UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

~~[X]~~

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

for the Quarterly Period Ended ~~December~~March 31, ~~2017~~ 2024OR

~~[ ]~~

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

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

for the transition period from ____ to ____

Commission file number 001-13601

GEOSPACE TECHNOLOGIES CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

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

~~7007 Pinemont Drive~~

~~Houston, Texas 77040-6601~~

~~(Address of Principal Executive Offices) (Zip Code)~~

~~(713) 986-4444~~

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

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

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock

GEOS

The Nasdaq Global Select Market

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

~~Yes~~ X No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

~~Yes~~ X No

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

Large accelerated filer	☐		Accelerated filer	☒

Non-accelerated filer	☐	~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐☒

			Emerging growth company	☐

~~Emerging growth company~~

☐

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

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

~~Yes No~~ X

~~There were 13,563,491~~As of April 30, 2024, the registrant had 13,362,090 shares of ~~the Registrant’s Common Stock outstanding as of the close of business on January 31, 2018.~~common stock, $0.01 par value, per share outstanding.

Table of Contents

		Page Number
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements		3

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1715

Item 3. Quantitative and Qualitative Disclosures about Market Risk		2318

Item 4. Controls and Procedures		2419

PART II. OTHER INFORMATION

Item 6. Exhibits		2520

PART I - ~~FINANCI~~ALFINANCIAL INFORMATION

Item 1. Financial Statements

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in ~~thousands)~~thousands except share amounts)

(unaudited)

	December 31, 2017			September 30, 2017			*March 31, 2024*			*September 30, 2023*
ASSETS
Current assets:
Cash and cash equivalents	$	13,923		$	15,092		$	20,762		$	18,803
Short-term investments		32,085			36,137			30,448			14,921
Trade accounts receivable, net		7,011			9,435
Financing receivables		5,793			3,055
Income tax receivable		263			273
Inventories		19,994			20,752
Trade accounts and note receivable, net								15,330			21,373
Inventories, net								23,932			18,430
Prepaid expenses and other current assets		1,939			1,623			1,611			2,251
Total current assets		81,008			86,367			92,083			75,778

Non-current inventories, net								18,141			24,888
Rental equipment, net		15,542			16,462			15,077			21,587
Property, plant and equipment, net		36,475			37,399			24,552			24,048
Non-current inventories		56,184			55,935
Deferred income tax assets, net		305			259
Non-current financing receivables, net		7,032			8,195
Prepaid income taxes		56			450
Other assets		619			629
Non-current trade accounts receivable								1,510			—
Operating right-of-use assets								590			714
Goodwill								736			736
Other intangible assets, net								4,601			4,805
Other non-current assets								408			486
Total assets	$	197,221		$	205,696		$	157,698		$	153,042

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable trade	$	3,322		$	2,599		$	4,955		$	6,659
Accrued expenses and other current liabilities		6,516			6,338
Deferred revenue		1,461			1,568
Operating lease liabilities								257			257
Other current liabilities								9,863			12,882
Total current liabilities		11,299			10,505			15,075			19,798

Deferred income tax liabilities		29			37
Non-current operating lease liabilities								397			512
Deferred tax liabilities, net								32			16
Total liabilities		11,328			10,542			15,504			20,326

Commitments and contingencies (Note 11)

Stockholders’ equity:
Preferred stock, 1,000,000 shares authorized, no shares issued and outstanding		—			—			—			—
Common stock, $.01 par value, 20,000,000 shares authorized, 13,560,291 and 13,438,316 shares issued and outstanding		136			134
Common Stock, $.01 par value, 20,000,000 shares authorized; 14,204,082 and 14,030,481 shares issued, respectively; and 13,362,090 and 13,188,489 shares outstanding, respectively								142			140
Additional paid-in capital		84,557			83,733			96,800			96,040
Retained earnings		115,686			125,517			70,212			61,860
Accumulated other comprehensive loss		(14,486	)		(14,230	)		(17,460	)		(17,824	)
Treasury stock, at cost, 841,992 shares								(7,500	)		(7,500	)
Total stockholders’ equity		185,893			195,154			142,194			132,716
Total liabilities and stockholders’ equity	$	197,221		$	205,696		$	157,698		$	153,042

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

Three Months Ended

December 31, 2017

December 31, 2016

Revenue:

Products

$
13,425

$
10,297

Rental equipment

1,219

4,988

Total revenue

14,644

15,285

Cost of revenue:

Products

13,243

14,836

Rental equipment

2,369

3,776

Total cost of revenue

15,612

18,612

Gross profit (loss)

(968
)

(3,327
)
Operating expenses:

Selling, general and administrative

5,129

5,094

Research and development

3,158

3,372

Bad debt expense (recovery)

350

(482
)
Total operating expenses

8,637

7,984

Loss from operations

(9,605
)

(11,311
)

Other income (expense):

Interest expense

(64
)

(8
)
Interest income

263

130

Foreign exchange losses, net

(43
)

(65
)
Other, net

(25
)

(17
)
Total other income, net

131

40

Loss before income taxes

(9,474
)

(11,271
)
Income tax expense

6

434

Net loss

$
(9,480
)

$
(11,705
)

Loss per common share:

Basic

$
(0.72
)

$
(0.89
)
Diluted

$
(0.72
)

$
(0.89
)

Weighted average common shares outstanding:

Basic

13,202,384

13,094,809

Diluted

13,202,384

13,094,809

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

Three Months Ended

December 31, 2017

December 31, 2016

Cash flows from operating activities:

Net loss

$
(9,480
)

$
(11,705
)
Adjustments to reconcile net loss to net cash used in operating activities:

Deferred income tax expense (benefit)

(55
)

34

Rental equipment depreciation

2,247

3,308

Property, plant and equipment depreciation

1,095

1,313

Accretion of discounts on short-term investments

13

16

Stock-based compensation expense

826

1,375

Bad debt expense (recovery)

350

(482
)
Inventory obsolescence expense

1,434

4,147

Gross profit from sale of used rental equipment

(2,566
)

(1,201
)
Realized loss on short-term investments

—

1

Effects of changes in operating assets and liabilities:

Trade accounts receivable

2,562

2,312

Income tax receivable

10

—

Inventories

(2,865
)

(1,507
)
Prepaid expenses and other current assets

(329
)

(39
)
Prepaid income taxes

41

393

Accounts payable trade

723

(348
)
Accrued expenses and other

267

(257
)
Deferred revenue

(65
)

771

Income tax payable

—

(31
)
Net cash used in operating activities

(5,792
)

(1,900
)

Cash flows from investing activities:

Purchase of property, plant and equipment

(218
)

(106
)
Proceeds from the sale of used rental equipment

997

1,915

Purchases of short-term investments

(1,905
)

—

Proceeds from the sale of short-term investments

5,898

2,674

Net cash provided by investing activities

4,772

4,483

Cash flows from financing activities:

Proceeds from the exercise of stock options

—

50

Net cash provided by financing activities

—

50

Effect of exchange rate changes on cash

(149
)

(101
)
Increase (decrease) in cash and cash equivalents

(1,169
)

2,532

Cash and cash equivalents, beginning of fiscal year

15,092

10,262

Cash and cash equivalents, end of fiscal period

$
13,923

$
12,794

	*Three Months Ended*						*Six Months Ended*
	*March 31, 2024*			*March 31, 2023*			*March 31, 2024*			*March 31, 2023*
Revenue:
Products	$	19,497		$	17,701		$	63,211		$	37,249
Rental		4,773			13,669			11,091			25,230
Total revenue		24,270			31,370			74,302			62,479
Cost of revenue:
Products		14,995			13,196			38,837			28,561
Rental		3,394			5,225			7,348			10,435
Total cost of revenue		18,389			18,421			46,185			38,996

Gross profit		5,881			12,949			28,117			23,483

Operating expenses:
Selling, general and administrative		6,546			6,387			12,372			12,822
Research and development		3,863			3,483			7,465			7,741
Provision for credit losses		(22	)		17			(51	)		137
Total operating expenses		10,387			9,887			19,786			20,700

Gain on disposal of property		—			1,315			—			1,315

Income (loss) from operations		(4,506	)		4,377			8,331			4,098

Other income (expense):
Interest expense		(44	)		(39	)		(100	)		(78	)
Interest income		247			127			482			283
Foreign currency transaction gains (losses), net		(20	)		185			(183	)		292
Other, net		7			6			(67	)		(6	)
Total other income, net		190			279			132			491

Income (loss) before income taxes		(4,316	)		4,656			8,463			4,589
Income tax expense		11			19			111			49
Net income (loss)	$	(4,327	)	$	4,637		$	8,352		$	4,540

Income (loss) per common share:
Basic	$	(0.32	)	$	0.35		$	0.63		$	0.35
Diluted	$	(0.32	)	$	0.35		$	0.62		$	0.35

Weighted average common shares outstanding:
Basic		13,343,793			13,156,715			13,297,324			13,111,866
Diluted		13,343,793			13,156,715			13,471,775			13,111,866

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

The consolidated balance sheet of Geospace Technologies Corporation and its subsidiaries (the “Company”) at September 30, ~~2017~~2023 was derived from the Company’s audited consolidated financial statements at that date. The consolidated balance sheet at ~~December~~March 31, ~~2017~~2024 and the consolidated statements of operations, comprehensive ~~loss~~income (loss), stockholders’ equity and ~~the consolidated statements of~~ cash flows for the three and six months ended ~~December~~March 31, ~~2017~~ 2024 and ~~2016~~2023 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 ~~December~~March 31, ~~2017~~2024 are not necessarily indicative of the operating results for a full year or of future operations.

Certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") were omitted pursuant to the rules of the Securities and Exchange Commission. The accompanying consolidated financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form ~~10-K~~10-K for the Company’s fiscal year ended September 30, ~~2017.~~2023.

The preparation of financial statements in conformity with ~~accounting principles generally accepted in the United States of America~~U.S. GAAP requires the use of estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company considers many factors in selecting appropriate operational and financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these ~~consolidated~~ financial statements. The Company continually evaluates its estimates, including those related to ~~bad debt reserves,~~revenue recognition, credit loss, collectability of rental revenue, inventory obsolescence reserves, self-insurance reserves, product warranty reserves, useful lives of long-lived assets, impairment of long-lived assets, impairment of goodwill and other intangible assets and deferred income tax assets. The Company bases its estimates on historical experience and various other factors that are believed to be reasonable under the circumstances. ~~Actual~~While management believes current estimates are reasonable and appropriate, actual results may differ from these estimates under different conditions or assumptions.

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.

~~The Company classifies its short-term investments consisting of corporate bonds, government bonds~~ At March 31, 2024, cash and other such similar investments as available-for-sale securities. Available-for-sale securities are carried at fair market value with net unrealized holding gains and losses reported each period as a component of accumulated other comprehensive loss in stockholders’ equity. See note 2 for additional information.

The Company records a write-down of its inventories when the cost basis of any manufactured product, including any estimated future costs to complete the manufacturing process, exceeds its net realizable value. Inventories are stated at the lower of cost or market value. Cost is determined on the first-in, first-out method, except that certain ofcash equivalents included $3.3 million held by the Company’s foreign subsidiaries ~~use an average cost method~~and branch offices, including $2.0 million held by its subsidiary in the Russian Federation. In response to ~~value~~sanctions imposed by the U.S. and others on Russia, the Russian government has imposed restrictions on companies' abilities to repatriate or otherwise remit cash from their ~~inventories.~~

~~The~~Russian-based operations to locations outside of Russia. As a result, this cash can be used in our Russian operations, but the Company ~~periodically reviews~~may be unable to transfer it out of Russia without incurring substantial costs, if at all. In addition, if the ~~composition of~~Company were to repatriate the cash held by its ~~inventories~~Russian subsidiary, it would be required to ~~determine if market demand, product modifications, technology changes, excessive quantities on-hand~~accrue and other factors hinder its ability to recover its investment in such inventories. The Company’s assessment is based upon historical product demand, estimated future product demand and various other judgments and estimates. Inventory obsolescence reserves are recorded when such assessments reveal that portions or components of the Company’s inventory investment will not be realized in its operating activities.

The Company reviews its inventories for classification purposes. The value of inventories not expected to be realized in cash, sold or consumed during its next operating cycle are classified as noncurrent assets.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)~~pay taxes on any amount repatriated.

The ~~Company’s~~Company's long-lived assets are reviewed for impairment whenever an event or ~~change in circumstances~~circumstance indicates that the carrying amount of an asset or group of assets may not be recoverable. The impairment review, if necessary, includes a comparison of the expected future cash flows (undiscounted and without interest charges) to be generated by an asset group with the associated carrying value of the related assets. If the carrying value of the asset group exceeds the expected future cash flows, an impairment loss is recognized to the extent that the carrying value of the asset group exceeds its fair value.

~~The Company primarily derives revenue from~~During the ~~sale~~quarter ended March 31, 2024, no events or changes in circumstances were identified indicating the carrying value of its manufactured products, including revenue derived from the sale of its manufactured rental equipment. In addition, the Company generates revenue from the short-term rental under operating leases of its manufactured products. The Company recognizes revenue from product sales, including the sale of used rental equipment, when allany of the following have occurred: (i) title passes to the customer, (ii) the customer assumes the risks and rewards of ownership, (iii) the product sales price has been determined, (iv) collectability of the sales price is reasonably assured, and (v) product delivery occurs as directed by the customer. Although infrequent, in cases where collectability is Company's asset groups may not reasonably assured, the installment or cost recovery method is used. Except for certain of the Company’s reservoir characterization products, the Company’s products are generally sold without any customer acceptance provisions, and the Company’s standard terms of sale do not allow customers to return products for credit. The Company recognizes rental revenue as earned over the rental period. Rentals of the Company’s equipment generally range from daily rentals to rental periods of up to six months or longer. Revenue from engineering services is recognized as services are rendered over the duration of a project, or as billed on a per hour basis. Field service revenue is recognized when services are rendered and is generally priced on a per day rate.

The Company expenses research and development costs as incurred. Research and development costs include salaries, employee benefit costs, department supplies, direct project costs and other related costs.

Most of the Company’s products do not require installation assistance or sophisticated instructions. The Company offers a standard product warranty obligating it to repair or replace equipment with manufacturing defects. The Company maintains a reserve for future warranty costs based on historical experience or, in the absence of historical product experience, management’s estimates. Reserves for future warranty costs are included within accrued expenses and other current liabilities on the consolidated balance sheets. Changes in the warranty reserve are reflected in the following table (in thousands):

In ~~October~~June 2016, the Financial Accounting Standards Board ~~(“FASB”~~(the “FASB”) issued guidance which eliminates the exception of recognizing, at the time of transfer, current and deferred income taxes for intercompany profits on intra-entity asset transfers other than inventory. The Company adopted this guidance in its first quarter of its fiscal year ending September 30, 2018 using the modified retrospective approach. The adoption resulted in a cumulative-effect adjustment to opening retained earnings of $0.4 million. Under prior guidance, the Company maintained a non-current prepaid income tax asset on its consolidated balance sheets representing income taxes paid in the U.S. on profits realized from the sale of rental equipment to its foreign subsidiaries. As this rental equipment was depreciated, the prepaid tax was recognized as a current income tax expense in the Company’s consolidated statement of operations. Under the new guidance, the Company is required to recognize a deferred tax asset related to the intercompany profits realized on the sale of non-inventory assets to its subsidiaries; however, profits realized from the intercompany sale of inventories will continue to be accounted for as a prepaid income tax asset in accordance with the prior guidance. Under the new guidance, the deferred tax asset resulting from the sale of non-inventory assets is recognized at the jurisdictional tax rate of the subsidiary which purchased the asset. Any differences between the subsidiary’s jurisdictional tax rate and the seller’s tax rate pertaining to the intercompany profit are charged to seller’s current income tax expense at the time of the sale. With the recent reduction in the U.S. income tax rate to 21%, and assuming that a majority of the Company’s equipment sales will continue to be made to its Canadian subsidiary having a higher statutory tax rate, the new guidance is expected to have a favorable impact on the Company’s provision for income taxes in future periods. Due to the fact the Company has a valuation allowance against its net deferred tax assets, the adoption of this guidance had no impact upon the Company’s income tax expense for the three months ended December 31, 2017.

In March 2016, the FASB issued guidance to simplify key components of employee share-based payment accounting. The new guidance simplifies several aspects of the accounting for share-based payment transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification of excess tax benefits from share-based payments on the statement of cash flows. The Company adopted this guidance in the first quarter of its fiscal year ending September 30, 2018. No cumulative effect adjustment to retained earnings was needed upon adoption as the Company has no unrecorded excess tax benefits residing in additional paid-in-capital account. Under the prior standard, the Company was required to track and record as a component of additional paid-in capital the tax impact of cumulative windfalls, net of any shortfalls, which resulted from excess tax benefits from share-based payments. As a result, the impact of net windfalls has not historically affected the Company’s provision for income taxes or its effective income tax rate. Under the new guidance, the Company will no longer track windfalls or shortfalls resulting from share-based payments since all future windfalls and shortfalls will be recorded as a component of the Company’s current provision for income taxes. Depending on the magnitude of future windfalls or shortfalls, this change could significantly affect the Company’s provision for income taxes in a positive or negative direction. Due to the fact the Company has a valuation allowance against its net deferred tax assets, the adoption of this guidance had no impact upon the Company’s income tax expense for the three months ended December 31, 2017.

In July 2015, the FASB issued guidance requiring management to measure inventory at the lower of cost or net realizable value. Under the new guidance, net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Since the Company is a manufacturer and the nature of its inventory is generally unique to its designs and applications thus preventing the gathering of relevant external market data, its existing practice for calculating net realizable value under the current standard is consistent with the practice prescribed by the new guidance. The Company adopted this standard in its first quarter of its fiscal year ending September 30, 2018. The adoption did not have a material effect upon the Company’s consolidated financial statements.

In November 2016, the FASB issued guidance which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance must be adopted by the Company no later than its first quarter of fiscal year 2019 and should be applied on a retrospective transition basis. The Company has historically not held restricted cash balances and, therefore, does not expect the adoption of this guidance to have a material effect on its consolidated financial statements. However, upon adoption of this guidance, the Company will make any necessary changes to present restricted cash balances in accordance with the guidance.

~~In June 2016, the FASB~~ issued guidance surrounding credit losses for financial instruments that replaces the incurred loss impairment methodology in ~~current U.S.~~ generally accepted accounting ~~principles (“GAAP”).~~principles. The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain other financial instruments. For available-for-sale debt securities with unrealized losses, credit losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The standard is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those annual periods. Early adoption for a fiscal year beginning after December 15, 2018 is permitted. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. The Company ~~expects to adopt~~adopted this standard ~~during the first quarter of its fiscal year ending September 30, 2021 and is currently evaluating the impact~~on October 1, 2023. The adoption of this ~~new guidance~~standard did not have any material impact on its consolidated financial statements.

In ~~February 2016,~~ November 2023, the FASB issued guidance requiring a lessee to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement and presentation of expense and cash flows arising from a lease by a lesseewhich updates reportable segment disclosure requirements primarily will depend on its classification of the lease as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the new guidance will also require operating leases of the lessee to be recognized on the balance sheet if the operating lease term is more than 12 months. The guidance also requiresthrough enhanced disclosures to help investors and other financial statement users to better understand the amount, timing and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about ~~the amounts recorded in the financial statements.~~significant segment expenses. The guidance is effective for fiscal years ~~and interim reporting periods therein,~~ beginning after December 15, ~~2018~~ 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is topermitted. The guidance shall be applied ~~using~~retrospectively to all prior periods presented in the modified retrospective approach. The Company expects to adopt this standard in its first quarter of its fiscal year ending September 30, 2020. The Company currently is not a lessee under any lease agreements with a term longer than one year.financial statements. The Company is ~~routinely a lessor in its rental contracts with customers; however, these rental agreements are generally short-term in nature,~~currently evaluating the provisions of this guidance and the ~~Company believes would be treated as operating leases under~~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 ~~new guidance; however,~~Company's financial position or results of operations.

In accordance with ASC Topic 606,Revenue from Contracts with Customers (“ASC 606”), the Company ~~has not completed a detailed review~~recognizes revenue when performance of ~~its lease arrangements, and these conclusions~~contractual obligations are ~~subject to change.~~

~~In May 2014,~~satisfied, generally when control of the ~~FASB issued guidance requiring entities to recognize revenue from contracts with customers by applying a five-step model in accordance with the core principle to depict the transfer of~~ promised goods or services is transferred to its customers, in an amount that reflects the consideration ~~to which the entity~~it expects to be entitled to in exchange for those goods or services. ~~In addition, this guidance specifies~~

The Company primarily derives product revenue from the ~~accounting for some costs to obtain or fulfill~~sale of its manufactured products. Revenue from these product sales, including the sale of used rental equipment, is recognized when obligations under the terms of a contract ~~with a customer~~are satisfied, control is transferred and expands disclosure requirements for revenue recognition. In August 2015, the FASB issued guidance deferring the effective date of this guidance to annual periods beginning after December 15, 2017, including interim reporting periods therein. Entities have the option to adopt this guidance either retrospectively or through a modified retrospective transition method. This new standard will supersede existing revenue guidance and affect the Company's revenue recognition process and the presentations or disclosurescollectability of the ~~Company's consolidated financial statements and footnotes.~~sales price is probable. The Company records deferred revenue when customer funds are received prior to shipment or delivery or performance has not yet occurred. The Company assesses collectability during the contract assessment phase. In situations where collectability of the sales price is not probable, the Company recognizes revenue ~~through three primary transactions types: (i)~~when it determines that collectability is probable or when non-refundable cash is received from its customers and there is not a significant right of return. Transfer of control generally occurs with shipment or delivery, depending on the ~~immediate recognition~~terms of the underlying contract. The Company’s products are generally sold without any customer acceptance provisions, and the Company’s standard terms of sale do not allow customers to return products for credit.

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

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

As permissible under ASC 606, sales taxes and transaction-based taxes are excluded from revenue. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Additionally, the Company expenses costs incurred to obtain contracts when incurred because the amortization period would have been one year or less. These costs are recorded in selling, general and administrative expenses.

The Company has elected to treat shipping and handling activities in a sales transaction after the customer obtains control of the goods as a fulfillment cost and not as a promised service. Accordingly, fulfillment costs related to the shipping and handling of goods are accrued at the time of shipment. Amounts billed to a customer in a sales transaction related to reimbursable shipping and handling costs are included in revenue and the associated costs incurred by the Company for reimbursable shipping and handling expenses are reported in cost of revenue.

At March 31, 2024, the Company had deferred contract liabilities of $0.3 million and no deferred contract cost. At September 30, 2023, the Company had deferred liabilities of $0.7 million and no deferred contract costs. During the three and six months ended March 31, 2024, revenue of $0.7 million and $0.7 million, respectively, was recognized from deferred contract liabilities. During the three and six months ended March 31, 2024, no cost of revenue ~~through~~was recognized from deferred contract costs. During the ~~routine delivery~~three and six months ended March 31, 2023, no revenue was recognized from deferred contract liabilities and no cost of revenue was recognized from deferred contract costs. At March 31, 2024, all contracts had an original expected duration of one year or less.

For each of the Company’s operating segments, the following table presents revenue (in thousands) only from the sale of products ~~to its customers, (ii)~~and the performance of services under contracts with customers. Therefore, the table excludes all revenue earned from rental of equipment to its customers through short-term operating leases, and (iii) the recognition of revenue utilizing the percentage of completion method for the delivery of complex products requiring long manufacturing times and substantial engineering resources. The Company expects to adopt this standard in the first quarter of its fiscal year ending September 30, 2019 and is in the early stages of evaluating the standard, including the method of adoption to determine the impact on its consolidated financial statements. Further disclosures around policy changes or quantitative effects will be made as the Company moves closer to the adoption of this standard.contracts.

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

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

The Company classifies its short-term investments as available-for-sale securities. Available-for-sale securities are carried at fair market value with net unrealized gains and losses reported as a component of accumulated other comprehensive loss in stockholders’ equity.

The Company’s short-term investments ~~have contractual maturities ranging from January 2018 to January 2020.~~were composed of the following (in thousands):

At December 31, 2017 and September 30, 2017, the Company’s Canadian subsidiary had CAN$32.7 million and CAD$26.1 million, respectively, of Canadian dollar denominated intercompany accounts payable owed to one of the Company’s U.S subsidiaries. In order to mitigate its exposure to movements in foreign currency rates between the U.S. dollar and Canadian dollar, the Company routinely enters into foreign currency forward contracts to hedge a portion of its exposure to changes in the value of the Canadian dollar. On December 29, 2017, the Company entered into a CAN$32.0 million 90-day hedge contract effective January 2, 2018 with a United States bank to reduce the impact on cash flows from movements in the Canadian dollar/U.S. dollar currency exchange rate, but has not been designated as a hedge for accounting purposes. The Company’s derivative instruments had no fair value as of December 31, 2017 and September 30, 2017.

The ~~following table summarizes~~Company had no securities in a material unrealized loss position at March 31, 2024 and September 30, 2023 and does not believe these securities represent credit losses based on the ~~Company’s~~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. No gains ~~on derivative instruments in~~or losses were realized during the ~~consolidated statements of operations for the three~~six months ended ~~December~~March 31, ~~2017~~ 2024 and ~~2016 (in thousands):~~2023 from the sale of short-term investments.

~~Amounts in the above table include realized and unrealized derivative gains and losses.~~

The Company’s financial instruments ~~included~~generally include cash and cash equivalents, short-term investments, ~~derivative instruments,~~ trade accounts and ~~financing receivables~~notes receivable and accounts payable. Due to the short-term maturities of cash and cash equivalents, trade accounts and ~~other receivables~~notes receivable and accounts payable, the carrying amounts of these financial instruments are deemed to approximate their fair value on the respective balance sheet dates.

The Company measures its short-term investments ~~and derivative instruments~~ at fair value on a recurring basis.

The following tables present the fair value ~~measurement~~ of the Company’s short-term investments and ~~derivative instruments was determined using the following inputs~~contingent consideration by valuation hierarchy and input (in thousands):

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

~~The allowance~~Trade accounts receivable at March 31, 2024 included $1.5 million classified as non-current which is due in December 2025. Credit quality indicators used for ~~doubtful accounts represents~~ the ~~Company’s best estimate~~non-current portion of ~~probable~~this receivable consisted of historical collection experience, internal credit ~~losses.~~risk grades and collateral. The Company determines the allowance ~~based upon historical experience and~~for credit losses through a ~~current~~ review of several factors, including historical collection experience, customer credit worthiness, current aging of customer accounts and current financial conditions of its ~~balances. Accounts~~customers. Trade accounts receivable balances are charged off against the allowance whenever it is probable that the receivable balance will not be recoverable.

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

December 31, 2017

September 30, 2017

Promissory notes

$
7,062

$
4,306

Sales-type lease

7,807

8,581

Total financing receivables

14,869

12,887

Unearned income:

   Promissory notes

(95
)

(90
)
   Sales-type lease

(444
)

(527
)
      Total unearned income

(539
)

(617
)
Total financing receivables, net of unearned income

14,330

12,270

Allowance for doubtful promissory notes

(1,505
)

(1,020
)
Less current portion

(5,793
)

(3,055
)
Non-current financing receivables

$
7,032

$
8,195

~~During the three months ended December 31, 2017, the~~The Company ~~issued a $2.8 million promissory~~had one note receivable tofrom a customer at September 30, 2023 with a balance of $1.2 million, which was paid in connection with the sale of rental equipment. Cash flows from financing receivables related to the sale of rental equipment for the three months ended December 31, 2017 of $0.9 million are presented in proceeds from the sale of used rental equipment in the consolidated statements of cash flows.January 2024.

~~During~~Inventory obsolescence expense for the three and six months ended ~~December~~March 31, ~~2017 and 2016, the Company made non-cash inventory transfers of $2.0~~2024 was $0.1 million and ~~$0.3~~$0.1 million, ~~respectively, to rental equipment.~~respectively. Inventory obsolescence expense for the three and six months ended March 31, 2023 was $0.5 million and $1.8 million, respectively. Raw materials include semi-finished goods and component parts ~~which~~that totaled approximately ~~$44.1~~$8.1 million and ~~$43.2~~$10.6 million at ~~December~~March 31, ~~2017~~2024 and September 30, ~~2017,~~2023, respectively.

The Company leases equipment to customers which generally range from daily rentals to minimum rental periods of up to one year. All of the Company’s current leasing arrangements, which the Company acts as lessor, are classified as operating leases. The majority of the Company’s rental revenue is generated from its marine-based wireless seismic data acquisition systems.

The Company regularly evaluates the collectability of its lease receivables on a lease-by-lease basis. The evaluation primarily consists of reviewing past due account balances and other factors such as the credit quality of the customer, historical trends of the customer and current economic conditions. The Company suspends revenue recognition when the collectability of amounts due are no longer probable and concurrently records a direct write-off of the lease receivable to rental revenue and limits future rental revenue recognition to cash received. As of March 31, 2024, the Company’s trade accounts receivables included lease receivables of $2.8 million.

Rental revenue related to leased equipment for the three and six months ended March 31, 2024 was $4.7 million and $10.9 million, respectively. Rental revenue related to leased equipment for the three and six months ended March 31, 2023 was $13.6 million and $25.1 million, respectively.

Future minimum lease obligations due from the Company’s leasing customers on operating leases executed as of March 31, 2024 were $4.9 million, all of which is expected to be due within the next 12 months.

The Company had no long-term debt outstanding at ~~December~~March 31, ~~2017~~2024 and September 30, ~~2017.~~2023.

On ~~March 2, 2011,~~ July 26, 2023, the Company entered into a credit agreement (“the Agreement”) with ~~Frost~~Woodforest National Bank, as sole lender. The Agreement refinanced the Company's credit agreement dated May 6, 2022, with ~~borrowing~~Amerisource Funding, Inc., as administrative agent and as a lender, and Woodforest National Bank, as a lender. The Agreement provides a revolving credit facility with a maximum availability of ~~$50.0 million (the “Credit Agreement”). On May 4, 2015,~~$15 million. Availability under the ~~Company amended the Credit~~ Agreement which reduced its borrowing availability to $30.0 million with amounts available for borrowing determined by a borrowing base. On October 25, 2017, the Company entered into another amendment to the Credit Agreement which extended its maturity to April 30, 2019. The 2017 amendment also modified the borrowing base to beis determined based upon a borrowing base comprised of certain of the Company’s domestic assets which include (i) 80% of ~~certain~~eligible accounts, ~~receivable~~ plus (ii) ~~50%~~90% of ~~certain notes receivable (such result not to exceed $10 million)~~eligible foreign insured accounts, plus (iii) 25% of certain inventories (such result not to exceed $20 million) and requires the Company to maintain unencumbered liquid assets of $10 million. The 2017 amendment also removed a requirement that the Company maintain a financial ratio that compares certaineligible inventory plus (iv) 50% of the ~~Company’s assets~~orderly liquidation value of eligible equipment, in each case subject to certain ~~of its liabilities~~limitations and ~~imposed~~adjustments. Interest shall accrue on outstanding borrowings at a ~~new financial covenant that the Company maintain~~rate equal to Term SOFR (Secured Overnight Financing Rate) plus a minimum amount of certain liquid assets. As of December 31, 2017, the Company’s borrowing base was $26.6 million. As of December 31, 2017, the amount available for borrowing was $26.3 million after consideration of $0.3 million of outstanding letters of credit. The Company’s domestic subsidiaries have guaranteed the obligations of the Company under the Credit Agreement and such subsidiaries have secured their obligations under such guarantees by the pledge of substantially all of the assets of such subsidiaries, except real property assets.margin equal to 3.25% per annum. The Company is required to make monthly interest payments on borrowed funds. The ~~Credit~~ Agreement ~~limits~~is secured by substantially all of the ~~incurrence of additional indebtedness, restricts~~Company's assets, except for certain excluded property. The Agreement requires the Company to maintain a minimum (i) consolidated tangible net worth of $100 million, (ii) liquidity of $5 million, and ~~its subsidiaries’ ability~~(iii) current ratio no less than 2.00 to ~~pay cash dividends and contains other covenants customary~~1.00, in ~~agreements~~each case tested quarterly. The Agreement also requires the Company to maintain a springing minimum interest coverage ratio of ~~this type.~~1.50 to 1.00, tested quarterly whenever there is an outstanding balance on the revolving credit facility. The ~~interest rate for borrowings~~Agreement expires in July 2025. At March 31, 2024 the Company's borrowing availability under the ~~Credit~~ Agreement ~~is based on the Wall Street Journal prime rate, which~~ was ~~4.50% at December~~$11.3 million after consideration of a $0.1 million outstanding letter of credit. At March 31, ~~2017. At December 31, 2017,~~2024, the Company was in compliance with all covenants under the ~~Credit~~ Agreement. The Company had no borrowings outstanding under the Agreement at March 31, 2024 and September 30, 2023.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)~~9. Stock-Based Compensation

~~Accumulated other comprehensive loss consisted of the following (in thousands):~~

During the ~~three~~six months ended ~~December~~March 31, ~~2017,~~2024, the Company issued ~~138,650 shares of~~213,200 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. The weighted average grant date fair value of ~~the restricted stock~~each RSU was ~~$15.54~~$12.23 per ~~share.~~unit. The grant date fair value of ~~these awards~~the RSUs was ~~$2.2~~$2.6 million, which will be charged to expense over the next four years as the restrictions lapse. Compensation expense for ~~restricted stock awards~~the RSUs was determined based on the closing market price of the Company’s stock on the date of grant applied to the total number of ~~shares~~units that are anticipated to fully vest. ~~Recipients~~Each RSU represents a contingent right to receive one share of ~~restricted~~the Company’s common stock ~~awards are entitled to vote such shares and are entitled to dividends, if paid.~~upon vesting.

As of ~~December~~March 31, ~~2017,~~2024, there were 400,020 RSUs outstanding. As of March 31, 2024, the Company had unrecognized compensation expense of ~~$4.8~~$2.9 million relating to ~~restricted stock awards. This unrecognized compensation expense~~RSUs that is expected to be recognized over a weighted average period of ~~3.1~~2.8 years. In addition, the Company had $0.3 million of unrecognized compensation expense related to nonqualified stock option awards which is expected to be recognized over a weighted average period of 1.2 years.

~~As of December 31, 2017, a total of 300,675 shares of restricted stock and 201,800 nonqualified stock options shares were outstanding.~~

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

Three Months Ended

December 31, 2017

December 31, 2016

Net loss

$
(9,480
)

$
(11,705
)
Less: Income allocable to unvested restricted stock

—

—

Loss available to common shareholders

(9,480
)

(11,705
)
Reallocation of participating earnings

—

—

Loss attributable to common shareholders for diluted
   earnings per share

$
(9,480
)

$
(11,705
)
Weighted average number of common share equivalents:

Common shares used in basic loss per share

13,202,384

13,094,809

Common share equivalents outstanding related to
   stock options

—

—

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

13,202,384

13,094,809

Loss per share:

Basic

$
(0.72
)

$
(0.89
)
Diluted

$
(0.72
)

$
(0.89
)

For the calculation of diluted ~~loss~~earnings (loss) per share for the three months ended ~~December~~March 31, ~~2017~~ 2024 and ~~2016, 201,800~~2023, there were 400,020 and ~~206,300 stock options,~~394,924 non-vested RSUs, respectively, ~~were~~ excluded infrom the calculation of weighted average shares outstanding ~~as a result of~~since their impact ~~being~~on diluted earnings (loss) per share were antidilutive. For the calculation of diluted earnings per share for the six months ended March 31, 2024 and 2023, there were 225,569 and 394,924 non-vested RSUs, respectively, excluded from the calculation of weighted average shares outstanding since their impact on diluted earnings per share were antidilutive.

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. 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 firstfour 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. 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, if any, will be recorded as compensation expense when incurred. No eligible revenue has been generated to date.

The Company is involved in various pending ~~or potential~~ legal actions in the ordinary course of its business. Management is unable to predict the ultimate outcome of these actions, because of the inherent uncertainty of ~~litigation. Management is not aware~~such actions. However, management believes that the most probable, ultimate resolution of ~~any~~current pending matters will not have a material ~~pending~~adverse effect on the Company’s consolidated financial position, results of operations or ~~known to be contemplated legal or government proceedings against the Company.~~cash flows.

The Company reports and evaluates financial information for ~~two~~three operating business segments: ~~Seismic~~Oil and ~~Non-Seismic. Seismic product lines include: land~~Gas Markets, Adjacent Markets and ~~marine~~Emerging Markets. The Oil and Gas Markets segment's products include wireless seismic data acquisition systems, ~~permanent land and seabed~~ reservoir ~~monitoring~~characterization products and services, ~~geophones~~ and ~~geophone strings,~~traditional seismic exploration products such as geophones, hydrophones, leader wire, connectors, ~~telemetry~~ cables, marine streamer retrieval and steering devices and various other seismic products. The ~~Non-Seismic product lines~~Adjacent Markets segment's products include imaging equipment, water meter products, remote shut-off valves and ~~industrial products.~~Internet of Things (IoT) platform, as well as and seismic sensors used for vibration monitoring and geotechnical applications such as mine safety applications and earthquake detection. The Emerging Markets segment designs and markets seismic products targeted at the border and perimeter security markets.

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

Three Months Ended

December 31, 2017

December 31, 2016

Revenue:

Seismic

$
8,039

$
9,406

Non-Seismic

6,454

5,736

Corporate

151

143

Total

$
14,644

$
15,285

Income (loss) from operations:

Seismic

$
(7,673
)

$
(9,453
)
Non-Seismic

1,029

1,052

Corporate

(2,961
)

(2,910
)
Total

$
(9,605
)

$
(11,311
)

Consolidated income tax expense for the three and six months ended March 31, 2024 was $11,000 and $111,000, respectively. Consolidated income tax expense for the three and six months ended March 31, 2023 was $19,000 and $49,000, respectively. The ~~Company’s~~primary difference between the Company's effective tax rate and the statutory rate is adjustments to the valuation allowance against deferred tax assets.

As of March 31, 2024, the Company had combined trade accounts receivable from two customers of $4.0 million and $2.2 million, respectively. During the three months ended March 31, 2024, revenue recognized from these two customers was $2.3 million and $3.2 million, respectively. During the six months ended March 31, 2024 revenue recognized from these two customers was $33.7 million and $6.7 million, respectively.

The ongoing COVID-19 pandemic has negatively impacted worldwide economic activity and continues to create challenges in the Company’s markets. The COVID-19 pandemic and the related mitigation measures have disrupted the Company’s supply chain, resulting in longer lead times in materials available from suppliers and extended the shipping time for these materials to reach the Company’s facilities. The occurrence or a resurgence of global or regional health events such as the COVID–19 pandemic, and the related government responses, could result in a material adverse effect on the Company's business, financial condition, results of operations and liquidity. As such, we continue to closely monitor COVID-19 and will continue to reassess our strategy and operational structure on a regular, ongoing basis.

Demand for many of the Company’s products and the profitability of its operations depend primarily on the level of worldwide oil and gas exploration activity. Prevailing oil and gas prices, with an emphasis on crude oil prices, and market expectations regarding potential changes in such prices significantly affect the level of worldwide oil and gas exploration activity. During periods of improved energy commodity prices, the capital spending budgets of oil and natural gas operators tend to expand, which results in increased demand for our customers services leading to increased demand in the Company’s products. Conversely, in periods when these energy commodity prices deteriorate, capital spending budgets of oil and natural gas operators tend to contract causing demand for the ~~three~~Company’s products to weaken. Historically, the markets for oil and gas have been volatile and are subject to wide fluctuations in response to changes in the supply of and demand for oil and gas, market uncertainty and a variety of additional factors that are beyond its control. These factors include the level of consumer demand, regional and international economic conditions, weather conditions, domestic and foreign governmental regulations (including those related to climate change), price and availability of alternative fuels, political conditions, the war between Russia and Ukraine, instability and hostilities in the Middle East and other significant oil-producing regions, increases and decreases in the supply of oil and gas, the effect of worldwide energy conservation measures and the ability of the Organization of Petroleum Exporting Countries ("OPEC') to set and maintain production levels and prices of foreign imports.

Crude oil prices have stabilized over the past 18 months, ~~ended December 31, 2017 was impacted by~~which may result in higher cash flows for exploration and production companies. Any material changes in oil and gas prices or other market trends, like slowing growth of the ~~Tax Cuts~~global economy, could adversely impact seismic exploration activity and ~~Jobs Act (“~~would likely affect the ~~Act”~~demand for the Company's products and could materially and adversely affect its results of operations and liquidity.

Generally, imbalances in the supply and demand for oil and gas will affect oil and gas prices and, in such circumstances, demand for the Company’s oil and gas products may be adversely affected when world supplies exceed demand.

A portion of the Company's oil and gas product manufacturing is conducted through its wholly-owned subsidiary Geospace Technologies Eurasia LLC ("GTE"), which was enacted into law on December 22, 2017. Income tax effects resulting from changes in tax laws are accounted for by the Company in accordance with the authoritative guidance, which requires that these tax effects be recognizedis based in the ~~period~~Russian Federation. In February 2022, the Russian Federation launched a full-scale military invasion of Ukraine, and Russia and Ukraine continue to engage in ~~which~~active and armed conflict. Although the ~~law~~length and impact of the ongoing military conflict is ~~enacted~~highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions in addition to any direct impact on the ~~effects are recorded as a component of provision for income taxes from continuing operations.~~Company's operations in Russia. As a result of the invasion, the governments of several western nations, including the U.S., Canada, the United Kingdom and the European Union, implemented new and/or expanded economic sanctions and export restrictions against Russia, Russian-backed separatist regions in Ukraine, certain banks, companies, government officials, and other individuals in Russia and Belarus. The implementation of these sanctions and exports restrictions, in combination with the withdrawal of numerous private companies from the Russian market, has had, and is likely to continue to have, a negative impact on the Company's business in the region. During fiscal year 2023the Company ~~made~~imported $3.8 million of products from GTE for resale elsewhere in the world and since then has imported $1.7 million of products during the firstsix months of fiscal year 2024. The rapid changes in rules and implementation of new rules on imports and exports of goods involving Russia has also led to material delays in getting goods to or from Russia as port authorities struggle to keep up with the changing environment. If imports of these products from the Russian Federation are restricted by government regulation, the Company may be forced to find other sources for the manufacturing of these products at potentially higher costs. Likewise, restrictions on the Company's ability to send products to GTE, may force our subsidiary to have to find other sources for the manufacturing of these products at potentially higher costs. However, the Company's exports to GTE have historically been limited. Boycotts, protests, unfavorable regulations, additional governmental sanctions and other actions in the region could also adversely affect the Company's ability to operate profitably. Delays in obtaining governmental approvals can affect the Company's ability to timely deliver its products pursuant to contractual obligations, which could result in the Company being liable to its ~~provision~~customers for ~~income tax resulting from~~damages. The risk of doing business in the ~~enactment~~Russian Federation and other economically or politically volatile areas could adversely affect the Company's operations and earnings. It is possible that increasing sanctions, export controls, restrictions on access to financial institutions, supply and transportation challenges, or other circumstances or considerations could necessitate a reduction, or even discontinuation, of ~~the Act for the three months ended December 31, 2017.~~operations by GTE or other business in Russia.

The ~~Act includes significant changes~~Company is actively monitoring the situation in Ukraine and Russia and assessing its impact on its business, including GTE. The net carrying value of GTE on the Company's consolidated balance sheet at March 31, 2024 was $5.5 million, including cash of $2.0 million. In response to sanctions imposed by the U.S. and others on Russia, the Russian government has imposed restrictions on companies' abilities to repatriate or otherwise remit cash from their Russian-based operations to locations outside of Russia. As a result, this cash can be used in our Russian operations, but we may be unable to transfer it out of Russia without incurring substantial costs, if at all. In addition to the ~~U.S. corporate income tax system which reduces~~products the ~~U.S. federal corporate tax rate~~Company imported from 35.0% to 21.0% as of January 1, 2018; shifts to a modified territorial tax regime which requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred; and creates new taxes on certain foreign-sourced earnings. The decreaseGTE, the subsidiary generated $1.8 million in ~~the U.S. federal corporate tax rate~~revenue from ~~35.0% to 21.0% results~~domestic sales in ~~a blended statutory tax rate of 24.5% for the Company’s~~ fiscal year ~~ending September 30, 2018. The new taxes for certain foreign-sourced earnings under~~2023 and has generated $1.5 million from domestic sales during the ~~Act are effective for the Company after the fiscal year ending September 30, 2018.~~

The Company is currently in the early stages of evaluating the impact of the Act on its consolidated financial statements. Based on the Company’s initial assessments to date, it expects the one-time transition tax on certain foreign earnings and profits to have a minimal cash impact since it anticipates that it will be able to utilize existing net operating loss carryforwards to substantially offset any taxes payable on foreign earnings and profits. Additionally, the Company has adjusted its U.S. gross deferred tax assets and

liabilities to the new 21% statutory tax rate; however, it also recorded a corresponding adjustment to a valuation allowance which resulted in no net impact to deferred tax assets or provision for income taxes. Except for the adjustments referred to above, the Company has not recorded any income tax effects of the Act in its consolidated financial statements (including any provisional amounts) because it does not yet have the necessary information available, prepared or analyzed in reasonable detail to complete the applicable accounting.

~~The Company’s effective tax rates for the three~~firstsix months ended December 31, 2017 and 2016 were (0.1)% and (9.6)% , respectively. The United States statutory rate for the three months ended December 31, 2017 and 2016 was 24.5% (blended) and 35%, respectively. Compared to the United States statutory rate, the lower effective tax rates resulted primarily from the provision of a valuation allowance against the Company’s U.S. and Canadian deferred tax assets due to the uncertainty surrounding the Company’s ability to utilize such deferred tax assets in the future to offset taxable income.

In December 2017, the Company initiated a program to reduce operating costs in light of expected and continuing low levels of seismic product demand. The program is expected to produce approximately $6 million of annualized cash savings. The majority of the cost reductions were realized through a reduction of over 60 employees from the Company’s Houston area workforce. In connection with the workforce reductions, the Company incurred $0.7 million of termination costs in its first quarter of fiscal year ~~2018.~~2024. The ~~termination costs were recorded~~Company has no way to ~~both cost~~predict the duration, progress or outcome of ~~revenue~~the military conflict in Ukraine. The extent and ~~operating expenses in~~duration of the ~~consolidated statement~~military action, sanctions, and resulting market disruptions could be significant and could potentially have substantial impact on the global economy and the Company's business for an unknown period of ~~operations. No further termination costs are expected and there are no outstanding liabilities related to this program as of December 31, 2017.~~

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

The following is management’s discussion and analysis of the major elements of our consolidated financial statements. You should read this discussion and analysis together with our consolidated financial statements, including the accompanying notes, and other detailed information appearing elsewhere in this Quarterly Report on Form 10-Q and our ~~annual report~~Annual Report on Form 10-K for the year ended September 30, ~~2017.~~2023.

This Quarterly Report on Form 10-Q and the documents incorporated by reference herein ~~if any,~~ contain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “could”, “intend”, “expect”, “plan”, “budget”, “forecast”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, “evaluating” or similar words. 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 and the recovery from the impact of the coronavirus (or COVID-19) pandemic, 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 ~~therefore,~~therefor, and our strategy for growth, product development, market position, financial results and the provision of accounting reserves. These forward-looking statements reflect our ~~best~~current judgment about future events and trends based on the information currently available to us. However, there will likely be events in the future that we are not able to predict or control. The factors listed under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017,~~2023, as well as other cautionary language in such Annual Report and this Quarterly Report on Form 10-Q, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Such examples include, but are not limited to, the failure of the Quantum and OptoSeis® or Aquana technology transactions to yield positive operating results, decreases in commodity price levels, the continued adverse impact of COVID-19 which could reduce demand for our products, the failure of our products to achieve market acceptance ~~despite~~(despite substantial investment by ~~us,~~us), our sensitivity to short term backlog, delayed or cancelled customer orders, product obsolescence resulting from poor industry conditions or new technologies, bad debt write-offs associated with customer accounts, ~~and any negative impact from~~inability to collect on promissory notes, lack of further orders for our ~~restatement~~OBX rental equipment, failure of our ~~financial statements regarding current assets.~~Quantum products to be adopted by the border and security perimeter market or a decrease in such market due to governmental changes, and infringement or failure to protect intellectual property. The occurrence of the events described in these risk factors and elsewhere in this Quarterly Report on Form 10-Q could have a material adverse effect on our business, results of operations and financial position, and actual events and results of operations may vary materially from our current expectations. We assume no obligation to revise or update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of new information, future developments or otherwise.

~~Geospace Technologies Corporation reincorporated as a Texas corporation on April 16, 2015. We originally incorporated as a Delaware corporation on September 27, 1994.~~

Unless otherwise specified, the discussion in this Quarterly Report on Form 10-Q refers to Geospace Technologies Corporation and its subsidiaries. We principally design and manufacture seismic instruments and ~~equipment used in~~equipment. These seismic products are marketed to the oil and gas industry ~~to acquire seismic data in order~~and used to locate, characterize and monitor hydrocarbon producing reservoirs. We also market our seismic products to other industries for vibration monitoring, border and perimeter security and various geotechnical applications. We design and manufacture other products of a non-seismic nature, including water meter products, ~~including industrial products, offshore cables~~imaging equipment, remote shutoff water valves and ~~imaging equipment.~~Internet of Things ("IoT") platform and provide contract manufacturing services. We report and categorize our customers and products into ~~two~~three different segments: ~~Seismic~~Oil and ~~Non-Seismic.~~Gas Markets, Adjacent Markets and Emerging Markets. In recent years, the revenue contribution from our Adjacent Markets segment has grown to represent nearly half of our total revenue, which is reflective of our diversification strategy.

~~We have engaged in the seismic instrument and equipment business since 1980 and market our products primarily to the oil and gas industry.~~

Demand for our seismic products targeted at customers in our Oil and Gas Markets segment has been, and will likely continue to be, vulnerable to downturns in the economy and the oil and gas industry in general. For more information, please refer to the risks discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017.~~2023.

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). Our SEC filings are available to the public over the ~~Internet~~internet at the SEC’s website at ~~http://~~www.sec.gov. You may also read and copy any document we file at the SEC’s public reference room at 100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on their public reference room. Our SEC filings are also available to the public on our website at ~~http://~~www.geospace.com. From time to time, we may post investor presentations on our website under the “Investor Relations” tab. Please note that information contained on our website, whether currently posted or posted in the future, is not a part of this Quarterly Report on Form 10-Q or the documents incorporated by reference in this Quarterly Report on Form 10-Q.

Our ~~seismic~~Oil and Gas Markets business segment has historically accounted for the majority of our revenue. 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. ~~Our~~This segment’s products include wireless seismic ~~product lines currently consist of land and marine nodal~~ data acquisition systems, ~~permanent land and seabed~~ reservoir ~~monitoring~~characterization products and services, ~~geophones~~ and ~~geophone strings,~~traditional seismic exploration products such as geophones, hydrophones, leader wire, connectors, ~~telemetry~~ cables, marine streamer retrieval and steering devices and various other ~~products. Our~~ seismic ~~products are compatible with most major competitive seismic data acquisition systems currently in use.~~products. We believe that our ~~seismic~~Oil and Gas Markets products are among the most technologically advanced instruments and equipment available for seismic data acquisition.

An energy source and a data recording system are combined to acquire seismic data. We provide many of the components of seismic data recording systems, including geophones, hydrophones, multi-component sensors, leader wire, geophone strings, connectors, seismic telemetry cables and other seismic related products. On land, our customers use geophones, leader wire, cables and connectors to receive and measure seismic reflections resulting from an energy source into data recording units, which store the seismic information for subsequent processing and analysis. In the marine environment, large ocean-going vessels tow long seismic cables known as “streamers” containing hydrophones ~~which~~that are used to detect pressure changes. Hydrophones transmit electrical impulses back to the vessel’s data recording unit where the seismic data is stored for subsequent processing and analysis. Our marine seismic products also help steer streamers while being towed and help recover streamers if they become disconnected from the vessel.

Our seismic sensor, cable and connector products are compatible with most major competitive seismic data acquisition systems currently in use. Revenue from these products results primarily from seismic contractors purchasing our products as components of new seismic data acquisition systems or to repair and replace components of seismic data acquisition systems already in use.

Our products used in marine seismic data acquisition include our seismic streamer retrieval devices (“SRDs”). Occasionally, streamer cables are severed and become disconnected from the vessel as a result of obstacles, inclement weather, vessel traffic or human error. Our SRDs, which are attached to the streamer cables, contain air bags which are designed to inflate automatically at a given water depth, bringing the severed streamer cables to the surface. These SRDs save the seismic contractors significant time and money compared to the alternative of losing the streamer cable. We also produce seismic streamer steering devices, or “birds,” which are fin-like devices that attach to the streamer cable. These birds help maintain the streamer cable at a certain desired depth as it is being towed through the water.

We have developed multiple versions of a land-based wireless (or nodal) seismic data acquisition ~~system called the GSX.~~system. Rather than utilizing interconnecting cables as required by most traditional land data acquisition systems, each ~~GSX station operates~~of our wireless stations operate as an independent data collection system, allowing ~~our GSX stations to be deployed in~~for virtually unlimited channel configurations. As a result, our ~~GSX system requires~~wireless systems require less maintenance, which we believe allows our customers to operate more effectively and efficiently because of its reduced environmental impact, lower weight and ease of operation. ~~Our GSX system~~Each wireless station is ~~designed into configurations ranging from one to four channels per station. Since its introduction~~available in 2008 and through December 31, 2017, we have sold 417,000 GSX channels and we have 64,000 GSX channels in our rental fleet. We expect to make additional investments in our GSX rental fleet in fiscal year 2018 to replenish a ~~sale of used GSX rental equipment in the fourth quarter of fiscal year 2017.~~single-channel or three-channel configuration.

We have also developed a marine-based wireless seismic data acquisition system called the ~~OBX.~~OBX, and recently released Mariner™. Similar to our ~~GSX~~ land-based wireless ~~system, the~~systems, these marine ~~OBX system can~~wireless systems may be deployed in virtually unlimited channel configurations and ~~does~~do not require interconnecting cables between each station. ~~Our deep water~~We have two versions of ~~the~~ OBX ~~system~~nodal stations: a shallow water version that can be used in depths up to 750 meters and a deepwater version that can be deployed in depths of up to 3,450 meters. Through ~~December~~March 31, ~~2017,~~2024, we have sold ~~approximately 600~~14,000 OBX stations and we currently have ~~6,700~~24,000 OBX stations in our rental fleet. The Mariner™ is a continuous, cable-free, four channel autonomous, shallow water ocean bottom recorder. Mariner™ is the next generation node designed for extended duration seabed ocean bottom seismic data acquisition. The slim profile nodes, which are part of our shallow water stations, are ideally deployed as deep as 750 meters. The device continuously records for up to 70 days and offers more rapid recharging times. Its slim profile creates space savings on seismic survey vessels, allowing contractors to fit up to 25% more nodes into a download/charge container. Through March 31, 2024, we have sold 7,600 Mariner™ nodes.

Seismic surveys repeated over selected time intervals show dynamic changes within ~~the~~a producing oil and gas reservoir, and operators can ~~be used~~use these surveys to monitor the effects of oil and gas development and production. ~~In this regard, we have developed permanently installed high-definition~~This type of reservoir monitoring systems for land and ocean-bottom applications in producing oil and gas fields. We also produce a retrievable version of our ocean-bottom system for use on fields where permanently installed systems are not appropriate or economical. Utilizing these tools, producers can enhance the recovery of oil and gas deposits over the life of a reservoir.

Our high-definition reservoir monitoring products include the HDSeis™ product line and a suite of borehole and reservoir monitoring products and services. Our HDSeis™ system is a high-definition seismic data acquisition system with flexible architecture that allows it to be configured as a borehole seismic system or as a subsurface system for both land and marine reservoir-monitoring projects. The scalable architecture of the HDSeis™ system enables custom designed system configuration for applications ranging from low-channel engineering and environmental-scale surveys requiring a minimum number of recording channels to high-channel surveys required to efficiently conduct permanent reservoir monitoring (“PRM”). Modular architecture allows virtually unlimited channel expansion. In addition, multi-system synchronization features make the HDSeis™ system well suited for multi-well or multi-site acquisition, simultaneous surface and downhole acquisition and continuous reservoir monitoring projects.

~~Reservoir~~ monitoring requires special purpose or custom designed systems in which portability becomes less critical and functional reliability assumes greater importance. This reliability factor helps assure successful operations in inaccessible locations over a considerable period of time. Additionally, reservoirs located in deep water or harsh environments require special instrumentation and new techniques to maximize recovery. Reservoir monitoring also requires high-bandwidth, high-resolution seismic data for engineering project planning and reservoir management. We believe our HDSeis™ System and tools, designed for cost-effective deployment and lifetime performance, will make borehole and seabed seismic acquisition a cost-effective and reliable process for the challenges of reservoir monitoring. Our multi-component seismic product developments include an omni-directional geophone for use inUtilizing these reservoir monitoring tools, producers can enhance the recovery of oil and gas deposits over the life of a ~~compact marine three-component or four-component gimbaled sensor and special-purpose connectors, connector arrays and cases.~~reservoir.

We have ~~not delivered nor did~~developed permanently installed high-definition reservoir monitoring systems for land and ocean-bottom applications in producing oil and gas fields. Our electrical reservoir monitoring systems are currently installed on numerous offshore reservoirs in the North Sea and elsewhere. Through our acquisition of the OptoSeis® fiber optic sensing technology, we ~~receive orders~~now offer both electrical and fiber optic reservoir monitoring systems. These high-definition seismic data acquisition systems have a flexible architecture allowing them to be configured as a subsurface system for ~~any~~both land and marine reservoir-monitoring projects. The scalable architecture of these systems enables custom designed configuration for applications ranging from low-channel engineering and environmental-scale surveys requiring a minimum number of recording channels to high-channel surveys required to efficiently conduct permanent reservoir monitoring ~~systems during fiscal year 2017 or during~~(“PRM”). The modular architecture of these products allows virtually unlimited channel expansion for these systems.

In the ~~first three months~~spring of ~~fiscal year 2018.~~2023, we released a derivative of the OptoSeis® technology for high temperature downhole applications. The product known as Insight by OptoSeis offers a passive, all-optical downhole sensor network - no electronics downhole - resulting in years long operational lifetime at 150 °C.

In addition, we produce seismic borehole acquisition systems ~~which~~that employ a fiber optic augmented wireline capable of very high data transmission rates. These systems are used for several reservoir monitoring applications, including an application pioneered by us allowing operators and service companies to monitor and measure the results of hydraulic fracturing operations.

We believe our reservoir characterization products make seismic acquisition a cost-effective and reliable process for reservoir monitoring. Our multi-component seismic product developments also include an omni-directional geophone for use in reservoir monitoring, a compact marine three-component or four-component gimbaled sensor and special-purpose connectors, connector arrays and cases.

We have maintained active discussions with potential clients for future PRM systems. During 2022, in coordination with a potential client, we concluded a successful demonstration of our OptoSeis® fiber optic PRM technology in real-world field conditions. This demonstration was a pre-requisite step toward future contract consideration. We have also held discussions and received requests for information from other major oil and gas producers regarding PRM systems. We have not received any orders for a large-scale seabed PRM system since November 2012.

Our ~~non-seismic~~Adjacent Markets businesses leverage upon ~~our~~ existing manufacturing facilities and engineering ~~capabilities. We have found that many~~capabilities utilized by our Oil and Gas Markets businesses. Many of ~~our~~the seismic products in our Oil and Gas Markets segment, with little or no modification, have direct application to ~~industries beyond those involved~~other industries.

Our business diversification strategy has centered largely on translating expertise in ~~oil~~ruggedized engineering and ~~gas exploration~~manufacturing into expanded customer markets. To bolster the solid market share we have established in the water utility market for water meter cables, in fiscal year 2021, we acquired the smart water IoT company, Aquana.

Our industrial products include water meter products, remote shut-off water valves and ~~development. For example,~~IoT Platform, contract manufacturing services and seismic sensors used for vibration monitoring.

Our water meter products support the global smart meter connectivity water utility market. Our products provide our customers ~~utilize~~with highly reliable automated meter-reading and automated meter infrastructure with our ~~borehole tools~~robust water-proof connectors. Our field splice kits allow for accelerated repairs once identified.

Our remote disconnect values and water IoT platform allows customers that manage multi-family and commercial properties to monitor ~~subsurface carbon dioxide injections~~their properties for leak and burst events, with real-time notifications, complimented with our remote-shut off to stop water damage. These products also allow water utilities to control and monitor water use remotely, discontinue or limit service without placing its employees in potential harm or danger.

Our robust manufacturing capabilities have allowed us to provide specialized contract manufacturing services for printed circuit board manufacturing, cabling and harnesses, machining, injection molding and electronic system assembly.

Our seismic sensors provide unique high definition, low frequency sensing that allows for vibration monitoring in industrial machinery, mine safety ~~applications.~~and earthquake detection.

Our ~~non-seismic~~imaging products include electronic pre-press products that employ direct thermal imaging, direct-to-screen printing systems, and digital inkjet printing technologies targeted at the commercial graphics, industrial graphics, textile and flexographic printing industries. Our other non-seismic products consist of (i) sensors and tools for vibration monitoring, mine safety application and earthquake detection, (ii) cables for power and communication for the offshore oil and gas and offshore construction industries, (iii) water meter cables and connectors, and (iv) other specialty industrial cable and connector products.

Our Emerging Markets business segment consists entirely of our Quantum business. Quantum’s product line includes a proprietary detection system called SADAR®, which detects, locates and tracks items of interest in real-time. Using the SADAR® technology, Quantum designs and sells products used for border and perimeter security surveillance, cross-border tunneling detection and other products targeted at movement monitoring, intrusion detection and situational awareness. SADAR's technology also provides passive seismic real-time monitoring in emerging energy applications such as Carbon Capture and Storage (CCS) and geothermal energy. Quantum's customers include various agencies of the U.S. government including the Department of Defense, Department of Energy, Department of Homeland Security and other agencies as well as energy companies needing real-time monitoring of seismic data.

We report and evaluate financial information for ~~two~~three segments: ~~Seismic~~Oil and ~~Non-Seismic.~~Gas Markets, Adjacent Markets and Emerging Markets. Summary financial data by business segment follows (in thousands):

	Three Months Ended						Three Months Ended						Six Months Ended
	December 31, 2017			December 31, 2016			March 31, 2024			March 31, 2023			March 31, 2024			March 31, 2023
Seismic
Oil and Gas Markets
Traditional exploration product revenue	$	3,790		$	2,570		$	3,548		$	3,391		$	5,311		$	6,146
Wireless exploration product revenue		3,631			6,323			7,240			14,896			45,313			32,134
Reservoir product revenue		618			513			59			132			132			287
Total revenue		8,039			9,406			10,847			18,419			50,756			38,567
Operating loss		(7,673	)		(9,453	)
Non-Seismic
Operating income (loss)								(3,135	)		4,176			11,428			6,582
Adjacent Markets
Industrial product revenue		3,676			3,079			9,024			9,642			15,467			17,572
Imaging product revenue		2,778			2,657			3,211			3,066			6,583			5,958
Total revenue		6,454			5,736			12,235			12,708			22,050			23,530
Operating income		1,029			1,052			2,796			3,055			4,830			4,802
Emerging Markets
Revenue								1,113			191			1,347			284
Operating loss								(651	)		(1,007	)		(1,276	)		(2,220	)
Corporate
Revenue		151			143			75			52			149			98
Operating loss		(2,961	)		(2,910	)		(3,516	)		(1,847	)		(6,651	)		(5,066	)
Consolidated Totals
Revenue		14,644			15,285			24,270			31,370			74,302			62,479
Operating loss		(9,605	)		(11,311	)
Operating income (loss)								(4,506	)		4,377			8,331			4,098

Although in ~~calendar year 2014, we began~~an already depressed oil and gas industry, demand further decreased in February 2020 because of the oversupply of crude oil due to ~~experience~~failed OPEC negotiations that led to a ~~softening~~dramatic drop in crude oil prices when combined with the impact of the COVID-19 pandemic. These declines in the demand for ~~our seismic exploration products, particularly in North America, as capital budgets for~~ oil and gas producers were trending away from exploration-focused activities toward production and exploitation activities. During this period oil production in North America’s unconventional shale reservoirs increased, as did oil production from other non-OPEC countries, resulting in an oversupply of crude oil in the world market. Market prices for a barrel of crude oil declined from over $100 in July 2014 to approximately $27 in January 2016, and have ~~recovered somewhat to approximately $64 today. With this decline in oil and natural gas prices,~~caused oil and gas exploration and production companies ~~experienced~~to experience a significant reduction in cash flows, which have resulted in ~~sharp~~ reductions in their capital spending budgets for oil and gas exploration-focused activities, including seismic data acquisition activities. Crude oil prices have stabilized over the past 18 months; however, a lag in time typically occurs between higher oil prices and greater demand for our Oil and Gas Markets segment products. We believe this lag is the result of exploration and production (“E&P”) companies allocating their cash flow towards shareholder reward initiatives, such as stock buy-back programs and dividend payments, or in debt reduction. We believe this lag is a short-term trend that will continue until E&P companies decide to reinvest capital into exploration activities. As this lag persists, we expect ~~revenue from~~the reduced levels of demand for our ~~seismic products,~~Oil and ~~in particular~~Gas Markets segment products. We also expect our land-based traditional and wireless products ~~to remain low until crude oil prices stabilize at higher levels and exploration-focused industry conditions improve. We expect these challenging industry conditions to~~will continue to ~~negatively impact the demand for our seismic products throughout fiscal year 2018.~~

In September 2017, we were notified by a previous PRM system customer that it was in the process of requesting quotes for two new PRM systems which must utilize fiber optic sensor technology. Since our PRM designs utilize electrical sensor technology, we did not participate with a quotation for the design and manufacture of these PRM systems. We believe that our PRM system designs, which utilize electrical sensor technology, provide the best long-term functionality and performance of any PRM system, and we continue to aggressively market our PRM systems to major oil and gas companies. However, the occurrence of this notice, combined with the absence of any new PRM orders of any technology type since November 2012, have caused us to provide additional obsolescence reserves for a substantial portion of our PRM inventories, and we concluded a triggering event occurred and performed an impairment assessment on certain heavy equipment used for the manufacturing of PRM systems, which resulted in an impairment. Specific to our PRM inventories and manufacturing equipment, we recorded obsolescence reserves of $5.1 million and impairment expense of $5.3 million, respectively, in the fourth quarter of our fiscal year ended September 30, 2017.

~~In December 2017, we initiated a program to reduce operating costs in light of expected and continuing~~experience low levels of ~~seismic~~ product ~~demand. The program is expected~~demand until our customers consume their excess levels of underutilized equipment. As discussed below, we had a $30 million wireless product sale to ~~produce approximately $6 million of annualized cash savings. The majority of~~a customer in the cost reductions were realized through a reduction of over 60 employees from our Houston area workforce. In connection with the workforce reductions, we incurred $0.7 million of termination costs in our first quarter of fiscal year 2018. The termination costs were recorded to both cost of revenue and operating expenses in the consolidated statement of operations. No further termination costs are expected and there are no outstanding liabilities related to2024. However, we do not currently anticipate another product sale this ~~program as of December 31, 2017.~~

~~Three months ended December 31, 2017 compared to the three months ended December 31, 2016~~

~~Consolidated revenue~~large for the ~~three months ended December 31, 2017, decreased $0.6 million, or 4.2%, from the corresponding period~~remainder of ~~the prior~~ fiscal ~~year. The decrease in revenue for the three months ended December 31, 2017 was primarily due to a decrease in wireless exploration rental revenue in our seismic business segment.~~ year 2024.

Consolidated gross profit (loss) for the three months ended December 31, 2017 was a loss of ($1.0) million, compared to a loss of ($3.3) million for the corresponding period of prior fiscal year. The improvement in gross profit (loss) for the three months ended December 31, 2017 was primarily the result of a decrease in inventory obsolescence and rental equipment depreciation expenses. These improvements were partially offset by a decrease in wireless exploration rental revenue. Until seismic product demand increases to historical norms, we expect our consolidated gross margins to remain low.

In light of current market conditions, the inventory balances in our ~~seismic product inventories~~Oil and Gas Markets business segment at ~~December~~March 31, ~~2017 far~~2024 continued to exceed levels ~~considered~~we consider appropriate for the current level of product demand. ~~While we~~We are continuing to work aggressively ~~working~~ to reduce these legacy inventory ~~balances,~~balances; however, we ~~have~~are also ~~added~~adding new inventories for ~~recent~~new wireless product developments and for other product ~~demand.~~demand in our Adjacent Markets segment. During periods of excessive inventory levels, our policy has been, and will continue to be, to record obsolescence expense ~~in our consolidated income statement~~ as we experience reduced ~~levels of inventory turnover~~product demand and as our inventories continue to age. ~~If current~~Although the Oil and Gas Markets segment is seeing a recovery after experiencing difficult market conditions, ~~continue,~~ we ~~expect to record~~have been recording additional expenses for inventory obsolescence ~~expense~~and will continue to do so in ~~fiscal year 2018 and beyond~~the future until ~~seismic~~ product demand ~~and~~and/or resulting ~~seismic~~ inventory turnover ~~returns~~return to acceptable levels.

A portion of our oil and gas product manufacturing is conducted by Geospace Technologies Eurasia LLC, our wholly-owned subsidiary based in the Russian Federation. Consequently, our oil and gas business could be directly affected by the current war between Russia and Ukraine. See Note 14 in this Quarterly Report on Form 10-Q for more information.

The ongoing COVID-19 pandemic has negatively impacted worldwide economic activity and continues to create challenges in our markets. The COVID-19 pandemic and the related mitigation measures have disrupted our supply chain, resulting in longer lead times in materials available from suppliers and extended shipping time for these materials to reach our facilities. The occurrence or resurgence of global or regional health events such as the COVID-19 pandemic, and the related government responses, could result in a material adverse effect on our business, financial condition, results of operations and liquidity. As such, we will continue to closely monitor COVID-19 and will continue to reassess our strategy and operational structure on a regular, ongoing basis.

Three and six months ended March 31, 2024 compared to the three and six months ended March 31, 2023

Consolidated ~~operating expenses~~revenue for the three months ended ~~December~~March 31, ~~2017 were $8.6~~2024 was $24.3 million, ~~an increase~~a decrease of ~~$0.7~~$7.1 million, or 8.2%, from the corresponding period of the prior fiscal year. This increase was primarily due to a $0.8 million increase in bad debt expense. Excluding the change in bad debt, consolidated operating expense declined by $0.1 million due to a reduction is stock-based compensation expenses and partially offset by termination costs.

Consolidated other income for the three months ended December 31, 2017 was $131,000, an increase of $91,000 from the corresponding period of the prior fiscal year. The increase for the three months ended December 31, 2017 was primarily due to an increase in interest income resulting from increased financing receivables.

Consolidated income tax expense for the three months ended December 31, 2017 was $6,000 compared to $0.4 million for the corresponding period of the prior fiscal year. Our effective tax rates for the three months ended December 31, 2017 and 2016 were (0.1)% and (9.6)%, respectively. The United States statutory tax rate for the three months ended December 31, 2017 and 2016 were 24.5% (blended) and 35%, respectively. Compared to the United States statutory rate, the lower effective tax rates for the three months ended December 31, 2017 and 2016 primarily resulted from our inability to recognize any tax benefits for the tax losses we incurred in the U.S. and Canada due to the uncertainty surrounding our ability to utilize these losses in the future to offset taxable income.

Revenue from our seismic products for the three months ended December 31, 2017 decreased $1.4 million, or 14.5%, from the corresponding period of the prior fiscal year. The components of this decrease include the following:

~~Despite decreased revenues, our operating loss associated with our seismic products~~income for the three months ended ~~December~~March 31, ~~2017 decreased $1.8~~2024 was $0.2 million, ~~or 18.9%,~~compared to $0.3 million from the corresponding period of the prior year. Consolidated other income for the six months ended March 31, 2024 was $0.1 million, compared to $0.5 million from the corresponding period of the prior year. The decrease ~~in operating loss~~for both periods was

~~primarily~~ principally due to ~~a decrease in inventory obsolescence and rental equipment depreciation expenses. These decreases were~~net foreign currency transaction losses, partially offset by ~~lower wireless exploration rental revenue.~~an increase in interest income attributable to short-term investments.

Revenue from our ~~non-seismic~~Oil and Gas Markets products for the three months ended ~~December~~March 31, ~~2017 increased $0.7~~2024 decreased $7.6 million, or ~~12.5%~~41.1%, from the corresponding period of the prior fiscal year. Revenue from our Oil and Gas Markets products for the six months ended March 31, 2024 increased $12.2 million, or 31.6%, from the corresponding period of the prior fiscal year. The components of these changes were as follows:

Operating income (loss) associated with our Oil and Gas Markets products for the three months ended March 31, 2024 was $(3.0) million, a decrease of $7.3 million from the corresponding period of the prior fiscal year. The decrease was primarily due to lower wireless rental revenue and related gross profits due to a decrease in the utilization of our OBX rental fleet. Operating income associated with our Oil and Gas Markets products for the six months ended March 31, 2024 was $11.4 million, an increase of $4.8 million from the corresponding period of the prior fiscal year. The increase in operating income was related to gross profits related to the Mariner™ sale. The income was partially offset by lower wireless rental revenue and related gross profits due to a decrease in the utilization of our OBX rental fleet.

Revenue from our Adjacent Markets products for the three months ended March 31, 2024 decreased $0.5 million, or 3.7%, from the corresponding period of the prior fiscal year. Revenue from our Adjacent Markets products for the six months ended March 31, 2024 decreased $1.5 million, or 6.3%, from the corresponding period of the prior fiscal year. The components of this ~~increase included the following:~~decrease was as follows:

~~Our operating income associated with sales of our non-seismic products for the~~ three months ended ~~December~~March 31, ~~2017 declined $23,000~~2024 compared to $0.2 million from the corresponding period of the prior fiscal year. Revenue from our Emerging Markets products was $1.3 million for the six months ended March 31, 2024 compared to $0.3 million from the corresponding period of the prior fiscal year. The ~~decline resulted from reduced gross profit margins~~increase in revenue for both periods was primarily due to ~~higher manufacturing~~revenue recognized on a $1.5 million government contract. The unrecognized revenue on this contract is approximately $0.3 million which will be recognized upon the expected completion of this contract in the fourth quarter of fiscal year 2024.

Operating loss from our Emerging Markets products for the three months ended March 31, 2024 was $0.7 million, a decrease of $0.4 million, or 35.4%, from the corresponding period in the prior fiscal year. Operating loss for the six months ended March 31, 2024 was $1.3 million, a decrease of $0.9 million, or 42.5%, from the corresponding period of the prior fiscal year. The decrease in operating loss for both periods was primarily due to an increase in revenue and related gross profits. The decrease for the six months ended March 31, 2024 was also attributable to lower personnel costs ~~and increased operating expenses resulting from increased sales and marketing expenses.~~attributable to our workforce reduction in the first quarter of fiscal year 2023.

At ~~December~~March 31, ~~2017,~~2024, we had ~~approximately $13.9~~$51.2 million in cash and cash equivalents and ~~$32.1 million in~~ short-term investments. For the ~~three~~six months ended ~~December~~March 31, ~~2017,~~2024, we used ~~$5.8~~$6.3 million of cash infrom operating activities. ~~Our net loss~~These uses of ~~$9.1~~cash included (i) the removal of $20.6 million ~~was~~gross profit from the sale of rental equipment is included in investing activities, a (ii) $5.6 million increase in inventories for the strategic purchase of long lead components needed for use in wireless products, valves and contract manufacturing and (iii) $3.2 million decrease in other liabilities due to the return of customer deposits and lower accrued employee compensation costs, partially offset by an increase in our product warranty accrual and (iv) $0.7 million decrease in accounts payable due to timing of payments to our suppliers. These uses of cash were partially offset by (i) our net income of $8.4 million and net non-cash charges of ~~$5.9~~$8.5 million resulting from deferred income taxes, depreciation, amortization, accretion, inventory obsolescence, stock-based compensation and ~~bad debts, (ii)~~provision for credit losses. Other sources of cash included a ~~$2.6~~(i) $6.0 million decrease in trade accounts and notes receivable ~~resulting from~~primarily due to the timing of collections from customers and ~~(iii) a $0.7~~(ii) $0.9 million ~~increase~~decrease in accounts payable primarily due to an increase in inventories and the timing of payments to suppliers. Other uses of cash in our operations included (i) a $2.9 increase in inventories for the replenishment of rental equipment sold to customers and the purchase of raw materials for new product production and (ii) the removal of a $2.6 million gross profit from the sale of used rental equipment since such gross profit is reflected in the proceeds from the sale of used rental equipment under investing activities.other assets.

For the ~~three~~six months ended ~~December~~March 31, ~~2017,~~2024, we generated cash of ~~$4.8~~$8.1 million ~~from~~in investing activities. Sources of cash ~~included (i) $4.0 million~~primarily consisted of ~~net proceeds from the sale of short-term investments and (ii) $1.0~~$30.5 million of proceeds from the sale of rental equipment. ~~These~~Offsetting sources of cash ~~were partially offset by an investment~~included (i) $15.3 million in purchases of ~~$0.2~~short-term investments, net, (ii) $3.9 million infor additions to our equipment rental fleet and (iii) $3.2 million for additions to our property, plant and equipment. We ~~estimate total~~expect cash investments into our rental fleet will be approximately $7 million in fiscal year ~~2018~~2024. We expect our cash investments in our property, plant and equipment will be approximately ~~$3 million. We expect~~$5 million in fiscal year ~~2018 cash investments into our rental fleet to be approximately $2 million in order to replenish land-based wireless rental fleet equipment recently sold to customers.~~2024. Our capital expenditures are expected to be funded from our cash on hand, ~~internal~~ cash ~~flow~~flows, including cash flows from rental contracts or, if necessary, ~~from~~ borrowings under our new credit agreement.

For the ~~three~~six months ended ~~December~~March 31, ~~2017,~~2024 we had no cash flows from financing activities. ~~We had no long-term debt outstanding throughout the fiscal year ended September 30, 2017 or for the three months ended December 31, 2017.~~

While crude oil prices have recently increased to their highest level in three years, the current level of crude oil prices remain significantly below the peak price levels seen in 2014. These lower crude oil prices combined with an ample supply of crude oil in the world market do not support the investment required by many exploration and production companies to explore and develop new frontier areas for oil and gas development and production. In addition, many smaller exploration and production companies are under-capitalized and their capital spending budgets for exploration-focused activities, including seismic activities, are financial restrained. As a result, our seismic business segment continues to experience lower levels of product orders and associated revenue, resulting in substantial operating losses and the continued depletion of our cash balances. Due to the uncertainty concerning a recovery of crude oil prices to levels capable of sustaining increased seismic exploration activities, we expect these depressed seismic market conditions to continue through fiscal year 2018.

Our available cash, cash equivalents and short-term investments ~~totaled $46.0~~was $51.2 million at ~~December~~March 31, ~~2017, including $8.4~~2024, which included $3.3 million of cash and cash equivalents held by our foreign subsidiaries and branch ~~offices.~~offices, of which $2.0 million was held by our subsidiary in the Russian Federation. In ~~light~~response to sanctions imposed by the U.S. and other countries on the Russian Federation, the Russian government has imposed restrictions on companies' abilities to repatriate or otherwise remit cash from their Russian-based operations to locations outside of ~~the Tax Cuts and Jobs Act signed into law on December 22, 2017 which requires companies~~Russia. As a result, this cash can be used in our Russian operations, but we may be unable to ~~pay a one-time transition tax on undistributed earnings~~transfer it out of ~~foreign~~

~~subsidiaries, we are currently re-evaluating our prior intent to permanently reinvest these undistributed earnings. If~~Russia without incurring substantial costs, if at all. In addition, if we were to repatriate the cash held by our ~~foreign subsidiaries,~~Russian subsidiary, we would be required to accrue and pay taxes on any ~~amounts~~amount repatriated.

On July 26, 2023, we entered into a credit agreement ~~allows for borrowings~~(“the Agreement”) with Woodforest National Bank, as sole lender. The Agreement refinanced our credit agreement dated May 6, 2022, with Amerisource Funding, Inc., as administrative agent and as a lender, and Woodforest National Bank, as a lender. The Agreement provides a revolving credit facility with a maximum availability of ~~up to $30.0 million with such amounts available for borrowing~~$15 million. Availability under the Agreement is determined bybased upon a borrowing ~~base. In October 2017, we extended the maturity~~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. We are required to make monthly interest payments on borrowed funds. The Agreement is secured by substantially all of our assets, except for certain excluded property. The Agreement requires us to maintain a minimum (i) consolidated tangible net worth of $100 million, (ii) liquidity of $5 million, and (iii) current ratio no less than 2.00 to 1.00, in each case tested quarterly. 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 ~~agreement from May 2018 to April 2019.~~ facility. The Agreement expires in July 2025.

At ~~December~~March 31, ~~2017,~~2024 we had no outstanding borrowings under the ~~credit agreement~~Agreement and our borrowing base availability under the Agreement was $11.3 million after consideration of ~~$0.3~~a $0.1 million outstanding letter of ~~outstanding letters of credit, our borrowing availability under the credit facility was $26.3 million. At December 31, 2017, we~~credit. We were in compliance with all covenants under the ~~credit agreement.~~Agreement. We ~~currently~~ do not currently anticipate the need to borrow under the ~~credit agreement;~~Agreement, however, we ~~can make no assurance that we will not~~may decide to do ~~so.~~ so in the future, if needed.

Our total available cash, cash equivalents and ~~2017, we received income tax refunds~~short-term investments increased $17.5 million during the six months ended March 31, 2024, largely due to the collection of $18.3 million and $12.8 million, respectively, from the U.S. Department of Treasury. These refunds were a result of the significant tax losses we experienced in fiscal year 2016 and 2015, which we elected to carryback and recoup taxes previously paid. For U.S. income tax purposes, we are now in a loss carryforward position in regardsan account receivable related to our tax losses for fiscal year 2017 and beyond. As a result, we will not receive any additional U.S. federal income tax refunds as a result of our current tax losses. The tax refunds we received in fiscal years 2016 and 2017 have been significant contributors to our overall liquidity.first quarter 2024 Mariner™ sale. In the absence of future profitable results of operations, we may need to rely on other sources of liquidity to fund our future ~~operating results,~~operations, including ~~liquidating short-term investments,~~ executed rental contracts, available borrowings under ~~our credit agreement~~the Agreement through its expiration in ~~April 2019,~~July 2025, leveraging or ~~sale~~sales of real estate assets, sales of rental assets and other liquidity sources which may be available to us. ~~However,~~We currently we believe that our cash, cash equivalents and short-term ~~investment balances~~investments will be sufficient to finance ~~our~~any future operating losses and planned capital expenditures through ~~December 2018.~~the next twelve months.

We do not have any obligations which meet the definition of an off-balance sheet arrangement and which have or are reasonably likely to have a current or future effect on our financial statements or the items contained therein that are material to investors.

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. 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 Combinations, due to the continued employment requirement, no liability has been recorded for the estimated fair value of contingent earn-out payments for this transaction. Earn-outs achieved, if any, will be recorded as compensation expense when incurred.

See Note 13 to our consolidated financial statements in this Quarterly Report on Form 10-Q for more information on our contractual contingencies.

During the ~~three~~six months ended ~~December~~March 31, ~~2017,~~2024, there has been no material change to our critical accounting ~~policies~~estimates discussed in Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2017 other than the adoption of Accounting Standards Update 2016-09, “Improvements to Employee Share-Based Payment Accounting” and 2016-16, “Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory”.2023.

Please refer to Note 1 to our consolidated financial statements contained in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.

We have market risk relative to our short-term investments, foreign currency rates and interest rates. We do not engage in commodity or commodity derivative instrument purchase or sales transactions. Becauseare a smaller reporting company as defined by Rule 12b-2 of the ~~inherent unpredictability~~Exchange Act and are not required to provide the information under this item, in accordance with Item 305(e) of ~~foreign currency rates and interest rates, as well as other factors, actual results could differ materially from those projected in this Item.~~Regulation S-K.

One of our wholly-owned subsidiaries, Geospace Technologies Eurasia, is located in the Russian Federation. In addition, we operate a branch office, Geospace Technologies Sucursal Sudamericana, in Colombia. Our financial results for these entities may be affected by factors such as changes in foreign currency exchange rates, weak economic conditions or changes in the political climate. Our consolidated balance sheet at December 31, 2017 reflected approximately USD $6.0 million and USD $0.2 million of foreign currency denominated net working capital related to our Russian and Colombian operations, respectively. Both of these entities receive a portion of their revenue and pay a majority of their expenses primarily in their local currency. To the extent that transactions of these entities are settled in their local currency, a devaluation of these currencies versus the U.S. dollar could reduce any contribution from these entities to our consolidated results of operations and total comprehensive income as reported in U.S. dollars. We do not hedge the market risk with respect to our operations in these countries; therefore, such risk is a general and unpredictable risk of future disruptions in the valuation of such currencies versus U.S. dollars to the extent such disruptions result in any reduced valuation of these foreign entities’ net working capital or future contributions to our consolidated results of operations. At December 31, 2017, the foreign exchange rate for $1.00 (one U.S. dollar) was equal to approximately 57.61 Russian Rubles and 2,973 Colombian Pesos, respectively. If the value of the U.S. dollar were to strengthen by ten percent against these foreign currencies, our working capital in the Russian Federation and in Colombia would decline by USD $0.6 million and USD $20,000, respectively.

From time to time, we may provide access to capital to our foreign subsidiaries through U.S. dollar denominated interest bearing promissory notes. Such funds are generally used by our foreign subsidiaries to purchase capital assets and for general working capital needs. In addition, we sell products to our foreign subsidiaries on trade credit terms in both U.S. dollars and in the subsidiary’s local currency. At December 31, 2017, we had outstanding Canadian-dollar denominated intercompany accounts receivable of CAN $33.6 million, which we consider to be of a short-term nature. The appreciation or devaluation of the Canadian dollar against the U.S. dollar will result in a gain or loss, respectively, to our consolidated statement of operations. At December 31, 2017, the foreign exchange rate for USD $1.00 was equal to approximately CAN $1.26. On December 29, 2017 we entered into a CAN $32.0 million 90-day hedge agreement effective January 2, 2018 with a United States bank to hedge a portion of our Canadian dollar foreign exchange rate exposure, resulting in an under-hedged position of approximately CAN $1.6 million. At December 31, 2017, if the U.S. dollar exchange rate were to strengthen by ten percent against the Canadian dollar, we would recognize a foreign exchange loss of USD $0.1 million in our consolidated financial statements.

Our credit agreement contains a floating interest rate which subjects us to the risk of increased interest costs associated with any upward movements in bank market interest rates. Under our credit agreement our borrowing interest rate is the Wall Street Journal prime rate, which was 4.50% at December 31, 2017. As of December 31, 2017 and September 30, 2017, there were no borrowings outstanding under our credit agreement.

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Notwithstanding the foregoing, there can be no assurance that our disclosure controls and procedures will detect or uncover all failures of persons within our ~~company~~Company and consolidated subsidiaries to report material information otherwise required to be set forth in our reports.

In connection with the preparation of this Quarterly Report on Form 10-Q, we carried out an evaluation under the supervision and with the participation of our management, including the CEO and CFO, as of ~~December~~March 31, ~~2017,~~2024, of the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~December~~March 31, ~~2017.~~2024.

There were no changes in our internal control over financial ~~reporting.~~ Asreporting (as defined in Rule 13a-15(f) and 15d-15(f) of September 30, 2017, we did not maintain effective controls concerning our classification of current assets with respect to inventories. We determined that a portion of our inventories should have been classified as noncurrent assets, as all inventories were not reasonably expected to be realized in cash, sold or consumedthe Exchange Act) during ~~our next operating cycle.~~

~~This error was subsequently identified and corrected, and resulted in a restatement to~~ the ~~consolidated balance sheets as of September 30, 2016 and 2015 and as of December 31, 2016,~~fiscal quarter ended March 31, 2017 and June 30, 2017, which was included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017. The error had no impact upon previously reported total assets, total liabilities, revenues, net loss, net loss per share,2024 that have materially affected, or ~~cash flows.~~

~~To remediate the material weakness described above we have designed and implemented a quarterly control~~are reasonably likely to determine the value of inventories expected to be realized in cash, sold or consumed during the next operating cycle. This control, which encompasses a review by senior management, utilizes a combination of forecasts and historical trends to determine our future expected inventory utilization.

~~We believe that this measure remediates the material weakness identified and strengthens~~materially affect, our internal ~~controls~~control over financial reporting.

The following exhibits are filed with this Report on Form 10-Q or are incorporated by reference

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Three Months Ended
	December 31, 2017			December 31, 2016
Net loss	$	(9,480	)	$	(11,705	)
Other comprehensive loss, net of tax
Change in unrealized losses on available-for-sale securities		(51	)		(62	)
Foreign currency translation adjustments		(205	)		(306	)
Total other comprehensive loss, net of tax		(256	)		(368	)
Total comprehensive loss	$	(9,736	)	$	(12,073	)

	*Three Months Ended*						*Six Months Ended*
	*March 31, 2024*			*March 31, 2023*			*March 31, 2024*			*March 31, 2023*
Net income (loss)	$	(4,327	)	$	4,637		$	8,352		$	4,540
Other comprehensive income (loss):
Change in unrealized gains on available-for-sale securities, net of tax		(20	)		7			(5	)		15
Foreign currency translation adjustments		(122	)		(1,348	)		369			(1,342	)
Total other comprehensive income (loss)		(142	)		(1,341	)		364			(1,327	)
Total comprehensive income (loss)	$	(4,469	)	$	3,296		$	8,716		$	3,213

	*Six Months Ended*
	*March 31, 2024*			*March 31, 2023*
Cash flows from operating activities:
Net income	$	8,352		$	4,540
Adjustments to reconcile net income to net cash used in operating activities:
Deferred income tax expense		15			—
Rental equipment depreciation		6,026			6,442
Property, plant and equipment depreciation		1,682			1,896
Amortization of intangible assets		204			430
Amortization of premiums (accretion of discounts) on short-term investments		(234	)		1
Stock-based compensation expense		762			676
Provision for (recovery of) credit losses		(51	)		137
Inventory obsolescence expense		110			1,836
Gross profit from sale of rental equipment		(20,553	)		(3,925	)
Gain on disposal of property		—			(1,315	)
Loss (gain) on disposal of equipment		10			(464	)
Effects of changes in operating assets and liabilities:
Trade accounts and note receivable		5,963			(8,352	)
Inventories		(5,566	)		(7,882	)
Other assets		873			1,702
Accounts payable trade		(684	)		(574	)
Other liabilities		(3,180	)		(226	)
Net cash used in operating activities		(6,271	)		(5,078	)

Cash flows from investing activities:
Purchase of property, plant and equipment		(3,166	)		(1,126	)
Proceeds from the sale of property, plant and equipment		2			4,221
Investment in rental equipment		(3,949	)		(635	)
Proceeds from the sale of rental equipment		30,502			8,794
Purchases of short-term investments		(19,293	)		—
Proceeds from the sale of short-term investments		4,000			900
Net cash provided by investing activities		8,096			12,154

Cash flows from financing activities:
Payments on contingent consideration		—			(175	)

Effect of exchange rate changes on cash		134			(205	)
Increase in cash and cash equivalents		1,959			6,696
Cash and cash equivalents, beginning of period		18,803			16,109
Cash and cash equivalents, end of period	$	20,762		$	22,805

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes	$	—		$	26
Inventory transferred to rental equipment		5,352			82

Balance at October 1, 2017	$	508
Accruals for warranties issued during the period		197
Settlements made (in cash or in kind) during the period		(150	)
Balance at December 31, 2017	$	555

	As of December 31, 2017 (in thousands)
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Short-term investments
Corporate bonds	$	21,739	$	—	$	(67	)	$	21,672
Government bonds		10,452		—		(39	)		10,413
Total	$	32,191	$	—	$	(106	)	$	32,085

	*Common Stock*										*Accumulated*
					*Additional*						*Other*
	*Shares*				*Paid-In*			*Retained*			*Comprehensive*			*Treasury*
	*Outstanding*		*Amount*		*Capital*			*Earnings*			*Loss*			*Stock*			*Total*
Balance at October 1, 2023		13,188,489	$	140	$	96,040		$	61,860		$	(17,824	)	$	(7,500	)	$	132,716
Net income		—		—		—			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

Net loss		—		—		—			(4,327	)		—			—			(4,327	)
Other comprehensive loss		—		—		—			—			(142	)		—			(142	)
Issuance of common stock pursuant to the vesting of restricted stock units		45,000		—		—			—			—			—			—
Stock-based compensation		—		—		356			—			—			—			356
Balance at March 31, 2024		13,362,090	$	142	$	96,800		$	70,212		$	(17,460	)	$	(7,500	)	$	142,194

Balance at October 1, 2022		13,021,241	$	139	$	94,667		$	49,654		$	(15,313	)	$	(7,500	)	$	121,647
Net loss		—		—		—			(97	)		—			—			(97	)
Other comprehensive income		—		—		—			—			14			—			14
Issuance of common stock pursuant to the vesting of restricted stock units		109,748		1		—			—			—			—			1
Stock-based compensation		—		—		370			—			—			-			370
Balance at December 31, 2022		13,130,989		140		95,037			49,557			(15,299	)		(7,500	)		121,935

Net income		—		—		—			4,637			—			—			4,637
Other comprehensive loss		—		—		—			—			(1,341	)		—			(1,341	)
Issuance of common stock pursuant to the vesting of restricted stock units		40,500		—		—			—			—			—			—
Stock-based compensation		—		—		306			—			—			—			306
Balance at March 31, 2023		13,171,489	$	140	$	95,343		$	54,194		$	(16,640	)	$	(7,500	)	$	125,537

	As of September 30, 2017 (in thousands)
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Short-term investments
Corporate bonds	$	22,829	$	—	$	(31	)	$	22,798
Government bonds		13,363		—		(24	)		13,339
Total	$	36,192	$	—	$	(55	)	$	36,137

	*As of March 31, 2024*
	*Amortized Cost*		*Unrealized Gains*		*Unrealized Losses*			*Estimated Fair Value*
Short-term investments:
Corporate bonds	$	21,937	$	—	$	(14	)	$	21,923
U.S. treasury securities and securities of U.S. government-sponsored agency		8,526		—		(1	)		8,525
Total	$	30,463	$	—	$	(15	)	$	30,448

	*As of September 30, 2023*
	*Amortized Cost*		*Unrealized Gains*		*Unrealized Losses*			*Estimated Fair Value*
Short-term investments:
Corporate bonds	$	11,310	$	—	$	(15	)	$	11,295
U.S. treasury securities and securities of U.S. government-sponsored agency		3,622		4		—			3,626
Total	$	14,932	$	4	$	(15	)	$	14,921

		Three Months Ended
Derivative Instrument	Location	December 31, 2017		December 31, 2016
Foreign Currency Forward Contracts	Other Income (Expense)	$	158	$	72

	As of December 31, 2017
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable (Level 2)		Significant Unobservable (Level 3)		Totals
Short-term investments
Corporate bonds	$	23,711	$	—	$	—	$	23,711
Government bonds		12,750		—		—		12,750
Total	$	36,461	$	—	$	—	$	36,461

	*As of March 31, 2024*
	*Quoted Prices in*		*Significant*
	*Active Markets for*		*Other*		*Significant*
	*Identical Assets*		*Observable*		*Unobservable*
	*(Level 1)*		*(Level 2)*		*(Level 3)*		*Totals*
Short-term investments:
Corporate bonds	$	—	$	21,923	$	—	$	21,923
U.S. treasury securities and securities of U.S. government-sponsored agency				8,525				8,525
Total assets	$	—	$	30,448	$	—	$	30,448

	As of September 30, 2017
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable (Level 2)		Significant Unobservable (Level 3)		Totals
Short-term investments
Corporate bonds	$	22,798	$	—	$	—	$	22,798
Government bonds		13,339		—		—	$	13,339
Total	$	36,137	$	—	$	—	$	36,137

	December 31, 2017			September 30, 2017
Promissory notes	$	7,062		$	4,306
Sales-type lease		7,807			8,581
Total financing receivables		14,869			12,887
Unearned income:
Promissory notes		(95	)		(90	)
Sales-type lease		(444	)		(527	)
Total unearned income		(539	)		(617	)
Total financing receivables, net of unearned income		14,330			12,270
Allowance for doubtful promissory notes		(1,505	)		(1,020	)
Less current portion		(5,793	)		(3,055	)
Non-current financing receivables	$	7,032		$	8,195

	*March 31, 2024*			*September 30, 2023*
Rental equipment, primarily wireless recording equipment	$	76,909		$	82,926
Accumulated depreciation		(61,832	)		(61,339	)
	$	15,077		$	21,587

	Unrealized Losses on Available-for-Sale Securities			Foreign Currency Translation Adjustments			Totals
Balance at October 1, 2017	$	(58	)	$	(14,172	)	$	(14,230	)
Changes in unrealized losses on available-for-sale securities		(51	)		—			(51	)
Foreign currency translation adjustments		—			(205	)		(205	)
Balance at December 31, 2017	$	(109	)	$	(14,377	)	$	(14,486	)

3.1		Amended and Restated Certificate of Formation of Geospace Technologies Corporation (incorporated by reference to Exhibit 3.1 to the ~~Registrant’s~~Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed May 8, 2015).

3.2		Amended and Restated Bylaws of Geospace Technologies Corporation (incorporated by reference to Exhibit 3.2 to the ~~Registrant’s~~Company’s Current Report on Form 8-K filed ~~April 17, 2015)~~August 8, 2019).

~~10.1~~31.1*		Fourth Amendment to Loan Agreement dated October 25, 2017 among Geospace Technologies Corporation, as borrower, certain subsidiaries of Geospace Technologies Corporation, as guarantors, and Frost Bank, as lender (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed October 27, 2017).

~~31.1~~		Certification of the Chief Executive Officer pursuant to ~~Section 302 of~~Rule 13a-14(a) under the ~~Sarbanes-Oxley~~Securities and Exchange Act of ~~2002.~~1934.

31.2*		Certification of the Chief Financial Officer pursuant Rule 13a-14(a) under the Securities and Exchange Act of 1934.

~~31.2~~32.1**		Certification of the Chief Executive Officer pursuant 18 U.S.C. Section 1350.

32.2**		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section ~~302 of the Sarbanes-Oxley Act of 2002.~~1350.

101*		The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Balance Sheets at March 31, 2024 and September 30, 2023 , (ii) the Consolidated Statements of Operations for the three and six months ended March 31, 2024 and 2023, (iii) the Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended March 31, 2024 and 2023, (iv) the Consolidated Statements of Stockholders’ Equity for the three and six months ended March 31, 2024 and 2023, (v) the Consolidated Statements of Cash Flows for the six months ended March 31, 2024 and 2023 and (vi) Notes to Consolidated Financial Statements.
~~32.1~~		~~Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
104*		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 formatted in Inline XBRL and contained in Exhibit 101.
~~32.2~~		~~Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~101~~		~~Interactive data file.~~

Date:	~~February 7, 2018~~May 10, 2024	By:	/s/ Walter R. Wheeler
			Walter R. Wheeler, President
			and Chief Executive Officer
			(duly authorized officer)


Date:	~~February 7, 2018~~ May 10, 2024	By:	/s/ ~~Thomas T. McEntire~~Robert L. Curda
				~~Thomas T. McEntire,~~Robert L. Curda, Vice President,
				~~and~~ Chief Financial Officer and Secretary
			(principal financial officer)	~~(principal financial officer)~~