geos20251231

geos20251231_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the Quarterly Period Ended December 31, 2025 OR

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from ____ to ____

Commission file number 001-13601

GEOSPACE TECHNOLOGIES CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Texas	76-0447780
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
7007 Pinemont Houston, Texas	77040
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (713) 986-4444

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock

GEOS

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of January 30, 2026 the registrant had 12,887,918 shares of common stock, $0.01 par value per share, outstanding.

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Table of Contents

		Page Number
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements		3

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

Item 3. Quantitative and Qualitative Disclosures about Market Risk		19

Item 4. Controls and Procedures		20

PART II. OTHER INFORMATION

Item 6. Exhibits		21

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands except share amounts)

(unaudited)

	*December 31, 2025*			*September 30, 2025*
ASSETS
Current assets:
Cash and cash equivalents	$	10,579		$	26,338
Trade accounts and financing receivables, net		25,356			28,009
Inventories, net		35,367			30,901
Prepaid expenses and other current assets		6,429			3,252
Total current assets		77,731			88,500

Non-current inventories, net		15,779			17,113
Rental equipment, net		7,018			8,120
Property, plant and equipment, net		24,577			23,244
Non-current financing receivables		11,917			8,190
Operating right-of-use assets		816			915
Goodwill		1,258			1,258
Other intangible assets, net		5,013			5,155
Other non-current assets		509			542
Total assets	$	144,618		$	153,037

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable trade	$	15,440		$	10,369
Operating lease liabilities		432			420
Other current liabilities		9,690			13,641
Total current liabilities		25,562			24,430

Contingent consideration		2,736			2,540
Non-current operating lease liabilities		441			554
Deferred tax liabilities, net		1			4
Total liabilities		28,740			27,528

Commitments and contingencies (Note 11)

Stockholders’ equity:
Preferred stock, 1,000,000 shares authorized, no shares issued and outstanding		—			—
Common Stock, $.01 par value, 20,000,000 shares authorized; 14,446,178 and 14,378,962 shares issued, respectively; and 12,887,918 and 12,820,702 shares outstanding, respectively		144			144
Additional paid-in capital		98,959			98,845
Retained earnings		35,793			45,558
Accumulated other comprehensive loss		(4,518	)		(4,538	)
Treasury stock, at cost, 1,558,260 shares		(14,500	)		(14,500	)
Total stockholders’ equity		115,878			125,509
Total liabilities and stockholders’ equity	$	144,618		$	153,037

The accompanying notes are an integral part of the consolidated financial statements.

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GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)

	*Three Months Ended*
	*December 31, 2025*			*December 31, 2024*
Revenue:
Products	$	24,389		$	32,645
Rental		1,197			4,578
Total revenue		25,586			37,223
Cost of revenue:
Products		20,831			14,269
Rental		2,059			2,805
Total cost of revenue		22,890			17,074

Gross profit		2,696			20,149

Operating expenses:
Selling, general and administrative		8,279			7,420
Research and development		4,489			4,894
Change in fair value of contingent consideration		196			—
Recovery of credit losses		(21	)		—
Total operating expenses		12,943			12,314

Income (loss) from operations		(10,247	)		7,835

Other income (expense):
Interest expense		(37	)		(44	)
Interest income		634			745
Foreign currency transaction gains (losses), net		3			(14	)
Other, net		(37	)		(33	)
Total other income, net		563			654

Income (loss) before income taxes		(9,684	)		8,489
Income tax expense		81			113
Net income (loss)	$	(9,765	)	$	8,376

Income (loss) per common share:
Basic	$	(0.76	)	$	0.66
Diluted	$	(0.76	)	$	0.65

Weighted average common shares outstanding:
Basic		12,849,600			12,753,378
Diluted		12,849,600			12,877,387

The accompanying notes are an integral part of the consolidated financial statements.

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GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	*Three Months Ended*
	*December 31, 2025*			*December 31, 2024*
Net income (loss)	$	(9,765	)	$	8,376
Other comprehensive income (loss):
Change in unrealized losses on available-for-sale securities, net of tax		—			(43	)
Foreign currency translation adjustments		20			(399	)
Total other comprehensive income (loss)		20			(442	)
Total comprehensive income (loss)	$	(9,745	)	$	7,934

The accompanying notes are an integral part of the consolidated financial statements.

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GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE three months ended December 31, 2025 and 2024

(in thousands, except share amounts)

(unaudited)

	*Common Stock*											*Accumulated*
						*Additional*						*Other*
	*Shares*					*Paid-In*			*Retained*			*Comprehensive*			*Treasury*
	*Outstanding*			*Amount*		*Capital*			*Earnings*			*Loss*			*Stock*			*Total*
Balance at October 1, 2025		12,820,702		$	144	$	98,845		$	45,558		$	(4,538	)	$	(14,500	)	$	125,509
Net loss		—			—		—			(9,765	)		—			—			(9,765	)
Other comprehensive income		—			—		—			—			20			—			20
Issuance of common stock pursuant to the vesting of restricted stock units		86,217			—		—			—			—			—			—
Common stock exchanged for withholding taxes on stock-based compensation		(19,001	)		—		(305	)		—			—			—			(305	)
Stock-based compensation		—			—		419			—			—			—			419
Balance at December 31, 2025		12,887,918		$	144	$	98,959		$	35,793		$	(4,518	)	$	(14,500	)	$	115,878

Balance at October 1, 2024		12,709,381		$	142	$	97,342		$	55,282		$	(4,257	)	$	(13,885	)	$	134,624
Net income		—			—		—			8,376			—			—			8,376
Other comprehensive loss		—			—		—			—			(442	)		—			(442	)
Issuance of common stock pursuant to the vesting of restricted stock units		109,180			1		(1	)		—			—			—			—
Purchase of treasury stock		(19,664	)		—		—			—			—			(197	)		(197	)
Stock-based compensation		—			—		349			—			—			—			349
Balance at December 31, 2024		12,798,897		$	143	$	97,690		$	63,658		$	(4,699	)	$	(14,082	)	$	142,710

The accompanying notes are an integral part of the consolidated financial statements.

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GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	*Three Months Ended*
	*December 31, 2025*			*December 31, 2024*
Cash flows from operating activities:
Net income (loss)	$	(9,765	)	$	8,376
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Deferred income benefit		(3	)		—
Rental equipment depreciation		1,259			1,884
Property, plant and equipment depreciation		1,155			867
Amortization of intangible assets		141			37
Amortization of discount on note receivable		(18	)		(12	)
Accretion of discounts on short-term investments		—			(104	)
Stock-based compensation expense		419			349
Recovery of credit losses		(21	)		—
Inventory obsolescence expense		627			506
Gross (profit) loss from sale of rental equipment		78			(15,978	)
(Gain) loss on disposal of property, plant and equipment		16			(86	)
Realized gain on investments		—			(10	)
Effects of changes in operating assets and liabilities:
Trade accounts and financing receivables		(3,155	)		(3,622	)
Inventories		(3,962	)		(2,988	)
Other assets		(3,043	)		(196	)
Accounts payable trade		5,071			(690	)
Other liabilities		(4,066	)		158
Fair value of contingent consideration		196			—
Net cash used in operating activities		(15,071	)		(11,509	)

Cash flows from investing activities:
Purchase of property, plant and equipment		(2,480	)		(3,199	)
Proceeds from the sale of property, plant and equipment		—			89
Investment in rental equipment		(30	)		(373	)
Proceeds from the sale of rental equipment		2,050			65
Proceeds from the sale of short-term investments		—			9,660
Payments received on note receivable related to sale of subsidiary		71			45
Net cash (used in) provided by investing activities		(389	)		6,287

Cash flows from financing activities:
Taxes payments on stock-based compensation for exchange of common stock		(305	)		—
Purchase of treasury stock		—			(197	)
Net cash used in financing activities		(305	)		(197	)

Effect of exchange rate changes on cash		6			(66	)
(Decrease) in cash and cash equivalents		(15,759	)		(5,485	)
Cash and cash equivalents, beginning of period		26,338			6,895
Cash and cash equivalents, end of period	$	10,579		$	1,410

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes	$	45		$	113
Financing receivables related to sale of rental equipment		—			16,112
Inventory transferred to rental equipment		205			36

The accompanying notes are an integral part of the consolidated financial statements.

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GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. Significant Accounting Policies

Basis of Presentation

The consolidated balance sheet of Geospace Technologies Corporation and its subsidiaries (the “Company”) at September 30, 2025, was derived from the Company’s audited consolidated financial statements at that date. The consolidated balance sheet at December 31, 2025 and the consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the three months ended December 31, 2025 and 2024 were prepared by the Company without audit. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the consolidated financial position, results of operations and cash flows were made. All significant intercompany balances and transactions have been eliminated. The results of operations for the three months ended December 31, 2025, are not necessarily indicative of the operating results for a full year or of future operations.

Certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") were omitted pursuant to the rules of the Securities and Exchange Commission. The accompanying consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended September 30, 2025.

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, contingent consideration 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.

Reclassifications

Certain amounts previously reported in the consolidated financial statements have been reclassified to conform to the current year presentation. Such reclassifications had no effect on our previously reported net loss, stockholders' equity or cash flows.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original or remaining maturity at the time of purchase of three months or less to be cash equivalents. At December 31, 2025 and September 30, 2025, cash and cash equivalents included $0.8 million held by the Company’s foreign subsidiaries and branch offices.

Concentration of Credit Risk

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 may be extended to 60 days or longer. The Company performs ongoing credit evaluations of its customers and generally does not 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 may require 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, and current aging of customer accounts and financial conditions of its customers. Receivables are charged off against the allowance whenever it is probable that the balance will not be recoverable.

The Company had trade accounts and financing receivables from four customers of $15.0 million, $7.7 million, $5.9 million and $1.2 million, respectively at December 31, 2025. The Company recognized revenue from these four customers of $10.6 million, $21,000, $0.2 million and $2.8 million, respectively, for the three months ended December 31, 2025. The Company recognized revenue from these four customers of zero, $44,000, $18.7 million and $2.8 million, respectively, for the three months ended December 31, 2024. These receivables and revenue are related to the Company's Energy Solutions segment, except for the latter customer who is related to the Company's Smart Water segment.

Impairment of Long-lived Assets

The Company's long-lived assets are reviewed for impairment whenever an event or circumstance indicates that the carrying amount of an asset or group of assets may not be recoverable. The impairment review, if necessary, includes a comparison of the 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. During the quarter ended December 31, 2025, no events or changes in circumstances were identified indicating the carrying value of any of the Company's asset groups may not be recoverable.

Goodwill

The Company conducts its evaluation of goodwill at the reporting unit level on an annual basis as of September 30 and more frequently if events or circumstances indicate that the carrying value of a reporting unit exceeds its fair value. The Company first 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 than not that the fair value of a reporting unit is more than its carrying amount then it does not 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.

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 multiple 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 its fourth quarter fiscal year 2025 acquisition of Geovox Securities, Inc. ("Geovox"). The Company recognizes measurement-period adjustments in the reporting period in which the adjustment amounts are determined.

Contingent Consideration

The Company established an earn-out liability in connection with its acquisition of Geovox in the fourth quarter of fiscal year 2025. 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 forecast, risk free rate, revenue volatility, revenue discount rate and payment discount rate. The 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.

Research and Development

We incur significant future research and development expenditures. These efforts are primarily aimed at the development of additional products for each of our business segments. The majority of our product research and development costs relates to the Company's engineers. The Company's engineering staff have been key to our past success. Research and development expense includes personnel costs of the Company's engineers, project expenditures, on-going product maintenance and improvements to our existing products, as well as general and administrative expenses associated with the engineering department. Research and development expense for the three months ended December 31, 2025 and 2024 was $4.5 million and $4.9 million, respectively.

Recently Issued Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board ("'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 asset amortization. The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the provisions of this guidance and the impact on its consolidation financial statements.

In December 2023, the FASB issued guidance improvements on 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 its fourth quarter of fiscal year 2026. The guidance allows for adoption using either a prospective or retrospective transition method. The adoption of this guidance is not expected to have any material impact on its consolidation financial statements.

All other new accounting pronouncements that have been issued, but are not yet effective, are currently being evaluated and at this time are not expected to have a material impact on the Company's financial position or results of operations.

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2. Revenue Recognition

In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), 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 has not yet occurred. The Company assesses collectability during the contract assessment phase. In situations where collectability of the sales price is not probable, the Company recognizes revenue when it determines that collectability is probable or when non-refundable cash is received from its customers and there is not 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 do not allow customers to return products for credit.

The Company occasionally recognizes revenue from contracts throughout the manufacturing or service process, even prior to delivery of the completed product or service to the customer. This overtime recognition of revenue requires that either (i) the customer simultaneously receives and consumes the economic benefits the Company provides, (ii) the Company creates or enhances an asset controlled by the customer or (iii) the Company’s performance does not create an asset for which the it has an alternative use and has an enforceable right to payment for performance completed to date.

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.

As permissible under ASC 606, sales taxes and transaction-based taxes are excluded from revenue. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Additionally, the Company expenses costs incurred to obtain contracts when incurred because the amortization period would have been one 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 and not 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 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 to one year. Rental revenue is recognized within the scope of ASC 842, Leases ("ASC 842"). 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 ASC 842, rental revenue is recognized as earned over the rental period if collectability of the rent is reasonably assured. When collectability of amounts are no 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 the second quarter of fiscal year 2025, the Company determined 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.

At December 31, 2025 and September 30, 2025, the Company had no deferred contract liabilities and no deferred contract assets. During the three months ended December 31, 2025 and 2024, no revenue or cost of revenue was recognized from deferred contract costs or deferred contract asset. At December 31, 2025 and October 1, 2025, the Company had accounts receivable from contracts with customers of $7.9 million and $11.4 million, respectively. At December 31, 2024 and October 1, 2024, the Company had accounts receivable from contracts with customers of $12.0 million and $13.4 million, respectively. Accounts receivable from contracts with customers exclude accounts receivable from rental contracts.

For the three months ended December 31, 2025 and 2024 revenue of $0.4 million and zero, respectively, was recognized from contracts with customers satisfied over-time, which was from the Company's Energy Solutions segment.

At December 31, 2025, the aggregate amount of transaction price allocation to unsatisfied performance obligations on contracts with a duration in excess of one year was approximately $93 million. The majority of these unsatisfied performance obligations are expected to be fulfilled over the next 24 months. The majority of the revenue will be recognized over-time over the duration of the contracts. All other revenue from contracts with customers are being recognized at a point-in time and have a duration of one 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. Therefore, the table excludes all revenue earned from rental contracts.

	*Three Months Ended*
	*December 31, 2025*		*December 31, 2024*
Smart Water	$	5,756	$	7,288
Energy Solutions		13,573		19,826
Intelligent Industrial		5,060		5,531
Total	$	24,389	$	32,645

See Note 12 for more information on the Company’s operating business segments.

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

	*Three Months Ended*
	*December 31, 2025*		*December 31, 2024*
Asia (including Russian Federation)	$	962	$	18,057
Canada		1,647		369
Europe		507		1,398
Mexico		49		1,281
South America		122		22
United States		20,965		11,423
Other		137		95
Total	$	24,389	$	32,645

Revenue is attributable to countries based on the ultimate destination of the product sold, if known. If the ultimate destination is not known, revenue is attributable to countries based on the geographic location of the initial shipment.

3. 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 of these financial instruments are deemed to approximate their fair value on the respective balance sheet dates. The Company measures its contingent consideration at fair value on a recurring basis.

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

	*As of December 31, 2025*
	*(Level 1)*		*(Level 2)*		*(Level 3)*			*Totals*
Recurring:
Contingent Consideration	$	—	$	—	$	(2,736	)	$	(2,736	)

	*As of September 30, 2025*
	*(Level 1)*		*(Level 2)*		*(Level 3)*			*Totals*
Recurring:
Contingent consideration	$	—	$	—	$	(2,540	)	$	(2,540	)

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 forecast, risk free rate, revenue volatility, revenue discount rate and payment discount rate (Level 3). Contingent payments, if any, will be based on eligible revenue generated during a four-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:

Contingent consideration balance at October 1, 2025	$	2,540
Fair value adjustments		196
Contingent consideration at December 31, 2025	$	2,736

Assets and liabilities Measured on a Nonrecurring basis

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4. Trade Accounts and Financing Receivables

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

	*December 31, 2025*			*September 30, 2025*
Trade accounts receivable	$	8,728		$	12,725
Allowance for credit losses		(42	)		(63	)
Total trade accounts receivable	$	8,686		$	12,662

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. Trade accounts receivable balances are charged off against the allowance whenever it is probable that the receivable balance will not be recoverable.

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

	*Three Months Ended*
	*December 31, 2025*			*December 31, 2024*
Allowance for credit losses:
Beginning of period	$	63		$	4
Provision for credit losses		5			—
Recoveries		(26	)		—
End of period	$	42		$	4

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

	*December 31, 2025*			*September 30, 2025*
Promissory notes	$	25,606		$	19,149
Sales-type lease		3,844			5,302
Total financing receivables		29,450			24,451
Discount to fair value and unearned income		(863	)		(914	)
Total financing receivables, net		28,587			23,537
Less current portion		(16,670	)		(15,347	)
Non-current financing receivables	$	11,917		$	8,190

During the first quarter of fiscal year 2026, the Company entered into three promissory notes totaling $7.9 million with a customer related to product sales. The notes bear interest at 8.75% and mature during the first quarter of fiscal year 2029. Principal and interest installments totaling $0.3 million are due monthly until maturity. The notes are collateralized by the products sold.

During the fourth quarter of fiscal year 2025, The Company entered into two promissory notes totaling $7.5 million with a customer related to product sales. The notes bear interest at 8.75% per annum and mature during the fourth quarter of fiscal year 2028. Principal and interest installments totaling $0.2 million are due monthly until maturity. The notes are collateralized by the products sold.

In November 2024, the Company entered into a sales-type lease with a customer on ocean bottom equipment from its rental fleet. The lease, which matured in October 2025, had a remaining unpaid principal balance of $3.8 million at December 31, 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 November 2026. 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 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 is being recognized under the effective interest method.

Credit quality indicators used for the financing receivables consisted of historical collection experience, internal credit risk grades and collateral. The Company determined 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.

5. Inventories

Inventories consist of the following (in thousands):

	*December 31, 2025*			*September 30, 2025*
Finished goods	$	24,852		$	24,180
Work in process		5,708			6,408
Raw materials		28,288			27,245
Obsolescence reserve (net realizable value adjustment)		(7,702	)		(9,819	)
Total		51,146			48,014
Less current portion		35,367			30,901
Non-current portion	$	15,779		$	17,113

Inventory obsolescence expense for the three months ended December 31, 2025 and 2024 was $0.6 million and $0.5 million, respectively. Raw materials include semi-finished goods and component parts that totaled approximately $7.8 million and $9.1 million at December 31, 2025 and September 30, 2025, respectively.

Table of Contents

6. Property, Plant and Equipment

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

	*December 31, 2025*			*September 30, 2025*
Land and land improvements	$	2,983		$	2,960
Building and building improvements		24,455			24,089
Machinery and equipment		49,065			48,647
Furniture and fixtures		1,353			1,032
Tools and molds		4,896			3,928
Construction in progress		3,222			2,856
Transportation equipment		41			41
		86,015			83,553
Accumulated depreciation and impairment		(61,438	)

SEC Form 10-Q filed by Geospace Technologies Corporation