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Washington, D.C. 20549


(Mark One)

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


for the Quarterly Period Ended June 30, 2023 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


(Exact Name of Registrant as Specified in Its Charter)




(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

7007 Pinemont

Houston, Texas


(Address of principal executive offices)

(Zip Code)


Registrants telephone number, including area code: (713) 986-4444

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


Title of each class





Name of each exchange on which registered

Common Stock




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 July 31, 2023, the registrant had 13,188,489 shares of common stock, $0.01 par value, per share outstanding.







Item 1. Financial Statements




(in thousands except share amounts)




June 30, 2023


September 30, 2022




Current assets:


Cash and cash equivalents

 $27,264  $16,109 

Short-term investments


Trade accounts and notes receivable, net

  26,309   20,886 

Inventories, net

  19,603   19,995 

Prepaid expenses and other current assets

  3,200   2,077 

Total current assets

  76,376   59,961 

Non-current inventories, net

  22,311   12,526 

Rental equipment, net

  18,381   28,199 

Property, plant and equipment, net

  21,919   26,598 

Operating right-of-use assets

  776   957 


  736   736 

Other intangible assets, net

  4,951   5,573 

Other non-current assets

  233   506 

Total assets

 $145,683  $135,056 



Current liabilities:


Accounts payable trade

 $6,884  $5,595 

Contingent consideration


Operating lease liabilities

  253   241 

Other current liabilities

  8,990   6,616 

Total current liabilities

  16,127   12,627 

Non-current operating lease liabilities

  583   769 

Deferred tax liabilities, net

  16   13 

Total liabilities

  16,726   13,409 

Commitments and contingencies (Note 13)


Stockholders’ equity:


Preferred stock, 1,000,000 shares authorized, no shares issued and outstanding


Common Stock, $.01 par value, 20,000,000 shares authorized; 14,028,481 and 13,863,233 shares issued, respectively; and 13,186,489 and 13,021,241 shares outstanding, respectively

  140   139 

Additional paid-in capital

  95,741   94,667 

Retained earnings

  57,422   49,654 

Accumulated other comprehensive loss

  (16,846)  (15,313)

Treasury stock, at cost, 841,992 shares

  (7,500)  (7,500)

Total stockholders’ equity

  128,957   121,647 

Total liabilities and stockholders’ equity

 $145,683  $135,056 


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







(in thousands, except share and per share amounts)




Three Months Ended


Nine Months Ended


June 30, 2023


June 30, 2022


June 30, 2023


June 30, 2022





  $ 19,727     $ 13,463     $ 56,976     $ 48,060  


    12,988       7,228       38,218       15,322  

Total revenue

    32,715       20,691       95,194       63,382  

Cost of revenue:



    14,522       12,460       43,083       37,310  


    4,214       4,580       14,649       13,909  

Total cost of revenue

    18,736       17,040       57,732       51,219  

Gross profit

    13,979       3,651       37,462       12,163  

Operating expenses:


Selling, general and administrative

    6,655       6,373       19,477       18,108  

Research and development

    4,356       4,108       12,097       14,050  

Change in estimated fair value of contingent consideration

          (384 )           (5,042 )

Bad debt expense (recovery)

    (178 )     88       (41 )     116  

Total operating expenses

    10,833       10,185       31,533       27,232  

Gain on disposal of property


Income (loss) from operations

    3,146       (6,534 )     7,244       (15,069 )

Other income (expense):


Interest expense

    (22 )     (26 )     (100 )     (26 )

Interest income

    88       402       371       722  

Foreign exchange gains (losses), net

    301       (341 )     593       (230 )

Other, net

    (66 )     (7 )     (72 )     (43 )

Total other income, net

    301       28       792       423  

Income (loss) before income taxes

    3,447       (6,506 )     8,036       (14,646 )

Income tax expense

    219       68       268       170  

Net income (loss)

  $ 3,228     $ (6,574 )   $ 7,768     $ (14,816 )

Income (loss) per common share:



  $ 0.25     $ (0.51 )   $ 0.59     $ (1.14 )


  $ 0.24     $ (0.51 )   $ 0.59     $ (1.14 )

Weighted average common shares outstanding:



    13,171,654       13,013,616       13,131,795       12,977,146  


    13,320,881       13,013,616       13,157,919       12,977,146  


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







(in thousands)




Three Months Ended


Nine Months Ended


June 30, 2023


June 30, 2022


June 30, 2023


June 30, 2022


Net income (loss)

 $3,228  $(6,574) $7,768  $(14,816)

Other comprehensive income (loss):


Change in unrealized gains (losses) on available-for-sale securities, net of tax

  2   5   17   (2)

Dissolution of foreign subsidiary

  38      38    

Foreign currency translation adjustments

  (246)  2,636   (1,588)  945 

Total other comprehensive income (loss)

  (206)  2,641   (1,533)  943 

Total comprehensive income (loss)

 $3,022  $(3,933) $6,235  $(13,873)


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







FOR THE nine months ended June 30, 2023 and 2022

(in thousands, except share amounts)




Common Stock
































Balance at October 1, 2022

    13,021,241     $ 139     $ 94,667     $ 49,654     $ (15,313 )   $ (7,500 )   $ 121,647  

Net loss

                      (97 )                 (97 )

Other comprehensive income

                            14             14  

Issuance of common stock pursuant to the vesting of restricted stock units

    109,748       1                               1  

Stock-based compensation

                370                         370  

Balance at December 31, 2022

    13,130,989       140       95,037       49,557       (15,299 )     (7,500 )     121,935  

Net income

                      4,637                   4,637  

Other comprehensive loss

                            (1,341 )           (1,341 )

Issuance of common stock pursuant to the vesting of restricted stock units

    40,500                                     -  

Stock-based compensation

                306       -                   306  

Balance at March 31, 2023

    13,171,489       140       95,343       54,194       (16,640 )     (7,500 )     125,537  

Net income

                      3,228                   3,228  

Other comprehensive loss

                            (206 )           (206 )

Issuance of common stock pursuant to the vesting of restricted stock units


Stock-based compensation

                398                         398  

Balance at June 30, 2023

    13,186,489     $ 140     $ 95,741     $ 57,422     $ (16,846 )   $ (7,500 )   $ 128,957  

Balance at October 1, 2021

    12,969,542     $ 137     $ 92,935     $ 72,510     $ (16,320 )   $ (6,805 )   $ 142,457  

Net loss

                      (6,768 )                 (6,768 )

Other comprehensive loss

                            (142 )           (142 )

Issuance of common stock pursuant to the vesting of restricted stock units

    84,762       1                               1  

Purchase of treasury stock

    (72,563 )                             (695 )     (695 )

Stock-based compensation

                536                   -       536  

Balance at December 31, 2021

    12,981,741       138       93,471       65,742       (16,462 )     (7,500 )     135,389  

Net loss

                      (1,474 )                 (1,474 )

Other comprehensive loss

                            (1,556 )           (1,556 )

Issuance of common stock pursuant to the vesting of restricted stock units

    37,500       1       (1 )                       -  

Stock-based compensation

                418                         418  

Balance at March 31, 2022

    13,019,241       139       93,888       64,268       (18,018 )     (7,500 )     132,777  

Net loss

                      (6,574 )                 (6,574 )

Other comprehensive income

                            2,641             2,641  

Stock-based compensation

                388                         388  

Balance at June 30, 2022

    13,019,241     $ 139     $ 94,276     $ 57,694     $ (15,377 )   $ (7,500 )   $ 129,232  


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







(in thousands)




Nine Months Ended


June 30, 2023


June 30, 2022


Cash flows from operating activities:


Net income (loss)

  $ 7,768     $ (14,816 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:


Deferred income tax expense (benefit)

    1       (12 )

Rental equipment depreciation

    9,204       10,500  

Property, plant and equipment depreciation

    2,785       3,112  

Amortization of intangible assets

    622       1,365  

Amortization of premiums (accretion of discounts) on short-term investments

    (50 )     89  

Stock-based compensation expense

    1,074       1,342  

Bad debt expense (recovery)

    (41 )     116  

Inventory obsolescence expense

    2,131       2,310  

Change in estimated fair value of contingent consideration

          (5,042 )

Gross profit from sale of used rental equipment

    (4,318 )     (10,801 )

Gain on disposal of property

    (1,315 )      

Gain on disposal of equipment

    (432 )     (9 )

Realized loss on short-term investments


Realized foreign currency translation loss from dissolution of foreign subsidiary


Effects of changes in operating assets and liabilities:


Trade accounts and notes receivable

    (10,561 )     1,455  

Unbilled receivables



    (7,175 )     (1,705 )

Other assets

    453       (250 )

Accounts payable trade

    1,290       (2,223 )

Other liabilities

    1,654       215  

Net cash provided by (used in) operating activities

    3,128       (13,281 )

Cash flows from investing activities:


Purchase of property, plant and equipment

    (1,862 )     (913 )

Proceeds from the sale of equipment

    724       9  

Proceeds from the sale of property


Investment in rental equipment

    (6,213 )     (4,121 )

Proceeds from the sale of used rental equipment

    11,095       5,929  

Purchases of short-term investments

          (450 )

Proceeds from the sale of short-term investments

    900       8,224  

Net cash provided by investing activities

    8,326       8,678  

Cash flows from financing activities:


Payments on contingent consideration

    (175 )     (807 )

Debt issuance costs

          (211 )

Purchase of treasury stock

          (695 )

Net cash used in financing activities

    (175 )     (1,713 )

Effect of exchange rate changes on cash

    (124 )     (282 )

Increase (decrease) in cash and cash equivalents

    11,155       (6,598 )

Cash and cash equivalents, beginning of fiscal year

    16,109       14,066  

Cash and cash equivalents, end of fiscal period

  $ 27,264     $ 7,468  



Cash paid for income taxes

  $ 111     $ 168  

Issuance of note receivable related to sale of used rental equipment


Inventory transferred to rental equipment

    117       1,194  

Inventory transferred to property, plant and equipment




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







1. Significant Accounting Policies


Basis of Presentation


The consolidated balance sheet of Geospace Technologies Corporation and its subsidiaries (the “Company”) at  September 30, 2022 was derived from the Company’s audited consolidated financial statements at that date. The consolidated balance sheet at  June 30, 2023 and the consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the three and nine months ended June 30, 2023 and 2022 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 and nine months ended June 30, 2023 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, 2022.


Use of Estimates


The preparation of financial statements in conformity 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, bad debt reserves, 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.


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  June 30, 2023 and September 30, 2022, the Company had restricted cash of $0.3 million and $0.2 million, respectively.  The restricted cash at June 30, 2023 consisted of collateral on a standby letter of credit and a deposit with a bank, which serves as collateral on employee issued credit cards. At June 30, 2023, cash and cash equivalents included $3.5 million held by the Company’s foreign subsidiaries and branch offices, including $2.1 million held by its subsidiary in the Russian Federation. In response to sanctions imposed by the U.S. and others on Russia, the Russian government has imposed restrictions on companies' abilities to repatriate or otherwise remit cash from their Russian-based operations to locations outside of Russia. As a result, this cash can be used in our Russian operations, but the Company may be unable to transfer it out of Russia without incurring substantial costs, if at all. In addition, if the Company were to repatriate the cash held by its Russian subsidiary, it would be required to accrue and pay taxes on any amount repatriated.  During the second quarter of fiscal year 2023, in light of recent volatility in the financial markets, the Company entered into an IntraFi Cash Service ("ICS") Deposit Placement Agreement with IntraFi Network LLC through its primary bank, Woodforest National Bank.  The ICS program offers access to unlimited Federal Deposit Insurance Corporation ("FDIC') insurance on the Company's domestically held cash in excess of $5.0 million, thereby mitigating its risk of falling outside of FDIC coverage limits.


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 June 30, 2023, no events or changes in circumstances were identified indicating the carrying value of any of the Company's asset groups may not be recoverable.


Recently Issued Accounting Pronouncements


In June 2016, the Financial Accounting Standards Board (the “FASB”) issued guidance surrounding credit losses for financial instruments that replaces the incurred loss impairment methodology in generally accepted accounting principles. The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other financial instruments. For available-for-sale debt securities with unrealized losses, credit losses will be recognized as allowances rather than reductions in the amortized cost of the securities. As a smaller reporting company, the Company must adopt this standard no later than the first quarter of its fiscal year ending September 30, 2024, although early adoption is permitted. The standard’s provisions will be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. The Company intends to adopt this standard during the first quarter of its fiscal year ending September 30, 2024 and does not expect the adoption of this guidance to have any material impact on its consolidated financial statements.


All other new accounting pronouncements that have been issued, but 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.




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.


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


The Company also generates revenue from short-term rentals under operating leases of its manufactured products. Rental revenue is recognized as earned over the rental period if collectability of the rent is reasonably assured. Rentals of the Company’s equipment generally range from daily rentals to minimum rental periods of up to one year. The Company has determined that ASC 606 does not apply to rental contracts, which are within the scope of ASC Topic 842, Leases.


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.


At June 30, 2023, the Company had deferred contract liabilities of $1.1 million and deferred contract costs of $0.5 million.  At September 30, 2022, the Company had no deferred liabilities or deferred contract costs.  During the three and nine months ended June 30, 2023 and 2022, no revenue was recognized from deferred contract liabilities and no cost of revenue was recognized from deferred contract costs.  At June 30, 2023, all contracts had an original expected 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


Nine Months Ended


June 30, 2023


June 30, 2022


June 30, 2023


June 30, 2022


Oil and Gas Markets


Traditional exploration product revenue

 $3,363  $1,592  $9,414  $3,389 

Wireless exploration product revenue

  907   100   8,077   14,358 

Reservoir product revenue

  523   692   810   1,513 

Total revenue

  4,793   2,384   18,301   19,260 

Adjacent Markets


Industrial product revenue

  11,678   7,465   29,250   18,471 

Imaging product revenue

  3,147   3,429   9,032   9,708 

Total revenue

  14,825   10,894   38,282   28,179 

Emerging Markets



  109   135   393   571 




     50      50 


 $19,727  $13,463  $56,976  $48,060 


See Note 14 for more information on the Company’s operating segments.




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


Nine Months Ended


June 30, 2023


June 30, 2022


June 30, 2023


June 30, 2022


Asia (including Russian Federation)

 $3,287  $1,223  $11,264  $7,580 


  85   577   1,179   1,634 


  1,856   1,625   4,782   14,368 

United States

  13,481   9,297   37,551   22,621 


  1,018   741   2,200   1,857 


 $19,727  $13,463  $56,976  $48,060 


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. Short-term Investments


The Company classifies its short-term investments as available-for-sale securities. Available-for-sale 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. No gains or losses were realized during the three and nine months ended June 30, 2023 from the sale of short-term investments. For the three and nine months ended June 30, 2022, the Company realized losses of $4,000 and $22,000, respectively, from the sale of short-term investments.


The Company’s short-term investments were composed of the following (in thousands):




September 30, 2022 (in thousands)











Estimated Fair



Short-term investments:


Corporate bonds

 $909  $  $(15) $894 


The Company had no short-term investments at June 30, 2023.



4. Fair Value of Financial Instruments


The Company’s financial instruments generally include cash and cash equivalents, short-term investments, trade accounts and notes receivable and accounts payable. Due to the short-term maturities of cash and cash equivalents, trade accounts and notes receivable and accounts payable, the carrying amounts of these financial instruments are deemed to approximate their fair value on the respective balance sheet dates. The valuation technique used to measure the fair value of the contingent consideration was based on internal estimates and the use of internal projections of future revenue.


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


The following tables present the fair value of the Company’s short-term investments and contingent consideration by valuation hierarchy and input (in thousands):



As of September 30, 2022


Quoted Prices in




Active Markets for






Identical Assets






(Level 1)


(Level 2)


(Level 3)




Short-term investments:


Corporate bonds

 $  $894  $  $894 

Total assets

 $  $894  $  $894 

Contingent consideration liabilities:

 $  $  $175  $175 

Total liabilities

 $  $  $175  $175 


The Company had no short-term investments or contingent consideration payable at June 30, 2023



The following table summarizes changes in the fair value of the Company’s Level 3 financial instruments for the nine months ended June 30, 2023 and 2022 (in thousands):


Contingent consideration balance at October 1, 2022


Fair value adjustments


Payment of contingent consideration


Contingent consideration at June 30, 2023


Contingent consideration balance at October 1, 2021


Fair value adjustments


Payment of contingent consideration


Contingent consideration balance at June 30, 2022



Adjustments to the fair value of the contingent consideration were based on internal estimates and management assessments regarding potential future scenarios which involved significant judgment. 


5. Trade Accounts and Notes Receivable


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



June 30, 2023


September 30, 2022


Trade accounts receivable

  $ 24,409     $ 13,252  

Allowance for doubtful accounts

    (208 )     (591 )


  $ 24,201     $ 12,661  


The allowance for doubtful accounts represents the Company’s best estimate of probable credit losses. The Company determines the allowance based upon historical experience and a current review of its trade accounts receivable balances. Trade accounts receivable balances are charged off against the allowance whenever it is probable that the receivable balance will not be recoverable.


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



June 30, 2023


September 30, 2022


Notes receivable

  $ 2,108     $ 8,225  

Less current portion

    (2,108 )     (8,225 )

Non-current notes receivable

  $     $  


Promissory notes receivable are generally collateralized by the products sold. At June 30, 2023, the Company had one promissory note outstanding from a customer with a face amount of $10.0 million.  The note originated during the second quarter of fiscal year 2020 in connection with a $12.5 million product sale with the customer. The note bears interest at 7.0% per year and has a three-year term with monthly principal and interest payments of $0.3 million. During the fourth quarter of fiscal year 2021, the Company granted the customer a six-month principal payment forbearance. The customer recommenced its monthly payments to the Company in the second quarter of fiscal year 2022.  In October 2022, the Company granted the customer an additional six-month principal payment forbearance. The customer recommenced its monthly payments to the Company in the third quarter of fiscal year 2023.  The customer has made payments totaling $10.4 million (exclusive of interest) as of June 30, 2023 related to the product sale, and the balance outstanding on the promissory note at June 30, 2023 was $2.1 million.  The note matures in January 2024.


6. Inventories


Inventories consist of the following (in thousands):



June 30, 2023


September 30, 2022


Finished goods

 $18,176  $14,653 

Work in process

  9,446   6,230 

Raw materials

  27,300   25,609 

Obsolescence reserve (net realizable value adjustment)

  (13,008)  (13,971)
   41,914   32,521 

Less current portion

  19,603   19,995 

Non-current portion

 $22,311  $12,526 


Raw materials include semi-finished goods and component parts that totaled $9.3 million and $9.4 million at June 30, 2023 and September 30, 2022, respectively.  At June 30,2023, non-current inventories included raw materials and work in process totaling $5.1 million that will be transferred to rental equipment during the fourth quarter of fiscal year 2023.




7. Property, Plant and Equipment


In February 2023, the Company completed the sale of its satellite property located at 6410 Langfield Road in Houston, Texas for a cash price of $3.7 million, net of closing costs of $0.3 million, and realized a gain on disposal of $1.3 million.  The satellite property provided additional warehousing and maintenance and repair capacity for the Company’s marine rental equipment operations.  The Company has relocated the operations of this facility to its main campus at 7007 Pinemont Drive in Houston, Texas.  The sale was part of the Company’s plan to streamline operations and reduce costs. 


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



June 30, 2023


September 30, 2022


Land and land improvements

  $ 7,291     $ 7,855  

Building and building improvements

    22,080       24,588  

Machinery and equipment

    49,588       59,393  

Furniture and fixtures

    1,495       1,434  

Tools and molds

    3,362       3,243  

Construction in progress

    509       341  

Transportation equipment

    75       74  
      84,400       96,928  

Accumulated depreciation and impairment

    (62,481 )     (70,330 )
    $ 21,919     $ 26,598  


Property, plant and equipment depreciation expense for the three and nine months ended June 30, 2023 was $0.9 million and $2.8 million, respectively.  Property, plant and equipment depreciation expense for the three and nine months ended June 30, 2022 was $1.0 million and $3.1 million, respectively.


8. Leases


As Lessee


The Company has elected not to record operating right-of-use assets or operating lease liabilities on its consolidated balance sheet for leases having a minimum term of 12 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 lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As of June 30, 2023, the Company has two operating right-of-use assets related to leased facilities in Austin, Texas and Melbourne, Florida.


Maturities of the operating lease liabilities as of June 30, 2023 were as follows: (in thousands):


For fiscal years ending September 30,


2023 (remainder)












Future minimum lease payments


Less interest


Present value of minimum lease payments


Less current portion


Non-current portion



Lease costs recognized in the consolidated statements of operations for the three and nine months ended June 30, 2023 and 2022 were as follows (in thousands):



Three Months Ended


Nine Months Ended


June 30, 2023


June 30, 2022


June 30, 2023


June 30, 2022


Right-of-use operating lease costs

 $68  $68  $204  $204 

Short-term lease costs

  36   52   168   148 


 $104  $120  $372  $352 


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):



Nine Months Ended


June 30, 2023


June 30, 2022


Cash paid for amounts included in the measurement of lease liabilities:


Operating cash flows from operating leases

 $196  $190 

Weighted average remaining lease term (in years)

  4.1   4.9 

Weighted average discount rate

  3.25%  3.25%


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




As Lessor




The Company leases equipment to customers which generally range from daily rentals to minimum rental periods of up to one year. All of the Company’s current leasing arrangements, which the Company acts 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 systems.


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 are no longer probable and concurrently records a direct write-off of the lease receivable to rental revenue and limits future rental revenue recognition to cash received. As of June 30, 2023, the Company’s trade accounts receivables included lease receivables of $10.1 million.


Rental revenue related to leased equipment for the three and nine months ended June 30, 2023 was $12.9 million and $38.0 million, respectively.  Rental revenue related to leased equipment for the three and nine months ended June 30, 2022 was $7.1 million and $15.2 million, respectively.


Future minimum lease obligations due from the Company’s leasing customers on operating leases executed as of  June 30, 2023 were $29.9 million, all of which is expected to be due within the next 12 months.


Rental equipment consisted of the following (in thousands):



June 30, 2023


September 30, 2022


Rental equipment, primarily wireless recording equipment

 $80,819  $83,887 

Accumulated depreciation and impairment

  (62,438)  (55,688)
  $18,381  $28,199 




During the first quarter of fiscal year 2022, the Company leased a portion of its property located in Calgary, Alberta, Canada and fully leased its warehouse in Colombia. The lease in Canada commenced in November 2021 and is for a five-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 these two property leases for the three and nine months ended June 30, 2023 was $0.1 million and $0.2 million, respectively.  Rental revenue related to these two properties for each of the three and nine months ended June 30, 2022 was $0.1 million.


Future minimum lease payments due to the Company as of June 30, 2023 on the lease in Canada was as follows (in thousands):


For fiscal years ending September 30,


2023 (remainder)










9. Goodwill and Other Intangible Assets


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







Remaining Useful


Lives (in years)


June 30, 2023


September 30, 2022




Emerging Markets reporting unit

        $ 4,336     $ 4,336  

Adjacent Markets reporting unit

          736       736  

Total goodwill

          5,072       5,072  

Accumulated impairment losses

          (4,336 )     (4,336 )
          $ 736     $ 736  

Other intangible assets:


Developed technology

  13.4     $ 6,475     $ 6,475  

Customer relationships

  --       3,900       3,900  

Trade names

  0.3       2,022       2,022  

Non-compete agreements

  0.2       186