GEOSPACE TECHNOLOGIES CORP

Previous wording

Our Smart Water segment has experienced a decline in sales in fiscal year 2026, however we believe this decline is temporary, largely due to overstocking by our customers in the prior fiscal year. Growing industry acceptance of our water meter cables and connectors provides a strong enabler for additional revenue from our Smart Water segment. Automatic meter reading efficiencies in operations and improved customer service has begun to be understood by the municipalities of the United States. We expect this portion of our business to continue to grow for the foreseeable future. Additionally, we anticipate this segment to see revenue contributions from our Aquana smart water valve and IoT technology products as market traction and increased sales backlog continues to gather. Given the well-known and often extreme volatility experienced in our Energy Solutions segment, careful expansion of products and market diversity in our Smart Water and Intelligent Industrial segments has been a longstanding part of our strategic vision and reflects our on-going diversification efforts.

Current wording

Our Smart Water segment has experienced a decline in sales in fiscal year 2026, due to a decrease in demand for our Hydroconn® products. Growing industry acceptance of our water meter cables and connectors provides a strong enabler for additional revenue from our Smart Water segment. Automatic meter reading efficiencies in operations and improved customer service has begun to be understood by the municipalities of the United States. We expect this portion of our business to continue to grow for the foreseeable future. Additionally, we anticipate this segment to see revenue contributions from our Aquana smart water valve and IoT technology products as market traction and increased sales backlog continues to gather. Given the well-known and often extreme volatility experienced in our Energy Solutions segment, careful expansion of products and market diversity in our Smart Water and Intelligent Industrial segments has been a longstanding part of our strategic vision and reflects our on-going diversification efforts.

Previous wording

Three and six months ended March 31, 2026 compared to the three and six months ended March 31, 2025

Current wording

Three and nine months ended June 30, 2026 compared to the three and nine months ended June 30, 2025

Previous wording

Consolidated revenue for the three months ended March 31, 2026, was $19.7 million, an increase of $1.7 million, or 9.5%, from the corresponding period of the prior fiscal year. The increase for the three months ended March 31, 2026 was primarily due to higher revenue from our Energy Solutions segment, which included initial revenue of $3.6 million recognized on our PRM contract. The increase was largely offset by lower demand for our Hydroconn® cable and connector products from our Smart Water segment. Furthermore, during the second quarter of the prior fiscal year, we determined the collectability of a receivable from an ocean bottom 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. As a result of reversal, our consolidated rental revenue for the three months ended March 31, 2025 was in a negative position ($0.7 million). Consolidated revenue for the six months ended March 31, 2026, was $45.3 million, a decrease of $9.9 million, or 18.0%, from the corresponding period of the prior fiscal year. The decrease for the six months ended March 31, 2026 was primarily due to lower demand for our Hydroconn® cable and connector products from our Smart Water segment. The decrease in consolidated revenue was also due to lower revenue from our Energy Solutions segment attributable to a $17 million sale of ocean bottom nodes in the first quarter of fiscal year 2025, which was largely offset by an increase in demand for our wireless land-based Pioneer™.

Current wording

Consolidated revenue for the three months ended June 30, 2026, was $15.8 million, a decrease of $9.0 million, or 36.4%, from the corresponding period of the prior fiscal year. The decrease for the three months ended June 30, 2026 was primarily due to lower demand for our Hydroconn® cable and connector products from our Smart Water segment. The decrease was also due to lower revenue from our Energy Solutions segment, primarily due to a sale of our marine recovery device in the corresponding period in the prior fiscal year. The decrease was partially offset by revenue recognized on our PRM contract. The decrease for the nine months ended June 30, 2026 was primarily due to lower demand for our Hydroconn® cable and connector products from our Smart Water segment.

Previous wording

Consolidated gross profit for the three months ended March 31, 2026, was $0.7 million, compared to $1.7 million from the corresponding period of the prior fiscal year. The decrease for the three months ended March 31, 2026 was primarily due to the decrease in revenue and related gross profits from our Smart Water segment. Consolidated gross profit for the six months ended March 31, 2026, was $3.4 million, compared to $21.9 million from the corresponding period of the prior fiscal year. The decrease in gross profit for the six months ended March 31, 2026 was primarily due to (i) a high gross margin on our $17 million sale of ocean bottom nodes in the first quarter of fiscal year 2025 and (ii) the decrease in revenue and gross profits from our Smart Water segment. The decrease in gross profit for both three and six months ended March 31, 2026 was also attributable to an increase in tariffs on the raw materials we purchase.

Current wording

Consolidated gross profit for the three months ended June 30, 2026, was $0.5 million, compared to $7.5 million from the corresponding period of the prior fiscal year. The decrease for the three months ended June 30, 2026 was primarily due to the decrease in revenue and related gross profits from our Smart Water segment. Consolidated gross profit for the nine months ended June 30, 2026, was $3.9 million, compared to $29.4 million from the corresponding period of the prior fiscal year. The decrease was also attributable to a high gross profit on the sale of our marine recovery device in the corresponding period of the prior fiscal year. The decrease in gross profit for the nine months ended June 30, 2026 was primarily due to (i) a high gross margin on our $17 million sale of ocean bottom nodes in the first quarter of fiscal year 2025 and (ii) the decrease in revenue and gross profits from our Smart Water segment. The decrease in gross profit for both three and nine months ended June 30, 2026 was also attributable to an increase in tariffs on the raw materials we purchase.

Previous wording

Consolidated other income was unchanged for the three months ended March 31, 2026 and 2025. Consolidated other income for the six months ended March 31, 2026, decreased $0.1 million, or 8.8% from the corresponding period of the prior fiscal year. The decrease was principally due to (i) a decrease in interest income on short-term investments and (ii) a decrease in foreign exchange transaction losses.

Current wording

Consolidated other income was unchanged for the three months ended June 30, 2026 compared to the corresponding period of the prior fiscal year. Consolidated other income for the nine months ended June 30, 2026 decreased $0.1 million, or 8.1%, from the corresponding period of the prior fiscal year. The decrease was principally due to a decrease in interest income on short-term investments.

Previous wording

Revenue from our Smart Water segment for the three months ended March 31, 2026, decreased $5.7 million, or 60.6%, from the corresponding period of the prior fiscal year. Revenue from our Smart Water segment for the six months ended March 31, 2026, decreased $7.3 million, or 43.4%, from the corresponding period of the prior fiscal year. The decrease for both periods was primarily due to a decrease in demand for our Hydroconn® cable and connector products. We believe this decline is temporary due to overstocking by our customers in the prior fiscal year.

Current wording

Revenue from our Smart Water segment for the three months ended June 30, 2026, decreased $5.9 million, or 56.1%, from the corresponding period of the prior fiscal year. Revenue from our Smart Water segment for the nine months ended June 30, 2026, decreased $13.2 million, or 48.3%, from the corresponding period of the prior fiscal year. The decrease for both periods was primarily due to a decrease in demand for our Hydroconn® cable and connector products.

Previous wording

Operating loss from our Smart Water segment for the three months ended March 31, 2026, was $(1.6) million, in comparison to operating income of $1.4 million from the corresponding period of the prior fiscal year. Operating loss from our Smart Water segment for the six months ended March 31, 2026, was $(2.4) million, in comparison to operating income of $1.8 million from the corresponding period of the prior fiscal year. The decrease for both periods was primarily due the decrease in revenue and related gross profits. The decrease for the six months ended March 31, 2026 was also attributable to higher research and development expense, largely personnel costs.

Current wording

Operating loss from our Smart Water segment for the three months ended June 30, 2026, was $(0.9) million, in comparison to operating income of $2.2 million from the corresponding period of the prior fiscal year. Operating loss from our Smart Water segment for the nine months ended June 30, 2026, was $(3.4) million, in comparison to operating income of $4.0 million from the corresponding period of the prior fiscal year. The decrease for both periods was primarily due the decrease in revenue and related gross profits, in addition to agent commissions. The decrease for the nine months ended June 30, 2026 was also attributable to higher research and development expense, largely personnel costs.

Previous wording

Revenue from our Energy Solutions segment for the three months ended March 31, 2026, increased $7.0 million, or 272.1%, from the corresponding period of the prior fiscal year. Revenue from our Energy Solutions segment for the six months ended March 31, 2026, decreased $2.6 million, or 9.7%, from the corresponding period of the prior fiscal year. The components of this changes were as follows:

Current wording

Revenue from our Energy Solutions segment for the three months ended June 30, 2026, decreased $2.3 million, or 27.8%, from the corresponding period of the prior fiscal year. Revenue from our Energy Solutions segment for the nine months ended June 30, 2026, decreased $4.9 million, or 13.9%, from the corresponding period of the prior fiscal year. The components of these decreases were as follows:

Previous wording

Operating loss associated with our Energy Solutions segment for the three months ended March 31, 2026, was $(4.8) million, compared $(6.7) million for the corresponding period of the prior fiscal year. The decrease in operating loss was primarily due to the increase in revenue and related gross profits. Operating loss for the six months ended March 31, 2026, was $(8.2) million, compared to operating income of $6.6 million for the corresponding period of the prior fiscal year. This decrease was primarily attributable to the decrease in revenue, largely rental revenue, coupled by a high gross margin on our $17 million sale of ocean bottom nodes in the first quarter of fiscal year 2025.

Current wording

Operating loss associated with our Energy Solutions segment for the three months ended June 30, 2026, was $(4.6) million, compared to $(1.2) million for the corresponding period of the prior fiscal year. The increase in operating loss was primarily due to the decrease in revenue and related gross profits. Operating loss for the nine months ended June 30, 2026, was $(12.8) million, compared to operating income of $5.4 million for the corresponding period of the prior fiscal year. This decrease was primarily attributable to the decrease in revenue due to (i) a high gross margin on our $17 million sale of ocean bottom nodes in the first quarter of fiscal year 2025 and (ii) lower utilization of our ocean bottom rental fleet.

Previous wording

Revenue from our Intelligent Industrial segment for the three months ended March 31, 2026, increased $0.4 million, or 7.1%, from the corresponding period of the prior fiscal year. The increase was primarily due to an increase in demand for our contract manufacturing services. Revenue from our Intelligent Industrial segment for the six months ended March 31, 2026, decreased $0.1 million, or 0.4%, from the corresponding period of the prior fiscal year. The decrease in revenue for the six months ended March 31, 2026, was primarily due to a decrease in demand for our industrial sensor products, largely offset by increased demand for our contract manufacturing services.

Current wording

Revenue from our Intelligent Industrial segment for the three months ended June 30, 2026, decreased $0.9 million, or 14.5%, from the corresponding period of the prior fiscal year. Revenue from our Intelligent Industrial segment for the nine months ended June 30, 2026, decreased $0.9 million, or 5.3%, from the corresponding period of the prior fiscal year. The decrease for both periods was primarily due to a decrease in demand for our industrial sensor products. The decrease for the three months ended June 30, 2026 was also due to a decrease in demand for our contract manufacturing services.

Previous wording

Operating loss from our Intelligent Industrial segment for the three months ended March 31, 2026 decreased $0.7 million, or 54.4%, from the corresponding period of the prior fiscal year. The decrease in operating loss for the three months ended March 31, 2026 was primarily due to the increase in revenue and related gross profits. Operating loss for the six months ended March 31, 2026 decreased $0.8 million, or 37.1%, from the corresponding period of the prior fiscal year. The decrease in operating loss for the six months ended March 31, 2026 was primarily due to lower research and development expense, principally personnel costs.

Current wording

Operating loss from our Intelligent Industrial segment for the three months ended June 30, 2026 decreased $0.6 million, or 55.4%, from the corresponding period of the prior fiscal year. Operating loss for the nine months ended June 30, 2026 decreased $1.4 million, or 43.0%, from the corresponding period of the prior fiscal year. The decrease in operating loss for both periods was primarily due to lower research and development expense, principally personnel costs.

Previous wording

At March 31, 2026, we had $13.4 million in cash and cash equivalents. For the six months ended March 31, 2026, we used $16.7 million of cash from operating activities. Uses of cash included (i) our net loss of $20.8 million, offset by non-cash charges of $7.7 million resulting from deferred income taxes, depreciation, amortization, accretion, inventory obsolescence, stock-based compensation and provision for credit losses, a (ii) $2.8 million increase in inventories largely due to material purchases for use in our PRM contract, (iii) $2.4 million increase in notes receivable on product sales, (iv) $5.2 million decrease in trade accounts payable primarily due the timing of payments and (v) $2.6 million increase in other assets, primarily due to prepaid product purchases related to our PRM contract. These uses of cash were partially offset by a $9.1 million increase in other liabilities, primarily deferred contract liabilities related to our PRM contract.

Current wording

At June 30, 2026, we had $4.8 million in cash, cash equivalents and restricted cash. For the nine months ended June 30, 2026, we used $27.3 million of cash from operating activities. Uses of cash included (i) our net loss of $30.5 million, offset by non-cash charges of $11.2 million resulting from deferred income taxes, depreciation, amortization, accretion, inventory obsolescence, stock-based compensation and provision for credit losses, a (ii) $5.4 million increase in inventories largely due to material purchases for use in our PRM contract, (iii) $1.5 million increase in notes receivable on product sales, (iv) $4.1 million decrease in trade accounts payable primarily due the timing of payments and (v) $3.3 million increase in other assets, primarily due to (i) prepaid product purchases related to our PRM contract and (ii) prepaid insurance related to the renewal of our insurance policies. These uses of cash were partially offset by a $5.8 million increase in other liabilities, primarily deferred contract liabilities related to our PRM contract.

Previous wording

For the six months ended March 31, 2026, we generated cash of $4.0 million in investing activities. Sources of cash included $6.9 million of proceeds from the sale of rental equipment, partially offset by $3.0 million used for additions to our property, plant and equipment. We do not expect significant cash investments in property, plant and equipment or our rental fleet for the remainder of fiscal year 2026.

Current wording

For the nine months ended June 30, 2026, we generated cash of $6.2 million in investing activities. Sources of cash included $9.4 million of proceeds from the sale of rental equipment, partially offset by $3.3 million used for additions to our property, plant and equipment. We do not expect significant cash investments in property, plant and equipment or our rental fleet for the remainder of fiscal year 2026.

Previous wording

For the six months ended March 31, 2026, we used $0.3 million from financing activities for tax payments on stock-based compensation for the exchange of common stock.

Current wording

For the nine months ended June 30, 2026, we used $0.4 million from financing activities primarily for tax payments on stock-based compensation for the exchange of common stock.

Previous wording

On August 29, 2025, we amended and restated our credit agreement (“the Agreement”) with Woodforest National Bank. The Agreement extended our revolving loan agreement, dated as of July 26, 2023, with Woodforest. The Agreement is for a three-year term and provides a revolving credit facility with a maximum availability of $25 million. Interest shall accrue on outstanding borrowings at 30 Day Term SOFR plus a margin equal to 2.75% per annum. We are required to make monthly interest payments on borrowed funds. The Agreement is secured by substantially all of our assets, except for certain excluded property. The Agreement requires us to maintain (i) a minimum consolidated tangible net worth of $85 million, (ii) minimum liquidity of $10 million, which includes cash and amounts available to borrow and (iii) a minimum asset coverage ratio of 2.00 to 1.00. The Agreement also requires us to maintain a springing minimum interest coverage ratio of at least 1.50 to 1.00, tested quarterly whenever (a) there is an outstanding balance on the revolving credit facility or (b) have letter of credit exposure greater than $1 million. Effective December 31, 2025, we entered into a limited waiver agreement with Woodforest which waived our springing minimum interest coverage ratio through February 16, 2027. At March 31, 2026 we were in compliance with all financial and non-financial covenants under the Agreement. We had no debt outstanding at March 31, 2026 and had a borrowing availability of $25 million.

Current wording

On August 29, 2025, we amended and restated our credit agreement (“the Agreement”) with Woodforest National Bank. The Agreement extended our revolving loan agreement, dated as of July 26, 2023, with Woodforest. The Agreement is for a three-year term expiring August 29, 2028 and provides a revolving credit facility with a maximum availability of $25 million. Interest shall accrue on outstanding borrowings at 30 Day Term SOFR plus a margin equal to 2.75% per annum. We are required to make monthly interest payments on borrowed funds. The Agreement is secured by substantially all of our assets, except for certain excluded property. The Agreement requires us to maintain (i) a minimum consolidated tangible net worth of $85 million, (ii) minimum liquidity of $10 million, which includes cash and amounts available to borrow and (iii) a minimum asset coverage ratio of 2.00 to 1.00. The Agreement also requires us to maintain a springing minimum interest coverage ratio of at least 1.50 to 1.00, tested quarterly whenever (a) there is an outstanding balance on the revolving credit facility or (b) have letter of credit exposure greater than $1 million. Effective December 31, 2025, we entered into a limited waiver agreement with Woodforest which waived our springing minimum interest coverage ratio through February 16, 2027. At June 30, 2026 we were in compliance with all financial and non-financial covenants under the Agreement. We had no debt outstanding at June 30, 2026 and had a borrowing availability of $25 million. On May 5, 2026, we entered into an amendment the Agreement which removed the springing minimum interest coverage requirement. This amendment requires us to maintain a $2 million cash reserve pledged to Woodforest and is primarily secured by our Pinemont facility.

Previous wording

Our available cash and cash equivalents decreased $13 million during the first six months of fiscal year 2026, largely due to the decrease in revenue across all of our segments. At the end of the second quarter of fiscal year 2026 we implemented an organizational change plan, which included a voluntary early retirement plan available to eligible qualifying employees as well as a reduction in force. This plan will result in an approximate 20% reduction our global workforce, and together with cost-containment measures are expected to produce approximately $10 million of annualized cash savings. We anticipate receiving our next installment payment from our PRM customer of approximately $35 million by the end of the calendar year.

Current wording

Our available cash and cash equivalents decreased $24 million during the first nine months of fiscal year 2026, largely due to the decrease in revenue across all of our segments. At the end of the second quarter of fiscal year 2026 we implemented an organizational change plan, which included a voluntary early retirement plan available to eligible qualifying employees as well as a reduction in force. This plan will result in an approximate 20% reduction our global workforce, and together with cost-containment measures are expected to produce approximately $10 million of annualized cash savings. We anticipate receiving our next installment payment from our PRM customer of approximately $35 million between the second and third quarters of fiscal year 2027. In July 2026, we funded $5 million from the Agreement and may require additional fundings to bridge the gap until the next PRM installment payment is received.

Previous wording

In the absence of future profitable results of operations, we may need to rely on other sources of liquidity to fund our future operations, including our backlog, executed rental contracts, available borrowings under the Agreement through its expiration in July 2028, sales or leveraging real estate assets, sales of rental assets and other liquidity sources which may be available to us. We currently believe that our cash, and amounts available under the Agreement if needed, will be sufficient to finance any future operating losses and planned capital expenditures through the next twelve months.

Current wording

In the absence of future profitable results of operations, we may need to rely on other sources of liquidity to fund our future operations, including our backlog, available borrowings under the Agreement through its expiration in July 2028, sales or leveraging real estate assets, sales of rental assets and other liquidity sources which may be available to us. We currently believe that our cash, and amounts available under the Agreement, will be sufficient to finance any future operating losses and planned capital expenditures through the next twelve months.

Previous wording

During the six months ended March 31, 2026, there has been no material change to our critical accounting estimates discussed in Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025.

Current wording

During the nine months ended June 30, 2026, there has been no material change to our critical accounting estimates discussed in Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025.