What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-08-08 compared with 2025-05-09 · 250 added, 219 removed, 599 unchanged (44% of the section changed)

3 unchanged sentences

(in thousands except share amounts)

March 31, 2025

June 30, 2025

September 30, 2024

3 unchanged sentences

Short-term investments

11,531 30,227

Trade accounts and financing receivables, net

52 unchanged sentences

Three Months Ended

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Nine Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

$ 23,227 $ 20,223 $ 74,580 $ 83,434

17 unchanged sentences

11,786 10,919 36,129 30,705

Gain on disposal of property

4,616 — 4,616 —

Income (loss) from operations

5 unchanged sentences

537 472 1,975 954

Foreign currency transaction losses, net

Foreign currency transaction gains (losses), net

4 ( 70 ) ( 265 ) ( 253 )

19 unchanged sentences

Three Months Ended

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Nine Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Net income (loss)

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

Other comprehensive income (loss):

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)

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 six months ended March 31, 2025 and 2024

FOR THE nine months ended June 30, 2025 and 2024

(in thousands, except share amounts)

11 unchanged sentences

Balance at March 31, 2025

Other comprehensive income

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

Stock-based compensation

Balance at June 30, 2025

Balance at October 1, 2023

7 unchanged sentences

Balance at March 31, 2024

Other comprehensive income

Purchase of treasury stock

Stock-based compensation

Balance at June 30, 2024

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

2 unchanged sentences

(in thousands)

Six Months Ended

March 31, 2025

March 31, 2024

Nine Months Ended

June 30, 2025

June 30, 2024

Cash flows from operating activities:

Net income (loss)

$ ( 662 ) $ 6,282

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

4 unchanged sentences

Accretion of discounts on short-term investments

( 169 ) ( 415 )

Stock-based compensation expense

2 unchanged sentences

Gross profit from sale of rental equipment

( 16,297 ) ( 20,751 )

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

2 unchanged sentences

Trade accounts and financing receivables

( 5,617 ) ( 5,787 )

( 591 ) ( 176 )

Accounts payable trade

( 4,232 ) ( 1,408 )

Other liabilities

1,968 ( 2,973 )

Net cash used in operating activities

( 18,125 ) ( 7,527 )

Cash flows from investing activities:

Purchase of property, plant and equipment

( 5,841 ) ( 3,577 )

Proceeds from the sale of property, plant and equipment

Investment in rental equipment

( 1,083 ) ( 8,181 )

Proceeds from the sale of rental equipment

5 unchanged sentences

Purchase of treasury stock

( 615 ) ( 2,999 )

Net cash used in financing activities

( 615 ) ( 2,999 )

Effect of exchange rate changes on cash

Increase in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

16,664 ( 6,476 )

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

$ 23,559 $ 12,327

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for income taxes

Accounts and financing receivables related to sale of rental equipment

Financing receivable related to sale of rental equipment

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 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.

The consolidated balance sheet at June 30, 2025 and the consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the three and nine months ended June 30, 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 and six months ended March 31, 2025 , are not necessarily indicative of the operating results for a full year or of future operations.

The results of operations for the three and nine months ended June 30, 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 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.

At June 30, 2025 and September 30, 2024, cash and cash equivalents included $ 1.0 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 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.

The Company had trade accounts and financing receivables from two customers of $ 15.3 million and $ 9.7 million, respectively at June 30, 2025 .

These receivables are related to the Company's Energy Solutions segment.

The Company recognized revenue from these customers of $ 1.1 million and zero , respectively, for the three months ended June 30, 2025, and $ 20.6 million and $ 75,000 , respectively, for the nine months ended June 30, 2025.

The Company recognized revenue from these customers of $ 1.3 million and $ 3.4 million, respectively, for the three months ended June 30, 2024, and $ 35.0 million and $ 10.1 million, respectively, for the nine months ended June 30, 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 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.

During the quarter ended June 30, 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.

Research and Development

We incur significant future research and development expenditures.

These efforts are primarily aimed at the development of additional products for each of our business segments.

The majority of our product research and development costs relates to the Company's engineers.

The Company's engineering staff have been key to our past success.

Research and development expense includes personnel costs of the Company's engineers, project expenditures, on-going product maintenance and improvements to our existing products, as well as general and administrative expenses associated with the engineering department.

Research and development expense for the three and nine months ended June 30, 2025 was $ 4.2 million and $ 14.4 million, respectively.

Research and development expense for the three and nine months ended June 30, 2024 was $ 4.0 million and $ 11.5 million, respectively.

Recently Issued Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board ("FASB"), as further amended in January 2025, issued guidance requiring enhanced disclosures in financial statements by requiring detailed disclosures of specific expenses like inventory purchases, employee compensation, depreciation, and intangible asset amortization.

The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the provisions of this guidance and the impact on its consolidation financial statements.

In November 2023, the FASB issued guidance which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

8 unchanged sentences

The adoption of this guidance is not expected to have any material impact on its consolidation financial statements.

In November 2024, the FASB, as further amended in January 2025, issued guidance requiring enhanced disclosures in financial statements by requiring detailed disclosures of specific expenses like inventory purchases, employee compensation, depreciation, and intangible asset amortization.

The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the provisions of this guidance and the impact on its consolidated financial statements.

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

24 unchanged sentences

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.

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

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

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.

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

At June 30, 2025 and September 30, 2024 , the Company had deferred contract costs of $ 0.5 million and zero, respectively.

During the three and nine months ended June 30, 2025 , no revenue was recognized from deferred contract liabilities and no cost of revenue was recognized from deferred contract costs.

During the three and nine months ended June 30, 2024 , revenue of $ 20,000 and $ 0.7 million, respectively, was recognized from deferred contract liabilities.

During the three and nine months ended June 30, 2024 , no cost of revenue was recorded from deferred contract costs.

At June 30, 2025 and October 1, 2024, the Company had accounts receivable from contracts with customers of $ 12.4 million and $ 12.6 million, respectively.

At June 30, 2024 and October 1, 2023, the Company had accounts receivable from contracts with customers of $ 13.2 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.

For the three and nine months ended June 30, 2025 revenue of $ 0.5 million and $ 0.7 million, respectively, was recognized from contracts with customers satisfied over-time, which was from the Company's Energy Solutions segment.

For the three and nine months ended June 30, 2024 revenue from contracts with customers satisfied over-time was $ 0.3 million and $ 1.2 million, respectively, which was from the Company's Intelligent Industrial segment.

At June 30, 2025 , the aggregate amount of transaction price allocation to unsatisfied performance obligations on contracts with a duration in excess of one year was $ 92 million.

These unsatisfied performance obligations are expected to be fulfilled over the next 24 months.

The majority of the revenue will be recognized over-time over the duration of the contracts.

All other revenue from contracts with customers are being recognized at a point-in time and have a duration of one year or less.

For each of the Company’s operating segments, the following table presents revenue (in thousands) only from the sale of products and the performance of services under contracts with customers.

1 unchanged sentence

Three Months Ended

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Nine Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

$ 10,518 $ 9,913 $ 27,278 $ 20,558

8 unchanged sentences

Three Months Ended

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Nine Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Asia (including Russian Federation)

13 unchanged sentences

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

As of March 31, 2025

As of June 30, 2025

Amortized Cost

5 unchanged sentences

$ 1,998 $ — $ ( 1 ) $ 1,997

treasury securities and securities of U.S.

government-sponsored agency

2,250 2 — 2,252

$ 11,531 $ 2 $ ( 2 ) $ 11,531

As of September 30, 2024

10 unchanged sentences

$ 30,170 $ 57 $ — $ 30,227

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.

The Company had no securities in a material unrealized loss position at June 30, 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 the three and nine months ended June 30, 2025 , a loss of ($ 1,000 ) and gain of $ 9,000 , respectively, was realized from the sale of short-term investments.

No gains or losses were recognized during the three and nine months ended June 30, 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 March 31, 2025

As of June 30, 2025

Short-term investments:

Corporate bonds

treasury securities and securities of U.S.

government-sponsored agency

As of September 30, 2024

18 unchanged sentences

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

March 31, 2025

June 30, 2025

September 30, 2024

Trade accounts receivable

$ 14,068 $ 16,151

Allowance for credit losses

14,047 16,147

Less current portion

( 14,047 ) ( 14,637 )

Non-current trade accounts receivable

3 unchanged sentences

Three Months Ended

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Nine Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Allowance for credit losses:

1 unchanged sentence

Provision for credit losses

— ( 34 ) — ( 106 )

( 3 ) — ( 3 ) ( 7 )

Charge-offs, net

Currency translation

End of period

$ 21 $ 67 $ 21 $ 67

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

March 31, 2025

June 30, 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.

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.

During the three and nine months ended June 30, 2025 interest income of $ 0.2 million and $ 0.5 million, respectively, was recognized on the lease.

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

2 unchanged sentences

Pursuant to an amendment in the first quarter of fiscal year 2025, the maturity of the note was extended from December 2025 to June 2026.

The note bears interest at 9.5 % per annum.

Pursuant to an amendment in the second quarter of fiscal year 2025, the maturity of the note was further extended to November 2026.

The note is collateralized by the product sold.

7 unchanged sentences

Inventories consist of the following (in thousands):

March 31, 2025

June 30, 2025

September 30, 2024

11 unchanged sentences

$ 18,860 $ 18,031

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.

Inventory obsolescence expense for the three and nine months ended June 30, 2025 , was $ 0.2 million and $ 1.1 million, respectively.

Inventory obsolescence expense for each of the three and nine months ended June 30, 2024 , was $ 0.1 million.

Raw materials include semi-finished goods and component parts that totaled approximately $ 9.4 million and $ 8.6 million at June 30, 2025 and September 30, 2024 , respectively.

Property, Plant and Equipment

In June 2025, the Company sold its property located at 4318 Northfield Lane in Houston, Texas.

The 17.3 -acre property served as additional parking for the Company's main campus and contained legacy structures used to support its manufacturing and warehousing operations.

The property had been classified as assets held on the Company's consolidated balance sheets since September 30, 2024.

The Company recognized a gain on disposal of property of $ 4.6 million during the second quarter of fiscal year 2025.

The gain is included as a component of income (loss) from operations on the Company's consolidated statements of operations.

June 30, 2025

September 30, 2024

Land and land improvements

Building and building improvements

Machinery and equipment

Furniture and fixtures

Tools and molds

Construction in progress

Transportation equipment

Accumulated depreciation and impairment

Property, plant and equipment depreciation expense for the three and nine months ended June 30, 2025 was $ 0.9 million and $ 2.7 million, respectively.

Property, plant and equipment depreciation expense for the three and nine months ended June 30, 2024 was $ 0.9 million and $ 2.6 million, respectively.

Rental Equipment

6 unchanged sentences

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.

As of June 30, 2025 , the Company’s trade accounts receivable included lease receivables of $ 1.2 million.

Future minimum lease obligations due from the Company’s leasing customers on operating leases executed as of June 30, 2025 , were $ 0.4 million, all of which is expected to be due within the next 12 months.

Rental equipment consisted of the following (in thousands):

March 31, 2025

June 30, 2025

September 30, 2024

1 unchanged sentence

Accumulated depreciation

Rental equipment depreciation expense for the three and nine months ended June 30, 2025 was $ 1.4 million and $ 4.8 million, respectively.

Property, plant and equipment depreciation expense for the three and nine months ended June 30, 2024 was $ 2.5 million and $ 8.5 million, respectively.

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 ( 7.66 % at March 31, 2025 ).

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 ( 7.65 % at June 30, 2025 ).

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

2 unchanged sentences

The Agreement also requires the Company to maintain a springing minimum interest coverage ratio of 1.50 to 1.00, tested quarterly whenever there is an outstanding balance on the revolving credit facility.

The Agreement expires in July 2025.

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.

At June 30, 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 June 30, 2025 , the Company was in compliance with all covenants under the Agreement.

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

Effective July 26, 2025, the Agreement was amended to extend the maturity date from July 26, 2025 to August 26, 2025.

The Company is currently negotiating a long-term maturity extension on the Agreement.

Stock-Based Compensation

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.

During the nine months ended June 30, 2025 , the Company issued 194,700 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 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.

As of June 30, 2025 , there were 350,318 RSUs outstanding.

For the three and nine months ended June 30, 2025 , stock-based compensation expense was $ 0.3 million and $ 1.2 million, respectively.

For the three and nine months ended June 30, 2024 , stock-based compensation expense was $ 0.3 million and $ 1.0 million, respectively.

As of June 30, 2025 , the Company had unrecognized compensation expense of $ 2.4 million relating to RSUs that is expected to be recognized over the next four years.

Earnings (Loss) Per Common Share

1 unchanged sentence

Three Months Ended

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Nine Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Net income (loss)

10 unchanged sentences

$ 0.06 $ ( 0.16 ) $ ( 0.05 ) $ 0.47

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.

For the calculation of diluted earnings (loss) per share for each of the three and nine months ended June 30, 2025 , there were 350,318 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 (loss) per share for the three and nine months ended June 30, 2024 , there were 412,770 and 230,322 non-vested RSUs, respectively, excluded from the calculation of weighted average shares outstanding since their impact on diluted earnings (loss) per share were antidilutive.

Commitments and Contingencies

22 unchanged sentences

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

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

Segment information for the three and nine months ended June 30, 2024 has been recast for comparability.

Three Months Ended

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

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

Nine Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Energy Solutions

2,588 11,035 26,870 50,946

Intelligent Industrial

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

80 75 156 149

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

Income (loss) from operations:

$ 1,420 $ 1,666 $ 1,790 $ 2,761

Energy Solutions

( 6,668 ) ( 1,948 ) 6,614 13,120

Intelligent Industrial

( 1,287 ) ( 708 ) ( 2,227 ) ( 899 )

( 3,746 ) ( 3,516 ) ( 8,623 ) ( 6,651 )

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

The Company's manufacturing operations for its operating business segments are combined.

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 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.

Consolidated income tax expense for each of the three and nine months ended June 30, 2025 , was $ 0.1 million.

Consolidated income tax expense (benefit) for the three and nine months ended June 30, 2024 , was $( 2,000 ) and $ 0.1 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.

Subsequent Event

On August 1, 2025, the Company acquired all the outstanding common stock of Geovox Security, Inc.

Geovox, which can detect human traffic in vehicles with it Heartbeat Detector, will operate in the Company's Intelligent Industrial segment.

T The acquisition purchase price for Geovox consists of (i) cash of $ 1.7 million, which included of $ 1.5 million paid at closing and $ 0.2 million to be paid June 1, 2027, and (ii) contingent earn-out payments of up to $ 3.3 million over a four -year period.

The contingent payments, if any, will be derived from certain eligible revenue that may be generated during the four -year earn-out period.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

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Statements that contain these words should be read carefully because they discuss our future expectations, contain projections of our future results of operations or of our financial position or state other forward-looking information.

Examples of forward-looking statements include, among others, statements that we make regarding our expected operating results, the timing, adoption, results and success of our rollout of our Aquana smart water valves and cloud-based control platform, future demand for our Quantum security solutions, the adoption and sale of our products in various geographic regions, potential tenders for permanent reservoir monitoring systems, future demand for OBX rental equipment, the adoption of Quantum's SADAR® product monitoring of subsurface reservoirs, the completion of new orders for channels of our GCL system, the fulfillment of customer payment obligations, the impact of the current armed conflict between Russia and Ukraine, our ability to manage changes and the continued health or availability of management personnel, volatility and direction of oil prices, anticipated levels of capital expenditures and the sources of funding therefor, and our strategy for growth, product development, market position, financial results and the provision of accounting reserves.

Examples of forward-looking statements include, among others, statements that we make regarding our expected operating results, the timing, adoption, results and success of our rollout of our Aquana smart water valves and cloud-based control platform, future demand for our Quantum security solutions, the adoption and sale of our products in various geographic regions, potential tenders for permanent reservoir monitoring systems, future demand for OBX rental equipment, sales or rentals for our Mariner™ or Mariner Deep® nodes, the adoption of Quantum's SADAR® product monitoring of subsurface reservoirs, the completion of new orders for channels of our Pioneer™ system, the fulfillment of customer payment obligations, the impact of the current armed conflict between Russia and Ukraine, our ability to manage changes and the continued health or availability of management personnel, volatility and direction of oil prices, anticipated levels of capital expenditures and the sources of funding therefor, and our strategy for growth, product development, market position, financial results and the provision of accounting reserves.

These forward-looking statements reflect our current judgment about future events and trends based on the information currently available to us.

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Geoscientists use seismic data primarily in connection with the exploration, development and production of oil and gas reserves to map potential and known hydrocarbon bearing formations and the geologic structures that surround them.

This 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.

Our seismic sensor, cable and connector products are compatible with most major competitive seismic data acquisition systems currently in use.

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We believe our wireless sensor systems allows our customers to operate more effectively and efficiently because of its reduced environmental impact, lower weight, ease of operation, and which require less maintenance.

We have also developed a marine-based wireless seismic data acquisition system called the OBX, and recently released Mariner® and Mariner Deep™.

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

We have also developed an ocean bottom seismic data acquisition system called the OBX, and recently released Mariner™ and Mariner Deep®.

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

Through June 30, 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 March 31, 2025, we have sold 7,600 Mariner® nodes and currently have 3,000 Mariner® nodes in our rental fleet.

Through June 30, 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 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.

We also have a derivative of the OptoSeis® technology for high temperature downhole applications.

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Three Months Ended

Six Months Ended

March 31, 2025

March 31, 2024

March 31, 2025

March 31, 2024

Nine Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Product revenue

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Total revenue

Income from operations

Income (loss) from operations

Intelligent Industrial

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Rental revenue

Loss from operations

Income (loss) from operations

Consolidated Totals

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Given the well-known and often extreme volatility experienced in our Energy Solutions segment, careful expansion of products and market diversity in our Smart Water and Intelligent Industrial segments has been a longstanding part of our strategic vision and reflects our on-going diversification efforts.

Our Energy Solution segment saw a shift from rentals of our OBX marine wireless nodes to purchases of the equipment in fiscal year 2024, of which trend has continued into fiscal year 2025.

Our Energy Solution segment saw a shift from rentals of our ocean bottom nodes to purchases of the equipment in fiscal year 2024, of which trend has continued in fiscal year 2025.

This shift signifies our customer’s recognition of future backlog to justify ownership versus renting the nodes.

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 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 customers' need to temporarily expand their nodal fleet.

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.

During the third quarter of fiscal year 2025, we entered into a PRM contract.

The duration of the contract is expected to be approximately 18 months.

Revenue will be recognized in our Energy Solutions segment over the duration of the contract.

We continue to maintain a strong balance sheet with no debt.

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 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 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 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.

Three and nine months ended June 30, 2025, compared to the three and nine months ended June 30, 2024

Consolidated revenue for the three months ended June 30, 2025, was $24.8 million, a decrease of $1.0 million, or 3.9%, from the corresponding period of the prior fiscal year.

The decrease was primarily due to lower utilization of our ocean bottom nodes rental fleet from our Energy Solutions segment.

The decrease was largely offset by an increase in demand for our traditional seismic products, partly from the sale of our marine retrieval and steering device product line completed in the third quarter of fiscal year 2025.

Consolidated revenue for the nine months ended June 30, 2025, was $80.1 million, a decrease of $20.1 million, or 20.0%, from the corresponding period of the prior fiscal year.

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

Revenue for the nine months ended June 30, 2025, included a $17 million sale of ocean bottom nodes structured as a sales-type lease.

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

The decrease was also attributable to lower wireless marine rental revenue.

The decrease in consolidated revenue for both the three and nine months ended June 30, 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 June 30, 2025, was $7.5 million, a decrease of $1.0 million, or 11.6%, from the corresponding period of the prior fiscal year.

The decrease in gross profit was primarily due to a decrease in ocean bottom nodes rental revenue from our Energy Solutions segment.

The decrease was partially offset by an increase in traditional seismic revenue, partly due to the sale of our marine retrieval and steering product line and related gross profits.

Consolidated gross profit for the nine months ended June 30, 2025, was $29.4 million, a decrease of $7.2 million, or 19.7%, from the corresponding period of the prior fiscal year.

The decrease in gross profit was primarily due to a decrease in ocean bottom nodes product revenue and rental revenue.

This decrease was partially offset by a high gross profit margin on a $17 million sale of ocean bottom nodes in the first quarter of fiscal year 2025.

The decrease in gross profit for both three and nine months ended June 30, 2025 was also due to an increase in tariffs on the raw materials we purchase.

Consolidated operating expenses for the three months ended June 30, 2025, were $11.8 million, an increase of $0.9 million, or 7.9%, from the corresponding period of the prior fiscal year.

Consolidated operating expenses for the nine months ended June 30, 2025, were $36.1 million, an increase of $5.4 million, or 17.7%, from the corresponding period of the prior fiscal year.

The increase for both the three and nine months ended June 30, 2025 was primarily due to (i) higher personnel costs, including severance costs and acceleration of stock-based compensation expense and (ii) an increase in and sales and marketing costs.

In June 2025, we sold our property located at 4318 Northfield Lane in Houston, Texas.

The 17.3-acre property served as additional parking for our main campus and contained legacy structures used to support our manufacturing and warehousing operations.

The property had been classified as assets held on our consolidated balance sheets since September 30, 2024.

We recognized a gain on disposal of property of $4.6 million during the third quarter of fiscal year 2025.

The gain is included as a component of income (loss) from operations on our accompanying consolidated statements of operations.

Consolidated other income was $0.5 million for the three months ended June 30, 2025, compared to $0.3 million from the corresponding period of the prior fiscal year.

Consolidated other income was $1.5 million for the nine months ended June 30, 2025, compared to $0.5 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 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.

Revenue from our Smart Water segment for the three months ended June 30, 2025, increased $0.6 million, or 6.1%, from the corresponding period of the prior fiscal year.

Revenue from our Smart Water segment for the nine months ended June 30, 2025, increased $6.7 million, or 32.7%, 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 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.

Operating income from our Smart Water segment for the three months ended June 30, 2025, was $2.2 million, a decrease of $0.4 million, or 14.5% from the corresponding period of the prior fiscal year.

Operating income from our Smart Water segment for the nine months ended June 30, 2025, was $4.0 million, a decrease of $1.3 million, or 25.1% from the corresponding period of the prior fiscal year.

The decrease for both periods was due to an increase in selling and marketing and research and development costs associated with our increase in revenue.

Energy Solutions

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.

Revenue from our Energy Solutions segment for the three months ended June 30, 2025, decreased $1.3 million, or 13.6%, from the corresponding period of the prior fiscal year.

Revenue from our Energy Solutions segment for the nine months ended June 30, 2025, decreased $25.4 million, or 42.0%, from the corresponding period of the prior fiscal year.

The components of this decrease were as follows:

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 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.

Product Revenue – For the three months ended June 30, 2025, product revenue increased $2.8 million, or 71.2%, from the corresponding period of the prior fiscal year.

The increase was primarily due to an increase in demand for our traditional seismic products, largely from the sale of our marine recovery device product line.

For the nine months ended June 30, 2025, product revenue decreased $14.1 million, or 32.1%, from the corresponding period of the prior fiscal year.

The decrease was primarily due to a decrease in demand for our ocean bottom nodes.

Revenue for the nine months ended June 30, 2025 included a $17 million sale of ocean bottom nodes structured as a sales-type lease.

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

Rental Revenue – For the three months ended June 30, 2025, rental revenue from our wireless exploration products was $1.5 million, a decrease of $4.0 million, or 72.9%, in comparison to the corresponding period of the prior fiscal year.

Consolidated rental revenue from our wireless exploration products for the nine months ended June 30, 2025, was $5.1 million, a decrease of $11.2 million, or 68.6%, from the corresponding period of the prior fiscal year.

The decrease for both periods was due to lower utilization of our ocean bottom nodes rental fleet.

The decrease for the nine months ended June 30, 2025 was also attributable to the reversal of a $2.2 million receivable from a rental customer against rental revenue during the second quarter of fiscal year 2025.

We determined the collectability of this receivable was less than probable.

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.

Operating loss associated with our Energy Solutions segment for the three months ended June 30, 2025, was $(1.2) million, compared to $(0.1) million for the corresponding period of the prior fiscal year.

The increase in operating loss was largely due to the decrease in revenue and related gross profits.

Operating income associated with our Energy Solutions segment for the nine months ended June 30, 2025, was $5.4 million, a decrease of $7.6 million from the corresponding period of the prior fiscal year.

The decrease in operating income for the nine months ended June 30, 2025, was primarily due to (i) lower revenue and related gross profits.

The decrease in operating loss for both the three and nine months ended June 30, 2025 was primarily due to (i) the decrease in revenue and related gross profits and (ii) higher research and development expense, primarily personnel costs.

Intelligent Industrial

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.

Revenue from our Intelligent Industrial segment for three months ended June 30, 2025, decreased $0.4 million, or 5.4%, from the corresponding period of the prior fiscal year.

Revenue from our Intelligent Industrial segment for nine months ended June 30, 2025, decreased $1.5 million, or 7.6%, from the corresponding period of the prior fiscal year.

The decrease in revenue for both the three and nine months ended June 30, 2025, was primarily due to (i) revenue recognized for the three and nine months ended June 30, 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 contract manufacturing services.

Operating Loss

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.

Operating loss from our Intelligent Industrial segment for the three months ended June 30, 2025, was $(1.0) million, a decrease of $0.2 million, or 18.8%, million from the corresponding period of the prior fiscal year.

The decrease was primarily due to lower operating expenses incurred during the three months ended June 30, 2025.

The decrease in operating loss was partially offset by (i) decrease in revenue and related gross profits.

Operating loss from our Intelligent Industrial segment for the nine months ended June 30, 2025, was $(3.3) million, an increase of $1.1 million, or 49.8%, from the corresponding period of the prior fiscal year.

The increase in operating loss for nine months ended June 30, 2025 was primarily due (i) the decrease in revenue and related gross profits and (ii) higher research and development costs.

Liquidity and Capital Resources

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.

At June 30, 2025, we had $25.6 million in cash and cash equivalents and short-term investments.

For the nine months ended June 30, 2025, we used $18.1 million of cash from operating activities.

Uses of cash included (i) our net loss of $0.7 million, offset by non-cash charges of $9.8 million resulting from deferred income taxes, depreciation, amortization, accretion, inventory obsolescence, stock-based compensation and provision for credit losses, a (ii) $5.6 million increase in inventories for the strategic purchase of long lead-time components needed for use in wireless products, valves and contract manufacturing, (iii) $4.2 million decrease in trade accounts payable due to timing of payments to our suppliers and (iv) $0.6 million increase in other assets, primarily for the prepayment of insurance premiums.

These uses of cash were partially offset by a (i) $2.2 million decrease in trade accounts receivables due to timing of collections from customers and (ii) $2.0 increase in other liabilities primarily related to accrued compensation costs.

For the nine months ended June 30, 2025, we generated cash of $35.4 million in investing activities.

Sources of cash consisted of (i) $28.4 million from the sale of short-term investments, (ii) $8.7 million of proceeds from the sale of property, plant and equipment and (iii) $5.1 million of proceeds from the sale of rental equipment.

These sources of cash were partially offset by (i) $5.8 million for additions to our property, plant and equipment and (ii) $1.1 million for additions to our equipment rental fleet.

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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 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.

For the nine months ended June 30, 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.

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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 (7.66% at March 31, 2025).

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 (7.65% at June 30, 2025).

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

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The Agreement also requires us to maintain a springing minimum interest coverage ratio of 1.50 to 1.00, tested quarterly whenever there is an outstanding balance on the revolving credit facility.

The Agreement expires in July 2025.

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.

Effective July 26, 2025, the Agreement was amended to extend the maturity date from July 26, 2025 to August 26, 2025.

The Company is currently negotiating a long-term maturity extension on the Agreement.

At June 30, 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 $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.

Our available cash, cash equivalents and short-term investments was $25.6 million at June 30, 2025, which included $1.0 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 assuming a long-term maturity extension in reached, sales or leveraging real estate assets, sales of rental assets and other liquidity sources which may be available to us.

We currently believe that our cash and short-term investments will be sufficient to finance any future operating losses and planned capital expenditures through the next twelve months.

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Critical Accounting Estimates

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.

During the nine months ended June 30, 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