GEOSPACE TECHNOLOGIES CORP

1. Summary of Significant Accounting Policies:

The Company

Geospace Technologies Corporation (“Geospace”) designs and manufactures instruments and equipment used by the oil and gas industry to acquire seismic data in order to locate, characterize and monitor hydrocarbon producing reservoirs. Geospace also designs and manufactures Adjacent Markets products including industrial products, imaging equipment, and provides contract manufacturing services, and Emerging Market products consisting of border and perimeter security products. Geospace and its subsidiaries are referred to collectively as the “Company”.

Basis of Presentation

The accompanying financial statements present the consolidated financial position, results of operations and cash flows of the Company in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). All significant intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company considers many factors in selecting appropriate operational and financial accounting policies and controls and in developing the estimates and assumptions that are used in the preparation of these financial statements. The Company continually evaluates its estimates, including those related to revenue recognition, credit loss, collectability of rental revenue, inventory obsolescence reserves, self-insurance reserves, product warranty reserves, useful lives of long-lived assets, impairment of long-lived assets, impairment of goodwill and other intangible assets and deferred income tax assets. The Company bases its estimates on historical experience and various other factors that are believed to be reasonable under the circumstances. While management believes current estimates are reasonable and appropriate, actual results* may*differ from these estimates under different conditions or assumptions.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original or remaining maturity at the time of purchase ofthree months or less to be cash equivalents. At* September 30, 2024*, cash and cash equivalents included $1.1 million held by the Company’s foreign subsidiaries and branch offices.

Concentrations of Risk

Credit

The Company maintains its cash in bank deposit accounts that, at times, exceed federally insured limits. Management of the Company believes that the financial strength of the financial institutions holding such deposits minimizes the credit risk of such deposits.

The Company sells products to customers throughout the United States and various foreign countries. The Company’s normal credit terms for trade receivables are 30 days. In certain situations, credit terms* maybe extended to 60 days or longer. The Company performs ongoing credit evaluations of its customers and generally doesnot* require collateral for its trade receivables. Additionally, the Company provides long-term financing in the form of promissory notes and sales-type leases when competitive conditions require such financing. In such cases, the Company* mayrequire collateral. Allowances are recognized for immediately for expected credit losses. The Company determines the allowance for credit losses through a review of several factors, including historical collection experience, customer credit worthiness, current aging of customer accounts and current financial conditions of its customers. Receivables are charged off against the allowance whenever it is probable that the balance willnot* be recoverable.

Two customers each comprised 27.4% and 16.0% of the Company’s revenue during fiscal year2024. At* September 30, 2024*, the Company had trade accounts and notes receivable from these customers of $4.1 million and $9.5 million, respectively. Two customers each comprised 26.7% and 11.7% of the Company’s revenue during fiscal year2023. At* September 30, 2023*, the Company had trade accounts and notes receivable from these customers of $3.5 million and $4.8 million, respectively.

F-9

Supplier

Certain models of the Company’s oil and gas marine wireless products require a timing device it purchases from a United States of America manufacturer. The Company currently doesnot possess the ability to manufacture this component and hasno other reliable source for this device. If this manufacturer were to discontinue its production of this timing device, were to become unwilling to contract with the Company on competitive terms or were unable to supply the component in sufficient quantities to meet its requirements, the Company’s ability to compete in the marine wireless marketplace could be impaired, which could adversely affect its financial performance. The device is used in certain models of the Company’s rental equipment. The Company hadno product sales in fiscal year2024 requiring this device. Product sales requiring this device in fiscal year2023 represented approximately 4% of the Company's revenue.

The Company purchases all of its thermal film fromone manufacturer for its imaging products. Except for the film sold to the Company by this manufacturer, the Company knows ofno other source for thermal film that performs as well in its imaging equipment. If the manufacturer were to discontinue producing thermal film, were to become unwilling to contract with the Company on competitive terms or were unable to supply thermal film in sufficient quantities to meet its requirements, the Company’s ability to compete in the direct thermal imaging marketplace could be impaired, which could adversely affect its financial performance. Thermal film sales represented approximately 5% of the Company’s revenue in each of fiscal years2024 and2023.

In* June 2016,the Financial Accounting Standards Board (the “FASB”) issued guidance surrounding credit losses for financial instruments that replaces the incurred loss impairment methodology in generally accepted accounting principles. The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other financial instruments. For available-for-sale debt securities with unrealized losses, credit losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The Company adopted this standard on October 1, 2023.The adoption of this standard didnot* have any material impact on its consolidated financial statements.

Short-term Investments

The Company classifies its short-term investments as available-for-sale debt securities which have maturities of less thanone year. These securities are carried at fair market value with net unrealized gains and losses reported as a component of accumulated other comprehensive loss in stockholders’ equity. Credit losses are recorded as an allowance rather than a reduction of the amortized cost basis for debt securities determined to be impaired for which there is neither an intent nor a more-likely-than-not requirement to sell. Reversals of credit losses are recorded in current period income as they occur.

Inventories

The Company records a write-down of its inventories when the cost basis of any manufactured product, including any estimated future costs to complete the manufacturing process, exceeds its net realizable value. Inventories are stated at the lower of cost or net realizable value. Cost is determined on thefirst-in,first-out method, except that certain of the Company’s foreign subsidiaries use an average cost method to value their inventories.

The Company periodically reviews the composition of its inventories to determine if market demand, product modifications, technology changes, excessive quantities on-hand and other factors hinder our ability to recover its investment in such inventories. The Company’s assessment is based upon historical product demand, estimated future product demand and various other judgments and estimates. Inventory obsolescence reserves are recorded when such assessments reveal that portions or components of the Company’s inventory investment willnot be realized in its operating activities.

The Company reviews it inventories for classification purposes. The value of inventoriesnot expected to be realized in cash, sold or consumed during its next operating cycle are classified as non-current assets.

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Property, Plant and Equipment and Rental Equipment

Property, plant and equipment and rental equipment are stated at cost. Depreciation expense is calculated using the straight-line method over the following estimated useful lives:

Expenditures for renewals and betterments are capitalized. Repairs and maintenance expenditures are charged to expense as incurred. The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts and any gain or loss thereon is reflected in the statements of operations.

Impairment of Long-lived Assets

The Company’s long-lived assets are reviewed for impairment whenever an event or change in circumstances indicates the carrying amount of an asset or group of assets* may**not* be recoverable. The impairment review, if necessary, includes a comparison of expected future cash flows (undiscounted and without interest charges) to be generated by an asset group with the associated carrying value of the related assets. If the carrying value of the asset group exceeds the expected future cash flows, an impairment loss is recognized to the extent that the carrying value of the asset group exceeds its fair value.

At* September 30, 2024*, in light of the Company's historical losses and continued delays in obtaining additional contracts from the U.S. Customs and Border Protection and other customers on its Emerging Markets segment, the Company performed a recoverability assessment on the long-lived assets of its Emerging Markets asset group in which its carrying value was compared to estimated undiscounted cash flows over the remaining useful life of the asset group's primary asset, its developed technology. The carrying value of the asset group was in excess of the estimated undiscounted future cash flows. Accordingly, a fair value analysis was performed. Based on the assessment, the Company determined the fair value of the asset was less than its carrying value. The Company used an excess earnings approach to value the asset. Key assumptions used in the analysis include revenue, gross margin and cash flow projections. As a result of the assessment, the Company recorded an impairment charge of $2.8 million on this asset group, which impaired its developed technology intangible asset in its entirety.

Goodwill

The Company conducts its evaluation of goodwill at the reporting unit level on an annual basis as of* September 30and more frequently if events or circumstances indicate that the carrying value of a reporting unit exceeds its fair value. The Companyfirst* assesses qualitative factors to determine if the fair value of a reporting unit exceeds its carrying amount. If, based on the qualitative assessment of events or circumstances, the Company determines it is more likely thannot that the fair value of a reporting unit is more than its carrying amount then it doesnot perform a quantitative assessment. However, if the Company concludes otherwise, then a it performs a quantitative assessment. If, based on the quantitative assessment, the Company determines that the fair value of a reporting unit is less that its carrying amount, a goodwill impairment is recognized equal to the difference between the carrying amount of the reporting unit and its fair value,not to exceed the carrying amount of the goodwill.

F-11

Other Intangible Assets

Intangible assets are carried at cost, net of accumulated amortization. The estimated useful life of the Company’s other intangible assets are evaluated each reporting period to determine whether events or circumstances warrant a revision to the remaining amortization period. If the estimate of an intangible asset’s remaining useful life is changed, the amortization period should be changed prospectively. Amortization expense is calculated using the straight-line method over the following estimated useful lives:

Revenue Recognition

See Note2 to these consolidated financial statements.

Research and Development Costs

The Company expenses research and development costs as incurred. Research and development costs include salaries, employee benefit costs, department supplies, direct project costs and other related costs.

Product Warranties

Most of the Company’s products donot require installation assistance or sophisticated instructions. The Company offers a standard product warranty obligating it to repair or replace equipment with manufacturing defects. The Company maintains a reserve for future warranty costs based on historical experience or, in the absence of historical product experience, management’s estimates. Reserves for future warranty costs are included within other current liabilities on the consolidated balance sheets.

Changes in the product warranty reserve are reflected in the following table (in thousands):

Stock-Based Compensation

The Company accounts for stock-based compensation, including grants of restricted awards and unqualified stock options in accordance with Accounting Standards Codification Topic718, which requires that all share-based payments (to the extent that they are compensatory) be recognized as an expense in the Company’s consolidated statements of operations based on their fair values on the award date and the estimated number of shares it ultimately expects to vest.

The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award. The Company’s stock-based compensation plan and awards are more fully described in Note15 to these consolidated financial statements.

F-12

Foreign Currency Gains and Losses

The assets and liabilities of the Company’s foreign subsidiaries and branch offices that have a foreign currency as their functional currency have been translated into U.S. dollars using the exchange rates in effect at the balance sheet date. Results of operations have been translated using the average exchange rates during the year. Resulting translation adjustments have been recorded as a component of accumulated other comprehensive loss in stockholders’ equity. Foreign currency transaction gains and losses are included in the statements of operations as they occur. Transaction gains and losses on intra-entity foreign currency transactions and balances, including advances and demand notes payable on which settlement isnot planned or anticipated in the foreseeable future, are recorded in “accumulated other comprehensive loss” on our consolidated balance sheets.

Fair Value

Fair value is the price that would be received to sell an asset or the amount paid to transfer a liability in an orderly transaction between market participants (an exit price) at the measurement date. U.S. GAAP has established a fair value hierarchy which prioritizes the inputs to the valuation techniques used to measure fair value intothree levels. These levels are determined based on the lowest level input that is significant to the fair value measurement. Level1 represents unadjusted quoted prices in active markets for identical assets and liabilities. Level2 represents quoted prices for similar assets and liabilities in active markets (other than those included in Level1) which are observable, either directly or indirectly. Level3 represents valuations derived from valuation techniques in whichone or more significant inputs or significant value drivers are unobservable. Also see Note5 to these consolidated financial statements.

Income Taxes

Income taxes are presented in accordance with the Accounting Standards Codification Topic740 (“Topic740”) guidance for accounting for income taxes. The estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, as well as operating loss and tax credit carrybacks and carryforwards are recorded. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities (temporary differences) and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company periodically reviews the recoverability of tax assets recorded on the balance sheet and provides valuation allowances if it is more likely thannot that such assets willnot be realized.

The Company follows the guidance of Topic740 to analyze all tax positions that are less than certain. Topic740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In accordance with Topic740, the Company recognizes in its financial statements the impact of a tax position if that position is “more likely thannot” to be sustained on audit, based on the technical merits of the position. The Company’s estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts, and circumstances existing at that time. The Company classifies interest and penalties associated with the payment of income taxes, if any, in the Other Income (Expense) section of its consolidated statements of operations.

Recently Adopted Accounting Pronouncements

In* June 2016,the Financial Accounting Standards Board (the “FASB”) issued guidance surrounding credit losses for financial instruments that replaces the incurred loss impairment methodology in generally accepted accounting principles. The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other financial instruments. For available-for-sale debt securities with unrealized losses, credit losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The Company adopted this standard on October 1, 2023.The adoption of this standard didnot* have any material impact on its consolidated financial statements.

Recently Issued Accounting Pronouncements

In* November 2023,the FASB issued guidance which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023,and for interim periods within fiscal years beginning after December 15, 2024.*Early adoption is permitted. The guidance shall be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the provisions of this guidance and the impact on its consolidated financial statements.

In* December 2023,the FASB issued guidance regarding improvements in income tax disclosure which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The guidance will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. The Company will adopt this guidance in itsfourth* quarter of fiscal year2026. The guidance allows for adoption using either a prospective or retrospective transition method. The adoption of this guidance isnot expected to have any material impact on its consolidation financial statements.

F-13

2. Revenue Recognition

In accordance with ASC Topic606, Revenue from Contracts with Customers (“ASC606”), the Company recognizes revenue when performance of contractual obligations are satisfied, generally when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services.

The Company primarily derives product revenue from the sale of its manufactured products. Revenue from these product sales, including the sale of used rental equipment, is recognized when obligations under the terms of a contract are satisfied, control is transferred and collectability of the sales price is probable. The Company records deferred revenue when customer funds are received prior to shipment or delivery or performance hasnot yet occurred. The Company assesses collectability during the contract assessment phase. In situations where collectability of the sales price isnot probable, the Company recognizes revenue when it determines that collectability is probable or when non-refundable cash is received from its customers and there isnot a significant right of return. Transfer of control generally occurs with shipment or delivery, depending on the terms of the underlying contract. The Company’s products are generally sold without any customer acceptance provisions, and the Company’s standard terms of sale donot allow customers to return products for credit.

Revenue from engineering services is recognized as services are rendered over the duration of a project, or as billed on a per hour basis. Field service revenue is recognized when services are rendered and is generally priced on a per day rate.

The Company also generates revenue from short-term rentals under operating leases of its manufactured products. Rental revenue is recognized as earned over the rental period if collectability of the rent is reasonably assured. Rentals of the Company’s equipment generally range from daily rentals to minimum rental periods of up toone year. The Company has determined that ASC606 doesnot apply to rental contracts, which are within the scope of ASC Topic842, Leases.

As permissible under ASC606, sales taxes and transaction-based taxes are excluded from revenue. The Company doesnot disclose the value of unsatisfied performance obligations for contracts with an original expected duration ofone year or less. Additionally, the Company expenses costs incurred to obtain contracts when incurred because the amortization period would have beenone year or less. These costs are recorded in selling, general and administrative expenses.

The Company has elected to treat shipping and handling activities in a sales transaction after the customer obtains control of the goods as a fulfillment cost andnot as a promised service. Accordingly, fulfillment costs related to the shipping and handling of goods are accrued at the time of shipment. Amounts billed to a customer in a sales transaction related to reimbursable shipping and handling costs are included in revenue, and the associated costs incurred by the Company for reimbursable shipping and handling expenses are reported in cost of revenue. The Company incurred shipping and handling expenses of $0.3 million and $0.5 million, respectively, for the fiscal years ended* September 30, 2024and2023*, respectively.

At* September 30, 2024*, the Company hadno deferred contract liabilities andno deferred contract costs. At* September 30, 2023,the Company had deferred contract liabilities of $0.7 million andno deferred contract cost. At October 1, 2022,the Company hadno deferred contract liabilities andno deferred contract costs. At October 1, 2022,the Company had accounts receivable from contracts with customers of $13.2 million. For the fiscal year ended September 30, 2024*, revenue of $0.7 million was recognized from deferred contract liabilities. For the fiscal year ended* September 30, 2023*, no revenue was recognized from deferred contract liabilities andno cost of revenue was recognized from deferred contract costs. At* September 30, 2024*, all contracts had an original duration ofone year or less.

For the fiscal years ended* September 30, 2024and2023*, revenue recognized from contracts with customers satisfied over-time was $1.3 million and $0.2 million, respectively. All other revenue from contracts with customers was recognized at a point-in-time. Revenue satisfied over-time for the fiscal years ended* September 30, 2024and2023* over-time was from the Company's Emerging Markets operating segment.

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For each of the Company’s operating segments, the following table presents revenue only from the sale of products and the performance of services under contracts with customers (in thousands). Therefore, the table excludes all revenue earned from rental contracts.

See Note20 for more information on the Company’s operating segments.

For each of the geographic areas where the Company operates, the following table presents revenue from the sale of products and performance of services under contracts with customers (in thousands). Therefore, the table excludes all revenue earned from rental contracts.

Revenue is attributable to countries based on the ultimate destination of the product sold, if known. If the ultimate destination isnot known, revenue is attributable to countries based on the geographic location of the initial shipment.

F-15

3. Sale of Subsidiary

On* August 30, 2024,the Company sold its oil and gas product manufacturing operations based in the Russian Federation. The sale was consummated pursuant to a stock purchase agreement between the Company and a group of former employees based in the Russian Federation ("the Buyer"). Consideration to the Company consists of a $1.0 million cash payment due from the buyer within90* days of the sale and a $3.5 million promissory note. The note is for a 10-year term and bears interest at 5% per annum. Principal and interest installments of $37,000 are due monthly. The Company recorded a loss on sale in connection with the transaction of $14.5 million, of which $13.1 million was related to the impact of cumulative foreign currency translation losses previously included in accumulated comprehensive loss. Based on a fair value analysis performed on the promissory note as of the sale date, the Company recorded a $0.9 million discount to fair value on the note receivable. The note receivable is included as components of current and non-current trade accounts and notes receivable, net, on the consolidated balance sheet as of* September 30, 2024.The sale didnot* have a material effect on the Company's consolidated net assets and isnot expected to have a material effect on the Company's future revenue, profits or losses. Also see Note5.

The Company has determined that the Buyer's legal entity is a variable interest entity ("VIE") due to the nature of the financing for the transaction. A VIE is an entity in which equity investors lack the characteristics of a controlling financial interest or donot have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. VIEs are consolidated by the primary beneficiary, which is the party who has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and who has an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. The Company determines whether it is the primary beneficiary of a VIE upon initial involvement with a VIE and reassesses whether it is the primary beneficiary of a VIE on an ongoing basis. The determination of whether an entity is a VIE and whether it is primary beneficiary of a VIE is based upon the facts and circumstances for the VIE and requires significant judgments such as whether the entity's interest in a VIE is a variable interest, whether it controls the activities that most significantly impact the economic performance of the VIE, and whether it has the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the VIE. A VIE is consolidated if management determines it is the primary beneficiary of the VIE.

While the debt represents a direct obligation to absorb significant losses of the VIE, the debt doesnot establish the right and power to direct activities that most significantly impact the economic performance of the entity. The Company retainedno equity or voting interest, hasno employees that are directors or advisors of the new ownership group, and hasno direct influence on the day-to-day decisions in operations or affect the VIE's ability to generate profits or losses. As such, the Company has determined it isnot the primary beneficiary of the VIE. The Company's maximum exposure to loss at* September 30, 2024*due to its involvement with the VIE is the carrying value of our account and note receivable from the sale of our former subsidiary, which is $3.6 million.

4. Short-term Investments

The Company classifies its short-term investments as available-for-sale debt securities. These securities are carried at fair market value with net unrealized gains and losses reported as a component of accumulated other comprehensive loss in stockholders’ equity. The Company’s short-term investments were composed of the following (in thousands):

At* September 30, 2024and2023*, accrued interest receivable related to these investments of $0.3 million and $0.1 million, respectively, are included as a component of prepaid expenses and other current assets.

The Company hasno debt securities in a material unrealized loss position at* September 30, 2024and2023* and doesnot believe the unrealized losses associated with these debt securities represent credit losses based on the evaluation of evidence, which includes an assessment of whether it is more likely thannot it will be required to sell or intend to sell the investment before recovery of the investments amortized cost basis. No gains or losses were realized from the sale of short-term investments for the fiscal years ended* September 30, 2024and2023*.

The Company’s short-term investments have contractual maturities ranging from* October 2024to September 2025.*

F-16

5. Fair Value of Financial Instruments

The Company’s financial instruments generally include cash and cash equivalents, short-term investments, trade accounts, notes receivable and accounts payable. Due to the short-term maturities of cash and cash equivalents, trade accounts and notes receivable and accounts payable, the carrying amounts approximate fair value on the respective balance sheet dates.

The Company measures its short-term investments at fair value on a recurring basis.

The following tables present the fair value of the Company’s short-term investments and note receivable on sale of subsidiary by valuation hierarchy and input (in thousands):

Assets and Liabilities Measured on a Nonrecurring Basis

The Company performed a fair value analysis of the $3.5 million promissory note obtained in connection with its subsidiary sale as of the* August 2024transaction date. The measurements utilized to determine the implied fair value of the note receivable obtained represented significant unobservable inputs (Level3*). The derivation of discount rate utilized in the analysis was based on comparable market yields. Based on the analysis, the Company recorded a $0.9 million discount to fair value on this note receivable. Also see Note3 to these consolidated financial statements.

The measurements utilized to determine the implied fair value of the Company's Emerging Markets asset group as of* September 30, 2024* represented significant unobservable inputs (Level3). The Company determined the fair value of this asset group to be approximately zero. See Note11 for more information.

F-17

6. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consisted of the following (in thousands):

7. Trade Accounts and Notes Receivable

Trade accounts receivable, net (excluding notes receivable) are reflected in the following table (in thousands):

Allowances for credit losses related to trade accounts receivable are reflected in the following table (in thousands):

Trade accounts receivable at* September 30, 2024*, included $1.5 million classified as non-current, which is due in* December 2025.Trade accounts receivable balances are charged off against the allowance whenever it is probable that the receivable balance willnot* be recoverable.

Notes receivable are reflected in the following table (in thousands):

F-18

In* August 2024,the Company entered into a $9.4 million promissory note with a customer related to a product sale. The note bears interest at 9.5% per annum and matures in December 2025.Principal and interest installments of $0.9 million are due monthly beginning in January 2025.*The note is collateralized by the product sold.

In* August 2024,the Company entered into a $3.5 million promissory note with the buyer of its Russian subsidiary. The note is bears interest at 5% per annum and is for a 10-year term. Principal and interest installments of $37,000 are due monthly beginning in November 2024.*Based on a fair value analysis performed at the date of sale, a discount to fair value of $0.9 million was placed on the note. Interest income on the amortization of the discount will recognized under the effective interest method.

Credit quality indicators used for the non-current portion of trade accounts and notes receivable consisted of historical collection experience, internal credit risk grades and collateral. The Company determines the allowance for credit losses through a review of several factors, including historical collection experience, customer credit worthiness, current aging of customer accounts and current financial conditions of its customers.

8. Inventories

Inventories consisted of the following (in thousands):

Inventory obsolescence expense totaled $0.6 million and $2.2 million during fiscal years2024 and2023, respectively. Raw materials include semi-finished goods and component parts that totaled approximately $8.6 million and $10.6 million at* September 30, 2024and2023*, respectively.

9. Leases

As Lessee

The Company has electednot to record operating right-of-use assets or operating lease liabilities on its consolidated balance sheet for leases having a minimum term of12 months or less. Such leases are expensed on a straight-line basis over the lease term. Variable lease payments are excluded from the measurement of operating right-of-use assets and operating liabilities and recognized in the period in which the obligation for those payments is incurred. As of* September 30, 2024*, the Company hastwo operating right-of use assets related to leased facilities in Austin, Texas and Melbourne, Florida.

F-19

Maturities of the operating lease liabilities as of* September 30, 2024* were as follows (in thousands):

Lease costs recognized in the consolidated statements of operations for the fiscal years ended* September 30, 2024and2023* is as follows (in thousands):

Right-of-use operating lease costs and short-term lease costs are included as a component of total operating expenses.

Other information related to operating leases is as follows (in thousands):

The discount rate used on the operating right-of-use assets represented the Company’s incremental borrowing rate at lease inception.

As Lessor

Equipment

The Company leases equipment to customers which generally range from daily rentals to minimum rental periods of up toone year. All of the Company's current leasing arrangements, with the Company acting as lessor, are classified as operating leases. The majority of the Company’s rental revenue is generated from its marine-based wireless seismic data acquisition system.

The Company regularly evaluates the collectability of its lease receivables on a lease-by-lease basis. The evaluation primarily consists of reviewing past due account balances and other factors such as the credit quality of the customer, historical trends of the customer and current economic conditions. The Company suspends revenue recognition when the collectability of amounts due areno longer probable and concurrently records a direct write-off of the lease receivable to rental revenue to limit rental revenue recognized to the cash collections received. As of* September 30, 2024*, the Company’s trade accounts receivables included lease receivables of $1.0 million.

F-20

Rental revenue related toleased equipment for fiscal years2024 and2023 was $19.3 million and $51.0 million, respectively.

Future minimum lease obligations due from the Company's leasing customers as of* September 30, 2024* were $15.2 million, the majority of which is due within the next12 months.

Rental equipment consisted of the following (in thousands):

Rental equipment depreciation expense was $10.8 million and $11.8 million in fiscal years2024 and2023, respectively.

Property

During thefirst quarter of fiscal year2022, the Company leased a portion of its property located in Calgary, Alberta, Canada and fully leased its warehouse in Bogotá, Colombia. The lease in Canada commenced in* November 2021and is for afive-year term. The lease on the warehouse in Bogotá commenced in December 2021*and is currently on a month-to-month basis.

Rental revenue related to thesetwo properties was $0.3 million and $0.2 million in fiscal years2024 and2023, respectively.

Future minimum lease payments due to the Company as of* September 30, 2024* were as follows (in thousands):

10. Property, Plant and Equipment

At* September 30, 2024*, the Company’s property located adjacent to its main campus at7007 Pinemont Drive in Houston, Texas was classified as assets held for sale on the consolidated balance sheet. The 17.3-acre property serves as additional parking for the main campus and contains legacy structures used to support the Company's manufacturing and warehousing operations. The carrying value of the property was $1.8 million at* September 30, 2024*. The Company believes the fair market value of the property exceeds its carrying value.

In* February 2023,the Company sold its satellite property located at6410* Langfield Road in Houston, Texas for a cash price of $3.7 million, net of closing costs of $0.3 million, and realized a gain on disposal of $1.3 million. The satellite property provided additional warehousing and maintenance and repair capacity for the Company’s marine rental equipment operations. The Company has relocated the operations of this facility to its main campus at7007 Pinemont Drive in Houston, Texas.

Property, plant and equipment consisted of the following (in thousands):

Property, plant and equipment depreciation expense was $3.5 million and $3.7 million for the fiscal years ended* September 30, 2024and2023*.

F-21

11. Goodwill and Other Intangible Assets

At* September 30, 2024*, the Company had goodwill of $0.7 million and other intangible assets, net of $0.5 million attributable to its Adjacent Markets reporting unit and other intangible assets, net of $1.2 million attributable to its Oil and Gas Markets reporting unit. Goodwill represents the excess cost of a business acquired over the fair market value of identifiable net assets at the date of acquisition.

At* September 30, 2024*, in light of the Company's historical losses and continued delays in obtaining additional contracts from the U.S. Customs and Border Protection and other customers on its Emerging Markets segment, the Company performed a recoverability assessment on the long-lived assets of its Emerging Markets asset group in which its carrying value was compared to estimated undiscounted cash flows over the remaining useful life of the asset group's primary asset, its developed technology. Accordingly, a fair value analysis was performed. Based on the assessment, the Company determined the fair value of the asset was less than its carrying value. The Company used an excess earnings approach to value the asset. Key assumptions used in the analysis include revenue, gross margin and cash flow projections. As a result of the assessment, the Company recorded an impairment charge of $2.8 million on this asset group, which impaired its intangible assets in their entirety.

Also see Note1 to these consolidated financial statements.

The Company’s consolidated goodwill and other intangible assets consisted of the following (in thousands):

Other intangible assets amortization expense for fiscal years2024 and2023 was $0.4 million and $0.8 million, respectively.

F-22

As of* September 30, 2024*, fiscal year future estimated amortization expense of other intangible assets is as follows (in thousands):

12. Long-Term Debt

The Company hadno long-term debt outstanding at* September 30, 2024* or2023.

On* July 26, 2023,the Company entered into a credit agreement (“the Agreement”) with Woodforest National Bank, as sole lender. The Agreement refinanced the Company's credit agreement dated May 6, 2022,with Amerisource Funding, Inc., as administrative agent and as a lender, and Woodforest National Bank, as a lender. The Agreement provides a revolving credit facility with a maximum availability of $15 million. Availability under the Agreement is determined based upon a borrowing base comprised of certain of the Company’s domestic assets which include (i)80% of eligible accounts, plus (ii)90% of eligible foreign insured accounts, plus (iii)25% of eligible inventory plus (iv)50% of the orderly liquidation value of eligible equipment, in each case subject to certain limitations and adjustments. Interest shall accrue on outstanding borrowings at a rate equal to Term SOFR (Secured Overnight Financing Rate) plus a margin equal to 3.25% per annum. The Company is required to make monthly interest payments on borrowed funds. The Agreement is secured by substantially all the Company's assets, except for certain excluded property. The Agreement requires the Company to maintain a minimum (i) consolidated tangible net worth of $100 million, (ii) liquidity of $5 million, and (iii) current rationo* less than 2.00 to1.00, in each case tested quarterly. The Agreement also requires the Company to maintain a springing minimum interest coverage ratio of 1.50 to1.00, tested quarterly whenever there is an outstanding balance. The Agreement expires in* July 2025.At September 30, 2024*, the Company's borrowing availability under the Agreement was $14.9 million after consideration of a $0.1 million outstanding letter of credit. At* September 30, 2024*, the Company was in compliance with all covenants under the Agreement.

Debt issuance costs of $0.4 million were incurred in connection with the Agreement in fiscal year2023. These costs were capitalized in other non-current assets on the consolidated balance sheet and are being amortized to interest expense over the term of the Agreement.

13. Other Current Liabilities

Other current liabilities consisted of the following (in thousands):

The Company is self-insured for certain losses related to employee medical claims. The Company has purchased stop-loss coverage for individual claims in excess of $0.2 million per claimant per year in order to limit its exposure to any significant levels of employee medical claims. Self-insured losses are accrued based on the Company’s historical experience and on estimates of aggregate liability for uninsured claims incurred using certain actuarial assumptions followed in the insurance industry.

14. Employee Benefits

The Company’s United States employees are participants in the Geospace Technologies Corporation’s Employee’s401(k) Retirement Plan (the “Plan”), which covers substantially all eligible employees in the United States. The Plan is a qualified salary reduction plan in which all eligible participants* mayelect to have a percentage of their compensation contributed to the Plan, subject to certain guidelines issued by the Internal Revenue Service. The Company’s share of discretionary matching contributions was $1.1 million and $1.3 million in fiscal years2024* and2023, respectively.

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The Company’s stock incentive plans in which key employees* mayparticipate are discussed in Note15* to these consolidated financial statements.

15. Stockholders’** Equity**

In* February 2014,the board of directors and stockholders approved the2014* Long Term Incentive Plan, as amended (the*“2014* Plan”). Under the2014 Plan, an aggregate of 3,000,000 shares of common stock* maybe issued. The Company is authorized to issue nonqualified and incentive stock options to purchase common stock, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) to key employees, directors and consultants under the2014* Plan. Options have a termnot to exceedten years, with the exception of incentive stock options granted to employees owningten percent or more of the outstanding shares of common stock, which have a termnot to exceed five years. The exercise price of any option* maynot* be less than the fair market value of the common stock on the date of grant. In the case of incentive stock options granted to an employee owningten percent or more of the outstanding shares of common stock, the exercise price of such option* maynot* be less than 110% of the fair market value of the common stock on the date of grant. An RSU represents a contingent right to receiveone share of the common stock upon vesting. Under the2014 Plan, the Company* mayissue RSAs and RSUs to employees forno* payment by the employee or for a payment below the fair market value on the date of grant. The RSAs and RSUs are subject to certain restrictions described in the2014 Plan.

At* September 30, 2024*, an aggregate of 827,088 shares of common stock were available for issuance under the2014 Plan.

The following table summarizes the combined activity under the equity incentive plans for the indicated periods:

During fiscal years2024 and2023, the Company issued 233,200 and 228,250 RSUs, respectively, to certain of its employees, executive officers and directors under the2014 Plan. The RSUs issued include both time-based and performance-based vesting provisions. The weighted average grant date fair value of each RSU issued for fiscal years2024 and2023 was $12.26 and $4.70 per unit, respectively. The total grant date fair value of all RSUs issued for fiscal years2024 and2023 was $2.9 million and $1.1 million, respectively, which will be charged to expense over the next 1-4 years as the restrictions lapse. Compensation expense for RSUs was determined based on the closing market price of the Company’s stock on the date of grant applied to the total number of units that are anticipated to fully vest. All RSUs outstanding at* September 30, 2024and2023* were issued from the2014 Plan.

No RSAs have been issued since fiscal year2019 andnone were outstanding at* September 30, 2024*.

Stock-based compensation expense recognized for the fiscal years ended* September 30, 2024and2023* was $1.3 million and $1.4 million, respectively. The Company accounts for forfeitures as they occur and records compensation costs under the assumption that the holder will complete the requisite service period. As of* September 30, 2024*, the Company had unrecognized compensation expense of $1.9 million relating to RSUs which is expected to be recognized over a weighted average period of 2.3 years.

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16. Income Taxes:

Components of income (loss) before income taxes were as follows (in thousands):

The provision for income taxes consisted of the following (in thousands):

The difference between the effective tax rate reflected in the provision for income taxes and the U.S. federal statutory rate were as follows (in thousands):

The income tax expense for fiscal years2024 and2023 primarily reflects tax accrual for U.S. state and Russian income tax. The Company maintains a full valuation allowance against deferred tax assets resulting from net operating loss ("NOL") carry-fowards in the United States and Canada due to the uncertainty surrounding its ability to utilize such losses in the future to offset taxable income.

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Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred income tax assets (liabilities) were as follows (in thousands):

The financial reporting basis of investments in foreign subsidiaries exceed their tax basis. A deferred tax liability isnot recorded for this temporary difference because the investment is deemed to be permanent. A reversal of the Company’s plans to permanently invest in these foreign operations would cause the excess to become taxable. At* September 30, 2024*, the Company had $1.1 million of cash and cash equivalents held by its foreign subsidiaries. At* September 30, 2024and2023*, the temporary difference related to undistributed earnings for whichno deferred taxes have been provided was approximately $1.2 million and $8.2 million, respectively.

The Company is subject to taxation in the United States as well as various states and foreign jurisdictions. Tax years that remain subject to examination by significant tax jurisdictions are the United States for tax years ending after 2016, the United Kingdom for tax years ending after 2022, and Canada for tax years ending after 2019.

At of* September 30, 2024*, the Company had NOL carry-forwards of approximately $85.6 million in the United States and $19.2 million in Canada which are available to offset future taxable income in those jurisdictions. The NOL carry-forward for Canada will begin to expire in2033. The NOL carry-forward for the United States which originated prior to the2017 Tax Act of $32.4 million begins to expire in2029 and those originating after the2017 Tax Act of $53.2 million donot expire.

Management of the Company has concluded that it wasnot more-likely-than-not that its U.S., Canadian and Russian net deferred tax assets will be realized in accordance with U.S. GAAP. On* September 30, 2024* and* September 30, 2023*, the Company had a valuation allowance against its U.S. net deferred tax assets of $36.1 million and $33.7 million, respectively. At* September 30, 2024* and* September 30, 2023*, the Company had a valuation allowance against its Canadian net deferred tax assets of $4.8 million and $4.8 million, respectively. At* September 30, 2023*, the Company had a valuation allowance against its Russian net deferred tax assets of $0.4 million.

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17. Income (Loss) Per Common Share

Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares used in basic earnings (loss) per share during the period. Diluted earnings (loss) per share is determined on the assumption that outstanding RSUs have been exchanged for common stock and outstanding dilutive stock options have been exercised and the aggregate proceeds as defined were used to reacquire common stock using the average price of such common stock for the period.

The following table summarizes the calculation of net income (loss) and weighted average common shares and common equivalent shares outstanding for purposes of the computation of earnings (loss) per share (in thousands, except share and per share amounts):

For the calculation of diluted earnings (loss) per share for fiscal years2024 and2023, RSUs of 408,895 and 308,568, respectively, were excluded in the calculation of weighted average shares outstanding as a result of their impact being antidilutive.

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18. Commitments and Contingencies

Contingent Compensation Costs

In connection with the acquisition of Aquana, LLC ("Aquana") in2021, the Company is subject to additional contingent cash payments to the former members of Aquana over asix-year earn-out period. The contingent payments, if any, will be derived from certain eligible revenue generated during the earn-out period from products and services sold by Aquana. There isno maximum limit to the contingent cash payments that could be made. The merger agreement with Aquana requires the continued employment of a certain key employee and former member of Aquana for thefirst four years of thesix year earn-out period in order for any of Aquana’s former members to be eligible to any earn-out payments. Due to the continued employment requirement,no liability has been recorded for the estimated fair value of contingent earn-out payments for this transaction. Earn-outs achieved, are recorded as compensation expense when incurred. Eligible revenue earned for fiscal year2024 was $17,000. No eligible revenue was earned in fiscal year2023.

The Company is involved in various pending legal actions in the ordinary course of its business. Management is unable to predict the ultimate outcome of these actions, because of the inherent uncertainty of such actions. However, management believes that the most probable, ultimate resolution of current pending matters willnot have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

19. Supplemental Cash Flow Information

Supplemental cash flow information is as follows (in thousands):

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20.** Segment and Geographic Information**

The Company reports and evaluates financial information forthree operating business segments: Oil and Gas Markets, Adjacent Markets and Emerging Markets. The Oil and Gas Markets segment’s products include wireless seismic data acquisition systems, reservoir characterization products and services, and traditional seismic exploration products such as geophones, hydrophones, leader wire, connectors, cables, marine streamer retrieval and steering devices and various other seismic products. The Adjacent Markets segment’s products include imaging equipment, water meter products, remote shut-off valves and IoT platform, as well as seismic sensors used for vibration monitoring and geotechnical applications such as mine safety applications and earthquake detection. The Emerging Markets segment designs and markets seismic products targeted at the border and perimeter security markets.

The following tables summarize the Company’s segment information:

The Company’s manufacturing operations for its business segments are combined. Therefore, the Company doesnot segregate and report separate balance sheet accounts for each of its segments and, therefore,no such segment balance sheet information is presented in the table above.

“Corporate” expense from operations primarily consists of the Company’s Houston headquarters general and administrative expenses.

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The Company generates revenue from product sales, product rentals and services from its subsidiaries located in the United States, Canada, Colombia, the Russian Federation and the United Kingdom. Revenue generated by the Company’s subsidiaries is as follows (in thousands):

A summary of revenue by geographic area is as follows (in thousands):

Revenue is attributed to countries based on the ultimate destination of the product sold, if known. If the ultimate destination isnot known, revenue is attributed to countries based on the geographic location of the initial shipment.

Long-lived asset balances are as follows (in thousands):

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