Other			(34	)			(1.17	%)
United Kingdom
Changes in Valuation Allowance			196				6.76	%
Deferred tax rate change			(180	)
Other			23				0.79	%
Singapore
Statutory tax rate difference between Singapore and U.S.			(428	)			(14.75	%)
Depreciation & Amortization			117				4.03	%
Statutory Adjustments			441				15.20	%
Other			(23	)			(0.79	%)
Malaysia
Changes in Valuation Allowance			(295	)			(10.17	%)
Statutory Adjustments			(164	)			(5.65	%)
Other			42				1.45	%
		$	2,151				74.15	%

 

		Year Ended
		January 31,
		2025
Federal income tax at 21%		$	1,482
Taxes created by return to provision adjustments to prior year temporary differences			110
Global intangible low tax income ("GILTI") inclusion			2,449
Permanent differences			61
Foreign effective tax rate differential			(429	)
Valuation allowance on deferred tax assets			(1,903	)
Excess tax deficiency for share-based payments under ASU 2016-09			149
Other			65
		$	1,984

 

The components of the Company’s deferred taxes consisted of the following:

 

		As of January 31,
		2026				2025
		(in thousands)
Deferred tax assets:
Net operating losses		$	24,820			$	24,613
Tax credit carry forwards			334				334
Stock option book expense			278				581
Allowance for credit losses			97				98
Inventory			438				475
Accruals not yet deductible for tax purposes			132				113
Fixed assets			12				63
Intangible assets			1				948
Disallowed interest expense			100				98
Other			1,243				945
Gross deferred tax assets			27,455				28,268
Valuation allowance			(27,153	)			(28,181	)
Deferred tax assets			302				87
Deferred tax liabilities:
Other			—				—
Deferred tax liabilities			—				—
Unrecognized tax benefits			—				—
Total deferred tax liabilities, net		$	—			$	—

 

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. This legislation introduces several measures, including the permanent extension of select provisions from the Tax Cuts and Jobs Act, revisions to the international tax framework, and the reinstatement of favorable tax treatment for certain business-related items. The OBBBA contains multiple effective dates, with key provisions beginning in fiscal 2026. While we are still assessing the overall impact of the OBBBA, we do not anticipate a material impact on our tax expense.

 

The Company has determined that, due to the potential requirement for additional investment and working capital to achieve its objectives, the undistributed earnings of foreign subsidiaries as of January 31, 2026, are not deemed indefinitely reinvested outside of the United States. However, determination of the amount of deferred taxes with respect to the undistributed foreign earnings is not practicable. Therefore, the Company has not recorded a deferred tax liability associated with the undistributed foreign earnings as of January 31, 2026.

 

Included in deferred tax assets is approximately $278,000 related to stock-based compensation, including non-qualified stock options. Recent market prices for the Company’s Common Stock remain below the exercise price of a number of options outstanding as of January 31, 2026. Should the market price of the Company’s Common Stock remain below the exercise price of the options, these stock options will expire without exercise. In accordance with the provisions of ASC 718-740-10, a valuation allowance has not been computed based on the decline in stock price.

 

As of January 31, 2026, the Company has recorded valuation allowances of approximately $27.2 million related to deferred tax assets. These deferred tax assets relate primarily to net operating loss carryforwards in the United States and other jurisdictions. These net operating loss carry forwards are subject to limitation and future expiration. The valuation allowances were determined based on management’s judgment as to the likelihood that the deferred tax assets would not be realized. The judgment was based on an evaluation of available evidence, both positive and negative.

 

On  January 31, 2026, the Company had tax credit carry forwards of approximately $334,000, which amounts can be carried forward through at least 2027.

 

As of January 31, 2026, and 2025 the Company had no unrecognized tax benefits attributable to uncertain tax positions.

 

The Company recognizes interest and penalties related to income tax matters as a component of income tax expense.

 

The Company files U.S. federal income tax returns as well as separate returns for its foreign subsidiaries within their local jurisdictions. The Company’s U.S. federal tax returns are subject to examination by the IRS for fiscal years ended January 31, 2022, through 2026. The Company’s tax returns may also be subject to examination by state and local revenue authorities for fiscal years ended January 31, 2021, through 2026. The Company’s Singapore income tax returns are subject to examination by the Singapore tax authorities for fiscal years ended January 31, 2018, through 2026. The Company’s tax returns in other foreign jurisdictions are generally subject to examination for the fiscal years ended January 31, 2019 through January 31, 2026.