What changed in this filing

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Item 1. Financial Statements

2025-05-09 compared with 2025-02-06 · 266 added, 186 removed, 552 unchanged (45% of the section changed)

3 unchanged sentences

(in thousands except share amounts)

December 31, 2024

March 31, 2025

September 30, 2024

58 unchanged sentences

Three Months Ended

December 31, 2024

December 31, 2023

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

$ 18,708 $ 19,497 $ 51,353 $ 63,211

( 685 ) 4,773 3,893 11,091

Total revenue

2 unchanged sentences

13,747 14,995 28,016 38,837

2,528 3,394 5,333 7,348

Total cost of revenue

3 unchanged sentences

Selling, general and administrative

6,775 6,546 14,195 12,372

Research and development

5,235 3,863 10,129 7,465

Provision for (recovery of) credit losses

19 ( 22 ) 19 ( 51 )

Total operating expenses

Income from operations

12,029 10,387 24,343 19,786

Income (loss) from operations

( 10,281 ) ( 4,506 ) ( 2,446 ) 8,331

Other income (expense):

2 unchanged sentences

Interest income

Foreign currency transaction gains (losses), net

693 247 1,438 482

Foreign currency transaction losses, net

( 255 ) ( 20 ) ( 269 ) ( 183 )

Total other income (loss), net

Income before income taxes

Income tax expense

( 38 ) 7 ( 71 ) ( 67 )

Income per common share:

Total other income, net

357 190 1,011 132

Income (loss) before income taxes

( 9,924 ) ( 4,316 ) ( 1,435 ) 8,463

Income tax expense (benefit)

( 126 ) 11 ( 13 ) 111

Net income (loss)

$ ( 9,798 ) $ ( 4,327 ) $ ( 1,422 ) $ 8,352

Income (loss) per common share:

$ ( 0.77 ) $ ( 0.32 ) $ ( 0.11 ) $ 0.63

$ ( 0.77 ) $ ( 0.32 ) $ ( 0.11 ) $ 0.62

Weighted average common shares outstanding:

3 unchanged sentences

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Three Months Ended

December 31, 2024

December 31, 2023

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Net income (loss)

$ ( 9,798 ) $ ( 4,327 ) $ ( 1,422 ) $ 8,352

Other comprehensive income (loss):

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

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

( 14 ) ( 20 ) ( 57 ) ( 5 )

Foreign currency translation adjustments

65 ( 122 ) ( 334 ) 369

Total other comprehensive income (loss)

Total comprehensive income

51 ( 142 ) ( 391 ) 364

Total comprehensive income (loss)

$ ( 9,747 ) $ ( 4,469 ) $ ( 1,813 ) $ 8,716

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY

FOR THE three months ended December 31, 2024 and 2023

FOR THE six months ended March 31, 2025 and 2024

(in thousands, except share amounts)

1 unchanged sentence

Balance at October 1, 2024

12,709,381 $ 142 $ 97,342 $ 55,282 $ ( 4,257 ) $ ( 13,885 ) $ 134,624

— — — 8,376 — — 8,376

Other comprehensive income

— — — — ( 442 ) — ( 442 )

Other comprehensive loss

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

109,180 1 ( 1 ) — — — —

Purchase of treasury stock

( 19,664 ) — — — — ( 197 ) ( 197 )

Stock-based compensation

— — 349 — — — 349

Balance at December 31, 2024

12,798,897 $ 143 $ 97,690 $ 63,658 $ ( 4,699 ) $ ( 14,082 ) $ 142,710

Other comprehensive income

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

Purchase of treasury stock

Stock-based compensation

Balance at March 31, 2025

Balance at October 1, 2023

13,188,489 $ 140 $ 96,040 $ 61,860 $ ( 17,824 ) $ ( 7,500 ) $ 132,716

— — — 12,679 — — 12,679

Other comprehensive income

— — — — 506 — 506

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

128,601 2 ( 2 ) — — — —

Stock-based compensation

— — 406 — — — 406

Balance at December 31, 2023

13,317,090 $ 142 $ 96,444 $ 74,539 $ ( 17,318 ) $ ( 7,500 ) $ 146,307

Other comprehensive loss

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

Stock-based compensation

Balance at March 31, 2024

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

2 unchanged sentences

(in thousands)

Three Months Ended

December 31, 2024

December 31, 2023

Six Months Ended

March 31, 2025

March 31, 2024

Cash flows from operating activities:

$ 8,376 $ 12,679

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

Deferred income tax expense

Net income (loss)

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

Deferred income tax expense (benefit)

Rental equipment depreciation

1 unchanged sentence

Amortization of intangible assets

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

( 104 ) ( 115 )

Accretion of discounts on short-term investments

Stock-based compensation expense

2 unchanged sentences

Gross profit from sale of rental equipment

( 15,978 ) ( 19,350 )

Gain on disposal of property, plant and equipment

(Gain) loss on disposal of property, plant and equipment

Realized gain on investments

1 unchanged sentence

Trade accounts and financing receivables

( 3,622 ) 8,001

( 2,988 ) ( 4,059 )

Accounts payable trade

( 690 ) ( 478 )

Other liabilities

Net cash provided by (used in) operating activities

( 11,509 ) 2,652

Net cash used in operating activities

Cash flows from investing activities:

Purchase of property, plant and equipment

( 3,199 ) ( 779 )

Proceeds from the sale of property, plant and equipment

Investment in rental equipment

( 373 ) ( 2,558 )

Proceeds from the sale of rental equipment

Purchases of short-term investments

Proceeds from the sale of short-term investments

Payments received on note receivable related to sale of subsidiary

Net cash provided by (used in) investing activities

6,287 ( 2,740 )

Net cash provided by investing activities

Cash flows from financing activities:

2 unchanged sentences

Effect of exchange rate changes on cash

Increase (decrease) in cash and cash equivalents

( 5,485 ) 104

Increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

$ 1,410 $ 18,907

SUPPLEMENTAL CASH FLOW INFORMATION:

1 unchanged sentence

Accounts and financing receivables related to sale of rental equipment

16,112 30,048

Inventory transferred to rental equipment

5 unchanged sentences

The consolidated balance sheet of Geospace Technologies Corporation and its subsidiaries (the “Company”) at September 30, 2024 , was derived from the Company’s audited consolidated financial statements at that date.

The consolidated balance sheet at December 31, 2024 and the consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for the three months ended December 31, 2024 and 2023 were prepared by the Company without audit.

The consolidated balance sheet at March 31, 2025 and the consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the three and six months ended March 31, 2025 and 2024 were prepared by the Company without audit.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the consolidated financial position, results of operations and cash flows were made.

All significant intercompany balances and transactions have been eliminated.

The results of operations for the three months ended December 31, 2024 , are not necessarily indicative of the operating results for a full year or of future operations.

The results of operations for the three and six months ended March 31, 2025 , are not necessarily indicative of the operating results for a full year or of future operations.

Certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America ("U.S.

10 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.

At December 31, 2024 and September 30, 2024, cash and cash equivalents included $ 0.9 million and $ 1.1 million, respectively, held by the Company’s foreign subsidiaries and branch offices.

At March 31, 2025 and September 30, 2024, cash and cash equivalents included $ 0.7 million and $ 1.1 million, respectively, held by the Company’s foreign subsidiaries and branch offices.

Concentration of Credit Risk

8 unchanged sentences

Receivables are charged off against the allowance whenever it is probable that the balance will not be recoverable.

The Company had trade accounts and financing receivables from one customer of $ 22.5 million at December 31, 2024 .

During the three months ended December 31, 2024 and 2023 , the Company recognized revenue from this customer of $ 18.7 million and $ 31.7 million, respectively.

The Company had trade accounts and financing receivables from two customers of $ 17.2 million and $ 9.7 million, respectively at March 31, 2025 .

The Company recognized revenue from these customers of $ 0.8 million and $ 33,000 , respectively, for the three months ended March 31, 2025, and $ 19.5 million and $ 75,000 , respectively, for the six months ended March 31, 2025.

The Company recognized revenue from these customers of $ 2.3 million and $ 3.2 , respectively, for the three months ended March 31, 2024, and $ 33.7 million and $ 6.7 million, respectively, for the six months ended March, 31, 2024, respectively.

Impairment of Long-lived Assets

2 unchanged sentences

If the carrying value of the asset group exceeds the expected future cash flows, an impairment loss is recognized to the extent that the carrying value of the asset group exceeds its fair value.

During the quarter ended December 31, 2024 , no events or changes in circumstances were identified indicating the carrying value of any of the Company's asset groups may not be recoverable.

During the quarter ended March 31, 2025 , no events or changes in circumstances were identified indicating the carrying value of any of the Company's asset groups may not be recoverable.

Recently Issued Accounting Pronouncements

25 unchanged sentences

Field service revenue is recognized when services are rendered and is generally priced on a per day rate.

The Company also generates revenue from short-term rentals under operating leases of its manufactured products.

Rental revenue is recognized as earned over the rental period if collectability of the rent is reasonably assured.

Rentals of the Company’s equipment generally range from daily rentals to minimum rental periods of up to one year.

The Company has determined that ASC 606 does not apply to rental contracts, which are within the scope of ASC Topic 842, Leases .

As permissible under ASC 606, sales taxes and transaction-based taxes are excluded from revenue.

5 unchanged sentences

Amounts billed to a customer in a sales transaction related to reimbursable shipping and handling costs are included in revenue and the associated costs incurred by the Company for reimbursable shipping and handling expenses are reported in cost of revenue.

At December 31, 2024 and September 30, 2024 , the Company had no deferred contract liabilities and no deferred contract costs.

During the three months ended December 31, 2024 , no revenue was recognized from deferred contract liabilities and no cost of revenue was recognized from deferred contract costs.

During the three months ended December 31, 2023 , revenue of $ 45,000 was recognized from deferred contract liabilities and no cost of revenue was recorded from deferred contract costs.

At December 31, 2024 , all contracts had an original expected duration of one year or less.

At December 31, 2024 and October 1 2024, the Company had accounts receivable from contracts of $ 12.0 million and $ 13.4 million, respectively.

At December 31, 2023 and October 1, 2023, the Company had accounts receivable from contracts of $ 37.6 million and $ 10.9 million, respectively.

For the three months ended December 31, 2024 , no revenue recognized from contracts with customers satisfied over-time.

For the three months ended December 31, 2023 , revenue from contracts with customers satisfied over-time was $ 45,000 , which was from the Company's Intelligent Industrial segment.

The Company also generates revenue from short-term rentals under operating leases of its manufactured products.

Rentals of the Company’s equipment generally range from daily rentals to minimum rental periods of up to one year.

Rental revenue is recognized within the scope of ASC 842, Leases ("ASC 842" ).

The Company regularly evaluates the collectability of its lease receivables on a lease-by-lease basis.

The evaluation primarily consists of reviewing past due account balances and other factors such as the credit quality of the customer, historical trends of the customer and current economic conditions.

In accordance with ASC 842, rental revenue is recognized as earned over the rental period if collectability of the rent is reasonably assured.

When collectability of amounts are no longer probable the Company records a direct write-off of the rent receivable to rental revenue and limits future rental revenue recognition to cash received.

During the second quarter of fiscal year 2025, the Company determined the collectibility of receivables from a rental customer was less than probable.

As a result of this determination, the rent receivable balance due from this customer of $ 2.2 million was reversed against rental revenue.

As a result of reversal, the Company's consolidated rental revenue for the three ended March 31, 2025 was in a negative position ($ 0.7 million).

Any future cash received from this customer will be recognized as rental revenue.

At March 31, 2025 and September 30, 2024 , the Company had no deferred contract liabilities.

At March 31, 2025 and September 30, 2024 , the Company had deferred contract costs of $ 0.2 million, and zero, respectively.

During the three and six months ended March 31, 2025 , no revenue was recognized from deferred contract liabilities and no cost of revenue was recognized from deferred contract costs.

For each of the three and six months ended March 31, 2024 , revenue of $ 1.0 million was recognized from deferred contract liabilities.

During the three and six months ended March 31, 2024 , no cost of revenue was recorded from deferred contract costs.

At March 31, 2025 , all contracts had an original expected duration of one year or less.

At March 31, 2025 and October 1, 2024, the Company had accounts receivable from contracts with customers of $ 13.2 million and $ 12.6 million, respectively.

At March 31, 2024 and October 1, 2023, the Company had accounts receivable from contracts with customers of $ 12.5 million and $ 11.1 million, respectively.

Accounts receivable from contracts with customers excludes accounts receivable from rental contracts.

For the three and six months ended March 31, 2025 , no revenue recognized from contracts with customers satisfied over-time.

For each of the three and six months ended March 31, 2024 , revenue from contracts with customers satisfied over-time was $ 1.0 million, which was from the Company's Intelligent Industrial segment.

All other revenue from contracts with customers was recognized at a point-in time.

2 unchanged sentences

Three Months Ended

December 31, 2024

December 31, 2023

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

$ 9,472 $ 6,411 $ 16,760 $ 10,645

3 unchanged sentences

5,837 6,706 11,368 12,480

$ 18,708 $ 19,497 $ 51,353 $ 63,211

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

2 unchanged sentences

Three Months Ended

December 31, 2024

December 31, 2023

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Asia (including Russian Federation)

$ 1,811 $ 3,672 $ 19,868 $ 35,888

626 1,002 995 2,228

1,190 1,507 2,588 2,885

811 204 2,092 370

United States

14,002 12,831 25,425 21,249

268 281 385 591

$ 18,708 $ 19,497 $ 51,353 $ 63,211

Revenue is attributable to countries based on the ultimate destination of the product sold, if known.

4 unchanged sentences

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

As of December 31, 2024

As of March 31, 2025

Amortized Cost

21 unchanged sentences

$ 30,170 $ 57 $ — $ 30,227

The Company had no securities in a material unrealized loss position at December 31, 2024 and September 30, 2024 and does not believe the unrealized losses associated with these securities represent credit losses based on the evaluation of evidence, which includes an assessment of whether it is more likely than not it will be required to sell or intend to sell the investment before recovery of the investments amortized cost basis.

A gain of $ 10,000 was realized during the three months ended December 31, 2024 from the sale of short-term investments.

No gains or losses were recognized during the three months ended December 31, 2023 from the sale of short-term investments.

The Company had no securities in a material unrealized loss position at March 31, 2025 and September 30, 2024 and does not believe the unrealized losses associated with these securities represent credit losses based on the evaluation of evidence, which includes an assessment of whether it is more likely than not it will be required to sell or intend to sell the investment before recovery of the investments amortized cost basis.

During each of the three and six months ended March 31, 2025 , a gain of $ 9,000 and $ 10,000 , respectively, was realized from the sale of short-term investments.

No gains or losses were recognized during the three and six months ended March 31, 2024 from the sale of short-term investments.

Fair Value of Financial Instruments

3 unchanged sentences

The following tables present the fair value of the Company’s short-term investments, note receivable on sale of subsidiary and Emerging Markets asset group intangible assets by valuation hierarchy and input (in thousands):

As of December 31, 2024

As of March 31, 2025

Short-term investments:

Corporate bonds

$ — $ 16,906 $ — $ 16,906

treasury securities and securities of U.S.

government-sponsored agency

— 3,749 — 3,749

$ — $ 20,655 $ — $ 20,655

As of September 30, 2024

1 unchanged sentence

Corporate bonds

$ — $ 21,849 $ — $ 21,849

treasury securities and securities of U.S.

government-sponsored agency

— 8,378 — 8,378

$ — $ 30,227 $ — $ 30,227

Nonrecurring:

Note receivable on sale of subsidiary

$ — $ — $ 2,600 $ 2,600

Emerging Markets asset group intangible assets

$ — $ — $ 2,600 $ 2,600

Assets and liabilities Measured on a Nonrecurring basis

4 unchanged sentences

Also see Note 5 for more information.

At September 30, 2024, the Company performed a recoverability assessment on its long-lived assets of it Emerging Markets asset group in which its carrying value was compared to the estimated undiscounted cash flows over the remaining useful life of the asset group's primarily asset, its developed technology.

At September 30, 2024, the Company performed a recoverability assessment on its long-lived assets of its Emerging Markets asset group in which its carrying value was compared to the estimated undiscounted cash flows over the remaining useful life of the asset group's primarily asset, its developed technology.

Accordingly, a fair value analysis was performed.

3 unchanged sentences

Trade Accounts and Financing Receivables

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

December 31, 2024

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

March 31, 2025

September 30, 2024

10 unchanged sentences

Three Months Ended

December 31, 2024

December 31, 2023

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Allowance for credit losses:

1 unchanged sentence

Provision for credit losses

— ( 34 ) — ( 106 )

( 3 ) — ( 3 ) ( 7 )

Currency translation

End of period

$ 21 $ 67 $ 21 $ 67

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

March 31, 2025

September 30, 2024

Promissory notes

$ 13,147 $ 12,996

Sales-type lease

Total financing receivables

28,084 12,996

Discount to fair value and unearned income

( 1,106 ) ( 900 )

Total financing receivables, net

26,978 12,096

Less current portion

( 22,251 ) ( 7,231 )

Non-current financing receivables

$ 4,727 $ 4,865

In November 2024, the Company entered into a sales-type lease with a customer on wireless seismic equipment from its rental fleet.

The lease matures in October 2025.

Future minimum payments required under the lease at December 31, 2024, were $ 16.7 including $ 0.6 million of unearned income.

Interest income of $ 0.1 million was recognized for the three months ended December 31, 2024 .

During the three and six months ended March 31, 2025 interest income of $ 0.2 million and $ 0.3 million, respectively, was recognized on the lease.

The ownership of the equipment will transfer to the customer at the end of the lease term.

8 unchanged sentences

Based on a fair value analysis performed at the date of sale, a discount to fair value of $ 0.9 million was placed on the note.

Interest income on the amortization of the discount is being recognized under the effective interest method.

Interest income on the amortization of the discount is recognized under the effective interest method.

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

1 unchanged sentence

Inventories consist of the following (in thousands):

December 31, 2024

March 31, 2025

September 30, 2024

11 unchanged sentences

$ 18,996 $ 18,031

Inventory obsolescence expense for the three months ended December 31, 2024 and 2023 , was $ 506,000 and $ 20,000 , respectively.

Raw materials include semi-finished goods and component parts that totaled approximately $ 10.6 million and $ 8.6 million at December 31, 2024 and September 30, 2024 , respectively.

Inventory obsolescence expense for the three and six months ended March 31, 2025 , was $ 0.4 million and $ 0.9 million, respectively.

Inventory obsolescence expense for each of the three and six months ended March 31, 2024 , was $ 0.1 million.

Raw materials include semi-finished goods and component parts that totaled approximately $ 10.9 million and $ 8.6 million at March 31, 2025 and September 30, 2024 , respectively.

Rental Equipment

5 unchanged sentences

The Company suspends revenue recognition when the collectability of amounts due are no longer probable and concurrently records a direct write-off of the lease receivable to rental revenue and limits future rental revenue recognition to cash received.

As of December 31, 2024 , the Company’s trade accounts receivable included lease receivables of $ 4.7 million.

Rental revenue related to leased equipment for the three months ended December 31, 2024 and 2023 was $ 4.5 million and $ 6.2 million, respectively.

Future minimum lease obligations due from the Company’s leasing customers on operating leases executed as of December 31, 2024 , were $ 0.8 million, all of which is expected to be due within the next 12 months.

Also see Note 2.

As of March 31, 2025 , the Company’s trade accounts receivable included lease receivables of $ 0.8 million.

Future minimum lease obligations due from the Company’s leasing customers on operating leases executed as of March 31, 2025 , were $ 1.2 million, all of which is expected to be due within the next 12 months.

Rental equipment consisted of the following (in thousands):

December 31, 2024

March 31, 2025

September 30, 2024

Rental equipment, primarily wireless recording equipment

$ 49,220 $ 63,111

Accumulated depreciation

( 36,740 ) ( 48,925 )

$ 12,480 $ 14,186

Long-Term Debt

3 unchanged sentences

Availability under the Agreement is determined based upon a borrowing base comprised of certain of the Company’s domestic assets which include (i) 80 % of eligible accounts, plus (ii) 90 % of eligible foreign insured accounts, plus (iii) 25 % of eligible inventory plus (iv) 50 % of the orderly liquidation value of eligible equipment, in each case subject to certain limitations and adjustments.

Interest shall accrue on outstanding borrowings at a rate equal to Term SOFR (Secured Overnight Financing Rate) plus a margin equal to 3.25 % per annum ( 7.75 % at December 31, 2024 ).

Interest shall accrue on outstanding borrowings at a rate equal to Term SOFR ( Secured Overnight Financing Rate ) plus a margin equal to 3.25 % per annum ( 7.66 % at March 31, 2025 ).

The Company is required to make monthly interest payments on borrowed funds.

3 unchanged sentences

The Agreement expires in July 2025.

At December 31, 2024 , the Company's borrowing availability under the Agreement was $ 12.1 million after consideration of a $ 0.1 million outstanding letter of credit.

At December 31, 2024 , the Company was in compliance with all covenants under the Agreement.

The Company had no borrowings outstanding under the Agreement at December 31, 2024 , and September 30, 2024 .

At March 31, 2025 , the Company's borrowing availability under the Agreement was $ 14.9 million after consideration of a $ 0.1 million outstanding letter of credit.

At March 31, 2025 , the Company was in compliance with all covenants under the Agreement.

The Company had no borrowings outstanding under the Agreement at March 31, 2025 , and September 30, 2024 .

The Company has begun negotiations with Woodforest for a maturity extension on the Agreement.

Stock-Based Compensation

During the three months ended December 31, 2024 , the Company issued 143,500 restricted stock units (“RSUs”) under its 2014 Long Term Incentive Plan, as amended.

During the six months ended March 31, 2025 , the Company issued 191,700 restricted stock units (“RSUs”) under its 2014 Long Term Incentive Plan, as amended.

The RSUs issued include both time-based and performance-based vesting provisions.

3 unchanged sentences

Each RSU represents a contingent right to receive one share of the Company’s common stock upon vesting.

As of December 31, 2024 , there were 359,215 RSUs outstanding.

For the three months ended December 31, 2024 and 2023 , stock-based compensation expense was $ 0.3 million and $ 0.4 million, respectively.

As of December 31, 2024 , the Company had unrecognized compensation expense of $ 3.4 million relating to RSUs that is expected to be recognized over the next four years.

Earnings Per Common Share

The following table summarizes the calculation of net earnings and weighted average common shares and common equivalent shares outstanding for purposes of the computation of earnings per share (in thousands, except share and per share data):

As of March 31, 2025 , there were 354,965 RSUs outstanding.

For the three and six months ended March 31, 2025 , stock-based compensation expense was $ 0.5 million and $ 0.9 million, respectively.

For the three and six months ended March 31, 2024 , stock-based compensation expense was $ 0.4 million and $ 0.8 million, respectively.

As of March 31, 2025 , the Company had unrecognized compensation expense of $ 2.8 million relating to RSUs that is expected to be recognized over the next four years.

Earnings (Loss) Per Common Share

The following table summarizes the calculation of net earnings (loss) and weighted average common shares and common equivalent shares outstanding for purposes of the computation of earnings (loss) per share (in thousands, except share and per share data):

Three Months Ended

December 31, 2024

December 31, 2023

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Net income (loss)

$ ( 9,798 ) $ ( 4,327 ) $ ( 1,422 ) $ 8,352

Weighted average number of common share equivalents:

Common shares used in basic earnings per share

Common shares used in basic earnings (loss) per share

12,792,803 13,343,793 12,772,981 13,297,324

1 unchanged sentence

— — — 174,451

Total weighted average common shares and common share equivalents used in diluted earnings per share

Total weighted average common shares and common share equivalents used in diluted earnings (loss) per share

12,792,803 13,343,793 12,772,981 13,471,775

Earnings per share:

Earnings (loss) per share:

$ ( 0.77 ) $ ( 0.32 ) $ ( 0.11 ) $ 0.63

$ ( 0.77 ) $ ( 0.32 ) $ ( 0.11 ) $ 0.62

For the calculation of diluted earnings per share for the three months ended December 31, 2024 and 2023 , there were 235,206 and 212,217 non-vested RSUs, respectively, excluded from the calculation of weighted average shares outstanding since their impact on diluted earnings per share were antidilutive.

For the calculation of diluted earnings per share for each of the three and six months ended March 31, 2025 , there were 354,965 non-vested RSUs, respectively, excluded from the calculation of weighted average shares outstanding since their impact on diluted earnings per share were antidilutive.

For the calculation of diluted earnings per share for the three and six months ended March 31, 2024 , there were 400,020 and 225,569 non-vested RSUs, respectively, excluded from the calculation of weighted average shares outstanding since their impact on diluted earnings per share were antidilutive.

Commitments and Contingencies

Contingent Compensation Costs

In connection with the acquisition of Aquana, LLC (“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.

In July 2021, the Company acquired Aquana, LLC (“Aquana”).

Pursuant to the merger agreement with Aquana, as amended ("the Merger Agreement"), the Company is subject to additional contingent cash payments to the former members of Aquana over a seven -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.

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 for any earn-out payments.

The Merger Agreement requires the continued employment of a certain key employee and former member of Aquana for the first five years of the seven -year earn-out period in order for any of Aquana’s former members to be eligible for any earn-out payments.

Due to the continued employment requirement, no liability has been recorded for the estimated fair value of earn-out payments for this transaction.

13 unchanged sentences

The Intelligent Industrial segment includes seismic sensor products used for vibration monitoring geotechnical applications such as mine safety applications and earthquake detection, designs seismic products targeted at the border and perimeter security markets, imaging products, as well as providing contract manufacturing services.

The change methodology for allocating manufacturing costs affected each business segment's operating income (loss) but had no effect on consolidated operating income.

The change in methodology for allocating manufacturing costs affected each business segment's operating income (loss) but had no effect on consolidated operating income (loss).

The following table summarizes the Company’s segment information (in thousands).

Segment information for the three months ended December 31, 2024 and 2023 , has been recast for comparability.

Segment information for the three and six months ended March 31, 2025 and 2024 , has been recast for comparability.

Three Months Ended

December 31, 2024

December 31, 2023

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

$ 9,472 $ 6,411 $ 16,760 $ 10,645

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5,883 6,749 11,460 12,562

80 75 156 149

$ 18,023 $ 24,270 $ 55,246 $ 74,302

Income (loss) from operations:

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Therefore, the Company does not segregate and report separate balance sheet accounts for each of its segments and therefore, no total asset information is presented in the table above.

Consolidated income tax expense for the each of the three months ended December 31, 2024 and 2023, was $ 0.1 million.

Consolidated income tax benefit for the three and six months ended March 31, 2025 , was $ 126,000 and $ 13,000 , respectively.

Consolidated income tax expense for the three and six months ended March 31, 2024 , was $ 11,000 and $ 111,000 million, respectively.

The primary difference between the Company's effective tax rate and the statutory rate is adjustments to the valuation allowance against deferred tax assets.

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Smart Water, Energy Solutions and Intelligent Industrial.

The change methodology for allocating manufacturing costs affected each segment's operating income (loss) but had no effect on consolidated operating income.

The change methodology for allocating manufacturing costs affected each segment's operating income (loss) but had no effect on consolidated operating income (loss).

Products and Product Development

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Similar to our land-based wireless systems, these marine wireless systems may be deployed in virtually unlimited channel configurations and do not require interconnecting cables between each station.

Through December 31, 2024, we have sold 35,000 OBX stations and we currently have 13,000 OBX stations in our rental fleet.

Through March 31, 2025, we have sold 28,000 OBX stations and we currently have 9,000 OBX stations in our rental fleet.

The Mariner® is a continuous, cable-free, four channel autonomous, shallow water ocean bottom recorder designed for extended duration seabed ocean bottom seismic data acquisition.

Through December 31, 2024, we have sold 7,600 Mariner® nodes.

Through March 31, 2025, we have sold 7,600 Mariner® nodes and currently have 3,000 Mariner® nodes in our rental fleet.

Additionally, we have developed high-definition permanent reservoir monitoring systems ("PRM") for land and ocean-bottom applications in producing oil and gas fields.

Our primary offering, OptoSeis® fiber optic sensing technology, provides high-definition seismic data acquisition systems with a flexible architecture allowing them to be configured as a subsurface system for both land and marine reservoir-monitoring projects.

We are in the process of responding to a large-scale seabed PRM tender from a major oil and gas producer.

The project is expected to be awarded in the third quarter of fiscal year 2025.

We have also entered into a contract for two Front-End Engineering and Design studies with this producer which is expected to be completed in the fourth quarter of fiscal year 2025.

We continue to have discussions with potential clients for future PRM systems.

We are currently performing engineering services for two Front-End Engineering and Design studies for a major oil and producer.

We have not received any orders for a large-scale seabed PRM system since 2012.

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Three Months Ended

December 31, 2024

December 31, 2023

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Product revenue

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Total revenue

Income from operations

Income (loss) from operations

Business Overview

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We do not expect significant expansion of the ocean bottom nodal market, for we expect the market is saturable and future rental fleet use will come from our customer’s need to temporarily expand their nodal fleet.

We expect our Energy Solutions segment to provide the majority of our revenue for years to come, but in diminishing portion to our other segments.

We expect our Energy Solutions segment to provide a significant portion of our revenue for years to come, but in diminishing portion to our other segments.

Demand for our seismic products has been, and will likely continue to be, vulnerable to downturns in the economy and the oil and gas industry in general.

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Our current liquidity enables our ability to seek out business acquisitions, allows us to continue investments in capital assets and product research and development, which have historically driven revenue growth.

Three months ended December 31, 2024, compared to the three months ended December 31, 2023

Consolidated revenue for the three months ended December 31, 2024, was $37.2 million, a decrease of $12.8 million, or 25.6%, from the corresponding period of the prior fiscal year.

Three and six months ended March 31, 2025, compared to the three and six months ended March 31, 2024

Consolidated revenue for the three months ended March 31, 2025, was $18.0 million, a decrease of $6.2 million, or 25.7%, from the corresponding period of the prior fiscal year.

The decrease was primarily due to lower OBX marine wireless rental revenue from our Energy Solutions segment.

During the second quarter of fiscal year 2025, the Company determined the collectability of a receivables from a rental customer was less than probable.

As a result of this determination, the rent receivable balance due from this customer of $2.2 million was reversed against rental revenue.

As a result of reversal, the Company's consolidated rental revenue for the three ended March 31, 2025 was in a negative position ($0.7 million).

Any future cash received from this customer will be recognized as rental revenue.

Consolidated revenue for the six months ended March 31, 2025, was $55.2 million, a decrease of $19.1 million, or 25.6%, from the corresponding period of the prior fiscal year.

The decrease was primarily due to lower revenue from our Energy Solutions segment.

Revenue for the three months ended December 31, 2024, included a $17 million OBX marine wireless product sale structured as a sales-type lease.

Revenue for the six months ended March 31, 2025, included a $17 million OBX marine wireless product sale structured as a sales-type lease.

However, in comparison, revenue for the first quarter of the prior year included a $30 million sale of our Mariner™ shallow water ocean bottom nodes.

The decrease in revenue from our Energy Solutions segment was partially offset by higher revenue generated from our Smart Water segment attributable to an increase in demand for our water meter products.

Consolidated gross profit for the three months ended December 31, 2024, was $20.1 million, a decrease of $2.1 million, or 9.4%, from the corresponding period of the prior fiscal year.

The decrease in gross profit was primarily due to a decrease in wireless product revenue from our Energy Solutions segment.

This decrease was partially offset by a high gross profit margin on our $16 million wireless product sale in the first quarter of fiscal year 2025 and the increase in revenue from our Smart Water segment.

Consolidated operating expenses for the three months ended December 31, 2024, were $12.3 million, an increase of $2.9 million, or 31.0%, from the corresponding period of the prior fiscal year.

The increase was due to higher personnel costs, including severance costs, higher professional fees and research and development project expenditures.

Consolidated other income was $0.6 million for the three months ended December 31, 2024, compared to a loss of $0.1 million from the corresponding period of the prior fiscal year.

The increase for the three months ended December 31, 2024 was principally due to higher interest income attributable to its short-term investments and financing receivables.

The decrease was also attributable to lower rental revenue.

The decrease in consolidated revenue for both the three and six months ended March 31, 2025 was partially offset by an increase in demand for our Hydroconn® cable and connector products from our Smart Water segment.

Consolidated gross profit for the three months ended March 31, 2025, was $1.7 million, a decrease of $4.1 million, or 70.3%, from the corresponding period of the prior fiscal year.

The decrease in gross profit was primarily due to a decrease in both our wireless product revenue and rental revenue from our Energy Solutions segment.

Consolidated gross profit for the six months ended March 31, 2025, was $21.9 million, a decrease of $6.2 million, or 22.1%, from the corresponding period of the prior fiscal year.

The decrease in gross profit was primarily due to a decrease in wireless product revenue and rental revenue.

This decrease was partially offset by a high gross profit margin on a $16 million wireless product sale in the first quarter of fiscal year 2025.

Consolidated operating expenses for the three months ended March 31, 2025, were $12.0 million, an increase of $1.6 million, or 15.8%, from the corresponding period of the prior fiscal year.

Consolidated operating expenses for the six months ended March 31, 2025, were $24.3 million, an increase of $4.6 million, or 23.0%, from the corresponding period of the prior fiscal year.

The increase for both the three and six months ended March 31, 2025 was primarily due to higher personnel costs, including severance costs and acceleration of stock-based compensation expense.

The increase in consolidated operating expenses for the six months ended March 31, 2025 was also attributable to higher sales and marketing costs in addition to an increase in research and development project expenditures.

Consolidated other income was $0.4 million for the three months ended March 31, 2025, compared to $0.2 million from the corresponding period of the prior fiscal year.

Consolidated other income was $1.0 million for the six months ended March 31, 2025, compared to $0.1 million from the corresponding period of the prior fiscal year.

The increase for both periods was principally due to higher interest income attributable to our financing receivables.

Segment Results of Operations

Revenue from our Smart Water segment for the three months ended December 31, 2024, increased $3.1 million, or 72.1%, from the corresponding period of the prior fiscal year.

The increase for the three months ended December 31, 2024, was primarily due to an increase in demand for our Hydroconn® cable and connector products.

Revenue from our Smart Water segment for the three months ended March 31, 2025, increased $3.1 million, or 47.7%, from the corresponding period of the prior fiscal year.

Revenue from our Smart Water segment for the six months ended March 31, 2025, increased $6.1 million, or 57.4%, from the corresponding period of the prior fiscal year.

The increase for both periods was primarily due to an increase in demand for our Hydroconn® cable and connector products.

Operating Income

Operating income from our Smart Water segment for the three months ended December 31, 2024 , was $0.4 million, a decrease of $0.7 million, or 66.2% , from the corresponding period of the prior fiscal year.

The decrease for the three months ended December 31, 2024 , was primarily a result of the change in composition of our business segments.

This decrease was largely offset by the increase in revenue.

Operating income from our Smart Water segment for the three months ended March 31, 2025, was $1.4 million, a decrease of $0.2 million, or 14.8%, from the corresponding period of the prior fiscal year.

Operating income from our Smart Water segment for the six months ended March 31, 2025, was $1.8 million, a decrease of $1.0 million, or 35.2% million, from the corresponding period of the prior fiscal year.

The decrease for both periods was due to (i) an increase in selling and marketing and research and development costs associated with our increase in revenue and (ii) the change in composition of our business segments and our methodology for allocating manufacturing costs including overhead and other costs of revenue to our segments.

Energy Solutions

Revenue from our Energy Solutions segment for the three months ended December 31, 2024, decreased $15.6 million, or 39.2%, from the corresponding period of the prior fiscal year.

Revenue from our Energy Solutions segment for the three months ended March 31, 2025, decreased $8.4 million, or 76.5%, from the corresponding period of the prior fiscal year.

Revenue from our Energy Solutions segment for the six months ended March 31, 2025, decreased $24.1 million, or 47.3%, from the corresponding period of the prior fiscal year.

The components of this decrease were as follows:

Product Revenue – For the three months ended December 31, 2024, product revenue decreased $13.9 million, or 41.2%, from the corresponding period of the prior fiscal year.

Product Revenue – For the three months ended March 31, 2025, product revenue decreased $3.0 million, or 46.7%, from the corresponding period of the prior fiscal year.

The decrease was primarily due to a decrease in demand for both our marine and land wireless products.

For the six months ended March 31, 2025, product revenue decreased $16.9 million, or 42.1%, from the corresponding period of the prior fiscal year.

The decrease was primarily due to a decrease in demand for our wireless products.

Revenue for the three months ended December 31, 2024 included a $17 million OBX marine wireless product sale structured as a sales-type lease.

However, in comparison, revenue for the first quarter of the prior year included a $30 million sale of our Mariner™ shallow water ocean bottom nodes.

Rental Revenue – For the three months ended December 31, 2024, rental revenue from our wireless exploration products decreased $1.7 million, or 28.2%, from the corresponding period of the prior fiscal year.

The decrease was primarily due lower utilization of our OBX rental fleet.

Operating Income

Operating income associated with our Energy Solutions segment for the three months ended December 31, 2024, was $13.3 million, a decrease of $1.8 million from the corresponding period of the prior fiscal year.

The decrease in operating income for the three months ended December 31, 2024, was primarily due to a decrease in wireless product revenue.

This decrease was largely offset by (i) a high profit margin on our $17 million product sale in the first quarter of fiscal year 2025 and (ii) the change in the composition of our business segments.

Revenue for the six months ended March 31, 2025 included a $17 million OBX marine wireless product sale structured as a sales-type lease.

However, in comparison, revenue for the six months ended March 31, 2024 included a $30 million sale of our Mariner™ shallow water ocean bottom nodes.

Rental Revenue – For the three months ended March 31, 2025, rental revenue from our wireless exploration products was in a negative position ($0.8 million) in comparison to $4.7 million for corresponding period of the prior fiscal year.

During the second quarter of fiscal year 2025, the Company determined the collectability of a receivables from a rental customer was less than probable.

As a result of this determination, the rent receivable balance due from this customer of $2.2 million was reversed against rental revenue.

Any future cash received from this customer will be recognized as rental revenue.

Consolidated rental revenue from our wireless exploration products for the six months ended March 31, 2025, was $3.6 million, a decrease of $7.2 million, or 66.4%, from the corresponding period of the prior fiscal year.

This decrease was due to both the rental revenue reversal mentioned above and due to lower utilization of our wireless marine rental fleet.

Operating Income (Loss)

Operating loss associated with our Energy Solutions segment for the three months ended March 31, 2025, was $(6.7) million, compared to $(1.9) million for the corresponding period of the prior fiscal year.

The increase in operating loss was largely due to (i) the decrease in revenue and related gross profits and (ii) a change in the composition of our business segments.

Operating income associated with our Energy Solutions segment for the six months ended March 31, 2025, was $6.6 million, a decrease of $6.5 million from the corresponding period of the prior fiscal year.

The decrease in operating income for the six months ended March 31, 2025, was primarily due to lower revenue and related gross profits largely driven by (i) a high profit margin on our $17 million product sale in the first quarter of fiscal year 2025 and (ii) the change in composition of our business segments and our methodology for allocating manufacturing costs including overhead and other costs of revenue to our segments.

Intelligent Industrial

Revenue from our Intelligent Industrial segment for three months ended December 31, 2024, decreased $0.2 million, or 4.1%, from the corresponding period of the prior fiscal year.

The decrease in revenue for the three months ended December 31, 2024, was primarily due to lower demand for our imaging products.

The decrease was partially offset by an increase in demand for our sensor products.

Revenue from our Intelligent Industrial segment for three months ended March 31, 2025, decreased $0.9 million, or 12.8%, from the corresponding period of the prior fiscal year.

Revenue from our Intelligent Industrial segment for six months ended March 31, 2025, decreased $1.1 million, or 8.8%, from the corresponding period of the prior fiscal year.

The decrease in revenue for both the three and six months ended March 31, 2025, was primarily due to (i) revenue recognized for the three and six months ended March 31, 2024 on a government contract completed in the fourth quarter of fiscal year 2024 and (ii) lower demand for our imaging products.

The decrease for both periods was partially offset by an increase in demand for our sensor products.

Operating Loss

Operating loss from our Intelligent Industrial segment for the three months ended December 31, 2024, was $0.9 million, an increase of $0.7 million from the corresponding period of the prior fiscal year.

The increase in operating loss for the three months ended December 31, 2024, was primarily due (i) the decrease in revenue and (ii) the change in composition of our business segments.

Operating loss from our Intelligent Industrial segment for the three months ended March 31, 2025, was $1.3 million, an increase of $0.6 million from the corresponding period of the prior fiscal year.

Operating loss from our Intelligent Industrial segment for the six months ended March 31, 2025, was $2.2 million, an increase of $0.9 million from the corresponding period of the prior fiscal year.

The increase in operating loss for both periods was primarily due (i) the decrease in revenue and (ii) the change in composition of our business segments and our methodology for allocating manufacturing costs including overhead and other costs of revenue to our segments.

Liquidity and Capital Resources

At December 31, 2024, we had $22.1 million in cash and cash equivalents and short-term investments.

For the three months ended December 31, 2024, we used $11.5 million of cash from operating activities.

Uses of cash included a (i) $3.0 million increase in inventories for the strategic purchase of long lead-time components needed for use in wireless products, valves and contract manufacturing, (ii) $3.6 million increase in trade accounts receivables due to timing of collections from customers and (iii) $0.7 million decrease in trade accounts payable due to timing of payments to our suppliers.

Uses of cash were partially off our net income of $8.4 million and non-cash charges of $3.5 million resulting from deferred income taxes, depreciation, amortization, accretion, inventory obsolescence, stock-based compensation and provision for recovery of credit losses.

For the three months ended December 31, 2024, we generated cash of $6.3 million in investing activities.

At March 31, 2025, we had $19.8 million in cash and cash equivalents and short-term investments.

For the six months ended March 31, 2025, we used $13.4 million of cash from operating activities.

Uses of cash included (i) our net loss of $1.4 million, offset by non-cash charges of $6.9 million resulting from deferred income taxes, depreciation, amortization, accretion, inventory obsolescence, stock-based compensation and provision for credit losses, a (ii) $3.5 million increase in inventories for the strategic purchase of long lead-time components needed for use in wireless products, valves and contract manufacturing, (iii) $2.6 million decrease in trade accounts payable due to timing of payments to our suppliers and (iv) $0.7 increase in other liabilities related to accrued compensation costs.

These uses of cash were partially offset by a (i) $1.8 million increase in trade accounts receivables due to timing of collections from customers and (ii) a $0.7 million decrease in other assets, primarily prepayment of insurance premiums.

For the six months ended March 31, 2025, we generated cash of $15.5 million in investing activities.

Sources of cash consisted of (i) $18.9 million from the sale of short-term investments and (ii) $1.7 million of proceeds from the sale of rental equipment.

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Our capital expenditures are expected to be funded from our cash on hand, short-term investments, internal cash flows, cash flows from our rental contracts or, if necessary, borrowings under our new credit agreement.

For the three months ended December 31, 2024, we used million from financing activities for the purchase of treasury stock pursuant to a stock buy-back program authorized by our board of directors.

The program authorizes us to repurchase up to $7 million of our common stock in open market transactions.

At December 31, 2024, $0.4 million of our common stock remains available for repurchases under the program.

For the six months ended March 31, 2025, we used $0.6 million from financing activities for the purchase of treasury stock pursuant to a stock buy-back program authorized by our board of directors.

The program authorized us to repurchase up to $7 million of our common stock in open market transactions.

The program was completed in the second quarter of fiscal year 2025.

On July 26, 2023, we entered into a credit agreement (“the Agreement”) with Woodforest National Bank ("Woodforest"), as sole lender.

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Availability under the Agreement is determined based upon a borrowing base comprised of certain of our domestic assets which include (i) 80% of eligible accounts receivable, plus (ii) 90% of eligible foreign insured accounts, plus (iii) 25% of eligible inventory plus (iv) 50% of the orderly liquidation value of eligible equipment, in each case subject to certain limitations and adjustments.

Interest shall accrue on outstanding borrowings at a rate equal to Term SOFR (Secured Overnight Financing Rate) plus a margin equal to 3.25% per annum (7.75% at December 31, 2024).

Interest shall accrue on outstanding borrowings at a rate equal to Term SOFR (Secured Overnight Financing Rate) plus a margin equal to 3.25% per annum (7.66% at March 31, 2025).

We are required to make monthly interest payments on borrowed funds.

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The Agreement expires in July 2025.

We intend to begin negotiations with Woodforest for an extension in the second quarter of fiscal year 2025.

At December 31, 2024 we had no outstanding borrowings under the Agreement and our borrowing base availability under the Agreement was $12.1 million after consideration of a $0.1 million outstanding letter of credit.

We have begun negotiations with Woodforest for a maturity extension to the Agreement.

At March 31, 2025 we had no outstanding borrowings under the Agreement and our borrowing base availability under the Agreement was $14.9 million after consideration of a $0.1 million outstanding letter of credit.

We were in compliance with all covenants under the Agreement.

We do not currently anticipate the need to borrow under the Agreement, however, we may decide to do so in the future, if needed.

Our available cash, cash equivalents and short-term investments was $22.1 million at December 31, 2024, which included $0.9 million of cash and cash equivalents held by our foreign subsidiaries and branch offices.

Our available cash, cash equivalents and short-term investments was $19.8 million at March 31, 2025, which included $0.7 million of cash and cash equivalents held by our foreign subsidiaries and branch offices.

In the absence of future profitable results of operations, we may need to rely on other sources of liquidity to fund our future operations, including executed rental contracts, available borrowings under the Agreement through its expiration in July 2025, sales or leveraging real estate assets, sales of rental assets and other liquidity sources which may be available to us.

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Contingent Compensation Costs

In connection with the acquisition of Aquana in July 2021, we are subject to additional contingent cash payments to the former members of Aquana over a six-year earn-out period.

In July 2021, the Company acquired Aquana, LLC (“Aquana”).

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.

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 for any of Aquana’s former members to be eligible to any earn-out payments.

In accordance with ASC 805, Business Combination s, due to the continued employment requirement, no liability has been recorded for the estimated fair value of contingent earn-out payments for this transaction.

The Merger Agreement requires the continued employment of a certain key employee and former member of Aquana for the first five years of the seven-year earn-out period in order for any of Aquana’s former members to be eligible for any earn-out payments.

Due to the continued employment requirement, no liability has been recorded for the estimated fair value of earn-out payments for this transaction.

Earn-outs achieved are recorded as compensation expense when incurred.

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Critical Accounting Estimates

During the three months ended December 31, 2024, there has been no material change to our critical accounting estimates discussed in Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

During the six months ended March 31, 2025, there has been no material change to our critical accounting estimates discussed in Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

Recent Accounting Pronouncements

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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.

What changed 10-Q

Item 1. Financial Statements