GEOSPACE TECHNOLOGIES CORP

1. Summary of Significant Accounting Policies

The Company

Geospace Technologies Corporation and its subsidiaries are referred to collectively as the “Company”. The Company designs and manufactures sophisticated technology solutions for applications in energy exploration, smart water management, as well as industrial and Internet of Things ("IoT"). The Company's seismic equipment and services are marketed to the energy exploration industry and used to locate, characterize and monitor hydrocarbon producing reservoirs. The Company also markets its seismic products to other industries for vibration monitoring, border and perimeter security and various geotechnical applications. The Company designs and manufacture other products of a non-seismic nature, including water meter connector cables, imaging equipment, remote shutoff water valves and ("IoT") platform. Additionally, the Company provides specialized contract manufacturing services. In recent years, the revenue contribution from our non-energy related products has grown to represent nearly half of our total revenue. Its business diversification strategy has centered largely on translating expertise in ruggedized engineering and technology manufacturing into expanded customer markets.

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, 2025*, cash and cash equivalents included $0.8 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 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 19.1% and 16.2% of the Company’s revenue during fiscal year2025. At* September 30, 2025*, the Company had trade accounts and financing receivables from these customers of $7.3 million and $2.2 million, respectively. 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 financing receivables from these customers of $4.1 million and $9.5 million, respectively.

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Suppliers

The Company purchases certain electronic components used in its land and marine wireless nodes fromtwo single source suppliers. In the event a change inone or both suppliers is necessary, significant engineering design efforts would be required by the Company.

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 7% and 5% of the Company’s revenue for fiscal years2025 and2024, respectively.

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. The Company hadno short-term investments at* September 30, 2025.*

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 its 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.

Business Acquisitions

The Company accounts for its business acquisitions under the acquisition method of accounting. The total value of the consideration paid for acquisitions is allocated to the underlying net assets acquired, based on their respective estimated fair values. The Company uses a number of valuation methods to determine the fair value of assets and liabilities acquired, including discounted cash flows, external market values, valuations on recent transactions or a combination thereof, and believes that it uses the most appropriate measure or a combination of measures to value each asset or liability. The Company utilized the excess earnings method to value itsfourth quarter fiscal year2025 acquisition of Geovox Securities, Inc. ("Geovox"). The Company recognizes measurement-period adjustments in the reporting period in which the adjustment amounts are determined.

The Company established an earn-out liability in connection with its acquisition of Geovox in thefourth quarter of fiscal year2025. The Company engaged the services of a valuation firm to measure the fair value of the liability. The valuation technique used to measure the fair value of the liability was a Monte Carlo simulation. The primary inputs included revenue forcast, risk free rate, revenue volatility, revenue discount rate and payment discount rate. Company reviews and assesses the value of the liability on a quarterly basis. Adjustments, if any, will be included as a component of earnings in the consolidated 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 (now a component of the Company's Intelligent Industrial 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, which is 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 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.

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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 Note16 to these consolidated financial statements.

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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 losses 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 Note6 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* November 2023,the Financial Accounting Standards Board (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 adopted this guidance in thefourth* quarter of fiscal year2024 and is reflected in Note21. The adoption of this guidance didnot have a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements

In* November 2024,the FASB, as further amended in January 2025,issued guidance requiring enhanced disclosures in financial statements by requiring detailed disclosures of specific expenses like inventory purchases, employee compensation, depreciation, and intangible assets amortization. The guidance is effective for fiscal years beginning after December 15, 2026,and interim periods within fiscal years beginning after December 31, 2027.Early adoption is permitted. The Company doesnot* expect the adoption of this guidance to have a material 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 consolidated financial statements.

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2. Revenue Recognition

In accordance with ASC Topic606, Revenue from Contracts with Customers (“ASC606”), the Company recognizes revenue when performances 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 hen 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. Rentals of the Company’s equipment generally range from daily rentals to minimum rental periods of up toone year. Rental revenue is recognized within the scope of ASC842, Leases ("ASC842"). 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. In accordance with ASC842, rental revenue is recognized as earned over the rental period if collectability of the rent is reasonably assured. When collectability of amounts areno longer probable the Company records a direct write-off of the rent receivable to rental revenue and limits future rental revenue recognition to cash received. During thesecond quarter of fiscal year2025, the Company determined that the collectability of receivables from a rental customer was less than probable. As a result of this determination, the rent receivable balance due from this customer of $2.2 million was reversed against rental revenue. Any future cash received from this customer will be recognized as rental revenue.

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 for each of the fiscal years ended* September 30, 2025and2024*, respectively.

At* September 30, 2025and2024,* the Company hadno deferred contract liabilities andno deferred contract costs. At* October 1, 2023,the Company had deferred contract liabilities of $0.7 million andno deferred contract costs. For the fiscal years ended September 30, 2025and2024,* revenue ofzero and $0.7 million, respectively, was recognized from deferred contract liabilities. For each of the fiscal years ended* September 30, 2025and2024,* no cost of revenue was recognized from deferred contract costs. At* September 30, 2025,** October 1, 2024and October 1, 2023,*the Company had accounts receivable from contracts with customers of $11.4 million, $12.6 million and $11.2 million, respectively. Accounts receivable from contracts with customers excludes accounts receivable from rental contracts.

For the fiscal years ended* September 30, 2025and2024*, revenue of $1.8 million and $1.3 million, respectively, was recognized from contracts with customers satisfied over-time. Revenue satisfied over-time for the fiscal year ended* September 30, 2025was from the Company's Energy Solutions operating segment. Revenue satisfied over-time for the fiscal year ended September 30, 2024was from the Company's Intelligent Industrial operating segment. All other revenue from contracts with customers for the fiscal years ended September 30, 2025and2024* was recognized at a point-in-time.

At* September**30,* 2025, the aggregate amount of transaction price allocation to unsatisfied performance obligations on contracts with a duration in excess ofone year was approximately $92 million. These unsatisfied performance obligations are expected to be fulfilled over the next18 months. The majority of the revenue will be recognized over-time over the duration of the contracts. All other revenue from contracts with customers is being recognized at a point-in time and have a duration ofone year or less. For each of the Company’s operating segments, the following table presents revenue (in thousands) only from the sale of products and the performance of services under contracts with customers.

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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 Note21 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.

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3. Business Acquisition

On* August 1, 2025,the Company acquired all the outstanding stock of Geovox. Geovox's Heartbeat Detector® is a heartbeat detection security technology developed by the United States Department of Energy’s Oak Ridge National Laboratory. It is used in more than a dozen countries to address human trafficking and prison security. The Heartbeat Detector® uses proprietary sensors to rapidly identify people hidden in vehicles, providing a modern, user-friendly interface in as little as10* seconds. The Heartbeat Detector® relies on geophones the Company manufactures and aligns with the Company's current perimeter security and surveillance offerings in its Intelligent Industrial segment.

The Geovox acquisition was accounted for under the acquisition method of accounting. The total value of the consideration paid for acquisitions was allocated to the underlying net assets acquired, based on their respective estimated fair values. The Company utilized the excess earnings method to determine the fair value of assets and liabilities acquired, including discounted cash flows, external market values, valuations on recent transactions or a combination thereof, and believes that it used the most appropriate measure to value each asset or liability. The Company will recognize measurement-period adjustments, if any, in the reporting period in which the adjustment amount is determined.

The acquisition purchase price for Geovox consisted of (i) cash of $1.7 million, which included $1.5 million paid at closing and $0.2 million to be paid* June 1, 2027,and (ii) contingent earn-out payments of up to $3.3 million over afour-year period. The contingent payments, if any, will be derived from certain eligible revenue that maybe generated during thefour*-year period. In connection with the acquisition the Company recorded goodwill of $0.5 million, other intangible assets of $3.7 million, and an initial contingent earn-out liability of $2.5 million. Also see Notes6 and12.

Legal and professional costs of $35,000 related to the acquisition are included in selling, general and administrative expenses for the fiscal year ended* September 30, 2025.*

4. 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 consisted 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 financing receivables, 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 Note6.

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 affects on 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, 2025*due to its involvement with the VIE is the carrying value of our note receivable from the sale of our former subsidiary, which was $3.2 million.

5. 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 hadno short-term investments as of* September 30, 2025.The Company’s short-term investments as of September 30, 2024*were composed of the following (in thousands):

At* September 30, 2024,*accrued interest receivable related to these short-term investments was $0.3 million, which is 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, 2024and 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. A gain of $9,000 was realized from the sale of short-term investments for the fiscal year ended* September 30, 2025.No gains or losses were realized from the sale of short-term investments for the fiscal year ended September 30, 2024.*

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6. Fair Value of Financial Instruments

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

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

The following tables present the fair value of the Company’s continent consideration, 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 Note4 to these consolidated financial statements.

At* September 30, 2024,the Company performed a recoverability assessment on its long-lived assets of its Intelligent Industrial asset group (formerly Emerging Markets) in which its carrying value was compared to the estimated undiscounted cash flows over the remaining useful life of the asset group's primary asset, which is 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 and recorded an impairment charge of $2.8 million on this asset group, which impaired its intangible assets in their entirety. The Company determined the fair value of this asset group to be approximately zero. The measurements utilized to determine the implied fair value represented significant unobservable inputs (Level3*). See Note12 for more information.

In connection with the Company's acquisition of Geovox in* August 2025,it recorded an initial contingent earn-out liability of $2.5 million. The Company engaged the services of a valuation firm to measure the fair value of the liability. The primary inputs included revenue forcast, risk free rate, revenue volatility, revenue discount rate and payment discount rate (Level3*). Contingent payments, if any, will be based on eligible revenue generated during afour-year earn-out period. The maximum amount of contingent payments is $3.3 million. The following table summarizes the changes in the fair value of the contingent consideration for the fiscal year* September 30, 2025:*

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7. Accumulated Other Comprehensive Loss

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

8. Trade Accounts and Financing Receivables

Trade accounts receivable, net (excluding financing receivables) 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 balances are charged off against the allowance whenever it is probable that the receivable balance willnot be recoverable.

Financing receivables are reflected in the following table (in thousands):

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In* September 2025,the Company entered into a $3.9 million promissory note with a customer related to a product sale. The note bears interest at 8.75% per annum and matures in September 2028.Principal and interest installments of $0.1 million are due monthly beginning in October 2025.*The note is collateralized by the product sold.

In* August2025,* the Company entered into a $3.6 million promissory note with a customer related to a product sale. The note bears interest at 8.75% per annum and matures in* August2028.* Principal and interest installments of $0.1 million are due monthly beginning in* September**2025.* The note is collateralized by the product sold.

In* November 2024,the Company entered into a sales-type lease with a customer on wireless seismic equipment from its rental fleet. The lease matures in October 2025.Interest income of $0.6 million was recognized on the lease for the fiscal year ended September 30, 2025.*Ownership of the equipment will transfer to the customer at the end of the lease term.

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 be 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.

9. Inventories

Inventories consisted of the following (in thousands):

Inventory obsolescence expense totaled $3.1 million and $0.6 million during fiscal years2025 and2024, respectively. Raw materials include semi-finished goods and component parts that totaled approximately $9.1 million and $8.6 million at* September 30, 2025and2024*, respectively.

10. Leases

As Lessee

The Company has electednot torecord 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, 2025*, the Company hastwo operating right-of use assets related to leased facilities in Austin, Texas and Melbourne, Florida.

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Maturities of the operating lease liabilities as of* September 30, 2025* were as follows (in thousands):

Lease costs recognized in the consolidated statements of operations for the fiscal years ended* September 30, 2025and2024* 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, 2025and2024,* the Company’s trade accounts receivables included lease receivables of $1.0 million and $1.0 million, respectively.

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Rental revenue related to leased equipment for fiscal years2025 and2024 were $6.3 million and $19.3 million, respectively.

Future minimum lease obligations due from the Company's leasing customers as of* September 30, 2025* were $0.4 million, all of which is due within the next12 months.

In* November 2024,the Company entered into a sales-type lease with a customer on wireless seismic equipment from its rental fleet. The lease matures in October 2025.Interest income of $0.6 million was recognized on the lease for the fiscal year ended September 30, 2025.Ownership of the equipment will transfer to the customer at the end of the lease term. Also see Note8.*

Rental equipment consisted of the following (in thousands):

Rental equipment depreciation expense was $6.2 million and $10.9 million in fiscal years2025 and2024, respectively.

Property

During 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 for each of the fiscal years ended* September 30, 2025and2024* was $0.3 million.

Future minimum lease payments due to the Company as of* September 30, 2025* were as follows (in thousands):

11. Property, Plant and Equipment

In* June 2025,the Company sold its property located at4318* Northfield Lane in Houston, Texas. The 17.3-acre property served as additional parking for the main campus and contained legacy structures used to support the Company's manufacturing and warehousing operations. The Company recognized a gain on disposal of property of $4.6 million during thethird quarter of fiscal year2025. The gain is included as a component of loss from operations on the Company's consolidated statements of operations.

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

Property, plant and equipment depreciation expense was $3.8 million and $3.5 million for the fiscal years ended* September 30, 2025and2024*, respectively.

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12. Goodwill and Other Intangible Assets

In* August 2025,*in connection with the Company's acquisition of Geovox, it recorded goodwill of $0.5 million (deductible for tax purposes) and other intangible assets of $3.7 million. The operations of Geovox are included as a component of the Company's Intelligent Industrial reporting unit.

At* September 30, 2025,*the Company had goodwill of $0.5 million and other intangible assets, net of $3.7 million attributable to its Intelligent Industrial reporting unit, goodwill of $0.7 million and other intangible assets, net of $0.4 million attributable to its Smart Water reporting unit and other intangible assets, net of $1.1 million attributable to its Energy Solutions 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 Industrial Intelligent segment, the Company performed a recoverability assessment on the long-lived assets of its Intelligent Industrial asset group (formerly a part of the Company's 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, which is 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.

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

Other intangible assets amortization expense for fiscal years2025 and2024 was $0.2 million and $0.4 million, respectively.

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As of* September 30, 2025*, fiscal year future estimated amortization expense of other intangible assets is as follows (in thousands):

13. Long-Term Debt

The Company hadno long-term debt outstanding at* September 30, 2025* or2024.

On* August 29, 2025,the Company amended its credit agreement (“the Agreement”) with Woodforest National Bank. The Agreement extended the Company’s revolving loan agreement, dated as of July 26, 2023,with Woodforest. The Agreement is for athree*-year term and provides a revolving credit facility with a maximum availability of $25 million. Interest shall accrue on outstanding borrowings at30 Day Term SOFR plus a margin equal to 2.75% per annum. The Company is required to make monthly interest payments on borrowed funds. The Agreement is secured by substantially all of the Company's assets, except for certain excluded property. The Agreement requires the Company to maintain (i) a minimum consolidated tangible net worth of $85 million, (ii) minimum liquidity of $10 million, and (iii) a minimum asset coverage ratio of 2.00 to1.00. The Agreement also requires the Company to maintain a springing minimum interest coverage ratio of at least 1.50 to1.00, tested quarterly whenever (a) there is an outstanding balance on the revolving credit facility or (b) has letter of credit exposure greater than $1 million.

At* September 30, 2025*, the Company was in compliance with all covenants under the Agreement. At* September 30, 2025*, the Company could borrow approximately $8 million under the Agreement without violating any debt covenants.

Debt issuance costs of $0.4 million were incurred in connection with the Agreement. 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.

14. 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.

15. 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 $1.2 million and $1.1 million in fiscal years2025* and2024, respectively.

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The Company’s stock incentive plans in which key employees* mayparticipate are discussed in Note16* to these consolidated financial statements.

16. 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. No RSA's have been issued since2019.

At* September 30, 2025*, an aggregate of 682,071 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 years2025 and2024, the Company issued 194,700 and 233,200 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 years2025 and2024 was $12.09 and $12.26 per unit, respectively. The total grant date fair value of all RSUs issued for fiscal years2025 and2024 was $2.4 million and $2.9 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, 2025and2024* were issued from the2014 Plan.

Stock-based compensation expense recognized for the fiscal years ended* September 30, 2025and2024* was $1.5 million and $1.3 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, 2025*, the Company had unrecognized compensation expense of $2.0 million relating to RSUs which is expected to be recognized over the next 1-4 years.

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17. Income Taxes:

Components of 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 years2025 and2024 primarily reflects tax accrual for U.S. state, U.K. income tax and foreign withholding tax on U.S. companies. Texas contributed to the majority of the state tax expense for fiscal years2025 and2024. The Company is currently unable to record any tax benefits for its tax loss in 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, 2025*, the Company had $0.8 million of cash and cash equivalents held by its foreign subsidiaries. At* September 30, 2025and2024*, the temporary difference related to undistributed earnings for whichno deferred taxes have been provided was approximately $0.8 million and $1.2 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 after2023, and Canada for tax years ending after2021.

At* September 30, 2025*, the Company had net operating loss ("NOL") carry-forwards of approximately $92.4 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 $60.0 million donot expire.

Management of the Company has concluded that it wasnot more-likely-than-not that its U.S. and Canadian net deferred tax assets will be realized in accordance with U.S. GAAP. On* September 30, 2025* and* September 30, 2024*, the Company had a valuation allowance against its U.S. net deferred tax assets of $39.0 million and $36.1 million, respectively. At* September 30, 2025* and* September 30, 2024*, the Company had a valuation allowance against its Canadian net deferred tax assets of $4.7 million and $4.8 million, respectively.

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18. Loss Per Common Share

Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares used in basic loss per share during the period. Diluted 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 loss and weighted average common shares and common equivalent shares outstanding for purposes of the computation of loss per share (in thousands, except share and per share amounts):

For the calculation of diluted loss per share for fiscal years2025 and2024, RSUs of 332,693 and 408,895, respectively, were excluded in the calculation of weighted average shares outstanding as a result of their impact being antidilutive.

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19. Commitments and Contingencies

In* August 2025,the Company acquired Geovox. In connection with the acquisition, the Company recorded an initial contingent earn-out liability of $2.5 million. Contingent payments, if any, will be based on eligible revenue generated during afour*-year earn-out period. The maximum amount of contingent payments is $3.3 million.

In connection with the acquisition of Aquana in2021, the Company is subject to additional contingent cash payments to the former members of Aquana over aseven-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 five 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 the fiscal years ended* September 30, 2025and2024* was $0.1 million and $17,000, respectively.

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.

20. Supplemental Cash Flow Information

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

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21.** Segment and Geographic Information**

Effective* October 1, 2024,*the Company changed the composition of itsthree operating business segments and changed its methodology for allocating manufacturing costs including overhead and other costs of revenue to the segments.

The Company's business segments are now comprised of: Smart Water, Energy Solutions and Intelligent Industrial. The Smart Water segment emphasizes the Company’s targeted approach in the water management industry. This business segment contains the Hydroconn® smart water connectivity offerings and the Company's Aquana products. The Energy Solutions segment encompasses the Company’s traditional business in oil and gas land and marine exploration products, reservoir monitoring solutions, and will additionally incorporate emerging energy solutions and microseismic monitoring. This segment will include energy-related business from Quantum’s SADAR® products and associated analytics. The Intelligent Industrial segment includes seismic sensor products used for vibration monitoring geotechnical applications such as mine safety applications and earthquake detection, seismic products targeted at the border and perimeter security markets, imaging products, as well as providing contract manufacturing services. The change in methodology for allocating manufacturing costs affected each business segment's operating income (loss) but hadno effect on consolidated operating income (loss).

The Company defines its segments as those operations our chief operating decision maker (“CODM”) regularly reviews to analyze performance and allocate resources. The Company’s CODM is the Chief Executive Officer. The CODM regularly reviews revenue, gross profit, operating expenses and operating income (loss) by segment as the primary measures of segment performance. The CODM reviews revenue as a primary indicator of operational performance, assessing how much revenue is brought in from core business activities, which reflects demand and execution of each segment’s strategy. Gross profit is reviewed by the CODM as a diagnostic metric, particularly useful in evaluating margin trends. Operating income is the key profitability metric used to assess performance across segments and make decisions related to resource allocation, including capital expenditures, headcount, and other investment initiatives. Each of these metrics is considered in budgeting, forecasting, and operational planning decisions.

For financial reporting purposes, we are organized into these reportable segments and “Corporate”, which includes the remainder of our businesses. The following table summarizes the Company’s segment information (in thousands). Segment information for the fiscal year ended* September 30,*2024 has been recast for comparability.

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.

F-30

The Company generates revenue from product sales, product rentals and services from its subsidiaries located in the United States, Canada, Colombia, the Russian Federation (sold in* August 2024)*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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