1 unchanged sentence
Evaluation of Disclosure Controls and Procedures
−Removed: Our management is responsible for establishing and maintaining a system of disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”).
+Added: Our management is responsible for establishing and maintaining a system of disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”).
Notwithstanding the foregoing, there can be no assurance that our disclosure controls and procedures will detect or uncover all failures of persons within the Company and its consolidated subsidiaries to report material information otherwise required to be set forth in our reports.
−Removed: In connection with the preparation of this Annual Report on Form 10-K, we carried out an evaluation under the supervision and with the participation of our management, including the CEO and CFO, as of September 30, 2021 of the effectiveness of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.
+Added: In connection with the preparation of this Annual Report on Form 10-K, we carried out an evaluation under the supervision and with the participation of our management, including the CEO and CFO, as of September 30, 2022 of the effectiveness of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.
Based on that evaluation, the CEO and CFO concluded that our disclosure controls and procedures are effective as of September 30, 2022.
−Removed: Management’s Report on Internal Control Over Financial Reporting
+Added: Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining effective internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).
7 unchanged sentences
Other Information
−Removed: Directors, Executive Officers and Corporate Governance
−Removed: The information required by this Item is contained in our definitive Proxy Statement to be distributed within 120 days of September 30, 2021 in connection with our 2022 Annual Meeting of Stockholders under the captions “Election of Directors,” “Executive Officers and Compensation,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Code of Ethics” and is incorporated herein by reference.
−Removed: Executive Compensation
−Removed: The information required by this Item is contained in our definitive Proxy Statement to be distributed within 120 days of September 30, 2021 in connection with our 2022 Annual Meeting of Stockholders under the caption “Executive Officers and Compensation” and is incorporated herein by reference.
−Removed: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
−Removed: The information required by this Item is contained in our definitive Proxy Statement to be distributed within 120 days of September 30, 2021 in connection with our 2022 Annual Meeting of Stockholders under the caption “Security Ownership of Certain Beneficial Owners and Management” and is incorporated herein by reference, and in Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities,” contained in Part II hereof.
−Removed: Certain Relationships and Related Transactions and Director Independence
−Removed: The information required by this Item is contained in our definitive Proxy Statement to be distributed within 120 days of September 30, 2021 in connection with our 2022 Annual Meeting of Stockholders under the caption “Certain Relationships and Related Transactions” and is incorporated herein by reference.
−Removed: Principal Accountant Fees and Services
−Removed: The information required by this Item is contained in our definitive Proxy Statement to be distributed within 120 days of September 30, 2021 in connection with our 2022 Annual Meeting of Stockholders under the caption “Independent Public Accountants” and is incorporated herein by reference.
−Removed: Exhibits and Financial Statement Schedules
+Added: Directors, Executive Of ficers and Corporate Governance
+Added: The information required by this Item is contained in our definitive Proxy Statement to be distributed within 120 days of September 30, 2022 in connection with our 2023 Annual Meeting of Stockholders under the captions “Election of Directors,”
+Added: “Executive Officers and Compensation,”
+Added: “Section 16(a) Beneficial Ownership Reporting Compliance”
+Added: and “Code of Ethics”
+Added: and is incorporated herein by reference.
+Added: Executi ve Compensation
+Added: The information required by this Item is contained in our definitive Proxy Statement to be distributed within 120 days of September 30, 2022 in connection with our 2023 Annual Meeting of Stockholders under the caption “Executive Officers and Compensation”
+Added: and is incorporated herein by reference.
+Added: Security Ownership of Certain Beneficial Ow ners and Management and Related Stockholder Matters
+Added: The information required by this Item is contained in our definitive Proxy Statement to be distributed within 120 days of September 30, 2022 in connection with our 2023 Annual Meeting of Stockholders under the caption “Security Ownership of Certain Beneficial Owners and Management”
+Added: and is incorporated herein by reference, and in Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities,”
+Added: contained in Part II hereof.
+Added: Certain Relationships and Relate d Transactions and Director Independence
+Added: The information required by this Item is contained in our definitive Proxy Statement to be distributed within 120 days of September 30, 2022 in connection with our 2023 Annual Meeting of Stockholders under the caption “Certain Relationships and Related Transactions”
+Added: and is incorporated herein by reference.
+Added: Principal Accou ntant Fees and Services
+Added: The information required by this Item is contained in our definitive Proxy Statement to be distributed within 120 days of September 30, 2022 in connection with our 2023 Annual Meeting of Stockholders under the caption “Independent Public Accountants”
+Added: and is incorporated herein by reference.
+Added: Exhibits and Fina ncial Statement Schedules
Financial Statements and Financial Statement Schedules
1 unchanged sentence
Description of Documents
−Removed: Amended and Restated Certificate of Formation of Geospace Technologies Corporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed May 8, 2015).
−Removed: Amended and Restated Bylaws of Geospace Technologies Corporation (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed August 8, 2019).
+Added: Amended and Restated Certificate of Formation of Geospace Technologies Corporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed May 8, 2015).
+Added: Amended and Restated Bylaws of Geospace Technologies Corporation (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed August 8, 2019).
Employment Agreement dated as of August 1, 1997, between the Company and Michael J.
−Removed: Sheen (incorporated by reference to the Registrant’s Registration Statement on Form S-1 filed September 30, 1997 (Registration No.
+Added: Sheen (incorporated by reference to the Registrant’s Registration Statement on Form S-1 filed September 30, 1997 (Registration No.
333-36727)).*
Employment Agreement effective as of January 1, 2012, by and between OYO Geospace Corporation and Walter R.
−Removed: Wheeler (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed December 9, 2011).*
+Added: Wheeler (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed December 9, 2011).*
Employment Agreement effective as of January 1, 2012, by and between OYO Geospace Corporation and Robbin B.
−Removed: Adams (incorporated by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed December 9, 2011).*
+Added: Adams (incorporated by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed December 9, 2011).*
Employment Agreement effective as of January 1, 2012, by and between OYO Geospace Corporation and Thomas T.
−Removed: McEntire (incorporated by reference to Exhibit 99.3 to the Registrant’s Current Report on Form 8-K filed December 9, 2011).*
−Removed: Geospace Technologies Corporation 2014 Long-Term Incentive Plan (incorporated by reference to Appendix A to the Company’s Proxy Statement on Schedule 14A filed December 11, 2013).*
−Removed: First Amendment to the Geospace Technologies Corporation 2014 Long-Term Incentive Plan (incorporated by reference to Appendix A to the Company’s Proxy Statement on Schedule 14A filed December 30, 2020).*
−Removed: Form of Employee Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Form S-8 filed May 21, 2014).*
−Removed: Form of Employee Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed November 26, 2018).*
−Removed: Form of Employee Incentive Stock Option Award Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Form S-8 filed May 21, 2014).*
−Removed: Form of Employee Non-Qualified Stock Option Award Agreement (incorporated by reference to Exhibit 10.3 to the Registrant’s Form S-8 filed May 21, 2014).*
−Removed: Form of Performance Option Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed November 20, 2015).*
−Removed: Form of Consultant Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 to the Registrant’s Form S-8 filed May 21, 2014).*
−Removed: Form of Consultant Stock Option Award Agreement (incorporated by reference to Exhibit 10.5 to the Registrant’s Form S-8 filed May 21, 2014).*
−Removed: Form of Director Stock Option Award Agreement (incorporated by reference to Exhibit 10.6 to the Registrant’s Form S-8 filed May 21, 2014).*
−Removed: Form of Director Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.7 to the Registrant’s Form S-8 filed May 21, 2014).*
−Removed: Form of Director Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed May 3, 2019).*
−Removed: Description of Documents
−Removed: Form of Employee Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed November 26, 2018).*
−Removed: Form of Amended and Restated Indemnity Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed May 26, 2015).*
−Removed: Geospace Technologies Corporation Annual Bonus Program (incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K for the year ended September 30, 2017 filed December 1, 2017).*
+Added: McEntire (incorporated by reference to Exhibit 99.3 to the Registrant’s Current Report on Form 8-K filed December 9, 2011).*
+Added: Geospace Technologies Corporation 2014 Long-Term Incentive Plan (incorporated by reference to Appendix A to the Company’s Proxy Statement on Schedule 14A filed December 11, 2013).*
+Added: First Amendment to the Geospace Technologies Corporation 2014 Long-Term Incentive Plan (incorporated by reference to Appendix A to the Company’s Proxy Statement on Schedule 14A filed December 30, 2020).*
+Added: Form of Employee Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Form S-8 filed May 21, 2014).*
+Added: Form of Employee Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed November 26, 2018).*
+Added: Form of Employee Incentive Stock Option Award Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Form S-8 filed May 21, 2014).*
+Added: Form of Employee Non-Qualified Stock Option Award Agreement (incorporated by reference to Exhibit 10.3 to the Registrant’s Form S-8 filed May 21, 2014).*
+Added: Form of Performance Option Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed November 20, 2015).*
+Added: Form of Consultant Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 to the Registrant’s Form S-8 filed May 21, 2014).*
+Added: Form of Consultant Stock Option Award Agreement (incorporated by reference to Exhibit 10.5 to the Registrant’s Form S-8 filed May 21, 2014).*
+Added: Form of Director Stock Option Award Agreement (incorporated by reference to Exhibit 10.6 to the Registrant’s Form S-8 filed May 21, 2014).*
+Added: Form of Director Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.7 to the Registrant’s Form S-8 filed May 21, 2014).*
+Added: Form of Director Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed May 3, 2019).*
+Added: Form of Employee Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed November 26, 2018).*
+Added: Form of Amended and Restated Indemnity Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed May 26, 2015).*
+Added: Geospace Technologies Corporation Annual Bonus Program (incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K for the year ended September 30, 2017 filed December 1, 2017).*
First Amendment effective October 1, 2008 to Employment Agreement dated as of August 1, 1997, between the Company and Michael J.
−Removed: Sheen (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2009, filed February 5, 2010).*
+Added: Sheen (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2009, filed February 5, 2010).*
Second Amendment effective November 17, 2020 to Employment Agreement dated as of August 1, 1997, between the Company and Michael J.
−Removed: Sheen (incorporated by reference to the Registrant’s Current Report on Form 8-K filed November 23, 2020, File No.:
−Removed: Loan Agreement dated September 27, 2013 among Geospace Technologies Corporation, as borrower, certain subsidiaries of Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender (incorporated by reference to Exhibit 10.1 of the registrant’s Current Report on Form 8-K filed October 1, 2013).
−Removed: First Amendment to Loan Agreement effective September 27, 2013 among Geospace Technologies Corporation, as borrower, certain subsidiaries of Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender (incorporated by reference to Exhibit 10.1 of the registrant’s Current Report on Form 8-K filed December 18, 2013).
−Removed: Second Amendment to the Loan Agreement effective May 4, 2015 by and between Geospace Technologies Corporation as borrower, certain subsidiaries of Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed May 8, 2015) .
−Removed: Third Amendment to the Loan Agreement effective May 9, 2017 by and between Geospace Technologies Corporation as borrower, certain subsidiaries of Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender (incorporated by reference to Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K for the year ended September 30, 2018 filed December 1, 2017).
−Removed: Fourth Amendment to Loan Agreement dated October 25, 2017 among Geospace Technologies Corporation, as borrower, certain subsidiaries of Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed October 27, 2017).
−Removed: Fifth Amendment to Loan Agreement dated November 9, 2018 among Geospace Technologies Corporation, as borrower, certain subsidiaries of Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed November 13, 2018).
−Removed: Sixth Amendment to Loan Agreement dated March 29, 2019 among Geospace Technologies Corporation, as borrower, certain subsidiaries of Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed March 29, 2019).
−Removed: Seventh Amendment to Loan Agreement dated November 15, 2019 among Geospace Technologies Corporation, as borrower, certain subsidiaries of Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed November 18, 2019, File No.:
−Removed: Eight Amendment to Loan Agreement dated March 25, 2021 among Geospace Technologies Corporation, as borrower, certain subsidiaries of Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed March 29, 2021, File No.:
−Removed: Revolving Promissory Note effective May 4, 2015 by and between Geospace Technologies Corporation as borrower, certain subsidiaries of Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed May 8, 2015).
−Removed: Waiver and Consent Letter to Loan Agreement effective April 6, 2015 among Geospace Technologies Corporation as borrower, certain subsidiaries of Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed April 7, 2015).
−Removed: Description of Documents
−Removed: Commercial Contract – Improved Property, dated June 3, 2019 by and between GTC, Inc.
−Removed: and Harmony Public Schools (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed June 3, 2019).
+Added: Sheen (incorporated by reference to the Registrant’s Current Report on Form 8-K filed November 23, 2020, File No.:
+Added: Revolving Loan and Security Agreement dated May 6, 2022 among Geospace Technologies Corporation and GTC, Inc., as borrowers, Amerisource Funding, Inc.
+Added: and Woodforest National Bank, as lenders, and Amerisource Funding, Inc., as administrative agent for lenders (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed May 10, 2022).
+Added: Commercial Contract –
+Added: Improved Property, dated June 3, 2019 by and between GTC, Inc.
+Added: and Harmony Public Schools (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed June 3, 2019).
Consulting Agreement dated November 21, 2019 between Geospace Technologies Corporation and Thomas T.
−Removed: McEntire (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed November 22, 2019, File No.:
−Removed: General Code of Business Conduct and Supplemental Code of Ethics for CEO and Senior Financial Officers (incorporated by reference to Exhibit 14.1 to the Registrant’s Current Report on Form 8-K filed February 6, 2019).
+Added: McEntire (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed November 22, 2019, File No.:
+Added: General Code of Business Conduct and Supplemental Code of Ethics for CEO and Senior Financial Officers (incorporated by reference to Exhibit 14.1 to the Registrant’s Current Report on Form 8-K filed February 6, 2019).
Subsidiaries of the Registrant.**
Consent of RSM US LLP.**
−Removed: Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
−Removed: Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
−Removed: Certification of the Company’s Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
−Removed: Certification of the Company’s Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
−Removed: The following financial information from the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021, formatted in Inline Extensible Business Reporting Language (iXBRL):
−Removed: (i) the Consolidated Balance Sheets as of September 30, 2021 and September 30, 2020, (ii) the Consolidated Statements of Operations for the years ended September 30, 2021 and 2020, (iii) the Consolidated Statements of Comprehensive Loss for the years ended September 30, 2021 and 2020, (iv) the Consolidated Statements of Stockholders’ Equity for the years ended September 30, 2021 and 2020, (v) the Consolidated Statements of Cash Flows for the years ended September 30, 2021 and 2020 and (vi) Notes to Consolidated Financial Statements.**
−Removed: The cover page from the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021 formatted in Inline XBRL.
+Added: Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
+Added: Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
+Added: Certification of the Company’s Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
+Added: Certification of the Company’s Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
+Added: The following financial information from the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2022, formatted in Inline Extensible Business Reporting Language (iXBRL):
+Added: (i) the Consolidated Balance Sheets as of September 30, 2022 and September 30, 2021, (ii) the Consolidated Statements of Operations for the years ended September 30, 2022 and 2021, (iii) the Consolidated Statements of Comprehensive Loss for the years ended September 30, 2022 and 2021 , (iv) the Consolidated Statements of Stockholders’
+Added: Equity for the years ended September 30, 2022 and 2021, (v) the Consolidated Statements of Cash Flows for the years ended September 30, 2022 and 2021 and (vi) Notes to Consolidated Financial Statements.**
+Added: The cover page from the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2022 formatted in iXBRL.
* This exhibit is a management contract or a compensatory plan or arrangement.
17 unchanged sentences
November 18, 2022
−Removed: /s/ KENNETH ASBURY
−Removed: November 19, 2021
−Removed: Kenneth Asbury
/s/ MARGARET S.
8 unchanged sentences
November 18, 2022
−Removed: /s/ MICHAEL J.
−Removed: November 19, 2021
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
4 unchanged sentences
Consolidated Statements of Comprehensive Loss for the Years Ended September 30, 2022 and 2021
−Removed: Consolidated Statements of Stockholders’ Equity for the Years Ended September 30, 2021 and 202 0
+Added: Consolidated Statements of Stockholders’
+Added: Equity for the Years Ended September 30, 2022 and 2021
Consolidated Statements of Cash Flows for the Years Ended September 30, 2022 and 2021
Notes to Consolidated Financial Statements
−Removed: Schedule II—Valuation and Qualifying Accounts
−Removed: Report of Independent Registered Public Accounting Firm
+Added: Schedule II—Valuation and Qualifying Accounts
+Added: Report of Independent Regist ered Public Accounting Firm
To the Shareholders and the Board of Directors of Geospace Technologies Corporation
Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheets of Geospace Technologies Corporation and its subsidiaries (the Company) as of September 30, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).
+Added: We have audited the accompanying consolidated balance sheets of Geospace Technologies Corporation and its subsidiaries (the Company) as of September 30, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, stockholders’
+Added: equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
−Removed: These financial statements are the responsibility of the Company’s management.
−Removed: Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
+Added: These financial statements are the responsibility of the Company’s management.
+Added: Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S.
3 unchanged sentences
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
−Removed: As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
+Added: As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
8 unchanged sentences
Inventory Valuation
−Removed: As described in Note 1 to the consolidated financial statements, the Company’s consolidated inventories balance, which is stated at lower of cost or net realizable value, was $34.3 million as of September 30, 2021.
−Removed: The valuation of inventories is based on the Company’s periodic review of the composition of its inventories to determine if market demand, product modifications, technology changes, excessive quantities on-hand and other factors hinder its ability to recover its investment in such inventories.
−Removed: The Company’s assessment is based upon historical product demand, estimated future product demand and various other judgments and estimates.
−Removed: Inventory obsolescence reserves are recorded when such assessments reveal that portions or components of the Company’s investment will not be realized in its operating activities.
+Added: As described in Note 1 to the consolidated financial statements, the Company’s consolidated inventories balance, which is stated at lower of cost or net realizable value, was $32.5 million as of September 30, 2022.
+Added: The valuation of inventories is based on the Company’s periodic review of the composition of its inventories to determine if market demand, product modifications, technology changes, excessive quantities on-hand and other factors hinder its ability to recover its investment in such inventories.
+Added: The Company’s assessment is based upon historical product demand, estimated future product demand and various other judgments and estimates.
+Added: Inventory obsolescence reserves are recorded when such assessments reveal that portions or components of the Company’s investment will not be realized in its operating activities.
We identified the valuation of inventories at the lower of cost or net realizable value as a critical audit matter due to the significant judgment and estimates required by management.
1 unchanged sentence
Auditing these judgments is especially challenging and involved significant auditor judgment due to fluctuations in sales trends and evolving customer demands.
−Removed: Our audit procedures related to the Company’s valuation of inventory included the following, among others:
−Removed: We tested the reasonableness of management’s projections by comparing management’s estimates to historical results and tested the completeness and accuracy of the data used in the calculation.
−Removed: We tested the mathematical accuracy of the calculation of the net realizable value by reperforming the calculation based on usage reports and inventory listings.
−Removed: We evaluated management’s process for subsequent adjustment to the net realizable value reserves by testing the subsequent increases in the inventory values after the net realizable value had been established.
−Removed: We compared actual purchases and sales data on an individual item basis and aggregated to perform an independent assessment of the net realizable value of inventory.
−Removed: Valuation of Goodwill– Emerging Markets Reporting Unit
−Removed: As discussed in Note 11 to the consolidated financial statements, the Company assessed $4.3 million of goodwill associated with its Emerging Markets reporting unit for impairment.
−Removed: The fair value of the reporting unit was estimated by management using the expected present value of future cash flows and judgments, market data and using estimates, judgments and assumptions that management believe are appropriate in the circumstances.
−Removed: Key assumptions in the impairment analysis include revenue and cash flow projections, discount rates, long-term growth rates, and the effective tax rate.
−Removed: In determining the fair value of the Company’s Emerging Markets reporting unit, estimated future cash flows include the Company’s ability to obtain an additional contract with its significant customer.
−Removed: We identified the valuation of goodwill for the Emerging Market's reporting unit as a critical audit matter because of the significant assumptions management makes in determining the estimate, including revenue and cash flow projections and the discount rate utilized.
−Removed: Auditing management’s assumptions of revenue and cash flow projections and the discount rate involved a high degree of auditor judgment and increased audit effort, including the use of valuation specialists, as changes in these assumptions could have a significant impact on the fair value of the Emerging Market's reporting unit and potential impairment charges.
−Removed: Our audit procedures related to the Company’s valuation of goodwill for the Emerging Markets reporting unit included the following, among others:
−Removed: • We evaluated the reasonableness of management’s revenue and cash flow projections by comparing management’s prior forecasts to historical results for the Company.
−Removed: • We evaluated management’s revenue projections by comparing to historical results and inquiry of management of the reporting unit regarding additional contracts with its significant customer.
−Removed: • With the assistance of our valuation specialists, we evaluated the reasonableness of the Company’s valuation methodology and the discount rates utilized by comparing them to comparable companies and market data.
−Removed: Valuation of Contingent Consideration – OptoSeis
−Removed: As described in Note 18 to the consolidated financial statements, the Company recognized contingent consideration related to the acquisition of the OptoSeis fiber optic sensing technology business in November 2018.
−Removed: The Company recorded the initial fair value of the contingent consideration as a liability on the acquisition date.
−Removed: The estimated earn-out payments are subsequently remeasured to fair value at each reporting date based on the estimated future earnings associated with the acquired entity.
−Removed: As of September 30, 2021, the contingent consideration liability related to OptoSeis was $4.4 million.
−Removed: The Company utilizes the services of independent valuation consultants to assist with the estimation of the fair value of the contingent consideration, which includes estimates and projections of future revenue, including the size, length, and timing of its future contracts.
−Removed: We identified the valuation of contingent consideration related to OptoSeis as a critical audit matter because of the significant assumptions management makes when selecting a valuation model and determining the estimate, including the projections of future revenue, including the size, length and timing of future contracts.
−Removed: Auditing management’s assumptions of revenue projections and the discount rate involved a high degree of auditor judgment and increased audit effort, including the use of valuation specialists, as changes in these assumptions could have a significant impact on the fair value of the contingent consideration.
−Removed: Our audit procedures related to the Company’s valuation of contingent consideration related to OptoSeis included the following, among others:
−Removed: • We tested management’s process for estimating the fair value of the contingent consideration, which included evaluating the significant assumptions related to estimated future customer demand and associated revenue and testing the completeness and accuracy of data used in the models.
−Removed: • We utilized an internal valuation specialist to assist in:
−Removed: o Evaluating the appropriateness of the valuation models utilized by management, and
−Removed: o Developing independent estimates of the discount rates based on publicly available market data and comparing the resulting reporting unit fair values to management’s estimates.
−Removed: /s/ RSM US LLP
−Removed: We have served as the Company's auditor since 2018.
+Added: Our audit procedures related to the Company’s valuation of inventory included the following, among others:
+Added: We evaluated management’s calculation of the inventory valuation reserve by testing the mathematical accuracy of the calculation.
+Added: We tested the completeness, accuracy, and relevance of the reports and inputs used in the Company’s analysis
+Added: We evaluated the appropriateness and consistency of management's methods and assumptions used in developing their estimate of the inventory valuation reserve, which included consideration of recent changes in historical usage information.
+Added: We evaluated management’s process for subsequent adjustments to net realizable value by performing a retrospective review on an individual item basis to test for subsequent changes in the inventory values after the net realizable value had been established.
+Added: We compared actual purchases and sales data on an individual item basis for all inventory items and aggregated to perform an independent assessment of the net realizable value of inventory.
+Added: Valuation of Goodwill—Emerging Markets Reporting Unit
+Added: As discussed in Note 11 to the consolidated financial statements, the Company assessed $4.3 million of goodwill and $3.5 million of other intangible assets associated with its Emerging Markets reporting unit, which was also determined to be an asset group for purposes of its long-lived asset recoverability assessment, for impairment.
+Added: The Company performed a quantitative assessment on the goodwill at its Emerging Markets reporting unit.
+Added: As part of this quantitative assessment, the Company determines the fair value of the reporting unit using a discounted cash flow model.
+Added: The Company also performed a recoverability assessment on the long-lived assets of the Emerging Markets asset group in which its carrying value was compared to estimated undiscounted cash flows over the remaining useful life of the asset group’s primary asset, its developed technology.
+Added: Key assumptions in the analyses include revenue and cash flow projections.
+Added: Discount rates, long-term growth rates, and the effective tax rate are also key assumptions for the goodwill impairment assessment.
+Added: Estimated future cash flows of the Company’s Emerging Markets reporting unit include the Company’s ability to obtain an additional contract with its significant customer.
+Added: We identified the valuation of goodwill and long-lived assets for the Emerging Market's reporting unit as a critical audit matter because of the significant assumptions management makes in determining the estimate, including revenue and cash flow projections and the discount rate utilized.
+Added: Auditing management’s assumptions of revenue and cash flow projections and the discount rate involved a high degree of auditor judgment and increased audit effort, including the use of valuation specialists, as management’s assumptions are subjective, and changes in these assumptions could have a significant impact on the fair value of the Emerging Market's reporting unit and potential impairment charges.
+Added: Our audit procedures related to the Company’s valuation of goodwill and long-lived assets for the Emerging Markets reporting unit included the following, among others:
+Added: We evaluated the reasonableness of management’s revenue and cash flow projections by comparing management’s prior forecasts to historical results for the Company.
+Added: We evaluated management’s cash flow projections by comparing to historical results, inquiry of management of the reporting unit regarding additional contracts with its significant customer, review of publicly available industry information, and testing the completeness and accuracy of the data used in the projections.
+Added: With the assistance of our valuation specialists, we evaluated the reasonableness of the Company’s valuation methodology and the discount rates utilized by comparing them to comparable companies and market data.
+Added: We have served as the Company’s auditor since 2018.
+Added: Houston, Texas
November 18, 2022
5 unchanged sentences
In our opinion, the financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
−Removed: /s/ RSM US LLP
Houston, Texas
1 unchanged sentence
Geospace Technologies Corporation and Subsidiaries
−Removed: Consolidated Balance Sheets
+Added: Consolidated B alance Sheets
(In thousands, except share amounts)
3 unchanged sentences
Short-term investments
−Removed: Trade accounts and financing receivables, net of allowance of $ 428 and $ 496
+Added: Trade accounts and financing receivables, net
Unbilled receivables
Inventories, net
−Removed: Property held for sale
Prepaid expenses and other current assets
6 unchanged sentences
Other intangible assets, net
−Removed: Deferred cost of revenue and other assets
−Removed: LIABILITIES AND STOCKHOLDERS’ EQUITY
+Added: Other non-current assets
+Added: LIABILITIES AND STOCKHOLDERS’
Current liabilities:
Accounts payable trade
−Removed: Earn-out consideration payable
+Added: Contingent consideration
Operating lease liabilities
−Removed: Deferred revenue and other current liabilities
+Added: Other current liabilities
Total current liabilities
1 unchanged sentence
Non-current operating lease liabilities
−Removed: Non-current deferred revenue and other liabilities
+Added: Deferred tax liabilities, net
Total liabilities
Commitments and contingencies (Note 18)
−Removed: Stockholders’ equity:
+Added: Stockholders’
Preferred stock, 1,000,000 shares authorized, no shares issued and outstanding
5 unchanged sentences
Accumulated other comprehensive loss
−Removed: Treasury stock, at cost, 769,429 shares at September 30, 2021
−Removed: Total stockholders’ equity
−Removed: Total liabilities and stockholders’ equity
+Added: Treasury stock, at cost, 841,992 and 769,429 shares, respectively
+Added: Total stockholders’
+Added: Total liabilities and stockholders’
The accompanying notes are an integral part of the consolidated financial statements.
Geospace Technologies Corporation and Subsidiaries
−Removed: Consolidated Statements of Operations
+Added: Consolidated Statem ents of Operations
(In thousands, except share and per share amounts)
16 unchanged sentences
Interest income
−Removed: Gain on investments, net
−Removed: Foreign exchange gains (losses), net
+Added: Gain (loss) on investments, net
+Added: Foreign exchange losses, net
Total other income, net
8 unchanged sentences
YEAR ENDED SEPTEMBER 30,
−Removed: Other comprehensive loss:
+Added: Other comprehensive income (loss):
Change in unrealized losses on available-for-sale securities, net of tax
Foreign currency translation adjustments
−Removed: Total other comprehensive income (loss)
+Added: Total other comprehensive income, net
Total comprehensive loss
1 unchanged sentence
Geospace Technologies Corporation and Subsidiaries
−Removed: Consolidated Statements of Stockholders’ Equity
+Added: Consolidated Statements o f Stockholders’
For the years ended September 30, 2022 and 2021
3 unchanged sentences
Balance at October 1, 2020
−Removed: Other comprehensive loss
+Added: Other comprehensive income
Issuance of common stock pursuant to the vesting of restricted stock units
Forfeiture of restricted stock
+Added: Purchase of treasury stock
Stock-based compensation
2 unchanged sentences
Issuance of common stock pursuant to the vesting of restricted stock units
−Removed: Forfeiture of restricted stock
Purchase of treasury stock
3 unchanged sentences
Geospace Technologies Corporation and Subsidiaries
−Removed: Consolidated Statements of Cash Flows
+Added: Consolidated Statem ents of Cash Flows
(In thousands)
1 unchanged sentence
Cash flows from operating activities:
−Removed: Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
−Removed: Deferred income tax expense
+Added: Adjustments to reconcile net loss to net cash used in operating activities:
+Added: Deferred income tax expense (benefit)
Rental equipment depreciation
2 unchanged sentences
Goodwill impairment expense
+Added: Property, plant and equipment impairment expense
Accretion of discounts on short-term investments
2 unchanged sentences
Inventory obsolescence expense
−Removed: Change in estimate of collectability of rental revenue
Change in estimated fair value of contingent consideration
1 unchanged sentence
Gain on disposal of property, plant and equipment
−Removed: Realized gain on sale of investments, net
+Added: Realized loss (gain) on sale of investments, net
Effects of changes in operating assets and liabilities:
1 unchanged sentence
Unbilled receivables
−Removed: Deferred cost of revenue and other assets
Accounts payable trade
−Removed: Deferred revenue and other liabilities
−Removed: Net cash provided by (used in) operating activities
+Added: Other liabilities
+Added: Net cash used in operating activities
Cash flows from investing activities:
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Proceeds from sale of investment in debt security
−Removed: Net cash used in investing activities
+Added: Net cash provided by (used in) investing activities
Cash flows from financing activities:
−Removed: Payments on contingent consideration
+Added: Payments of contingent consideration
+Added: Debt issuance costs
Purchase of treasury stock
7 unchanged sentences
Notes to Consolidated Financial Statements
−Removed: Summary of Significant Accounting Policies:
−Removed: Geospace Technologies Corporation (“Geospace”) designs and manufactures instruments and equipment used by the oil and gas industry to acquire seismic data in order to locate, characterize and monitor hydrocarbon producing reservoirs.
+Added: Summary of Significan t Accounting Policies:
+Added: Geospace Technologies Corporation (“Geospace”) designs and manufactures instruments and equipment used by the oil and gas industry to acquire seismic data in order to locate, characterize and monitor hydrocarbon producing reservoirs.
Geospace also designs and manufactures Adjacent Markets products including industrial products, imaging equipment, and provides contract manufacturing services, and Emerging Market products consisting of border and perimeter security products.
−Removed: Geospace and its subsidiaries are referred to collectively as the “Company”.
+Added: Geospace and its subsidiaries are referred to collectively as the “Company”.
Basis of Presentation
−Removed: The accompanying financial statements present the consolidated financial position, results of operations and cash flows of the Company in accordance with accounting principles generally accepted in the United States of America.
−Removed: All intercompany balances and transactions have been eliminated.
+Added: The accompanying financial statements present the consolidated financial position, results of operations and cash flows of the Company in accordance with U.S.
+Added: generally accepted accounting principles ("GAAP').
+Added: All significant intercompany balances and transactions have been eliminated.
Use of Estimates
1 unchanged sentence
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.
−Removed: The Company continually evaluates its estimates, including those related to 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 and intangible assets, contingent consideration and deferred income tax assets.
+Added: 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.
2 unchanged sentences
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.
−Removed: At September 30, 2021 cash and cash equivalents included $ 5.2 million held by the Company’s foreign subsidiaries and branch offices.
−Removed: If the Company were to repatriate the cash held by its foreign subsidiaries, it could be required to accrue and pay taxes on any amount repatriated.
−Removed: Concentrations of Credit and Supplier Risk
+Added: At September 30, 2022, the Company had restricted cash of $ 0.2 million on deposit with a bank which serves as collateral on employee issued credit cards.
+Added: The Company had no restricted cash at September 30, 2021.
+Added: At September 30, 2022, cash and cash equivalents included $ 2.6 million held by the Company’s foreign subsidiaries and branch offices, including $ 1.8 million held by its subsidiary in the Russian Federation.
+Added: In response to sanctions imposed by the U.S.
+Added: and others on Russia, the Russian government has imposed restrictions on companies’
+Added: abilities to repatriate or otherwise remit cash from their Russian-based operations to locations outside of Russia.
+Added: 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.
+Added: 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.
+Added: Concentrations of Risk
The Company maintains its cash in bank deposit accounts that, at times, exceed federally insured limits.
1 unchanged sentence
The Company sells products to customers throughout the United States and various foreign countries.
−Removed: The Company’s normal credit terms for trade receivables are 30 days.
+Added: 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.
3 unchanged sentences
Allowances are recognized for potential credit losses.
−Removed: Three customers comprised 19.8 %, 16.4 % and 10.6 %, of the Company’s revenue during fiscal year 2021.
−Removed: At September 30, 2021, the Company had trade accounts, financing receivables and unbilled receivables from these customers of $ 4.9 million, $ 7.4 million (of which $ 2.1 million was long-term) and $ 1.1 million, respectively.
−Removed: One of the Company’s major customers in fiscal year 2021 also comprised 48.2 % of the Company’s revenue during fiscal year 2020.
−Removed: At September 30, 2020, the Company had trade account receivables due from this customer of $ 7.3 million.
−Removed: Certain models of the Company’s oil and gas marine wireless products require a timing device it purchases from a United States manufacturer.
−Removed: The Company currently does not possess the ability to manufacture this component and has no other reliable source for this device.
−Removed: If this manufacturer were to discontinue its production of this timing device, were to become unwilling to contract with the Company on competitive terms or were unable to supply the component in sufficient quantities to meet its requirements, the Company’s ability to compete in the marine wireless marketplace could be impaired, which could adversely affect its financial performance.
−Removed: The device is used in certain models of the Company’s rental equipment.
−Removed: The Company had no product sales requiring this device in fiscal year 2021.
+Added: One customer comprised 29.3 % of the Company’s revenue during fiscal year 2022.
+Added: At September 30, 2022, the Company had trade accounts and financing receivables from this customer of $ 5.5 million.
+Added: Three customers comprised 19.8 %, 16.4 % and 10.6 %, of the Company’s revenue during fiscal year 2021.
+Added: At September 30, 2021, the Company had trade accounts and financing receivables from these customers of $ 4.9 million, $ 7.4 million and $ 1.1 million, respectively.
Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: Certain models of the Company’s oil and gas marine wireless products require a timing device it purchases from a United States manufacturer.
+Added: The Company currently does not possess the ability to manufacture this component and has no other reliable source for this device.
+Added: If this manufacturer were to discontinue its production of this timing device, were to become unwilling to contract with the Company on competitive terms or were unable to supply the component in sufficient quantities to meet its requirements, the Company’s ability to compete in the marine wireless marketplace could be impaired, which could adversely affect its financial performance.
+Added: The device is used in certain models of the Company’s rental equipment.
+Added: Product sales requiring this device represented approximately 11 % of the Company's revenue in fiscal year 2022.
+Added: There were no product sales requiring this device in fiscal year 2021.
The Company purchases all of its thermal film from one manufacturer for its imaging products.
Except for the film sold to the Company by this manufacturer, the Company knows of no other source for thermal film that performs as well in its imaging equipment.
−Removed: If the manufacturer were to discontinue producing thermal film, were to become unwilling to contract with the Company on competitive terms or were unable to supply thermal film in sufficient quantities to meet its requirements, the Company’s ability to compete in the direct thermal imaging marketplace could be impaired, which could adversely affect its financial performance.
−Removed: Thermal film sales represented approximately 7 % of the Company’s revenue in fiscal year 202 1 .
+Added: If the manufacturer were to discontinue producing thermal film, were to become unwilling to contract with the Company on competitive terms or were unable to supply thermal film in sufficient quantities to meet its requirements, the Company’s ability to compete in the direct thermal imaging marketplace could be impaired, which could adversely affect its financial performance.
+Added: Thermal film sales represented approximately 8 % and 7 % of the Company’s revenue in fiscal year 2022 and 2021, respectively.
+Added: Armed Conflict Between Russia and Ukraine
+Added: A portion of the Company's oil and gas product manufacturing is conducted through its wholly-owned subsidiary Geospace Technologies Eurasia LLC, which is based in the Russian Federation.
+Added: In February 2022, the Russian Federation launched a full-scale military invasion of Ukraine.
+Added: Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions in addition to any direct impact on the Company's operations in Russia.
+Added: The United States, the United Kingdom, the EU and other countries have each imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in and associated with Russia, and additional sanction packages to constrain Russia have been and continue to be proposed and adopted.
+Added: United States sanctions against Russia have been expanded to preclude the export of oil and gas equipment anywhere in the world that involve persons designated under the sanctions and to include projects in which persons subject to the sanctions have a 33 % ownership interest or a majority of voting interests.
+Added: The rapid changes in rules and implementation of new rules on imports and exports of goods involving Russia has also led to serious delays in getting goods to or from Russia as port authorities struggle to keep up with the changing environment.
+Added: If imports of these products from the Russian Federation are restricted by government regulation, the Company may be forced to find other sources for the manufacturing of these products at potentially higher costs.
+Added: Likewise, restrictions on the Company's ability to send products to our subsidiary in Russia, may force our subsidiary to have to find other sources for the manufacturing of these products at potentially higher costs;
+Added: however, the Company's exports to Geospace Technologies Eurasia LLC have historically been limited.
+Added: The risk of doing business in the Russian Federation and other economically or politically volatile areas could adversely affect the Company's operations and earnings.
+Added: The Company is actively monitoring the situation in Ukraine and Russia and assessing its impact on its business, including its wholly-owned subsidiary Geospace Technologies Eurasia LLC.
+Added: The net carrying value of this subsidiary on the Company's consolidated balance sheet at September 30, 2022 was $ 6.0 million.
+Added: The subsidiary generated $ 1.9 million in revenue from domestic sales and the Company imported $ 1.9 million of products from the subsidiary in fiscal year 2022.
+Added: The Company has no way to predict the duration, progress or outcome of the military conflict in Ukraine.
+Added: The extent and duration of the military action, sanctions, and resulting market disruptions could be significant and could potentially have substantial impact on the global economy and the Company's business for an unknown period of time.
The Company records a write-down of its inventories when the cost basis of any manufactured product, including any estimated future costs to complete the manufacturing process, exceeds its net realizable value.
Inventories are stated at the lower of cost or net realizable value.
−Removed: Cost is determined on the first-in, first-out method, except that certain of the Company’s foreign subsidiaries use an average cost method to value their inventories.
+Added: Cost is determined on the first-in, first-out method, except that certain of the Company’s foreign subsidiaries use an average cost method to value their inventories.
The Company periodically reviews the composition of its inventories to determine if market demand, product modifications, technology changes, excessive quantities on-hand and other factors hinder our ability to recover its investment in such inventories.
−Removed: The Company’s assessment is based upon historical product demand, estimated future product demand and various other judgments and estimates.
−Removed: Inventory obsolescence reserves are recorded when such assessments reveal that portions or components of the Company’s inventory investment will not be realized in its operating activities.
+Added: The Company’s assessment is based upon historical product demand, estimated future product demand and various other judgments and estimates.
+Added: Inventory obsolescence reserves are recorded when such assessments reveal that portions or components of the Company’s inventory investment will not be realized in its operating activities.
The Company reviews it inventories for classification purposes.
The value of inventories not expected to be realized in cash, sold or consumed during its next operating cycle are classified as noncurrent assets.
+Added: Geospace Technologies Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements—(Continued)
Property, Plant and Equipment and Rental Equipment
9 unchanged sentences
Impairment of Long-lived Assets
−Removed: The Company’s long-lived assets are reviewed for impairment whenever an event or change in circumstances indicates the carrying amount of an asset or group of assets may not be recoverable.
+Added: The Company’s long-lived assets are reviewed for impairment whenever an event or change in circumstances indicates the carrying amount of an asset or group of assets may not be recoverable.
The impairment review, if necessary, includes a comparison of expected future cash flows (undiscounted and without interest charges) to be generated by an asset group with the associated carrying value of the related assets.
If the carrying value of the asset group exceeds the expected future cash flows, an impairment loss is recognized to the extent that the carrying value of the asset group exceeds its fair value.
−Removed: Impairment charges are included as a component of cost of revenue in the Company’s consolidated statements of operations.
+Added: At March 31, 2022, in light of the Company’s losses from operations for the six months ended March 31, 2022 and for fiscal year 2021 and the current war between Russia and Ukraine, management reviewed the recoverability of the carrying value of certain asset groups based on future undiscounted cash flows and determined that their expected future cash flows exceeded their carrying value.
+Added: No additional indicators of impairment related to this asset group were observed at September 30, 2022.
+Added: At September 30, 2022, in light of the Company's impairment of its goodwill associated with its Emerging Markets reporting unit, the Company reviewed the recoverability of the carrying value of the long-lived assets of this reporting unit and determined that their undiscounted cash flows exceeded their carrying value.
+Added: As a result, no impairment charges were necessary to the Company's long-lived assets associated with its Emerging Markets reporting unit.
+Added: At September 30, 2022, in light of the Company's decision to dispose of certain manufacturing cabling equipment, the Company reviewed the recoverability of the carrying value of these assets and determined that their carrying value exceeded their fair value.
+Added: As a result of the fair value analysis, an impairment charge of $ 0.4 million was recorded in the fourth quarter of fiscal year 2022 related to the equipment.
+Added: The impairment charge is included as a component of cost of revenue in the Company’s consolidated statements of operations.
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.
2 unchanged sentences
However, if an entity concludes otherwise, then a quantitative assessment must be performed.
−Removed: 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
−Removed: Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: 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 .
+Added: 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.
+Added: At September 30, 2022, the Company impaired its goodwill associated with its Emerging Markets reporting unit.
+Added: See Note 11 for more information.
Other Intangible Assets
Intangible assets are carried at cost, net of accumulated amortization.
−Removed: The estimated useful life of the Company’s other intangible assets are evaluated each reporting period to determine whether events or circumstances warrant a revision to the remaining amortization period.
−Removed: If the estimate of an intangible asset’s remaining useful life is changed, the amortization period should be changed prospectively.
+Added: The estimated useful life of the Company’s other intangible assets are evaluated each reporting period to determine whether events or circumstances warrant a revision to the remaining amortization
+Added: Geospace Technologies Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: If the estimate of an intangible asset’s remaining useful life is changed, the amortization period should be changed prospectively.
Amortization expense is calculated using the straight-line method over the following estimated useful lives:
9 unchanged sentences
The Company reviews the fair value of its contingent earn-out liabilities on a quarterly basis.
−Removed: Adjustments to the liabilities, if any, are included as a component of earnings in the consolidated statements of operations.
+Added: Adjustments to the liabilities are included as a component of earnings in the consolidated statements of operations.
See Note 18 to these consolidated financial statements for additional information.
3 unchanged sentences
Product Warranties
−Removed: Most of the Company’s products do not require installation assistance or sophisticated instructions.
+Added: Most of the Company’s products do not require installation assistance or sophisticated instructions.
The Company offers a standard product warranty obligating it to repair or replace equipment with manufacturing defects.
−Removed: The Company maintains a reserve for future warranty costs based on historical experience or, in the absence of historical product experience, management’s estimates.
−Removed: Reserves for future warranty costs are included within deferred revenue and other current liabilities on the consolidated balance sheets.
+Added: The Company maintains a reserve for future warranty costs based on historical experience or, in the absence of historical product experience, management’s estimates.
+Added: Reserves for future warranty costs are included within other current liabilities on the consolidated balance sheets.
Changes in the product warranty reserve are reflected in the following table (in thousands):
6 unchanged sentences
Balance at September 30, 2022
−Removed: Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
Stock-Based Compensation
−Removed: The Company accounts for stock-based compensation, including grants of restricted awards and unqualified stock options in accordance with Accounting Standards Codification Topic 718, which requires that all share-based payments (to the extent that they are compensatory) be recognized as an expense in the Company’s consolidated statements of operations based on their fair values on the award date and the estimated number of shares it ultimately expects to vest.
+Added: The Company accounts for stock-based compensation, including grants of restricted awards and unqualified stock options in accordance with Accounting Standards Codification Topic 718, which requires that all share-based payments (to the extent that they are compensatory) be recognized as an expense in the Company’s consolidated statements of operations based on their fair values on the award date and the estimated number of shares it ultimately expects to vest.
The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award.
−Removed: The Company’s stock-based compensation plan and awards are more fully described in Note 15 to these consolidated financial statements.
+Added: The Company’s stock-based compensation plan and awards are more fully described in Note 15 to these consolidated financial statements.
+Added: Geospace Technologies Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements—(Continued)
Foreign Currency Gains and Losses
−Removed: The assets and liabilities of the Company’s foreign subsidiaries and branch offices that have a foreign currency as their functional currency have been translated into U.S.
+Added: The assets and liabilities of the Company’s foreign subsidiaries and branch offices that have a foreign currency as their functional currency have been translated into U.S.
dollars using the exchange rates in effect at the balance sheet date.
Results of operations have been translated using the average exchange rates during the year.
−Removed: Resulting translation adjustments have been recorded as a component of accumulated other comprehensive loss in stockholders’ equity.
+Added: Resulting translation adjustments have been recorded as a component of accumulated other comprehensive loss in stockholders’
Foreign currency transaction gains and losses are included in the statements of operations as they occur.
−Removed: Transaction gains and losses on intra-entity foreign currency transactions and balances, including advances and demand notes payable on which settlement is not planned or anticipated in the foreseeable future, are recorded in “accumulated other comprehensive loss” on our consolidated balance sheets.
+Added: Transaction gains and losses on intra-entity foreign currency transactions and balances, including advances and demand notes payable on which settlement is not planned or anticipated in the foreseeable future, are recorded in “accumulated other comprehensive loss”
+Added: on our consolidated balance sheets.
Fair value is the price that would be received to sell an asset or the amount paid to transfer a liability in an orderly transaction between market participants (an exit price) at the measurement date.
−Removed: generally accepted accounting principles (“GAAP”) has established a fair value hierarchy which prioritizes the inputs to the valuation techniques used to measure fair value into three levels.
+Added: GAAP has established a fair value hierarchy which prioritizes the inputs to the valuation techniques used to measure fair value into three levels.
These levels are determined based on the lowest level input that is significant to the fair value measurement.
2 unchanged sentences
Level 3 represents valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
−Removed: Income taxes are presented in accordance with the Accounting Standards Codification Topic 740 (“Topic 740”) guidance for accounting for income taxes.
+Added: Also see Note 5 to these consolidated financial statements.
+Added: Income taxes are presented in accordance with the Accounting Standards Codification Topic 740 (“Topic 740”) guidance for accounting for income taxes.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, as well as operating loss and tax credit carrybacks and carryforwards are recorded.
3 unchanged sentences
Topic 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
−Removed: In accordance with Topic 740, the Company recognizes in its financial statements the impact of a tax position if that position is “more likely than not” to be sustained on audit, based on the technical merits of the position.
−Removed: The Company’s estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts, and circumstances existing at that time.
+Added: In accordance with Topic 740, the Company recognizes in its financial statements the impact of a tax position if that position is “more likely than not”
+Added: to be sustained on audit, based on the technical merits of the position.
+Added: The Company’s estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts, and circumstances existing at that time.
The Company classifies interest and penalties associated with the payment of income taxes, if any, in the Other Income (Expense) section of its consolidated statements of operations.
The Company incurred no interest or penalties for the fiscal years ended September 30, 2022 and 2021.
+Added: Recently Adopted Accounting Pronouncements
+Added: In December 2019, the Financial Accounting Standards Board (the “FASB”) issued guidance on simplifying the accounting for income taxes.
+Added: The guidance eliminates certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application.
+Added: This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020.
+Added: The Company adopted this standard during the first quarter of fiscal year 2022 .
+Added: The adoption of this guidance did not have any impact on the Company's consolidated financial statements.
Recently Issued Accounting Pronouncements
−Removed: 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.
+Added: In June 2016, 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.
−Removed: As a small reporting company, the Company must adopt this
+Added: 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.
+Added: 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.
+Added: The Company intends to adopt this standard during the
Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: standard no later than the first quarter of its fiscal year ending September 30, 2024.
−Removed: Early adoption is permitted.
−Removed: 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.
−Removed: The Company intends to adopt this standard during the first quarter of its fiscal year ending September 30, 2024 and is continuing to evaluat e the impact of this new guidance on its consolidated financial statements.
−Removed: In December 2019, the FASB issued guidance on simplifying the accounting for income taxes.
−Removed: The guidance eliminates certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application.
−Removed: This guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020.
−Removed: Certain amendments within the guidance are required to be applied on a retrospective basis for all periods presented;
−Removed: others are to be applied using a modified retrospective approach with a cumulative-effect adjustment to retained earnings, if any, as of the beginning of the first reporting period in which the guidance is adopted;
−Removed: and yet others are to be applied using either basis.
−Removed: All other amendments not specified in the guidance should be applied on a prospective basis.
−Removed: Early adoption is permitted.
−Removed: An entity that elects to early adopt in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period.
−Removed: Additionally, an entity that elects early adoption must adopt all the amendments in the same period.
−Removed: The Company intends to adopt this standard during the first quarter of its fiscal year ending September 30, 2022 and does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: first quarter of its fiscal year ending September 30, 2024 and is continuing to evaluate the impact of this new guidance on its consolidated financial statements.
Revenue Recognition
−Removed: 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.
+Added: 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.
4 unchanged sentences
Transfer of control generally occurs with shipment or delivery, depending on the terms of the underlying contract.
−Removed: 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.
+Added: 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.
2 unchanged sentences
Rental revenue is recognized as earned over the rental period if collectability of the rent is reasonably assured.
−Removed: Rentals of the Company’s equipment generally range from daily rentals to minimum rental periods of up to six months or longer.
+Added: 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 .
7 unchanged sentences
The Company incurred shipping and handling expenses of $ 0.6 million and $ 0.4 million, respectively, for the fiscal years ended September 30, 2022 and 2021, respectively.
−Removed: During the third quarter of fiscal year 2020, the Company was awarded a $ 10.5 million contract (inclusive of a subsequent contract amendment of $ 0.3 million) with the Bureau of Customs and Border Patrol (the “CBP”) to provide a technology solution to the Department of Homeland Security.
−Removed: Revenue recognized under the contract for fiscal year 2020 and 2021 was $ 0.3 million and $ 10.1 million, respectively.
−Removed: The Company had unbilled receivables of $ 1.1 million at September 30, 2021 under this contract.
−Removed: Unrecognized revenue for unsatisfied performance obligations on this contract at September 30, 2021 was approximately $ 0.1 million.
−Removed: The Company anticipates the revenue on the remaining performance obligation on this contract will be recognized in the first quarter
−Removed: Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: of fiscal year 2022 .
+Added: During the third quarter of fiscal year 2020, the Company was awarded an approximate $ 10.5 million contract (inclusive of a subsequent contract amendment of $ 0.3 million) with the U.S.
+Added: Customs and Border Protection (the “CBP”) to provide a technology solution to the Department of Homeland Security.
+Added: Revenue recognized under the contract for the fiscal years ended September 30, 2022 and 2021 was $ 0.3 million and $ 9.9 million, respectively.
+Added: The Company has recognized revenue on the entire amount of the contract and no performance obligations remain under the contract except for on-going service and maintenance.
Unsatisfied performance obligations on all other contracts held by the Company at September 30, 2022 had an original duration of one year or less.
−Removed: At September 30, 2021, the Company had no deferred contract costs or deferred contract liabilities.
−Removed: At September 30, 2020, the Company had no deferred contract costs and $ 0.2 million deferred contract liabilities, which are included in current liabilities on the Company’s consolidated balance sheet as a component of deferred revenue and other liabilities.
−Removed: During the fiscal years ended September 30, 2021 and 2020, no revenue and $ 0.2 million, respectively, was recognized from deferred contract liabilities.
+Added: At September 30, 2022 and September 30, 2021, the Company had no deferred contract costs or deferred contract liabilities.
+Added: During the fiscal years ended September 30, 2022 and 2021, no revenue was recognized from deferred contract liabilities and no cost of revenue was recognized from deferred contract costs.
During the second quarter of fiscal year 2020, the Company partially financed a $ 12.5 million product sale by entering into a $ 10.0 million promissory note with the customer.
2 unchanged sentences
As a result, the Company did no t recognize any revenue or cost of revenue on the product sale through its first quarter of fiscal year 2021.
−Removed: During the second quarter of fiscal year 2021, as a result of new information received from the customer, management determined that it is probable that the customer will satisfy its remaining payment obligations on the promissory note with the Company and recognized revenue of $ 12.5 million on the product sale.
+Added: During the second quarter of fiscal year 2021, as a result of new information received from the customer, management determined that it was probable that the customer would satisfy its remaining payment obligations on the promissory note with the Company and recognized revenue of $ 12.5 million on the product sale.
During the fourth quarter of fiscal year 2021, the Company granted the customer a six-month principal payment forbearance.
−Removed: The customer is expected to recommence its monthly payments to the Company in the second quarter of fiscal year 2022.
−Removed: The customer has made payments totaling $ 7.2 million (exclusive of interest) as of September 30, 2021 related to the product sale.
−Removed: Deferred contract costs associated with this sale was recognized in fiscal year 2021.
−Removed: For each of the Company’s operating segments, the following table presents revenue only from the sale of products and the performance of services under contracts with customers (in thousands).
+Added: The customer recommenced its monthly payments to the Company in the second quarter of fiscal year 2022.
+Added: In October 2022, the Company granted the customer an additional six-month payment forbearance.
+Added: The customer has made payments totaling $ 9.5 million (exclusive of interest) as of September 30, 2022 related to the product sale, and the
+Added: Geospace Technologies Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: balance outstanding on the promissory note at September 30, 2022 was $ 3.0 million.
+Added: Deferred contract costs associated with this sale were recognized in the second quarter of fiscal year 2021.
+Added: For each of the Company’s operating segments, the following table presents revenue only from the sale of products and the performance of services under contracts with customers (in thousands).
Therefore, the table excludes all revenue earned from rental contracts.
10 unchanged sentences
Emerging Markets
−Removed: See Note 20 for more information on the Company’s operating segments.
−Removed: 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.
−Removed: The table excludes all revenue earned from rental contracts:
+Added: See Note 20 for more information on the Company’s operating segments.
+Added: For each of the geographic areas where the Company operates, the following table presents revenue from the sale of products and performance of services under contracts with customers (in thousands).
+Added: Therefore, the table excludes all revenue earned from rental contracts.
YEAR ENDED SEPTEMBER 30,
+Added: South America
United States
−Removed: Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
Revenue is attributable to countries based on the ultimate destination of the product sold, if known.
1 unchanged sentence
Business Acquisition
−Removed: On July 2, 2021 , we acquired 100 percent of the outstanding membership interest in Aquana, LLC, a comprehensive wireless water monitoring and control system provider.
−Removed: Aquana will operate as a wholly-owned subsidiary of the Company and reside in the Company’s Adjacent Markets business segment.
−Removed: The acquisition purchase price consisted of an initial cash down payment at closing of approximately $ 1.4 million, subject to adjustment, and additional contingent cash payments over a six year earn-out period.
+Added: Geospace Technologies Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: On July 2, 2021 , we acquired 100 percent of the outstanding membership interest in Aquana, LLC ("Aquana") a comprehensive wireless water monitoring and control system provider.
+Added: Aquana operates as a wholly-owned subsidiary of the Company and resides in the Company’s Adjacent Markets business segment.
+Added: The acquisition purchase price consisted of an initial cash down payment at closing of approximately $ 1.4 million and additional contingent cash payments over a six year earn-out period.
The contingent earn-out payments, if any, will be derived from certain eligible revenue generated during the earn-out period from products and services sold by Aquana.
There is no maximum limit to the contingent cash payments that could be made.
−Removed: The merger agreement with Aquana requires the continued employment of a certain key employee and former member of Aquana, LLC for the first four years of the six year earn-out period in order for any of Aquana’s former members to be eligible to any earn-out payments.
+Added: The merger agreement with Aquana requires the continued employment of a certain key employee and former member of Aquana for the first four years of the six year earn-out period in order for any of Aquana’s former members to be eligible to any earn-out payments.
In accordance with ASC 805, Business Combinations , due to the continued employment requirement, no liability has been recorded for the estimated fair value of contingent earn-out payments for this transaction.
3 unchanged sentences
Legal and professional costs of $ 0.2 million related to the Aquana acquisition are included in selling, general and administrative expenses for the fiscal year ended September 30, 2021.
−Removed: The Aquana acquisition represents the Company’s strategy to expand its product revenues, as well as its engineering and manufacturing competencies, to markets outside the oil and gas industry.
+Added: The Aquana acquisition represents the Company’s strategy to expand its product revenues, as well as its engineering and manufacturing competencies, to markets outside the oil and gas industry.
Short-term Investments
The Company classifies its short-term investments as available-for-sale securities.
−Removed: 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.
−Removed: For the fiscal year ended September 30, 2021, the Company realized losses of $ 4,000 from the sale of short-term investments.
−Removed: No gains or losses were realized during the fiscal year ended September 30, 2020 from the sale of short-term investments.
−Removed: The Company’s short-term investments were composed of the following (in thousands):
+Added: 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’
+Added: For the fiscal years ended September 30, 2022 and 2021, the Company realized losses of $ 22,000 and $ 4,000 , respectively, from the sale of short-term investments.
+Added: The Company’s short-term investments were composed of the following (in thousands):
AS OF SEPTEMBER 30, 2022
1 unchanged sentence
Corporate bonds
−Removed: The Company had no short-term investments at September 30, 2020.
−Removed: The Company’s short-term investments had contractual maturities of $ 9.0 million due within one year and $ 0.5 million due from October 2022 to March 2023.
+Added: AS OF SEPTEMBER 30, 2021
+Added: Short-term investments:
+Added: Corporate bonds
+Added: The Company’s short-term investments have contractual maturities ranging from February 2023 to March 2023.
Investment in Debt Security
−Removed: On July 13, 2020, the Company received an interest in a senior secured bond issued from an international seismic marine customer.
−Removed: The Company’s interest in the bond, which had a face value of $ 13.0 million, was received in exchange for $ 13.0 million of unpaid invoices and late fees owed by the customer.
−Removed: The bond was secured by a third in line lien on the assets owned by the customer and had an 8 % interest rate with bi-annual interest and possible principal payments based on available excess cash flows.
−Removed: Interest payments could be made either in cash or in-kind payments in the form of additional debt security.
−Removed: In-kind interest payments require an 8.8 % interest rate.
−Removed: The bond’s scheduled maturity date was July 13, 2022 .
−Removed: Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: Upon receipt of the senior secured bond, the Company performed a fair value assessment of the investment to determine the bond’s initial carrying amount.
−Removed: In accordance with ASC 825, “Fair Value Instruments”, the Company determined that the investment is a Level 3 financial instrument primarily due to its unknown marketability.
−Removed: Because of the distressed financial condition of the customer, the Company believ ed the fair value of the bond is nominal.
−Removed: In January 2021, the Company transferred the security pursuant to a purchase agreement (the “Agreement”) entered into with a third party (the “Buyer”).
−Removed: Pursuant to the Agreement, the Company received non-refundable consideration of $ 0.3 million and was entitled to receive additional cash compensation of $ 2.4 million from the Buyer if certain terms and conditions between the Buyer and the Company’s customer were met by December 31, 2021.
−Removed: In the event these terms and conditions were not met, the Company had the option to reacquire the bond from the Buyer for one dollar US ($ 1.00 ).
−Removed: The Company recognized a gain on investment of $ 0.3 million during the three months ended March 31, 2021 in connection with the transfer of the bond.
−Removed: During the third quarter of fiscal year 2021, the Company agreed to a reduction to the additional cash compensation required from the Buyer to obtain full rights to the bond from $ 2.4 million to $ 1.8 million.
−Removed: In June 2021, the Company received the $ 1.8 million from the Buyer and relinquished all rights to the bond.
−Removed: The Company recognized a $ 1.7 million gain on the sale of the bond during the third quarter of fiscal year 2021.
+Added: During the fiscal year ended September 30, 2021, the Company recognized a gain of $ 2.0 million in connection with the sale of its interest in a senior secured bond originally issued from an international seismic marine customer.
Fair Value of Financial Instruments
−Removed: The Company’s financial instruments generally include cash and cash equivalents, short-term investments, trade accounts, financing receivables and accounts payable.
+Added: The Company’s financial instruments generally include cash and cash equivalents, short-term investments, trade accounts, financing receivables and accounts payable.
Due to the short-term maturities of cash and cash equivalents, trade accounts receivable, financing receivables and accounts payable, the carrying amounts approximate fair value on the respective balance sheet dates.
The valuation technique used to measure the fair value of the contingent consideration was derived from models utilizing market observable inputs.
+Added: Geospace Technologies Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements—(Continued)
The Company measures its short-term investments and contingent consideration at fair value on a recurring basis.
−Removed: The following tables present the fair value of the Company’s short-term investments and contingent consideration by valuation hierarchy and input (in thousands):
+Added: 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
1 unchanged sentence
Identical Assets
−Removed: Significant Other
+Added: Other Unobservable
Short-term investments:
6 unchanged sentences
Significant Other
−Removed: Contingent consideration
−Removed: Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: The following table summarizes changes in the fair value of the Company’s Level 3 financial instruments for the fiscal year s ended September 30, 20 20 and 20 2 1 :
−Removed: Balance at October 1, 2019
+Added: Short-term investments:
+Added: Corporate bonds
+Added: Contingent consideration liabilities:
+Added: Current portion
+Added: Non-current portion
+Added: Total liabilities
+Added: Assets and Liabilities Measured on a Nonrecurring Basis
+Added: The measurements utilized to determine the implied fair value of the Company's Emerging Markets reporting unit as of September 30, 2022 represented significant unobservable inputs (Level 3).
+Added: See Note 11 for discussion of these inputs.
+Added: The following table summarizes changes in the fair value of the Company’s Level 3 financial instruments for the fiscal years ended September 30, 2022 and 2021:
+Added: Contingent Consideration balance at October 1, 2020
Fair value adjustments
3 unchanged sentences
Payment of contingent consideration
−Removed: Consideration payable
Balance at September 30, 2022
−Removed: Adjustments to the fair value of the contingent consideration are based on Monte Carlo simulations or the probability-weighted expected return method utilizing inputs which include market comparable information and management assessments regarding potential future scenarios.
−Removed: The Company believes its estimates and assumptions are reasonable, however, there is significant judgment involved.
+Added: Geospace Technologies Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: Adjustments to the fair value of the contingent consideration are based on internal estimates and management assessments regarding potential future scenarios.
+Added: The Company believes its estimates and assumptions are reasonable;
+Added: however, there is significant judgment involved.
+Added: Also see Note 18.
Accumulated Other Comprehensive Loss
2 unchanged sentences
Balance at October 1, 2020
−Removed: Other comprehensive loss
−Removed: Balance at September 30, 2020
Other comprehensive income (loss)
Balance at September 30, 2021
−Removed: Accounts and Financing Receivables
−Removed: Trade accounts receivable, net (excluding notes receivable) are reflected in the following table (in thousands):
+Added: Other comprehensive income
+Added: Balance at September 30, 2022
+Added: Trade Accounts and Financing Receivables
+Added: Trade accounts receivable, net (excluding financing receivables) are reflected in the following table (in thousands):
AS OF SEPTEMBER 30,
1 unchanged sentence
Allowance for doubtful accounts
−Removed: The allowance for doubtful accounts represents the Company’s best estimate of probable credit losses.
+Added: 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 accounts receivable balances.
1 unchanged sentence
Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
+Added: Notes to Consolidated Financial Statements—(Continued)
Financing receivables are reflected in the following table (in thousands):
9 unchanged sentences
Non-current notes receivable
−Removed: Promissory notes receivable are generally collateralized by the products sold, and bear interest at rates ranging up to 8 % per year.
−Removed: The promissory notes receivable mature at various times through January 2023 .
+Added: Promissory notes receivable are generally collateralized by the products sold, and bear interest at rates ranging from 7.0 % to 9.5 % per year.
+Added: After consideration of the forbearance discussed in Note 2, the promissory notes receivable mature at various times through January 2024 .
The Company has, on occasion, extended or renewed notes receivable as they mature, but there is no obligation to do so.
+Added: During the first quarter of fiscal year 2022, the Company financed a sale of rental equipment by entering into a $ 3.7 million promissory note with a customer.
+Added: The note has a term of nine months , with principal and interest payments due monthly until maturity.
+Added: During the second quarter of fiscal year 2022, the Company partially financed a $ 10.0 million sale of rental equipment by entering into an $ 8.0 million promissory note with a customer.
+Added: The note has a one-year term, with principal and interest payments due quarterly until maturity.
+Added: During the third quarter of fiscal year 2021, the Company entered into a sales-type lease with a customer for rental equipment.
+Added: The lease, which had a term of six months , was paid during the second quarter of fiscal year 2022.
During the second quarter of fiscal year 2020, the Company partially financed a $ 12.5 million product sale by entering into a $ 10.0 million promissory note with the customer.
1 unchanged sentence
Due to the financial condition of the customer, the Company had concerns over the probable collectability of the promissory note.
−Removed: As a result, the promissory note was not reflected on the Company’s consolidated balance sheet through its first quarter of fiscal year 2021.
−Removed: During the second quarter of fiscal year 2021, as a result of a new information received from the customer, management determined that it is probable that the customer will satisfy its remaining payment obligations to the Company and recognized the promissory note on its consolidated balance sheet as of March 31, 2021.
+Added: As a result, the promissory note was not reflected on the Company’s consolidated balance sheet through its first quarter of fiscal year 2021.
+Added: During the second quarter of fiscal year 2021, as a result of new information received from the customer, management determined that it was probable that the customer would satisfy its remaining payment obligations to the Company and, therefore, the Company recognized the promissory note on its consolidated balance sheet as of March 31, 2021.
See Note 2 for more information on this matter.
−Removed: During the third quarter of fiscal year 2021, the Company entered into a sales-type lease with a customer on land-based wireless seismic equipment from its rental fleet.
−Removed: The lease has a term of six months .
−Removed: Scheduled minimum payments due and outstanding under the lease at September 30, 2021 were $ 1.5 million.
−Removed: Minimum leases payments of $ 1.0 million are due in the first quarter of fiscal year 2022.
−Removed: Interest income of $ 37,000 was recognized during the fiscal year ended September 30, 2021.
−Removed: The ownership of the equipment will transfer to the customer at the end of the lease term.
Inventories consisted of the following (in thousands):
8 unchanged sentences
Raw materials include semi-finished goods and component parts that totaled approximately $ 20.7 million and $ 22.7 million at September 30, 2022 and 2021, respectively.
−Removed: Finished goods and raw materials that totaled $ 23.3 million and $ 21.8 million were fully reserved at September 30, 2021 and 2020, respectively.
Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
+Added: Notes to Consolidated Financial Statements—(Continued)
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.
22 unchanged sentences
Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: The discount rate used on the operating right-of-use assets represented the Company’s incremental borrowing rate at lease inception.
−Removed: The Company leases equipment to customers primarily for minimum terms of six months or less.
−Removed: The majority of the Company’s rental revenue is generated from its marine-based wireless seismic data acquisition system.
−Removed: All of the Company’s leasing arrangements as lessor are classified as operating leases except for one sales-type lease.
−Removed: See Note 7 for more information on the Company’s sales-type lease.
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: The discount rate used on the operating right-of-use assets represented the Company’s incremental borrowing rate at lease inception.
+Added: The Company leases equipment to customers which generally range from daily rentals to minimum rental periods of up to one year .
+Added: All of the Company's current leasing arrangements, with the Company acting as lessor, are classified as operating leases.
+Added: The majority of the Company’s rental revenue is generated from its marine-based wireless seismic data acquisition system.
The Company regularly evaluates the collectability of its lease receivables on a lease-by-lease basis.
1 unchanged sentence
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 to limit rental revenue recognized to the cash collections received.
−Removed: As of September 30, 2021, the Company’s trade accounts receivables included lease receivables of $ 7.5 million.
−Removed: Rental revenue for fiscal years 2021 and 2020 was $ 19.0 million and $ 53.7 million, respectively.
−Removed: At September 30, 2021, future minimum lease obligations due from the Company’s leasing customers on operating leases (all in fiscal year 2022) were $ 0.8 million.
+Added: As of September 30, 2022, the Company’s trade accounts receivables included lease receivables of $ 3.2 million.
+Added: Rental revenue related to leased equipment for fiscal years 2022 and 2021 was $ 24.9 million and $ 19.0 million, respectively.
+Added: Future minimum lease obligations due from the Company's leasing customers as of September 30, 2022 were $ 24.6 million, all of which is expected to be due within the next 12 months.
Rental equipment consisted of the following (in thousands):
3 unchanged sentences
Rental equipment depreciation expense was $ 13.7 million and $ 15.1 million in fiscal years 2022 and 2021, respectively.
+Added: 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 Bogotá, Colombia.
+Added: The lease in Canada commenced in November 2021 and is for a five-year term.
+Added: The lease on the warehouse in Bogotá
+Added: commenced in December 2021 and is for a one-year term.
+Added: Rental revenue related to these two properties for fiscal year 2022 was $ 0.2 million.
+Added: Future minimum lease payments due to the Company as of September 30, 2022 were as follows (in thousands):
+Added: For fiscal years ending September 30,
Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
+Added: Notes to Consolidated Financial Statements—(Continued)
Property, Plant and Equipment
−Removed: At September 30, 2020, the Company’s property located in Bogot á , Colombia was classified as held for sale on the accompanying consolidated balance sheet.
−Removed: The property was used for warehousing its rental equipment operations, product sales and service support to its customers in South America.
−Removed: The Company has been marketing the property since the second quarter of fiscal year 2020.
−Removed: The carrying value of the property was $ 0.6 million at September 30, 2020.
−Removed: During the fourth quarter of fiscal year 2021, the Company commenced negotiations with a prospective tenant to lease the property and anticipates that a lease will be entered into during the first quarter of fiscal year 2022.
−Removed: As a result of the anticipated leasing arrangement, Company has included the asset’s carrying value in property, plant and equipment on the accompanying consolidated balance sheet as of September 30, 2021.
Property, plant and equipment consisted of the following (in thousands):
6 unchanged sentences
Construction in progress
−Removed: Leasehold improvements
Transportation equipment
Accumulated depreciation and impairment
−Removed: Property, plant and equipment depreciation expense was $ 4.0 million for each of the fiscal years ended September 30, 2021 and 2020.
+Added: Property, plant and equipment depreciation expense was $ 4.1 and $ 4.0 million for the fiscal years ended September 30, 2022 and 2021.
+Added: Impairment expense of $ 0.4 million was incurred on certain manufacturing equipment in fiscal year 2022.
+Added: The impairment expense is included as a component of cost of revenue in the consolidated statement of operations.
Goodwill and Other Intangible Assets
−Removed: In connection with the acquisition of Aquana in July 2021, the Company recorded goodwill of $ 0.7 million (deductible for tax purposes) and other intangible assets of $ 0.7 million.
−Removed: The operations of Aquana are included as a component of the Company’s Adjacent Markets reporting unit.
−Removed: At September 30, 2021, the Company had additional goodwill of $ 4.3 million and other intangible assets, net of $ 4.5 million attributable to its Emerging Markets reporting unit and other intangible assets, net of $ 2.1 million attributable to its Oil & Gas Markets reporting unit.
+Added: At September 30, 2022, the Company had goodwill of $ 0.7 million and other intangible assets, net of $ 0.6 million attributable to its Adjacent Markets reporting unit;
+Added: other intangible assets, net of $ 3.5 million attributable to its Emerging Markets reporting unit;
+Added: and other intangible assets, net of $ 1.5 million attributable to its Oil and Gas Markets reporting unit.
Goodwill represents the excess cost of a business acquired over the fair market value of identifiable net assets at the date of acquisition.
3 unchanged sentences
The Company determined future cash flows provided the best estimate of the fair value of its reporting units.
−Removed: In determining fair value for the Company’s Emerging Markets reporting unit, estimated future cash flows included obtaining a second contract with the CBP.
−Removed: Key assumptions in the impairment analysis include revenue and EBITDA projections, discount rates, long-term growth rates, and the effective tax rate the Company determined to be appropriate.
−Removed: These estimates and projections can be unpredictable, particularly for Quantum as an emerging business.
−Removed: T he total Company’s estimate of reporting unit fair values was reconciled to its then market capitalization (based upon the stock market price) plus an implied control premium.
−Removed: Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: The assessment determined that the fair market value of its Adjacent Markets and Emerging Markets reporting units were more than their carrying amount.
−Removed: As a result, no impairment charges were recorded for the fiscal year ended September 30, 2021.
−Removed: For the fiscal year ended September 30, 2020, the Company recorded an impairment charge of $ 0.7 million for the entire goodwill associated with its Oil and Gas Markets reporting unit.
+Added: Key assumptions in determining the fair value in the impairment analysis include revenue and cash flow projections, discount rates, long-term growth rates, and the effective tax rate the Company determined to be appropriate.
+Added: In determining fair value for the Company's Emerging Markets reporting unit, cash flow projections included obtaining additional contracts from the CBP and considered competition in the marketplace.
+Added: These estimates and projections can be unpredictable, particularly for Quantum Technology Sciences, Inc.
+Added: ("Quantum") as an emerging business.
+Added: The total Company’s estimate of reporting unit fair values was reconciled to its then market capitalization (based upon the stock market price) plus an implied control premium.
+Added: As a result of the assessment, the Company determined that the fair value its Emerging Markets reporting unit was less than its carrying amount and recorded an impairment charge of $ 4.3 million for the entire goodwill associated with this reporting unit for the fiscal year ended September 30, 2022.
+Added: The primary factors impacting the decrease in the fair value of the Emerging Markets reporting unit was historical operating losses and the current outlook for sales and operating performance.
+Added: The carrying value of the reporting unit exceeded the fair value by approximately $ 8 million as a result of the assessment.
+Added: In measuring sensitivity, changes to key assumptions, each of which would cause an approximate $ 1.0 million change in the fair value of the reporting unit include (i) a 3 % change in the discount rate, (ii) a 4 % change in revenue, (iii) a 10 % change in cost of revenue or (iv) a 13 % change in research and development expense.
+Added: No impairment charge to the Emerging Markets asset group was necessary as its future undiscounted cash flows exceeded the carrying value.
+Added: The Emerging Markets asset group could incur future impairment charges to its other intangible assets if it is unable to obtain additional contracts from the CBP or other customers.
+Added: No impairment charge was necessary on the Company's Adjacent Markets reporting unit as a result of the assessment.
Also see Note 1 to these consolidated financial statements.
−Removed: The Company’s consolidated goodwill and other intangible assets consisted of the following (in thousands):
+Added: Geospace Technologies Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: The Company’s consolidated goodwill and other intangible assets consisted of the following (in thousands):
Weighted-Average Remaining Useful Lives (in years)
AS OF SEPTEMBER 30,
+Added: Emerging Markets reporting unit
+Added: Adjacent Markets reporting unit
+Added: Total goodwill
+Added: Accumulated impairment losses
Other intangible assets:
6 unchanged sentences
Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
+Added: Notes to Consolidated Financial Statements—(Continued)
As of September 30, 2022, future estimated amortization expense of other intangible assets is as follows (in thousands):
1 unchanged sentence
Long-Term Debt
−Removed: The Company had no long-term debt outstanding at September 30, 2021 and 2020.
−Removed: On March 2, 2011 , the Company entered into a credit agreement with Frost Bank (the “Original Credit Agreement”).
−Removed: The Original Credit Agreement has been amended periodically since 2011 (as so amended, the “Credit Agreement”).
−Removed: In November 2019, the credit agreement was amended to (i) extend the maturity date from April 2020 to April 2022 , (ii) increase the unencumbered liquid assets covenant threshold from $ 5 million to $ 10 million effective in the first quarter of fiscal year 2021, (iii) to increase the tangible net worth requirement from $ 140 million to $ 145 million in the first quarter of fiscal year 2021 and (iv) remove the requirement that we obtain the consent of Frost Bank prior to paying dividends or repurchasing stock so long as we are in compliance with the covenants of the credit agreement.
−Removed: In March 2021, the Company further amended the Credit Agreement to reduce the maximum amount of available borrowing from $ 30 million to $ 20 million.
−Removed: The March 2021 amendment also altered the tangible net worth requirement to decrease the minimum threshold from $ 145 million to $ 132 million commencing with the fiscal quarter ended March 31, 2021 and for each fiscal quarter thereafter.
−Removed: Additionally, the March 2021 amendment added a funded debt to EBITDA ratio financial covenant which requires the Company to maintain, for a twelve-month period ending on the last day of each fiscal quarter commencing with the fiscal quarter ended March 31, 2021, and for each fiscal quarter thereafter, a ratio of funded debt to EBITDA not exceeding 1.50 to 1.00 .
−Removed: The March 2021 amendment also amended the definition of “Eligible Accounts” to include certain unbilled receivables, and reduced the limit on the amount of “Eligible Inventory” that may be included in the borrowing base from $ 20 million to $ 15 million.
−Removed: The borrowing base is determined based upon certain of the Company’s assets which include (i) 80 % of certain accounts receivable plus (ii) 50 % of certain notes receivable (such result not to exceed $ 10 million) plus (iii) 25 % of certain inventories (such result not to exceed $ 20 million).
−Removed: Several of the Company’s domestic subsidiaries have guaranteed the obligations of the Company under the Credit Agreement and such subsidiaries have secured their obligations under such guarantees by the pledge of substantially all of the assets of such subsidiaries.
+Added: The Company had no long-term debt outstanding at September 30, 2022 or 2021.
+Added: In May 2022, the Company entered into a credit agreement (the “Agreement”) with Amerisource Funding, Inc, as administrative agent and as a lender, and Woodforest National Bank, as a lender.
+Added: Available borrowings under the Agreement are determined by a borrowing base with a maximum availability of $ 10 million.
+Added: The borrowing base is determined based upon certain of the Company's domestic assets which include (i) 70 % loan to value of the Company's property located at 6410 Langfield Road in Houston, Texas (the “Property”), (ii) 50 % of forced liquidation value of equipment, (iii) 80 % of certain accounts receivable and (iv) 50 % of forced liquidation value of certain inventory (inventory borrowing base limited to 100 % of borrowing base credit given toward accounts receivable).
+Added: The Agreement is for a two-year term with all funds borrowed due at the expiration of the term.
+Added: The interest rate on borrowed funds is the Wall Street prime rate (with a minimum of 3.25 %) plus 4.00 %.
The Company is required to make monthly interest payments on borrowed funds.
−Removed: The Credit Agreement limits the incurrence of additional indebtedness and contains other covenants customary in agreements of this type.
−Removed: The interest rate for borrowings under the Credit Agreement is based on the Wall Street Journal prime rate, which was 3.25 % at September 30, 2021.
−Removed: In October 2021, Frost Bank notified the Company that they will not be extending the credit agreement upon its expiration in April 2022, and in November 2021 we elected to cancel the credit agreement.
−Removed: We are currently in negotiations with multiple lenders for a new credit facility arrangement;
−Removed: however, we may not be successful in obtaining a credit facility on terms that are favorable to us.
+Added: Borrowings under the Agreement will be principally secured by the Property and the Company's domestic equipment, inventory and accounts receivables.
+Added: In addition, certain domestic subsidiaries of the Company have guaranteed the obligations of the Company under the Agreement and such subsidiaries have secured the obligations by pledging certain assets.
+Added: The Agreement requires the Company to maintain a minimum consolidated tangible net worth of $ 100 million.
+Added: At September 30, 2022, the Company was compliant with all covenants under the Agreement and its borrowing availability was $ 8.5 million.
+Added: Debt issuance costs of $ 0.2 million were incurred in connection with the Agreement.
+Added: These costs were capitalized in other non-current assets on the consolidated balance sheet and are being amortized to interest expense over the term of the Agreement.
Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: Deferred Revenue and Other Liabilities
−Removed: Deferred revenue and other liabilities consisted of the following (in thousands):
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: Other Current Liabilities
+Added: Other current liabilities consisted of the following (in thousands):
AS OF SEPTEMBER 30,
5 unchanged sentences
Product warranty
−Removed: Less current portion
−Removed: Non-current portion
The Company is self-insured for certain losses related to employee medical claims.
The Company has purchased stop-loss coverage for individual claims in excess of $ 175,000 per claimant per year in order to limit its exposure to any significant levels of employee medical claims.
−Removed: Self-insured losses are accrued based on the Company’s historical experience and on estimates of aggregate liability for uninsured claims incurred using certain actuarial assumptions followed in the insurance industry.
+Added: Self-insured losses are accrued based on the Company’s historical experience and on estimates of aggregate liability for uninsured claims incurred using certain actuarial assumptions followed in the insurance industry.
Employee Benefits
−Removed: The Company’s U.S.
−Removed: employees are participants in the Geospace Technologies Corporation’s Employee’s 401(k) Retirement Plan (the “Plan”), which covers substantially all eligible employees in the United States.
+Added: The Company’s U.S.
+Added: employees are participants in the Geospace Technologies Corporation’s Employee’s 401(k) Retirement Plan (the “Plan”), which covers substantially all eligible employees in the United States.
The Plan is a qualified salary reduction plan in which all eligible participants may elect to have a percentage of their compensation contributed to the Plan, subject to certain guidelines issued by the Internal Revenue Service.
−Removed: The Company’s share of discretionary matching contributions was approximately $ 0.9 million and $ 0.8 million in fiscal years 2021 and 2020, respectively.
−Removed: The Company’s stock incentive plans in which key employees may participate are discussed in Note 15 to these consolidated financial statements.
−Removed: Stockholders’ Equity
−Removed: In February 2014, the board of directors and stockholders approved the 2014 Long Term Incentive Plan, as amended (the “2014 Plan”).
−Removed: In February 2021, board of directors and stockholders approved an amendment which increased the aggregate amount of shares of common stock may be issued under the 2014 Plan from 1,500,000 to 3,000,000 .
−Removed: The Company is authorized to issue nonqualified and incentive stock options to purchase common stock, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) to key employees, directors and consultants under the 2014 Plan.
+Added: The Company’s share of discretionary matching contributions was approximately $ 1.0 million and $ 0.9 million in fiscal years 2022 and 2021, respectively.
+Added: The Company’s stock incentive plans in which key employees may participate are discussed in Note 15 to these consolidated financial statements.
+Added: Stockholders’
+Added: In February 2014, the board of directors and stockholders approved the 2014 Long Term Incentive Plan, as amended (the “2014 Plan”).
+Added: Under the 2014 Plan, an aggregate of 3,000,000 shares of common stock may be issued.
+Added: The Company is authorized to issue nonqualified and incentive stock options to purchase common stock, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) to key employees, directors and consultants under the 2014 Plan.
Options have a term not to exceed ten years , with the exception of incentive stock options granted to employees owning ten percent or more of the outstanding shares of common stock, which have a term not to exceed five years .
6 unchanged sentences
Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
+Added: Notes to Consolidated Financial Statements—(Continued)
The following table summarizes the combined activity under the equity incentive plans for the indicated periods:
2 unchanged sentences
Outstanding at September 30, 2022
−Removed: During fiscal years 2021 and 2020, the Company issued 195,950 and 162,250 RSUs to certain of its employees, executive officers and directors under the 2014 Plan, as amended.
+Added: During fiscal years 2022 and 2021, the Company issued 200,350 and 195,950 RSUs to certain of its employees, executive officers and directors under the 2014 Plan.
The RSUs issued include both time-based and performance-based vesting provisions.
1 unchanged sentence
The total grant date fair value of all RSUs issued for fiscal years 2022 and 2021 was $ 1.7 million and $ 1.4 million, respectively, which will be charged to expense over the next one to four years as the restrictions lapse.
−Removed: Compensation expense for RSUs was determined based on the closing market price of the Company’s stock on the date of grant applied to the total number of units that are anticipated to fully vest.
+Added: Compensation expense for RSUs was determined based on the closing market price of the Company’s stock on the date of grant applied to the total number of units that are anticipated to fully vest.
No RSAs have been issued since fiscal year 2019.
−Removed: All RSAs, RSUs and stock options outstanding at September 30, 2021 and 2020 were issued from the 2014 Plan.
−Removed: All stock options outstanding are nonqualified options.
−Removed: No nonqualified stock options were exercised during fiscal years 2021 and 2020.
−Removed: The following table summarizes information about stock options outstanding and exercisable at September 30, 2021:
−Removed: Options Outstanding
−Removed: Options Exercisable
−Removed: Range of Exercise Prices
+Added: All RSAs and RSUs outstanding at September 30, 2022 and 2021 were issued from the 2014 Plan.
Stock-based compensation expense recognized for the fiscal years ended September 30, 2022 and 2021 was $ 1.7 million and $ 2.0 million, respectively.
−Removed: Company accounts for forfeitures as they occur and records compensation costs under the assumption that the holder will complete the requisite service period.
−Removed: As of September 30, 2021, the Company had unrecognized compensation expense of $ 0.2 million relating to RSAs which is expected to be recognized over a weighted average period of 0.5 years.
+Added: The Company accounts for forfeitures as they occur and records compensation costs under the assumption that the holder will complete the requisite service period.
+Added: As of September 30, 2022, the Company had unrecognized compensation expense of $ 2,000 relating to RSAs which is expected to be recognized in the first quarter of fiscal year 2023.
As of September 30, 2022, the Company had unrecognized compensation expense of $ 1.9 million relating to RSUs which is expected to be recognized over a weighted average period of 2.3 years.
−Removed: The Company had no unrecognized compensation expense related to nonqualified stock option awards.
Income Taxes:
2 unchanged sentences
United States
−Removed: Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
The provision for income taxes consisted of the following (in thousands):
YEAR ENDED SEPTEMBER 30,
−Removed: Actual income tax expense (benefit) differs from income tax expense computed by applying the U.S.
+Added: Geospace Technologies Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: Actual income tax expense differs from income tax expense computed by applying the U.S.
statutory federal tax rate of 21 % for each of the fiscal years ended September 30, 2022 and 2021 as follows (in thousands):
YEAR ENDED SEPTEMBER 30,
−Removed: Expense for U.S federal income tax at statutory rate
+Added: Expense (benefit) for U.S federal income tax at statutory rate
Effect of foreign income taxes
10 unchanged sentences
The Company is currently unable to record any tax benefits for its tax losses in the U.S., Canada and the Russian Federation due to the uncertainty surrounding its ability to utilize such losses in the future to offset taxable income.
−Removed: Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
−Removed: Significant components of the Company’s net deferred income tax asset were as follows (in thousands):
+Added: Significant components of the Company’s net deferred income tax assets (liabilities) were as follows (in thousands):
AS OF SEPTEMBER 30, 2022
10 unchanged sentences
Other reserves
+Added: Subtotal deferred income tax assets
+Added: Valuation allowance
+Added: Net deferred income tax assets
Deferred income tax liabilities:
3 unchanged sentences
Property, plant and equipment and other
−Removed: Subtotal deferred income tax assets
−Removed: Valuation allowance
−Removed: Net deferred income tax assets (liabilities)
−Removed: Deferred income tax assets and liabilities are reported as follows in the accompanying consolidated balance sheets (in thousands):
−Removed: AS OF SEPTEMBER 30,
−Removed: Deferred income tax assets, net
−Removed: Deferred income tax liabilities, net
−Removed: Deferred income tax liabilities, net are included as a component of non-current deferred revenue and other liabilities in the accompanying consolidated balance sheets.
−Removed: The 2017 Tax Act was enacted in December 2017.
−Removed: The 2017 Tax Act, among other things, reduces the U.S.
−Removed: federal corporate tax rate from 35 % to 21 %, effective January 1, 2018, creates new taxes on certain foreign earnings and may require companies to pay a one-time transition tax on undistributed earnings of certain foreign subsidiaries that were previously tax deferred.
−Removed: The Company is not required to pay a one-time transition tax on earnings of our foreign subsidiaries since there were no accumulated earnings on a consolidated basis.
+Added: Total deferred income tax liabilities
+Added: Net deferred income tax liabilities
The financial reporting basis of investments in foreign subsidiaries exceed their tax basis.
A deferred tax liability is not recorded for this temporary difference because the investment is deemed to be permanent.
−Removed: A reversal of the Company’s plans to permanently invest in these foreign operations would cause the excess to become taxable.
+Added: A reversal of the Company’s plans to permanently invest
+Added: Geospace Technologies Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: in these foreign operations would cause the excess to become taxable.
At September 30, 2022, the Company had $ 2.6 million of cash and cash equivalents held by its foreign subsidiaries.
At September 30, 2022 and 2021, the temporary difference related to undistributed earnings for which no deferred taxes have been provided was approximately $ 6.9 million and $ 6.5 million, respectively.
−Removed: Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
Tax return filings which are subject to review by local tax authorities by major jurisdiction are as follows:
−Removed: United States—fiscal years ended September 30, 2018 through 2021
−Removed: State of Texas—fiscal years ended September 30, 2018 through 2021
−Removed: State of New York—fiscal years ended September 30, 2019
−Removed: State of California – fiscal years ended September 30, 2018 through 2021
−Removed: State of Pennsylvania – fiscal years ended September 30, 2019
−Removed: Russian Federation—calendar years 2019 through 2021
−Removed: Canada—fiscal years ended September 30, 2018 through 2021
−Removed: United Kingdom—fiscal years ended September 30, 2020 through 2021
−Removed: Colombia—calendar years 2019 through 2021
+Added: United States—fiscal years ended September 30, 2019 through 2022
+Added: State of Texas—fiscal years ended September 30, 2019 through 2022
+Added: State of New York—fiscal year ended September 30, 2020
+Added: State of California –
+Added: fiscal years ended September 30, 2019 through 2022
+Added: State of Pennsylvania –
+Added: fiscal year ended September 30, 2019
+Added: Russian Federation—calendar years 2020 through 2022
+Added: Canada—fiscal years ended September 30, 2019 through 2022
+Added: United Kingdom—fiscal years ended September 30, 2021 through 2022
+Added: Colombia—calendar years 2020 through 2022
The Company had no unrecognized tax liabilities as of September 30, 2022 and 2021.
−Removed: As of September 30, 2021, the Company had net operating loss (“NOL”) carry-forwards of approximately $ 101.4 million in the United States, $ 20.2 million in Canada and $ 1.5 million in Russia which are available to offset future taxable income in those jurisdictions.
+Added: As of September 30, 2022, the Company had net operating loss (“NOL”) carry-forwards of approximately $ 106.2 million in the United States, $ 19.8 million in Canada and $ 2.3 million in Russia which are available to offset future taxable income in those jurisdictions.
The NOL carry-forwards for Canada and Russia begin to expire in 2033 and 2026 , respectively.
The NOL carry-forward for the United States which originated prior to the 2017 Tax Act of $ 28.0 million begins to expire in 2028 .
−Removed: The Company’s NOLs originating after the 2017 Tax Act of $ 73.1 million do not expire.
+Added: The Company’s NOLs originating after the 2017 Tax Act of $ 77.9 million do not expire.
The Company has not completed a Section 382 limitation study which may prevent it from using its NOLs in the future.
−Removed: Management of the Company has concluded that it is more-likely-than-not that its U.S., Canadian and Russian net deferred tax assets will not be realized in accordance with U.S.
+Added: Management of the Company has concluded that it is more-likely-than-not that its U.S., Canadian and Russian net deferred tax assets will not be realized in accordance with GAAP.
At September 30, 2022 and 2021, the Company had a valuation allowance against its U.S.
6 unchanged sentences
Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
+Added: Notes to Consolidated Financial Statements—(Continued)
The following table summarizes the calculation of net loss and weighted average common shares and common equivalent shares outstanding for purposes of the computation of loss per share (in thousands, except share and per share amounts):
10 unchanged sentences
Loss per shares:
−Removed: For the calculation of diluted loss per share for fiscal years 2021 and 2020, stock options of 38,800 and 91,100 , respectively, and RSUs of 299,374 and 218,257 , respectively, were excluded in the calculation of weighted average shares outstanding as a result of their impact being antidilutive.
+Added: For the calculation of diluted loss per share for fiscal years 2022 and 2021, stock options of zero and 38,800 , respectively, and RSUs of 323,859 and 299,374 , respectively, were excluded in the calculation of weighted average shares outstanding as a result of their impact being antidilutive.
Commitments and Contingencies
Contingent Consideration
−Removed: In connection with its acquisitions of Quantum Technology Sciences, Inc.
−Removed: (“Quantum”) and the OptoSeis ® fi ber optic sensing technology business, the Company recorded contingent purchase price payments, or contingent consideration, that may be owed in the future.
+Added: In connection with its acquisitions of Quantum and the OptoSeis ® fiber optic sensing technology business, the Company recorded contingent purchase price payments, or contingent consideration, that may be owed in the future.
For both acquisitions, the contingent payments are based on future receipt of contract awards and the resulting revenue derived from such contracts.
−Removed: The Company reviews and assesses the fair value of its contingent earn-out liabilities on a quarterly basis.
−Removed: The Company utilizes the services of independent valuation consultants to assist with the estimation of the fair value of this contingent consideration.
+Added: The Company reviews and assesses the fair value of its contingent consideration on a quarterly basis.
The determination of fair value is inherently unpredictable since it requires estimates and projections of future revenue, including the size, length, timing and, in the case of Quantum, the extent of gross profits earned under its future contracts.
−Removed: As a result, the Company anticipates fair value adjustments to these liabilities over the respective earn-out periods, and these adjustments will result in either charges or credits to the Company’s operating expenses when the fair value of the contingent consideration increases or decreases, respectively.
−Removed: The Company recorded an initial contingent earn-out liability of $ 7.7 million in connection with its July 2018 acquisition of Quantum.
−Removed: Contingent payments, if any, may be paid in the form of cash or Company stock and will be derived from eligible revenue generated during a four-year earn-out period ending July 2022 .
−Removed: The maximum amount of contingent payments is $ 23.5 million over the four-year earn-out period.
−Removed: In fiscal year 2020, the Company made a cash earn-out payment of $ 0.1 million to the former shareholders of Quantum.
−Removed: At September 30, 2020, the contingent earn-out liability was valued at $ 5.8 million.
−Removed: During fiscal year 2021, the Company recorded adjustments of $ 2.7 million to decrease the earn-out liability due to a decrease in projected future eligible revenue.
−Removed: In September 2021 and October 2021, the Company made cash earn-out payments of $ 1.4 million and $ 0.8 million, respectively, to the former shareholders of Quantum.
−Removed: The payments were primarily attributable to revenue earned on Quantum’s $ 10 million contract with the CBP to provide a technology solution to the Department of Homeland Security.
−Removed: At September 30, 2021, the contingent earn-out liability was valued at $ 0.8 million related to projected future eligible revenue.
−Removed: The Company recorded an initial contingent earn-out liability of $ 4.3 million in connection with its November 2018 acquisition of all the intellectual property and related assets of the OptoSeis ® fiber optic sensing technology.
+Added: As a result, the Company anticipates fair value adjustments to these liabilities over the respective earn-out periods, and these adjustments will result in either charges or credits to the Company’s operating expenses when the fair value of the contingent consideration increases or decreases, respectively.
+Added: The Company recorded an initial contingent consideration liability of $ 7.7 million in connection with its July 2018 acquisition of Quantum.
+Added: Contingent payments, if any, may be paid in the form of cash or Company stock and will be derived from eligible revenue generated during a four-year earn-out period, which ended in July 2022 .
+Added: The maximum amount of contingent payments was $ 23.5 million over the four-year earn-out period.
+Added: In fiscal year 2020, the Company made cash contingent consideration payments of $ 0.1 million to the former shareholders of Quantum.
+Added: In September 2021 and October 2021, the Company made additional cash earn-out payments of $ 1.4 million and $ 0.8 million, respectively, to the former shareholders of Quantum.
+Added: The payments were primarily attributable to revenue earned on Quantum’s $ 10.5 million contract with the CBP to provide a technology solution to the Department of Homeland Security.
+Added: At September 30, 2021, the contingent consideration liability was valued at $ 0.8 million related to projected future eligible revenue.
+Added: During the fiscal year ended September 30, 2022, the Company recorded an adjustment of $ 0.6 million to decrease the liability to $ 0.2 million.
+Added: The decrease for the fiscal year ended September 30, 2022 was primarily the result of timing in securing a potential second contract with the CBP caused by federal budget delays.
+Added: In November 2022, the Company made a final payment of $ 0.2 million to the former shareholders of Quantum and has no further earn-out obligations related to this acquisition.
+Added: The Company recorded an initial contingent consideration liability of $ 4.3 million in connection with its November 2018 acquisition of all the intellectual property and related assets of the OptoSeis ® fiber optic sensing technology.
Contingent cash payments, if any, will be derived from eligible revenue generated during a five-and-a-half year earn-out period ending in May 2024 .
−Removed: In order for revenue to be considered eligible, sales contracts must be entered into during the first four years of the earn-out period ending in November 2022.
+Added: In order for revenue to be considered eligible, sales contracts must be entered into during the first four years of the earn-out period ending November 13, 2022.
The maximum amount of contingent payments is $ 23.2 million over the five-and-a-half year earn-out period.
−Removed: At September 30, 2021, the contingent earn-out liability was valued at $ 5.2 million.
−Removed: During fiscal year 2021, the Company recorded net adjustments of $ 0.8 million to decrease the earn-out liability to an estimated value of $ 4.4 million.
−Removed: No earnout-payments have been made to date on the acquisition.
+Added: At September 30, 2021, the contingent consideration liability was valued at $ 4.4 million.
+Added: During the fiscal year ended September 30, 2022, the Company recorded an adjustment of $ 4.4 million to decrease the liability to zero .
+Added: The decrease for the fiscal year ended September 30, 2022 was
Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: the result of the unlikelihood of entering into a sales contract prior to the eligibility date.
+Added: No sales contracts were entered into by the November 13, 2022 eligibility date.
+Added: The Company had no further earn-out obligations related to this acquisition.
Contingent Compensation Costs
−Removed: In connection with the acquisition of Aquana in July 2021, the Company is subject to additional contingent cash payments to the former members of Aquana, LLC.
−Removed: over a six-year earn-out period.
+Added: In connection with the acquisition of Aquana in July 2021, the Company is subject to additional contingent cash payments to the former members of Aquana over a six-year earn-out period.
The contingent payments, if any, will be derived from certain eligible revenue generated during the earn-out period from products and services sold by Aquana.
There is no maximum limit to the contingent cash payments that could be made.
−Removed: The merger agreement with Aquana requires the continued employment of a certain key employee and former member of Aquana, LLC for the first four years of the six year earn-out period in order for any of Aquana’s former members to be eligible to any earn-out payments.
+Added: The merger agreement with Aquana requires the continued employment of a certain key employee and former member of Aquana for the first four years of the six year earn-out period in order for any of Aquana’s former members to be eligible to any earn-out payments.
As discussed in Note 3, due to the continued employment requirement, no liability has been recorded for the estimated fair value of contingent earn-out payments for this transaction.
Earn-outs achieved, if any, will be recorded as compensation expense when incurred.
−Removed: Operating Leases
−Removed: The Company leases office space and certain equipment for terms of seven years or less.
−Removed: Rent expense was approximately $ 0.5 million for each of fiscal years 2021 and 2020.
−Removed: At September 30, 2021, future minimum lease payments was $ 1.4 million.
−Removed: See Note 9 for additional information.
Legal Proceedings
1 unchanged sentence
Management is unable to predict the ultimate outcome of these actions, because of the inherent uncertainty of such actions.
−Removed: However, management believes that the most probable, ultimate resolution of current pending matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
+Added: However, management believes that the most probable, ultimate resolution of current pending matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
Supplemental Cash Flow Information
1 unchanged sentence
YEAR ENDED SEPTEMBER 30,
−Removed: Cash paid for interest
Cash paid for income taxes
2 unchanged sentences
Inventory transferred to property, plant and equipment
−Removed: Financing receivables recognized in connection with sale of used rental equipment
+Added: Issuance of notes receivables in connection with sale of used rental equipment
Segment and Geographic Information
1 unchanged sentence
Oil and Gas Markets, Adjacent Markets and Emerging Markets.
−Removed: The Oil and Gas Markets segment’s products include wireless seismic data acquisition systems, reservoir characterization products and services, and traditional seismic exploration products such as geophones, hydrophones, leader wire, connectors, cables, marine streamer retrieval and steering devices and various other seismic products.
−Removed: The Adjacent Markets segment’s products include imaging equipment, water meter products, remote shut-off valves and Internet of Things (IoT) platform, offshore cables, as well as seismic sensors used for vibration monitoring and geotechnical applications such as mine safety applications and earthquake detection.
+Added: The Oil and Gas Markets segment’s products include wireless seismic data acquisition systems, reservoir characterization products and services, and traditional seismic exploration products such as geophones, hydrophones, leader wire, connectors, cables, marine streamer retrieval and steering devices and various other seismic products.
+Added: The Adjacent Markets segment’s products include imaging equipment, water meter products, remote shut-off valves and IoT platform, as well as seismic sensors used for vibration monitoring and geotechnical applications such as mine safety applications and earthquake detection.
The Emerging Markets segment designs and markets seismic products targeted at the border and perimeter security markets.
Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: The following tables summarize the Company’s segment information:
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: The following tables summarize the Company’s segment information:
YEAR ENDED SEPTEMBER 30,
22 unchanged sentences
Emerging Markets
−Removed: The Company’s manufacturing operations for its business segments are combined.
+Added: The Company’s manufacturing operations for its business segments are combined.
Therefore, the Company does not segregate and report separate balance sheet accounts for each of its segments and, therefore, no such segment balance sheet information is presented in the table above.
−Removed: “Corporate” loss from operations primarily consists of the Company’s Houston headquarters general and administrative expenses.
+Added: “Corporate”
+Added: loss from operations primarily consists of the Company’s Houston headquarters general and administrative expenses.
Geospace Technologies Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements—(Continued)
+Added: Notes to Consolidated Financial Statements—(Continued)
The Company generates revenue from product sales, product rentals and services from its subsidiaries located in the United States, Canada, Colombia, the Russian Federation and the United Kingdom.
−Removed: Revenue generated by the Company’s subsidiaries is as follows (in thousands):
+Added: Revenue generated by the Company’s subsidiaries is as follows (in thousands):
YEAR ENDED SEPTEMBER 30,
4 unchanged sentences
YEAR ENDED SEPTEMBER 30,
+Added: South America
United States
19 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.