# Geospace Technologies Corp: Form 10-Q for the period ended Jun 30, 2025

- Company: [Geospace Technologies Corp](/companies/geos.md) (CIK 1001115)
- Form: 10-Q
- Filed: 2025-08-08
- Accepted by EDGAR: Aug 8, 2025, 15:00 ET
- Period: 2025-06-30
- Accession: 0001437749-25-025683
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1001115/000143774925025683/geos20250630_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1001115/000143774925025683/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $24.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-10-01 to 2025-06-30 | $80.1m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-04-01 to 2025-06-30 | $17.3m | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2024-10-01 to 2025-06-30 | $50.7m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-04-01 to 2025-06-30 | $7.5m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2024-10-01 to 2025-06-30 | $29.4m | us-gaap:GrossProfit |
| Research and development | 3 months, 2025-04-01 to 2025-06-30 | $4.2m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2024-10-01 to 2025-06-30 | $14.4m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2025-04-01 to 2025-06-30 | $7.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2024-10-01 to 2025-06-30 | $21.7m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | $369.0k | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-10-01 to 2025-06-30 | −$2.1m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | $68.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-10-01 to 2025-06-30 | $55.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | $760.0k | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-10-01 to 2025-06-30 | −$662.0k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | $0.06 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-10-01 to 2025-06-30 | −$0.05 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | $0.06 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-10-01 to 2025-06-30 | −$0.05 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 12,805,414 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-10-01 to 2025-06-30 | 12,783,832 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-10-01 to 2025-06-30 | −$18.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-10-01 to 2025-06-30 | $5.8m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 9 months, 2024-10-01 to 2025-06-30 | $615.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-06-30 | $23.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $90.1m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $149.8m | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $15.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-30 | $15.5m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-06-30 | $134.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 34,519 characters.

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 on Form 10-K for the year ended September 30, 2024.

### Forward-Looking Statements

This Quarterly Report on Form 10-Q and the documents incorporated by reference herein 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, sales or rentals for our Mariner™ or Mariner Deep® nodes, the adoption of Quantum's SADAR® product monitoring of subsurface reservoirs, the completion of new orders for channels of our Pioneer™ system, the fulfillment of customer payment obligations, the impact of the current armed conflict between Russia and Ukraine, our ability to manage changes and the continued health or availability of management personnel, volatility and direction of oil prices, anticipated levels of capital expenditures and the sources of funding therefor, and our strategy for growth, product development, market position, financial results and the provision of accounting reserves. These forward-looking statements reflect our current judgment about future events and trends based on the information currently available to us. 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, 2024, 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 failure of our products to achieve market acceptance (despite substantial investment by us), our sensitivity to short term backlog, delayed or cancelled customer orders, product obsolescence resulting from poor industry conditions or new technologies, credit losses associated with customer accounts, inability to collect on financing receivables, lack of further orders for our OBX rental equipment, failure of our 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.

### Available Information

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 at the SEC’s website at www.sec.gov. Our SEC filings are also available to the public on our website at 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.

### Overview

Unless otherwise specified, the discussion in this Quarterly Report on Form 10-Q refers to Geospace Technologies Corporation and its subsidiaries. We design and manufacture sophisticated technology solutions for applications in energy exploration, smart water management as well as industrial and Internet of Things. Our seismic equipment and services are marketed to the energy exploration industry 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 connector cables, imaging equipment, remote shutoff water valves and Internet of Things ("IoT") platform. Additionally, the company provides specialized contract manufacturing services. In recent years, the revenue contribution from our non-energy related products has grown to represent nearly half of our total revenue. Our business diversification strategy has centered largely on translating expertise in ruggedized engineering and technology manufacturing into expanded customer markets.

Effective October 1, 2024, the Company changed the composition of its three operating business segments and changed its methodology for allocating manufacturing costs including overhead and other costs of revenue to the segments. The business segments are now comprised of: Smart Water, Energy Solutions and Intelligent Industrial. The change methodology for allocating manufacturing costs affected each segment's operating income (loss) but had no effect on consolidated operating income (loss).

### Products and Product Development

### Smart Water

Our Smart Water business segment comprises our market dominant water meter connector cable series known as Hydroconn®, and our Aquana branded remote shut-off water valves and cloud-based IoT Platform. In municipal and utility applications, our smart water products support the global smart meter connectivity water utility market. These products provide our customers with highly reliable automated meter-reading and automated meter infrastructure with our robust water-proof connectors. Our highly-ruggedized outdoor valves include the AquaFlex™ and AquaFlow™ remote shut off valves.

In commercial applications for multi-family and real estate property management, our remote sensing water valves offer asset managers the ability to gather accurate usage information, implement occupancy-based billing and submetering as well as guard against costly leak and burst events. The AquaSense remote disconnect valve and AquaControl smart water IoT platform allow customers that manage multi-family and commercial properties to monitor 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.

### Energy Solutions

Our Energy Solutions 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. This segment’s products include wireless seismic data acquisition systems, reservoir characterization products and services, and traditional seismic exploration products such as geophones, hydrophones, leader wire, connectors, cables and various other seismic products.

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

We have developed multiple versions of a land-based wireless (or nodal) seismic data acquisition system including our most recent launch of the Pioneer™, an ultralight wireless sensor product. We believe our wireless sensor systems allows our customers to operate more effectively and efficiently because of its reduced environmental impact, lower weight, ease of operation, and which require less maintenance.

We have also developed an ocean bottom seismic data acquisition system called the OBX, and recently released Mariner™ and Mariner Deep®. Similar to our land-based wireless systems, these ocean bottom systems may be deployed in virtually unlimited channel configurations and do not require interconnecting cables between each station. Through June 30, 2025, we have sold 28,000 OBX stations and we currently have 9,000 OBX stations in our rental fleet. The Mariner® is a continuous, cable-free, four channel autonomous, shallow water ocean bottom recorder designed for extended duration seabed ocean bottom seismic data acquisition. Through June 30, 2025, we have sold 7,600 Mariner® nodes and currently have 3,000 Mariner® nodes in our rental fleet.

Additionally, we have developed high-definition permanent reservoir monitoring systems ("PRM") for land and ocean-bottom applications in producing oil and gas fields. Our primary offering, OptoSeis® fiber optic sensing technology, provides high-definition seismic data acquisition systems with a flexible architecture allowing them to be configured as a subsurface system for both land and marine reservoir-monitoring projects.

We also have 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.

We also produce a seismic borehole acquisition systems 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.

Lastly, our SADAR® technology provides passive seismic real-time monitoring in emerging energy applications such as Carbon Capture and Storage (CCS) and geothermal energy. Our 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.

### Intelligent Industrial

Our Intelligent Industrial segment is comprised of diverse software and hardware solutions leveraging decades of sensor technologies for use by the U.S. Federal government, specialized contractors and academia. This segment also includes specialized contract manufacturing in the United States along with solutions for industrial screen printers.

For more than a decade our sensor products have been used for national security and homeland defense applications. More recently our SADAR® technology, has been used for border and perimeter security surveillance, cross-border tunneling detection and other products targeted at movement monitoring, intrusion detection and situational awareness. Our seismic sensors provide unique high definition, low frequency sensing that allows for vibration monitoring in industrial machinery, mine safety and earthquake detection.

Our 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 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. We are certified to the latest revisions of ISO9001, 14001, 13485, and AS9100 standards and are committed to quality manufacturing, document and process control, qualification, non-conformance handling as well as continuous improvement. We maintain environmentally sound working conditions in all of our facilities.

### Consolidated Results of Operations

We report and evaluate financial information for three segments: Smart Water, Energy Solutions, and Intelligent Industrial Markets. Summary financial data by business segment follows (in thousands):

| Smart Water | Three Months Ended June 30, 2025 | June 30, 2024 | Nine Months Ended June 30, 2025 | June 30, 2024 |
| --- | ---: | ---: | ---: | ---: |
| Product revenue | $10,518 | $9,913 | $27,278 | $20,558 |
| Income from operations | 2,233 | 2,611 | 4,023 | 5,372 |
| **Energy Solutions** |  |  |  |  |
| Product revenue | 6,612 | 3,862 | 29,837 | 43,948 |
| Rental revenue | 1,495 | 5,520 | 5,140 | 16,380 |
| Total revenue | 8,107 | 9,382 | 34,977 | 60,328 |
| Income (loss) from operations | (1,234) | (117) | 5,380 | 13,003 |
| **Intelligent Industrial** |  |  |  |  |
| Product revenue | 6,097 | 6,448 | 17,465 | 18,928 |
| Rental revenue | 39 | 41 | 131 | 123 |
| Total revenue | 6,136 | 6,489 | 17,596 | 19,051 |
| Loss from operations | (1,041) | (1,282) | (3,268) | (2,181) |
| **Corporate** |  |  |  |  |
| Rental revenue | 82 | 74 | 238 | 223 |
| Income (loss) from operations | 411 | (3,605) | (8,212) | (10,256) |
| **Consolidated Totals** |  |  |  |  |
| Product revenue | 23,227 | 20,223 | 74,580 | 83,434 |
| Rental revenue | 1,616 | 5,635 | 5,509 | 16,726 |
| Total revenue | 24,843 | 25,858 | 80,089 | 100,160 |
| Income (loss) from operations | $369 | $(2,393) | $(2,077) | $5,938 |

### Business Overview

Growing industry acceptance of our water meter cables and connectors provides a strong enabler for additional revenue from our Smart Water segment. Automatic meter reading efficiencies in operations and improved customer service has begun to be understood by the municipalities of the United States. We expect this portion of our business to continue to grow for the foreseeable future. Additionally, we anticipate this segment to see revenue contributions from our Aquana smart water valve and IoT technology products as market traction and increased sales backlog continues to gather. Given the well-known and often extreme volatility experienced in our Energy Solutions segment, careful expansion of products and market diversity in our Smart Water and Intelligent Industrial segments has been a longstanding part of our strategic vision and reflects our on-going diversification efforts.

Our Energy Solution segment saw a shift from rentals of our ocean bottom nodes to purchases of the equipment in fiscal year 2024, of which trend has continued in fiscal year 2025. This shift signifies our customer’s recognition of future backlog to justify ownership versus renting the nodes. We do not expect significant expansion of the ocean bottom nodal market, for we expect the market is saturable and future rental fleet use will come from our customers' need to temporarily expand their nodal fleet. We expect our Energy Solutions segment to provide a significant portion of our revenue for years to come, but in diminishing portion to our other segments. During the third quarter of fiscal year 2025, we entered into a PRM contract. The duration of the contract is expected to be approximately 18 months. Revenue will be recognized in our Energy Solutions segment over the duration of the contract.

We continue to maintain a strong balance sheet with no debt. Our current liquidity enables our ability to seek out business acquisitions, allows us to continue investments in capital assets and product research and development, which have historically driven revenue growth.

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

Consolidated revenue for the three months ended June 30, 2025, was $24.8 million, a decrease of $1.0 million, or 3.9%, from the corresponding period of the prior fiscal year. The decrease was primarily due to lower utilization of our ocean bottom nodes rental fleet from our Energy Solutions segment. The decrease was largely offset by an increase in demand for our traditional seismic products, partly from the sale of our marine retrieval and steering device product line completed in the third quarter of fiscal year 2025. Consolidated revenue for the nine months ended June 30, 2025, was $80.1 million, a decrease of $20.1 million, or 20.0%, from the corresponding period of the prior fiscal year. The decrease was primarily due to lower product revenue from our Energy Solutions segment. Revenue for the nine months ended June 30, 2025, included a $17 million sale of ocean bottom nodes structured as a sales-type lease. However, in comparison, revenue for the nine months ended June 30, 2024 included a $30 million sale of our Mariner™ shallow water ocean bottom nodes. The decrease was also attributable to lower wireless marine rental revenue. The decrease in consolidated revenue for both the three and nine months ended June 30, 2025 was partially offset by an increase in demand for our Hydroconn® cable and connector products from our Smart Water segment.

Consolidated gross profit for the three months ended June 30, 2025, was $7.5 million, a decrease of $1.0 million, or 11.6%, from the corresponding period of the prior fiscal year. The decrease in gross profit was primarily due to a decrease in ocean bottom nodes rental revenue from our Energy Solutions segment. The decrease was partially offset by an increase in traditional seismic revenue, partly due to the sale of our marine retrieval and steering product line and related gross profits. Consolidated gross profit for the nine months ended June 30, 2025, was $29.4 million, a decrease of $7.2 million, or 19.7%, from the corresponding period of the prior fiscal year. The decrease in gross profit was primarily due to a decrease in ocean bottom nodes product revenue and rental revenue. This decrease was partially offset by a high gross profit margin on a $17 million sale of ocean bottom nodes in the first quarter of fiscal year 2025. The decrease in gross profit for both three and nine months ended June 30, 2025 was also due to an increase in tariffs on the raw materials we purchase.

Consolidated operating expenses for the three months ended June 30, 2025, were $11.8 million, an increase of $0.9 million, or 7.9%, from the corresponding period of the prior fiscal year. Consolidated operating expenses for the nine months ended June 30, 2025, were $36.1 million, an increase of $5.4 million, or 17.7%, from the corresponding period of the prior fiscal year. The increase for both the three and nine months ended June 30, 2025 was primarily due to (i) higher personnel costs, including severance costs and acceleration of stock-based compensation expense and (ii) an increase in and sales and marketing costs.

In June 2025, we sold our property located at 4318 Northfield Lane in Houston, Texas. The 17.3-acre property served as additional parking for our main campus and contained legacy structures used to support our manufacturing and warehousing operations. The property had been classified as assets held on our consolidated balance sheets since September 30, 2024. We recognized a gain on disposal of property of $4.6 million during the third quarter of fiscal year 2025. The gain is included as a component of income (loss) from operations on our accompanying consolidated statements of operations.

Consolidated other income was $0.5 million for the three months ended June 30, 2025, compared to $0.3 million from the corresponding period of the prior fiscal year. Consolidated other income was $1.5 million for the nine months ended June 30, 2025, compared to $0.5 million from the corresponding period of the prior fiscal year. The increase for both periods was principally due to higher interest income attributable to our financing receivables.

### Segment Results of Operations

### Smart Water

#### Revenue

Revenue from our Smart Water segment for the three months ended June 30, 2025, increased $0.6 million, or 6.1%, from the corresponding period of the prior fiscal year. Revenue from our Smart Water segment for the nine months ended June 30, 2025, increased $6.7 million, or 32.7%, from the corresponding period of the prior fiscal year. The increase for both periods was primarily due to an increase in demand for our Hydroconn® cable and connector products.

#### Operating Income

Operating income from our Smart Water segment for the three months ended June 30, 2025, was $2.2 million, a decrease of $0.4 million, or 14.5% from the corresponding period of the prior fiscal year. Operating income from our Smart Water segment for the nine months ended June 30, 2025, was $4.0 million, a decrease of $1.3 million, or 25.1% from the corresponding period of the prior fiscal year. The decrease for both periods was due to an increase in selling and marketing and research and development costs associated with our increase in revenue.

### Energy Solutions

#### Revenue

Revenue from our Energy Solutions segment for the three months ended June 30, 2025, decreased $1.3 million, or 13.6%, from the corresponding period of the prior fiscal year. Revenue from our Energy Solutions segment for the nine months ended June 30, 2025, decreased $25.4 million, or 42.0%, from the corresponding period of the prior fiscal year. The components of this decrease were as follows:

- *Product Revenue –* For the three months ended June 30, 2025, product revenue increased $2.8 million, or 71.2%, from the corresponding period of the prior fiscal year. The increase was primarily due to an increase in demand for our traditional seismic products, largely from the sale of our marine recovery device product line. For the nine months ended June 30, 2025, product revenue decreased $14.1 million, or 32.1%, from the corresponding period of the prior fiscal year. The decrease was primarily due to a decrease in demand for our ocean bottom nodes. Revenue for the nine months ended June 30, 2025 included a $17 million sale of ocean bottom nodes structured as a sales-type lease. However, in comparison, revenue for the nine months ended June 30, 2024 included a $30 million sale of our Mariner™ shallow water ocean bottom nodes.
- *Rental Revenue –* For the three months ended June 30, 2025, rental revenue from our wireless exploration products was $1.5 million, a decrease of $4.0 million, or 72.9%, in comparison to the corresponding period of the prior fiscal year. Consolidated rental revenue from our wireless exploration products for the nine months ended June 30, 2025, was $5.1 million, a decrease of $11.2 million, or 68.6%, from the corresponding period of the prior fiscal year. The decrease for both periods was due to lower utilization of our ocean bottom nodes rental fleet. The decrease for the nine months ended June 30, 2025 was also attributable to the reversal of a $2.2 million receivable from a rental customer against rental revenue during the second quarter of fiscal year 2025. We determined the collectability of this receivable was less than probable. Any future cash received from this customer will be recognized as rental revenue.

#### Operating Income (Loss)

Operating loss associated with our Energy Solutions segment for the three months ended June 30, 2025, was $(1.2) million, compared to $(0.1) million for the corresponding period of the prior fiscal year. The increase in operating loss was largely due to the decrease in revenue and related gross profits. Operating income associated with our Energy Solutions segment for the nine months ended June 30, 2025, was $5.4 million, a decrease of $7.6 million from the corresponding period of the prior fiscal year. The decrease in operating income for the nine months ended June 30, 2025, was primarily due to (i) lower revenue and related gross profits. The decrease in operating loss for both the three and nine months ended June 30, 2025 was primarily due to (i) the decrease in revenue and related gross profits and (ii) higher research and development expense, primarily personnel costs.

### Intelligent Industrial

#### Revenue

Revenue from our Intelligent Industrial segment for three months ended June 30, 2025, decreased $0.4 million, or 5.4%, from the corresponding period of the prior fiscal year. Revenue from our Intelligent Industrial segment for nine months ended June 30, 2025, decreased $1.5 million, or 7.6%, from the corresponding period of the prior fiscal year. The decrease in revenue for both the three and nine months ended June 30, 2025, was primarily due to (i) revenue recognized for the three and nine months ended June 30, 2024 on a government contract completed in the fourth quarter of fiscal year 2024 and (ii) lower demand for our imaging products. The decrease for both periods was partially offset by an increase in demand for our contract manufacturing services.

#### Operating Loss

Operating loss from our Intelligent Industrial segment for the three months ended June 30, 2025, was $(1.0) million, a decrease of $0.2 million, or 18.8%, million from the corresponding period of the prior fiscal year. The decrease was primarily due to lower operating expenses incurred during the three months ended June 30, 2025. The decrease in operating loss was partially offset by (i) decrease in revenue and related gross profits. Operating loss from our Intelligent Industrial segment for the nine months ended June 30, 2025, was $(3.3) million, an increase of $1.1 million, or 49.8%, from the corresponding period of the prior fiscal year. The increase in operating loss for nine months ended June 30, 2025 was primarily due (i) the decrease in revenue and related gross profits and (ii) higher research and development costs.

19

### Liquidity and Capital Resources

At June 30, 2025, we had $25.6 million in cash and cash equivalents and short-term investments. For the nine months ended June 30, 2025, we used $18.1 million of cash from operating activities. Uses of cash included (i) our net loss of $0.7 million, offset by non-cash charges of $9.8 million resulting from deferred income taxes, depreciation, amortization, accretion, inventory obsolescence, stock-based compensation and provision for credit losses, a (ii) $5.6 million increase in inventories for the strategic purchase of long lead-time components needed for use in wireless products, valves and contract manufacturing, (iii) $4.2 million decrease in trade accounts payable due to timing of payments to our suppliers and (iv) $0.6 million increase in other assets, primarily for the prepayment of insurance premiums. These uses of cash were partially offset by a (i) $2.2 million decrease in trade accounts receivables due to timing of collections from customers and (ii) $2.0 increase in other liabilities primarily related to accrued compensation costs.

For the nine months ended June 30, 2025, we generated cash of $35.4 million in investing activities. Sources of cash consisted of (i) $28.4 million from the sale of short-term investments, (ii) $8.7 million of proceeds from the sale of property, plant and equipment and (iii) $5.1 million of proceeds from the sale of rental equipment. These sources of cash were partially offset by (i) $5.8 million for additions to our property, plant and equipment and (ii) $1.1 million for additions to our equipment rental fleet. We expect fiscal year 2025 cash investments in property, plant and equipment will be approximately $7 million. We expect fiscal year 2025 cash investments into our rental fleet will be limited unless we experience an expansion of customer demand of our rental fleet. Our capital expenditures are expected to be funded from our cash on hand, short-term investments, internal cash flows, cash flows from our rental contracts or, if necessary, borrowings under our new credit agreement.

For the nine months ended June 30, 2025, we used $0.6 million from financing activities for the purchase of treasury stock pursuant to a stock buy-back program authorized by our board of directors. The program authorized us to repurchase up to $7 million of our common stock in open market transactions. The program was completed in the second quarter of fiscal year 2025.

On July 26, 2023, we entered into a credit agreement (the “Agreement”) with Woodforest National Bank ("Woodforest"), as sole lender. The Agreement refinanced our credit agreement dated May 6, 2022, with Amerisource Funding, Inc., as administrative agent and as a lender, and Woodforest, as a lender. The Agreement provides a revolving credit facility with a maximum availability of $15 million. Availability under the Agreement is determined based upon a borrowing base comprised of certain of our domestic assets which include (i) 80% of eligible accounts receivable, plus (ii) 90% of eligible foreign insured accounts, plus (iii) 25% of eligible inventory plus (iv) 50% of the orderly liquidation value of eligible equipment, in each case subject to certain limitations and adjustments. Interest shall accrue on outstanding borrowings at a rate equal to Term SOFR (Secured Overnight Financing Rate) plus a margin equal to 3.25% per annum (7.65% at June 30, 2025). 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 facility. Effective July 26, 2025, the Agreement was amended to extend the maturity date from July 26, 2025 to August 26, 2025. The Company is currently negotiating a long-term maturity extension on the Agreement.

At June 30, 2025 we had no outstanding borrowings under the Agreement and our borrowing base availability under the Agreement was $14.9 million after consideration of a $0.1 million outstanding letter of credit. We were in compliance with all covenants under the Agreement. We do not currently anticipate the need to borrow under the Agreement, however, we may decide to do so in the future, if needed.

Our available cash, cash equivalents and short-term investments was $25.6 million at June 30, 2025, which included $1.0 million of cash and cash equivalents held by our foreign subsidiaries and branch offices. In the absence of future profitable results of operations, we may need to rely on other sources of liquidity to fund our future operations, including executed rental contracts, available borrowings under the Agreement assuming a long-term maturity extension in reached, sales or leveraging real estate assets, sales of rental assets and other liquidity sources which may be available to us. We currently believe that our cash and short-term investments will be sufficient to finance any future operating losses and planned capital expenditures through the next twelve months.

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.

### Contractual Obligations

#### Contingent Compensation Costs

In July 2021, the Company acquired Aquana, LLC (“Aquana”). Pursuant to the merger agreement with Aquana, as amended ("the Merger Agreement"), the Company is subject to additional contingent cash payments to the former members of Aquana over a seven-year earn-out period. The contingent payments, if any, will be derived from certain eligible revenue generated during the earn-out period from products and services sold by Aquana. There is no maximum limit to the contingent cash payments that could be made. The Merger Agreement requires the continued employment of a certain key employee and former member of Aquana for the first five years of the seven-year earn-out period in order for any of Aquana’s former members to be eligible for any earn-out payments. Due to the continued employment requirement, no liability has been recorded for the estimated fair value of earn-out payments for this transaction. Earn-outs achieved are recorded as compensation expense when incurred.

See Note 12 to our consolidated financial statements in this Quarterly Report on Form 10-Q for more information on our contractual contingencies.

### Critical Accounting Estimates

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

### Recent Accounting Pronouncements

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.

## Market risk

As filed, 194 characters.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item, in accordance with Item 305(e) of Regulation S-K.

## Controls and procedures

As filed, 1,690 characters.

### Evaluation of Disclosure Controls and Procedures

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 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 June 30, 2025, 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 June 30, 2025.

### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the fiscal quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 2,338 characters.

***Increases in Tariffs, Trade Restrictions or Taxes on our Products Could Have an Adverse Impact on our Operations.***

Approximately half of our revenue is generated from customers outside of the U.S. We also purchase a portion of our raw materials from suppliers in China and other foreign countries. The commerce we conduct in the international marketplace makes us subject to tariffs, trade restrictions and other taxes when the raw materials we purchase, and the products we ship, cross international borders. Trade tensions between the United States and China, as well as those between the U.S. and Canada, Mexico and other countries have been escalating in recent years. In addition, the transition to a new presidential administration in the United States could further impact our business and operations, due to potential trade wars as a result of the implementation of tariffs or otherwise. Historically, trade tensions have led to a series of tariffs imposed by the U.S. on imports from China, as well as retaliatory tariffs imposed by China on imports from the U.S. If the U.S. and China are able to negotiate the issues to restore a mutually advantageous and fair trading regime, the increased tariffs could be eliminated. Certain raw materials we purchase from China are subject to these tariffs which has increased our manufacturing costs. Products we sell into certain foreign markets could also become subject to similar retaliatory tariffs, making the products we sell uncompetitive to similar products not subjected to such import tariffs. Further changes in U.S. trade policies, tariffs, taxes, export restrictions or other trade barriers, or restrictions on raw materials including rare earth minerals, may limit our ability to produce products, increase our manufacturing costs, decrease our profit margins, reduce the competitiveness of our products, or inhibit our ability to sell products or purchase raw materials, which could have a material adverse effect on our business, results of operations or financial conditions. Moreover, the change in presidential administration, as well as a transition of control in the U.S. House of Representatives and U.S. Senate, creates regulatory uncertainty and it remains unclear as to the tariff related impact the future geopolitical climate will bring to our operations.

Filed Aug 8, 2025.
Source: SEC EDGAR, the filing index for accession 0001437749-25-025683. Last ingested by Listed: Nov 3, 2026, 09:38 ET. No prices; not investment advice.