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What changed in GEOSPACE TECHNOLOGIES CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GEOSPACE TECHNOLOGIES CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+179 added−196 removedSource: 10-K (2023-11-17) vs 10-K (2022-11-18)

Top changes in GEOSPACE TECHNOLOGIES CORP's 2023 10-K

179 paragraphs added · 196 removed · 148 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

37 edited+9 added−6 removed65 unchanged
Biggest changeThese 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.
Biggest changeOur 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 and earthquake detection.
Competitive geophysical technologies utilizing fiber 5 optic sensing techniques are provided by OptaSense, Fibersensys, Future Fiber Technologies and other specialty sensor manufacturing firms. Suppliers We purchase raw materials from a variety of suppliers located in various countries. We typically have multiple suppliers for our critical materials.
Competitive geophysical technologies utilizing fiber optic sensing techniques are provided by OptaSense, Fibersensys, Future Fiber Technologies and other specialty sensor manufacturing firms. 5 Suppliers We purchase raw materials from a variety of suppliers located in various countries. We typically have multiple suppliers for our critical materials.
We protect our 6 proprietary rights to our technology through a variety of methods, including confidentiality agreements and proprietary information agreements with suppliers, employees, consultants and others who may have access to proprietary information. Research and Development We expect to incur significant future research and development expenditures aimed at the development of additional products for each of our business segments.
We protect our proprietary rights to our technology through a variety of methods, including confidentiality agreements and proprietary information agreements with suppliers, employees, consultants and others who may have access to proprietary information. 6 Research and Development We expect to incur significant future research and development expenditures aimed at the development of additional products for each of our business segments.
While our primary growth initiative is to expand our oil and gas seismic product offerings, as seen with our acquisition of the OptoSeis ® fiber optic sensing technology in fiscal year 2019, we may also seek out other business opportunities in adjacent markets and emerging markets which complement our existing oil and 4 gas seismic products, engineering and manufacturing capabilities, and company-wide culture.
While our primary growth initiative is to expand our oil and gas seismic product offerings, as seen with our acquisition of the OptoSeis® fiber optic sensing technology in fiscal year 2019, we may also seek out other business opportunities in adjacent markets and emerging markets which complement our existing oil and gas seismic products, engineering and manufacturing capabilities, and company-wide culture.
Our primary competitors for the rental of our traditional and land wireless seismic equipment are STRYDE, SmartSolo, INOVA, Geophysical Technologies and Seismic Equipment Specialists. Our primary competitor for our seabed PRM systems is Alcatel-Lucent. Our primary competitors for high-definition borehole seismic data acquisition systems are Avalon Sciences Ltd and Sercel.
Our primary competitors for the rental of our traditional and land wireless seismic equipment are STRYDE, SmartSolo, INOVA, and Geophysical Technologies. Our primary competitor for our seabed PRM systems is Alcatel-Lucent. Our primary competitors for high-definition borehole seismic data acquisition systems are Avalon Sciences Ltd and Sercel.
As a result, we have adopted what we think is a conservative and prudent business strategy which places a focus on sound financial management practices, as outlined below.
Business Strategy We have adopted what we think is a conservative and prudent business strategy which places a focus on sound financial management practices, as outlined below.
For a discussion of financial information by segment and geographic area, see Note 20 to the consolidated financial statements contained in this Annual Report on Form 10-K. Products and Product Development Oil and Gas Markets Our Oil and Gas Markets business segment has historically accounted for the majority of our revenue.
For a discussion of financial information by segment and geographic area, see Note 19 to the consolidated financial statements contained in this Annual Report on Form 10-K. Products and Product Development Oil and Gas Markets Our Oil and Gas Markets business segment has historically accounted for the majority of our revenue.
To attract and retain talented employees, we strive to make Geospace Technologies Corporation a diverse and safe workplace, with opportunities for our employees to receive educational benefits, cross-function skill-development to grow and develop their career, all supported by competitive compensation and benefits.
To attract and retain talented employees, we strive to make Geospace Technologies Corporation a diverse and safe workplace, with opportunities for our employees to receive educational benefits, cross-function skill-development to grow and develop their careers, all supported by competitive compensation and benefits.
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. During 2022, we maintained active discussions with potential clients for future PRM systems.
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.
We believe that our Oil and Gas Markets products are among the most technologically advanced instruments and equipment available for seismic data acquisition. Traditional Products An energy source and a data recording system are combined to acquire seismic data.
We believe that our Oil and Gas Markets' products are among the most technologically advanced instruments and equipment available for seismic data acquisition. Traditional Products An energy source and a data recording system are combined to acquire seismic data.
To bolster the solid market share we’ve established in the water utility market for water meter cables, in fiscal year 2021, we acquired the smart water IoT company Aquana, LLC ("Aquana"). 3 Industrial Products Our industrial products include water meter products, remote shut-off water valves and IoT Platform, contract manufacturing services and seismic sensors used for vibration monitoring.
To bolster the solid market share we’ve established in the water utility market for water meter connectors, in fiscal year 2021, we acquired the smart water IoT company Aquana, LLC ("Aquana"). 3 Industrial Products Our industrial products include water meter products, remote disconnect shut-off water valves and IoT Platform, contract manufacturing services and seismic sensors used for vibration monitoring.
Financial Information by Segment and Geographic Area For a discussion of financial information by segment and geographic area, see Note 20 to the consolidated financial statements contained in this Annual Report on Form 10-K.
Financial Information by Segment and Geographic Area For a discussion of financial information by segment and geographic area, see Note 19 to the consolidated financial statements contained in this Annual Report on Form 10-K.
We believe the primary competitors for our marine nodal data acquisition systems are Magseis Fairfield ASA and Sercel, each of whom utilizes their own proprietary nodal technology. Most oil and gas seismic products are price sensitive, so the ability to manufacture these products at a low cost is essential to maintain market share.
We believe the primary competitors for our marine nodal data acquisition systems are Magseis Fairfield ASA (a division of TGS), Sercel and InApril AS each of whom utilizes their own proprietary nodal technology. Most oil and gas seismic products are price sensitive, so the ability to manufacture these products at a low cost is essential to maintain market share.
Our professional staff includes geoscientists, electrical and mechanical engineers, accountants, computer and data scientists, marketing and human resource professionals. 65% of our global workforce is employed in manufacturing, 16% in Engineering and 19% in Sales and Administration. The majority of our employees in the Russian Federation belong to a regional union for machine manufacturers. Our remaining employees are not unionized.
Our professional staff includes geoscientists, electrical and mechanical engineers, accountants, computer and data scientists, marketing and human resource professionals. 65% of our global workforce is employed in manufacturing, 14% in engineering and 17% in sales and administration. The majority of our employees in the Russian Federation belong to a regional union for machine manufacturers. Our remaining employees are not unionized.
Our water IoT platform and remote-shut off valve allows 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.
Our remote disconnect values and water IoT platform allows 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.
As a result of the steep decline in product demand that began in fiscal year 2014, further accentuated by the COVID-19 pandemic creating a global decline in the demand for oil and gas, also aggravated by the decline in crude oil prices, we currently hold more than twelve months supply of inventory.
As a result of the steep decline in product demand that began in fiscal year 2014, further accentuated by the COVID-19 pandemic creating a global decline in the demand for oil and gas, also aggravated by global supply shortages of electronic components, we currently hold more than twelve months supply of inventory.
In this regard, we do not anticipate paying any cash dividends in the foreseeable future, however, during the first quarter of fiscal year 2022 we repurchased 841,992 shares of our common stock in open market transactions completing a $7.5 million stock-buy-back program authorized by our board of directors.
In this regard, we do not anticipate paying any cash dividends in the foreseeable future, however, during fiscal years 2021 and 2022 we repurchased 841,992 shares of our common stock in open market transactions completing a $7.5 million stock-buy-back program authorized by our board of directors.
Similar to our land-based wireless systems, the marine OBX system may be deployed in virtually unlimited channel configurations and does not require interconnecting cables between each station. We have two versions of OBX nodal stations.
Similar to our land-based wireless systems, the marine OBX system may be deployed in virtually unlimited channel configurations and does not require interconnecting cables between each station.
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 September 30, 2022, we have sold 12,000 OBX stations and we currently have 25,000 OBX stations in our rental fleet.
We have two versions of OBX 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 September 30, 2023, we have sold 13,000 OBX stations and we currently have 28,000 OBX stations in our rental fleet.
We have incurred company-sponsored research and development expenses of $18.1 million and $14.8 million during the fiscal years ended September 30, 2022 and 2021, respectively.
We have incurred company-sponsored research and development expenses of $16.0 million and $18.1 million during the fiscal years ended September 30, 2023 and 2022, respectively.
Workforce Composition - At September 30, 2022, we employed 650 people predominantly on a full-time basis, of which 415 were employed in the United States, 204 in the Russian Federation and the remainder in the United Kingdom, Canada, China and Colombia.
Workforce Composition - At September 30, 2023, we employed 681 people predominantly on a full-time basis, of which 451 were employed in the United States, 209 in the Russian Federation and the remainder in the United Kingdom, Canada, China and Colombia.
As a result, our 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. Each wireless station is available in a single-channel or three-channel 2 configuration.
As a result, our 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. Each wireless station is available in a single-channel or three-channel configuration. 2 We have also developed a marine-based wireless seismic data acquisition system called the OBX.
Our water meter products support the global smart meter connectivity water utility market. Our products provide our customers with highly reliable automated meter-reading and automated meter infrastructure with our robust water-proof connectors. Our field splice kits allow for accelerated repairs once identified.
Our water meter products support the global smart meter connectivity water utility market. Our products provide our customers with highly reliable automated meter-reading and automated meter infrastructure with our robust water-proof connectors.
The workforce make up includes 37% white, 32% Asian, 23% Hispanic or Latino, 7% Black or African American, and 1% two or more races. Women in managerial roles represent 30% of our domestic workforce. We proudly employ veterans of the US Armed Forces, who make up 6% of our domestic workforce.
Our domestic workforce make-up includes 29% white, 34% Asian, 24% Hispanic or Latino, 11% Black or African American, and 2% two or more races. Women in managerial roles represent 3% of our domestic workforce. We proudly employ veterans of the US Armed Forces, who make up 3% of our domestic workforce.
The following table describes our revenue by product type (in thousands): YEAR ENDED SEPTEMBER 30, 2022 2021 Traditional seismic exploration product revenue $ 6,597 $ 4,518 Wireless seismic exploration product revenue 40,667 45,751 Seismic reservoir product revenue 1,877 1,983 Industrial product revenue 25,640 21,335 Imaging product revenue 13,531 11,084 Border & perimeter security product revenue 711 10,193 Corporate revenue 230 — Total revenue $ 89,253 $ 94,864 Intellectual Property We seek to protect our intellectual property by means of patents, trademarks, trade secrets and other measures.
The following table describes our revenue by product type (in thousands): YEAR ENDED SEPTEMBER 30, 2023 2022 Traditional seismic exploration product revenue $ 12,183 $ 6,597 Wireless seismic exploration product revenue 60,848 40,667 Seismic reservoir product revenue 962 1,877 Industrial product revenue 36,859 25,640 Imaging product revenue 12,180 13,531 Border & perimeter security product revenue 1,234 711 Corporate revenue 243 230 Total revenue $ 124,509 $ 89,253 Intellectual Property We seek to protect our intellectual property by means of patents, trademarks, trade secrets and other measures.
This revenue growth is reflective of both our diversification strategy as well as the continued downturn in the Oil and Gas Markets segment. 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.
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.
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, imaging equipment, offshore cables, remote shutoff water valves and Internet of Things ("IoT") platform and provide contract manufacturing services.
We design and manufacture other products of a non-seismic nature, including water meter products, imaging equipment, offshore cables, remote shutoff water valves and Internet of Things ("IoT") platform. Additionally, we provide contract manufacturing services, which leverage our capabilities and manufacturing resources.
In order to diversify our revenue base and expose us to different markets with different business cycles, we have directed these efforts toward businesses outside the oil and gas industry, as seen with our acquisition of Quantum in fiscal year 2018 and Aquana in fiscal year 2021. • Financial Management – Industry conditions since fiscal year 2014 have required us to place increased emphasis on cash management and preservation.
In order to diversify our revenue base and expose us to different markets with different business cycles, we have directed these efforts toward businesses outside the oil and gas industry, as seen with our acquisition of Quantum in fiscal year 2018 and Aquana in fiscal year 2021. 4 ● Financial Management – Due to the cyclicality of the oil and gas industry, we have historically managed our financial risk by limiting or eliminating debt leverage in our balance sheet.
Systems provided by these competitors are generally multifaceted and may include numerous integrated surveillance technologies, including the geophysical sensor and software systems that we have developed. Our sensing technology does not rely on line-of-sight motion detection, which is required by cameras and other visual and radio frequency technologies, and thus enables motion-sensing such devices would miss.
Our sensing technology does not rely on line-of-sight motion detection, which is required by cameras and other visual and radio frequency technologies, and thus enables motion-sensing such devices would miss.
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. Adjacent Markets Our Adjacent Markets businesses leverage upon existing manufacturing facilities and engineering capabilities utilized by our Oil and Gas Markets businesses.
We have not received any orders for a large-scale seabed PRM system since November 2012. Adjacent Markets Our Adjacent Markets businesses leverage upon existing manufacturing facilities and engineering capabilities utilized by our Oil and Gas Markets businesses. Many of the seismic products in our Oil and Gas Markets segment, with little or no modification, have direct application to other industries.
Our seismic sensors provide unique high definition, low frequency sensing that allows for vibration monitoring in industrial machinery, mine safety and earthquake detection. Imaging Products 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.
Imaging Products 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. Emerging Markets Our Emerging Markets business segment consists entirely of our Quantum business.
Many of the seismic products in our Oil and Gas Markets segment, with little or no modification, have direct application to other industries. Our business diversification strategy has centered largely on translating expertise in ruggedized engineering and manufacturing into expanded customer markets.
Our business diversification strategy has centered largely on translating expertise in ruggedized engineering and manufacturing into expanded customer markets.
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. 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.
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.
Adjacent Markets Products Our industrial and imaging products face competition from numerous domestic and international specialty product manufacturers. Emerging Markets Products The border and perimeter security marketplace is dominated by large integrated system providers such as Boeing, General Dynamics, Lockheed Martin, Raytheon, Elbit Systems and others.
Emerging Markets Products The border and perimeter security marketplace is dominated by large integrated system providers such as Boeing, General Dynamics, Lockheed Martin, Raytheon, Elbit Systems and others. Systems provided by these competitors are generally multifaceted and may include numerous integrated surveillance technologies, including the geophysical sensor and software systems that we have developed.
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 prerequisite step toward future contract consideration. If we are awarded a PRM contract in fiscal year 2023, revenue will most likely not be recognized until fiscal year 2024.
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 prerequisite 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.
Our imaging customers primarily consist of direct users of our equipment as well as specialized resellers that focus on the screen-printing and flexographic printing industries. Our border and perimeter security customers are primarily government agencies. One customer comprised 29.3% of our revenue during fiscal year 2022. Three customers comprised 19.8%, 16.4% and 10.6% of our revenue during fiscal year 2021.
Our imaging customers primarily consist of direct users of our equipment as well as specialized resellers that focus on the screen-printing and flexographic printing industries. Our border and perimeter security customers are primarily government agencies. Our smart water connectivity customers include municipalities, water utilities, water meter manufacturing companies as well as asset management firms such as multifamily property owners.
Over the last three years, we have recycled more than 250 tons of recyclable materials. Year to date 2022, we have recycled over 40 tons of manufacturing waste materials.
We pledge to conduct ourselves in a most responsible manner in each community. As a manufacturer, we have a responsibility to reuse or recycle waste materials from our operations. Over the last three years, we have recycled more than 263 tons of recyclable materials. Year to date 2023, we have recycled over 174 tons of manufacturing waste materials.
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Since its introduction in 2008 and through September 30, 2022, we have sold 486,000 land-based wireless channels and we currently have 73,000 land-based wireless channels in our rental fleet. We have also developed a marine-based wireless seismic data acquisition system called the OBX.
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More recently, we’ve begun marketing our seismic products for energy transition applications such as carbon storage, geothermal and mining. We also market our seismic products to other industries for vibration monitoring, border and perimeter security and various geotechnical applications.
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Emerging Markets 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.
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This revenue growth in this segment is largely attributable to the rise in water utility modernization which includes our waterproof meter connector cable series of products.
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Business Strategy We have experienced several years of very low demand for most of the products we sell and rent into our Oil and Gas Markets. Demand for these products has also been adversely affected by COVID-19 and the resulting lower global demand for oil and gas.
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In August 2023, we announced the latest in our ocean bottom node product line known as Aquanaut™, a deepwater, wireless seismic acquisition node capable of operating for 200 days in water as deep at 3,450 meters.
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Many ocean-bottom nodal projects have been delayed and rescheduled due to the pandemic and uncertainty in oil and gas commodity prices, reducing rental demand for our ocean-bottom nodal products used to gather seismic data on the ocean-bottom. Depressed demand also continues for our traditional seismic products and our land nodal seismic products.
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In the spring of 2023, we released a derivative of the OptoSeis® technology for high temperature downhole applications. The product know as Insight by OptoSeis offers a passive, all-optical downhole sensor network – no electronics downhole - resulting in years long operational lifetime @ 150 °C.
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Due to the cyclicality of the oil and gas industry, we have historically managed our financial risk by limiting or eliminating debt leverage in our balance sheet.
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These products also allow water utilities to re-claim non-revenue water at a lower energy and field service cost through remote control of water service without placing its employees in potential harm or danger.
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We pledge to conduct ourselves in a most responsible manner in each community. As a manufacturer, we have a responsibility to reuse or recycle waste materials from our operations. Waste recycled includes aluminum, brass, copper, stainless steel, steel, and titanium as well as armored cable, film, lithium batteries, PCB boards and solder paste.
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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.
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Our primary competitors for the new energy or energy transition market are Microseismic, Inc., Namometrics, ISTI and ESG. Adjacent Markets Products Our industrial and imaging products face competition from numerous domestic and international specialty product manufacturers.
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Two customers comprised 26.7% and 11.7% of our revenue during fiscal year 2023. One customer comprised 29.3% of our revenue during fiscal year 2022.
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This includes production recyclable materials (aluminum, brass, copper, stainless steel, steel, and titanium as well as armored cable, film, lithium batteries, PCB boards and solder paste) plus paper, plastic, cardboard and e-waste (electronics). We produce an Environmental, Society and Governance (ESG) report annually which is made public on our website.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe Short-Term Nature of Our Order Backlog for Sales of Our Oil and Gas Products and Delayed or Canceled Customer Orders May Cause Us to Experience Fluctuations in Quarterly Results of Operations 12 Historically, the rate of new orders for the sale of our oil and gas products has varied substantially from quarter to quarter.
Biggest changeWe cannot assure that we will realize our expectations regarding acceptance of and revenue generated by our new products and services in existing or new markets. 12 The Short-Term Nature of Our Order Backlog for Sales of Our Oil and Gas Products and Delayed or Canceled Customer Orders May Cause Us to Experience Fluctuations in Quarterly Results of Operations.
The Ongoing Armed Conflict Between Russia and Ukraine Could Adversely Affect Our Business, Financial Condition, and Results of Operations, including our ability to repatriate cash from Russia A portion of our oil and gas product manufacturing is conducted through our wholly-owned subsidiary, Geospace Technologies Eurasia LLC, which is based in the Russian Federation.
The Ongoing Armed Conflict Between Russia and Ukraine Could Adversely Affect Our Business, Financial Condition, and Results of Operations, including our ability to repatriate cash from Russia. A portion of our oil and gas product manufacturing is conducted through our wholly-owned subsidiary, Geospace Technologies Eurasia LLC ("GTE"), which is based in the Russian Federation.
The credit agreement limits the incurrence of additional indebtedness, contains a covenant that requires us to maintain a certain amount of consolidated tangible net worth and contains other covenants customary in agreements of this type.
The credit agreement limits the incurrence of additional indebtedness, contains a covenant that requires us to maintain a certain amount of consolidated tangible net worth and liquidity, and contains other covenants customary in agreements of this type.
COVID-19 and the related mitigation measures have disrupted our supply chain, resulting in longer lead times in materials available from suppliers and extended the shipping time for these materials to reach our facilities.
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.
Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. We Have a Relatively Small Public Float, and Our Stock Price May be Volatile At September 30, 2022, we have approximately 12.2 million shares outstanding held by non-affiliates.
Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. We Have a Relatively Small Public Float, and Our Stock Price May be Volatile. At September 30, 2023, we have approximately 12.2 million shares outstanding held by non-affiliates.
Any material changes in oil and gas prices or other market trends, like slowing growth of the global economy, could adversely impact seismic exploration activity and would likely affect the demand for our products and could materially and adversely affect our results of operations and liquidity. 9 Generally, imbalances in the supply and demand for oil and gas will affect oil and gas prices and, in such circumstances, demand for our oil and gas products may be adversely affected when world supplies exceed demand.
Any material changes in oil and gas prices or other market trends, like slowing growth of the global economy, could adversely impact seismic exploration activity and would likely affect the demand for the Company's products and could materially and adversely affect its results of operations and liquidity. 9 Generally, imbalances in the supply and demand for oil and gas will affect oil and gas prices and, in such circumstances, demand for our oil and gas products may be adversely affected when world supplies exceed demand.
As a result, we may be subject to foreign currency fluctuations on our revenue. The reporting currency for our financial statements is the U.S. dollar. However, the assets, liabilities, revenue and costs of our Russian, Canadian and United Kingdom subsidiaries and our Brazilian, Chinese and Colombian branch offices are denominated in currencies other than U.S. dollars.
As a result, we may be subject to foreign currency fluctuations on our revenue. The reporting currency for our financial statements is the U.S. dollar. However, the assets, liabilities, revenue and costs of our Russian, Canadian and United Kingdom subsidiaries and our Brazilian, Colombian, and Kazakhstan branch offices are denominated in currencies other than U.S. dollars.
We market our seabed PRM systems products to large oil and gas companies. Since this product’s introduction in 2002, we have received system orders from three offshore oil and gas operators: BP, Shell and Equinor, which have accounted for a significant portion of our revenue in fiscal year 2014 and prior fiscal years.
We market our seabed PRM systems' products to large oil and gas companies. Since this product’s introduction in 2002, we have received system orders from three offshore oil and gas operators: BP, Shell and Equinor, which have accounted for a significant portion of our revenue in fiscal year 2014 and prior fiscal years.
Export Control Laws, as Well as the Laws of Other Countries We have offices in Brazil, Colombia, Canada, China, the Russian Federation and the United Kingdom, in addition to our offices in the United States.
Export Control Laws, as Well as the Laws of Other Countries We have offices in Brazil, Colombia, Canada, the Russian Federation, Kazakhstan and the United Kingdom, in addition to our offices in the United States.
We again expect revenue outside of the United States to represent a substantial portion of our revenue for fiscal year 2023 and subsequent years.
We again expect revenue outside of the United States to represent a substantial portion of our revenue for fiscal year 2024 and subsequent years.
Increases in Tariffs, Trade Restrictions or Taxes on our Products Could Have an Adverse Impact on our Operations. In fiscal year 2022, customers outside the United States accounted for approximately 60% of our revenues. We also purchase a portion of our raw materials from suppliers in China and other foreign countries.
Increases in Tariffs, Trade Restrictions or Taxes on our Products Could Have an Adverse Impact on our Operations. In fiscal year 2023, customers outside the United States accounted for approximately 50% of our revenues. We also purchase a portion of our raw materials from suppliers in China and other foreign countries.
These translations could result in significant changes to our results of operations from period to period. For the fiscal year ended September 30, 2022, approximately 8% of our consolidated revenue was related to the operations of our foreign subsidiaries and branches. Our Long-Lived Assets May be Subject to Impairment We periodically assess our long-lived assets for impairment.
These translations could result in significant changes to our results of operations from period to period. For the fiscal year ended September 30, 2023, approximately 5% of our consolidated revenue was related to the operations of our foreign subsidiaries and branches. Our Long-Lived Assets May be Subject to Impairment. We periodically assess our long-lived assets for impairment.
This limited number of shares outstanding results in a relatively limited market for our common stock. Our daily trading volume for the year ended September 30, 2022 averaged approximately 48,000 shares. Our small float and daily trading volumes have in the past caused, and may in the future result in, significant volatility in our stock price.
This limited number of shares outstanding results in a relatively limited market for our common stock. Our daily trading volume for the year ended September 30, 2023 averaged approximately 41,000 shares. Our small float and daily trading volumes have in the past caused, and may in the future result in, significant volatility in our stock price.
Likewise, restrictions on our ability to send products to our subsidiary in Russia may force our subsidiary to have to find other sources for the manufacturing of these products at potentially higher costs; however, our exports to Geospace Technologies Eurasia LLC have historically been limited.
Likewise, restrictions on our ability to send products to our subsidiary in Russia may force our subsidiary to have to find other sources for the manufacturing of these products at potentially higher costs; however, our exports to GTE have historically been limited.
Item 1A. Ri sk Factors In evaluating the Company’s business, you should consider the following discussion of risk factors, in addition to other information contained in this report and in the Company’s other public filings with the U.S. Securities and Exchange Commission.
Item 1A. Risk Factors In evaluating the Company ’ s business, you should consider the following discussion of risk factors, in addition to other information contained in this report and in the Company ’ s other public filings with the U.S. Securities and Exchange Commission.
Because our business depends on the level of oil exploration, existing or future laws or regulations related to GHGs and climate change, including incentives to conserve energy or use alternative energy sources, could have a negative impact on our business if such laws or regulations reduce demand for our customers’ products and, accordingly, our services.
Because our business depends on the level of oil exploration, existing or future laws or regulations related to GHGs and climate change, including incentives to conserve energy or use alternative energy sources, our business could be negatively impacted if such laws or regulations reduce demand for our customers’ products and, accordingly, our services.
We Rely on Key Suppliers for Certain Components Used in Our Products Certain models of our oil and gas marine wireless products require a timing device we purchase from a United States manufacturer. We currently do not possess the ability to manufacture this component and have no other reliable source for this device.
Certain models of our oil and gas marine wireless products require a timing device we purchase from a United States manufacturer. We currently do not possess the ability to manufacture this component and have no other reliable source for this device.
The High Fixed Costs of Our Operations Could Adversely Affect Our Results of Operations We have a high fixed cost structure primarily consisting of (i) depreciation expenses associated with our rental equipment and (ii) fixed manufacturing costs including salaries and benefits, taxes, insurance, maintenance, depreciation and other fixed manufacturing costs.
We have a high fixed cost structure primarily consisting of (i) depreciation expenses associated with our rental equipment and (ii) fixed manufacturing costs including salaries and benefits, taxes, insurance, maintenance, depreciation and other fixed manufacturing costs.
Amounts available for borrowing under the credit agreement are determined by a borrowing base, which is determined based upon certain of our domestic assets. Borrowings under the credit agreement will be principally secured by certain domestic assets.
Amounts available for borrowing under the credit agreement are determined by a borrowing base, which is determined based upon certain of our domestic assets. Borrowings under the credit agreement will be secured by substantially all of our domestic assets, except for certain excluded property.
The failure of our subcontractors to deliver quality products or services in a timely manner could adversely affect our profitability and reputation.
The failure of our subcontractors to deliver quality products or services in a timely manner could adversely affect our profitability and reputation. The High Fixed Costs of Our Operations Could Adversely Affect Our Results of Operations.
Should We Fail to Maintain an Effective System of Internal Control Over Financial Reporting, We May Not Be Able to Accurately Report Our Financial Results and Prevent Material Fraud, Which Could Adversely Affect the Value of Our Common Stock Effective internal control over financial reporting is necessary for us to provide reliable financial reports and effectively prevent and detect material fraud.
Should We Fail to Maintain an Effective System of Internal Control Over Financial Reporting, We May Not Be Able to Accurately Report Our Financial Results and Prevent Material Fraud, Which Could Adversely Affect the Value of Our Common Stock.
External Factors that Could Adversely Affect Us The Ongoing COVID-19 Pandemic Has Significantly Impacted Worldwide Economic Conditions and Could Have a Material Adverse Effect on Our Operations and Business.
External Factors that Could Adversely Affect Us The Ongoing COVID-19 Pandemic Has Significantly Impacted Worldwide Economic Conditions and Could Have a Material Adverse Effect on Our Operations and Business. The ongoing COVID-19 pandemic has negatively impacted worldwide economic activity and continues to create challenges in our markets.
Our Credit Risk Could Increase and We May Incur Bad Debt Write-Offs If Our Customers Continue to Face Difficult Economic Circumstances While we believe that our allowance for bad debts is adequate in light of known circumstances, additional amounts attributable to uncollectible accounts and notes receivable and bad debt write-offs may have a material adverse effect on our future results of operations.
While we believe that our allowance for bad debts is adequate in light of known circumstances, additional amounts attributable to uncollectible accounts and notes receivable and bad debt write-offs may have a material adverse effect on our future results of operations.
If we are unable to prevent such outages and breaches, these events could damage our reputation and lead to financial losses from remedial actions, loss of business or potential liability.
If we are unable to prevent such outages and breaches, these events could damage our reputation and lead to financial losses from remedial actions, loss of business or potential liability. We Rely on Key Suppliers for Certain Components Used in Our Products.
The extent and duration of the military action, sanctions, and resulting market disruptions could be significant and could potentially have substantial impact on the global economy and our business for an unknown period of time.
We have no way to predict the duration, progress or outcome of the military conflict in Ukraine. The extent and duration of the military action, sanctions, and resulting market disruptions could be significant and could potentially have substantial impact on the global economy and our business for an unknown period of time.
Additionally, in anticipation of customer product orders, from time to time we acquire substantial quantities of inventories, which if not sold or integrated into products within a reasonable period of time, could become obsolete. In such case, we would be required to impair the value of such inventories on our balance sheet.
Additionally, in anticipation of customer product orders, from time to time we acquire substantial quantities of inventories, which if not sold or integrated into products within a reasonable period of time, could become obsolete.
During times of economic slowdowns, some of our customers have (and other customers may have) undergone restructuring or bankruptcy that has or could adversely impact our revenues and profitability.
Such developments occur even among customers that are not experiencing financial difficulties. During times of economic slowdowns, some of our customers have (and other customers may have) undergone restructuring or bankruptcy that has or could adversely impact our revenues and profitability.
If we are not successful in this emerging market segment, it will negatively impact our financial performance and could negatively impact our reputation and harm our other business segments.
If we are not successful in this emerging market segment, it will negatively impact our financial performance and could negatively impact our reputation and harm our other business segments. 14 Cybersecurity Breaches and Other Disruptions of Our Information Technology Network and Systems Could Adversely Affect Our Business.
The implementation of these sanctions and export 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.
The implementation of these sanctions and export 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 2023, we imported $3.8 million of products from GTE for resale elsewhere in the world.
Our Foreign Subsidiaries and Foreign Marketing Efforts Are Subject to Additional Political, Economic, Legal and Other Uncertainties Not Generally Associated with Domestic Operations Based on customer billing data, revenue to customers outside the United States accounted for approximately 60% of our revenue during fiscal year 2022; however, we believe the percentage of revenue outside the United States is likely higher since many of our products are first delivered to a domestic location and ultimately shipped to a foreign location.
Based on customer billing data, revenue to customers outside the United States accounted for approximately 50% of our revenue during fiscal year 2023; however, we believe the percentage of revenue outside the United States is likely higher since many of our products are first delivered to a domestic location and ultimately shipped to a foreign location.
The Limited Market for Our Oil and Gas Markets and Emerging Markets Products Can Affect Our Revenue 13 In our Oil and Gas Markets segment, we generally market many of our products to seismic service contractors.
In such case, we would be required to impair the value of such inventories on our balance sheet. 13 The Limited Market for Our Oil and Gas Markets and Emerging Markets' Products Can Affect Our Revenue. In our Oil and Gas Markets segment, we generally market many of our products to seismic service contractors.
Despite the implementation of network security measures, our systems and those of third parties on which we rely may also be vulnerable to computer viruses, break-ins, malware and similar disruptions.
Any of these systems may be susceptible to outages due to fire, floods, power loss, telecommunications failures, terrorist attacks and similar events. Despite the implementation of network security measures, our systems and those of third parties on which we rely may also be vulnerable to computer viruses, break-ins, malware and similar disruptions.
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 operations by Geospace Technologies Eurasia LLC or other business in Russia.
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 operations by GTE or other business in Russia. We are actively monitoring the situation in Ukraine and Russia and assessing its impact on our business, including GTE.
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.
The net carrying value of GTE on our consolidated balance sheet at September 30, 2023 was $5.8 million, including cash of $2.5 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.
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 $3.8 million of products we imported from GTE in fiscal year 2023, the subsidiary generated $1.8 million in revenue from domestic sales in fiscal year 2023.
The Industries in Which We Operate are Characterized by Rapid Technological Development and Product Obsolescence, Which May Affect Our Ability to Provide Product Enhancements or New Products on a Timely and Cost-Effective Basis Our instruments and equipment are constantly undergoing rapid technological improvement.
If these customers experience financial difficulties, it could be difficult or impossible to retrieve our rental equipment from foreign countries. The Industries in Which We Operate are Characterized by Rapid Technological Development and Product Obsolescence, Which May Affect Our Ability to Provide Product Enhancements or New Products on a Timely and Cost-Effective Basis.
A Continued General Downturn in the Economy in Future Periods May Adversely Affect Our Business Economic slowdowns, currently or in the future, in the United States, China or India, could adversely affect our business in ways that we cannot predict.
A General Downturn in the Economy in Future Periods May Adversely Affect Our Business. Economic slowdowns, currently or in the future, in the United States, China or India, could adversely affect our business in ways that we cannot predict. During times of economic slowdown, our customers may reduce their capital expenditures and defer or cancel pending projects and product orders.
If we cannot provide reliable financial reports or prevent or detect material fraud, our operating results could be misstated.
Effective internal control over financial reporting is necessary for us to provide reliable financial reports and effectively prevent and detect material fraud. If we cannot provide reliable financial reports or prevent or detect material fraud, our operating results could be misstated.
Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brands, our international expansion efforts, our ability to attract and retain employees, our business and our operating results.
Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brands, our international expansion efforts, our ability to attract and retain employees, our business and our operating results. 16 Because We Have No Plans to Pay Any Dividends for the Foreseeable Future, Investors Must Look Solely to Stock Appreciation for a Return on Their Investment in Us.
Because We Have No Plans to Pay Any Dividends for the Foreseeable Future, Investors Must Look Solely to Stock Appreciation for a Return on Their Investment in Us 16 We have not paid cash dividends on our common stock since our incorporation and do not anticipate paying any cash dividends in the foreseeable future.
We have not paid cash dividends on our common stock since our incorporation and do not anticipate paying any cash dividends in the foreseeable future.
In particular, we depend on our information technology infrastructure for a variety of functions, including worldwide financial reporting, inventory management, procurement, invoicing and email communications. Any of these systems may be susceptible to outages due to fire, floods, power loss, telecommunications failures, terrorist attacks and similar events.
We rely on information technology networks and systems, some of which are owned and operated by third parties, to process, transmit and store electronic information. In particular, we depend on our information technology infrastructure for a variety of functions, including worldwide financial reporting, inventory management, procurement, invoicing and email communications.
If COVID–19 continues to spread or the response to contain the COVID–19 pandemic is unsuccessful, we could experience a material adverse effect on our business, financial condition, results of operations and liquidity. Oil Commodity Price Levels Could Affect Demand for Our Oil and Gas Products, Which Could Materially and Adversely Affect Our 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. Oil Commodity Price Levels Could Affect Demand for Our Oil and Gas Products, Which Could Materially and Adversely Affect Our Results of Operations and Liquidity.
Removed
The ongoing COVID-19 pandemic has spread across the globe and has negatively impacted worldwide economic activity, including the global demand for oil and natural gas, and continues to create challenges in our markets.
Added
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.
Removed
In addition to measures we have taken voluntarily, the government authorities in our markets have taken actions to mitigate the spread of COVID-19, including travel restrictions, border closings, restrictions on public gatherings, stay-at-home orders and other quarantine and isolation measures.
Added
Crude oil prices held above $65 per barrel throughout 2022 and through September 2023, which may result in higher cash flows for exploration and production companies.
Removed
COVID-19 continues to pose the risk that we or our employees, contractors, suppliers and customers may be prevented from conducting business activities for an indefinite period of time.
Added
Our Foreign Subsidiaries and Foreign Marketing Efforts Are Subject to Additional Political, Economic, Legal and Other Uncertainties Not Generally Associated with Domestic Operations.
Removed
The effort to vaccinate the global population appears to be reducing the effects of COVID-19, but new mutations of the virus and the global unvaccinated population has allowed the continued spread of COVID-19.
Added
Historically, the rate of new orders for the sale of our oil and gas products has varied substantially from quarter to quarter.
Removed
Sustained low oil prices or the failure of oil prices to rise in the future and the resulting downturns or lack of growth in the energy industry and energy‑related business, could have a negative impact on our results of operations and financial condition.
Added
Our Credit Risk Could Increase and We May Incur Bad Debt Write-Offs If Our Customers Continue to Face Difficult Economic Circumstances.
Removed
In light of the decline in oil prices caused by the COVID-19 pandemic in 2020, oil and gas exploration and production companies experienced a significant reduction in cash flows, which resulted in reductions in their capital spending budgets for oil and gas exploration-focused activities, including seismic data acquisition activities.
Added
Our instruments and equipment are constantly undergoing rapid technological improvement.
Removed
Demand for the sale of our seismic products targeted at customers in our Oil and Gas Markets segment, which has historically accounted for the majority of our revenue, significantly declined during fiscal year 2020, and both product sales and rental revenue diminished during the first half of fiscal year 2021 as a result of significant uncertainty in the outlook for oil and gas exploration.
Removed
Recently, crude oil prices have increased, which will likely result in higher cash flows for exploration and production ("E&P") companies. We believe E&P companies are allocating their increased levels of cash flows toward debt reduction and shareholder reward initiatives, such as stock buy-back programs and dividend payments.
Removed
We expect low demand for our Oil and Gas Markets products until E&P companies redirect their cash flows toward investments in exploration activities, especially seismic exploration.
Removed
In fiscal year 2022, we imported $1.9 million of products from Geospace Technologies Eurasia LLC for resale elsewhere in the world.
Removed
We are actively monitoring the situation in Ukraine and Russia and assessing its impact on our business, including our wholly-owned subsidiary Geospace Technologies Eurasia LLC. The net carrying value of this subsidiary on our consolidated balance sheet at September 30, 2022 was $6.0 million, including cash of $1.8 million.
Removed
In addition to the $1.9 million of products we imported from Geospace Technologies Eurasia LLC in fiscal year 2022, the subsidiary also generated $1.9 million in revenue from domestic sales in fiscal year 2022. We have no way to predict the duration, progress or outcome of the military conflict in Ukraine.
Removed
During times of economic slowdown, our customers may reduce their capital expenditures and defer or cancel pending projects and product orders. Such developments occur even among customers that are not experiencing financial difficulties.
Removed
We cannot assure that we will realize our expectations regarding acceptance of and revenue generated by our new products and services in existing or new markets.
Removed
If these customers experience financial difficulties, it could be difficult or impossible to retrieve our rental equipment from foreign countries.
Removed
Cybersecurity Breaches and Other Disruptions of Our Information Technology Network and Systems Could Adversely Affect Our Business 14 We rely on information technology networks and systems, some of which are owned and operated by third parties, to process, transmit and store electronic information.
Removed
In addition, certain of our domestic subsidiaries have guaranteed our obligations under the credit agreement and such subsidiaries have secured the obligations by pledging certain assets.

Item 2. Properties

Properties — owned and leased real estate

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Biggest change(3) This property is located adjacent to the Pinemont Facility. It is currently being used as additional parking for the Pinemont Facility and legacy structures are being used to support our manufacturing and warehousing operations. (4) This property is located at 8701 Cross Park Drive, Suite 100, in Austin, Texas.
Biggest changeIt is currently being used as additional parking for the Pinemont Facility and legacy structures are being used to support our manufacturing and warehousing operations. (3) This property is located at 8701 Cross Park Drive, Suite 100, in Austin, Texas. This facility supports the majority of our OptoSeis® research and development and engineering operations.
Pr operties As of September 30, 2022, our operations included the following locations: Location Owned/Leased Approximate Square Footage/Acreage Use Segment (see notes below) Houston, Texas Owned 387,000 See Note 1 below 6 and 7 Houston, Texas Owned 30,000 See Note 2 below 6 Houston, Texas Owned 17.3 acres See Note 3 below 6 Austin, Texas Leased 9,000 See Note 4 below 6 Melbourne, Florida Leased 7,000 See Note 5 below 8 Ufa, Bashkortostan, Russia Owned 120,000 Manufacturing, sales and service 6 Calgary, Alberta, Canada Owned 45,000 Manufacturing, sales and service 6 and 7 Luton, Bedfordshire, England Owned 8,000 Sales and service 7 Beijing, China Leased 1,000 Sales and service 6 Bogotá, Colombia Owned 19,000 Sales and service 6 (1) This property is located at 7007 Pinemont Drive in Houston, Texas (the “Pinemont Facility”).
Properties As of September 30, 2023, our operations included the following locations: Location Owned/Leased Approximate Square Footage/Acreage Use Segment (see notes below) Houston, Texas Owned 387,000 See Note 1 below 6 and 7 Houston, Texas Owned 17.3 acres See Note 2 below 6 Austin, Texas Leased 9,000 See Note 3 below 6 Melbourne, Florida Leased 7,000 See Note 4 below 8 Ufa, Bashkortostan, Russia Owned 120,000 Manufacturing, sales and service 6 Calgary, Alberta, Canada Owned 45,000 Manufacturing, sales and service 6 and 7 Luton, Bedfordshire, England Owned 8,000 Sales and service 7 Bogotá, Colombia Owned 19,000 Sales and service 6 (1) This property is located at 7007 Pinemont Drive in Houston, Texas (the “Pinemont Facility”).
This facility supports the majority of our OptoSeis ® research and development and engineering operations. (5) This property is located at 5700 N. Harbor City Blvd., Suite 100, in Melbourne, Florida. This facility contains all the operations of Quantum. (6) Oil and Gas Markets. (7) Adjacent Markets (8) Emerging Markets
(4) This property is located at 5700 N. Harbor City Blvd., Suite 100, in Melbourne, Florida. This facility contains all the operations of Quantum. (5) Oil and Gas Markets. (6) Adjacent Markets (7) Emerging Markets
The Pinemont Facility contains substantially all manufacturing activities and all engineering, selling, marketing and administrative activities for us in the United States. The Pinemont Facility also serves as our international corporate headquarters. (2) This property is located at 6410 Langfield Road in Houston, Texas. This facility provides additional warehousing and maintenance and repair capacity for our marine rental equipment operations.
The Pinemont Facility contains substantially all manufacturing activities and all engineering, selling, marketing and administrative activities for us in the United States. The Pinemont Facility also serves as our international corporate headquarters. (2) This property is located adjacent to the Pinemont Facility.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeYear Ended September 30, 2022: Low High Fourth Quarter $ 4.10 $ 5.45 Third Quarter 4.64 6.72 Second Quarter 4.97 8.88 First Quarter 6.41 10.27 Year Ended September 30, 2021: Fourth Quarter $ 7.78 $ 10.94 Third Quarter 7.30 9.36 Second Quarter 8.15 12.40 First Quarter 5.02 10.29 Dividends Since our initial public offering in 1997, we have not paid dividends, and we do not intend to pay cash dividends on our common stock in the foreseeable future.
Biggest changeYear Ended September 30, 2023: Low High Fourth Quarter $ 7.22 $ 14.59 Third Quarter 6.60 9.16 Second Quarter 3.96 7.55 First Quarter 3.76 4.88 Year Ended September 30, 2022: Fourth Quarter $ 4.10 $ 5.45 Third Quarter 4.64 6.72 Second Quarter 4.97 8.88 First Quarter 6.41 10.27 Dividends Since our initial public offering in 1997, we have not paid dividends, and we do not intend to pay cash dividends on our common stock in the foreseeable future.
For purposes of calculating the number of securities remaining under the 2014 Plan in column (c), Full Value Awards are counted as 1.5 shares for each share awarded. The number of securities shown 19 in column (a) of the table above represents restricted stock unit awards outstanding under the 2014 Plan. Column (b) excludes restricted stock unit awards.
For purposes of calculating the number of securities remaining under the 2014 Plan in column (c), Full Value Awards are counted as 1.5 shares for each share awarded. The number of securities shown in column (a) of the table above represents restricted stock unit awards outstanding under the 2014 Plan.
Securities Authorized for Issuance under Equity Compensation Plans The following equity plan information is provided as of September 30, 2022: Equity Compensation Plan Information Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted-average Exercise Price of Outstanding Options, Warrants and Rights (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) (In shares) (In dollars per share) (In shares) Equity Compensation Plans Approved by Security Holders (1) 367,859 N/A 1,402,916 Equity Compensation Plans Not Approved by Security Holders — — — Total 367,859 N/A 1,402,916 (1) The number of securities shown in column (c) represents number of securities remaining available for issuance under the Company’s 2014 Long Term Incentive Plan, as amended (the “2014 Plan”).
Securities Authorized for Issuance under Equity Compensation Plans The following equity plan information is provided as of September 30, 2023: Equity Compensation Plan Information Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted-average Exercise Price of Outstanding Options, Warrants and Rights (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) (In shares) (In dollars per share) (In shares) Equity Compensation Plans Approved by Security Holders (1) 377,549 N/A 1,137,509 Equity Compensation Plans Not Approved by Security Holders — — — Total 377,549 N/A 1,137,509 (1) The number of securities shown in column (c) represents number of securities remaining available for issuance under the Company’s 2014 Long Term Incentive Plan, as amended (the “2014 Plan”).
Item 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities Holders of Record Our common stock is traded on The NASDAQ Global Select Market under the symbol “GEOS”.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Holders of Record Our common stock is traded on The NASDAQ Global Select Market under the symbol “GEOS”.
On October 31, 2022, there were approximately 139 holders of record of our common stock, and the closing price per share on such date was $4.04 as quoted by The NASDAQ Global Select Market.
On October 31, 2023, there were approximately 143 holders of record of our common stock, and the closing price per share on such date was $11.99 as quoted by The NASDAQ Global Select Market.
Recent Sales of Unregistered Securities and Use of Proceeds None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. 20
Column (b) excludes restricted stock unit awards. 19 Recent Sales of Unregistered Securities and Use of Proceeds None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. 20

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

59 edited+16 added−25 removed39 unchanged
Biggest changeOther uses of cash in our operations primarily included (i) the removal of $11.1 million gross profit from the sale of used rental equipment as it is included in investing activities, (ii) a $0.8 million decrease in accounts payable due to the timing of payments to suppliers, (iii) a $2.4 million increase in inventories to meet an increase in demand for our Adjacent Markets products and (iv) a $0.7 million decrease in other liabilities primarily due to a decrease in customer deposits on rental equipment and a decrease in accrued compensation costs.
Biggest changeThese sources of cash were partially offset by (i) a $5.6 million increase in trade accounts and notes receivable primarily due to our increase in revenue and the timing of collections from customers, (ii) a $11.0 million increase in inventories to meet an increase in demand for our products, (iii) the removal of $4.4 million gross profit from the sale of used rental equipment and (iv) a $1.1 million of gain from the sale of property and equipment since they are included in investing activities.
Crude oil prices have recently rebounded; however, lasting higher levels of oil and gas commodity pricing may not stabilize in the long term, thus continuing the challenging industry conditions we have experienced in previous fiscal years. Many of our land-based traditional seismic products can be damaged, destroyed or otherwise consumed during our customer’s field operations.
Crude oil prices have rebounded; however, lasting higher levels of oil and gas commodity pricing may not stabilize in the long term, thus continuing the challenging industry conditions we have experienced in previous fiscal years. Many of our land-based traditional seismic products can be damaged, destroyed or otherwise consumed during our customer’s field operations.
We design and manufacture other products of a non-seismic nature, including water meter products, imaging equipment and provide contract manufacturing services. For further informtion on the nature of our operations, see the information under the heading “Business” in this Annual Report on Form 10-K.
We design and manufacture other products of a non-seismic nature, including water meter products, imaging equipment and provide contract manufacturing services. For further information on the nature of our operations, see the information under the heading “Business” in this Annual Report on Form 10-K.
Such examples include, but are not limited to, the failure of the Quantum or OptoSeis ® or Aquana technology transactions to yield positive operating results, decreases in commodity price levels and continued adverse impact of COVID-19 which could reduce demand for our products, 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, bad debt write-offs associated with customer accounts, inability to collect on promissory notes, lack of further orders for our OBX systems, failure of our Quantum products to be adopted by the border and perimeter security market, or a decrease in such market due to governmental changes, and infringement or failure to protect intellectual property.
Such examples include, but are not limited to, the failure of the Quantum or OptoSeis® or Aquana technology transactions to yield positive operating results, decreases in commodity price levels and continued adverse impact of COVID-19 which could reduce demand for our products, 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, bad debt write-offs associated with customer accounts, inability to collect on promissory notes, lack of further orders for our OBX rental equipment, failure of our Quantum products to be adopted by the border and perimeter security market, or a decrease in such market due to governmental changes, and infringement or failure to protect intellectual property.
If, based on the quantitative assessment, we determine that the fair value of a reporting unit is less that its carrying amount, a goodwill impairment is recognized equal to the difference between the carrying amount of the reporting unit and its fair value, not to exceed the carrying amount of the goodwill. 26 We record a write-down of our inventories when the cost basis of any manufactured product, including any estimated future costs to complete the manufacturing process, exceeds its net realizable value.
If, based on the quantitative assessment, we determine that the fair value of a reporting unit is less that its carrying amount, a goodwill impairment is recognized equal to the difference between the carrying amount of the reporting unit and its fair value, not to exceed the carrying amount of the goodwill. 27 We record a write-down of our inventories when the cost basis of any manufactured product, including any estimated future costs to complete the manufacturing process, exceeds its net realizable value.
While we have experienced stronger marine nodal rental activity in fiscal year 2022, the need for new seismic equipment, particularly land-based equipment, remains restrained due to our customers’ (i) limited capital resources, (ii) lack of visibility into future demand for their seismic services and (iii) in some cases, under-utilized legacy equipment.
While we have experienced stronger marine nodal rental activity in fiscal year 2023, the need for new seismic equipment, particularly land-based equipment, remains restrained due to our customers’ (i) limited capital resources, (ii) lack of visibility into future demand for their seismic services and (iii) in some cases, under-utilized legacy equipment.
We expect that fiscal year 2023 revenue from our oil and gas reservoir products, and principally our borehole tools and services, will increase slightly over fiscal year 2022 levels. We have not received any orders for a large-scale seabed PRM system since November 2012, although we do believe opportunities for PRM orders do exist in today's market.
We expect that fiscal year 2024 revenue from our oil and gas reservoir products, and principally our borehole tools and services, will increase slightly over fiscal year 2023 levels. We have not received any orders for a large-scale seabed PRM system since November 2012, although we do believe opportunities for PRM orders do exist in today's market.
We expect fiscal year 2023 revenue from our Emerging Markets products to increase over 2022 levels largely due to optimism of obtaining new security-related contracts and opportunities with oil and gas industry customers.
We expect fiscal year 2024 revenue from our Emerging Markets products to increase over 2023 levels largely due to optimism of obtaining new security-related contracts and opportunities with oil and gas industry customers.
In light of current market conditions, the inventory balances in our Oil and Gas Markets business segment at September 30, 2022 continued to exceed levels we consider appropriate for the current level of product demand.
In light of current market conditions, the inventory balances in our Oil and Gas Markets business segment at September 30, 2023 continued to exceed levels we consider appropriate for the current level of product demand.
Examples of forward-looking statements include, among others, statements that we make regarding our expected operating results, the 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 PRM systems, future demand for OBX systems, the completion of new orders for our 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 therefor, and our strategy for growth, product development, market position, financial results and the provision of accounting reserves.
Examples of forward-looking statements include, among others, statements that we make regarding our expected operating results, the 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 PRM systems, future demand for OBX rental equipment, the adoption of Quantum's SADAR® product monitoring of subsurface reservoirs, the completion of new orders for our 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 therefor, and our strategy for growth, product development, market position, financial results and the provision of accounting reserves.
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 our Agreement through its expiration in May 2024, leveraging or sales of real estate assets, sales of rental assets and other liquidity sources which may be available to us.
In the absence of future profitable results of operations, we may need to rely on other sources of liquidity to fund our future operations, including executed rental contracts, available borrowings under the Agreement through its expiration in July 2025, leveraging or sales of real estate assets, sales of rental assets and other liquidity sources which may be available to us.
As this lag persists, we expect the reduced levels of demand for our Oil and Gas Markets segment products and our rental marine wireless nodal products to continue. We also expect our land-based traditional and wireless products will continue to experience low levels of product demand until our customers consume their excess levels of underutilized equipment.
As this lag persists, we expect the reduced levels of demand for our Oil and Gas Markets segment products. We also expect our land-based traditional and wireless products will continue to experience low levels of product demand until our customers consume their excess levels of underutilized equipment.
Management’s Current Outlook and Assumptions As further discussed above, there remains uncertainties regarding the duration and to what extent the COVID-19 pandemic will ultimately impact the demand for our products and services or with our supply chain. Regarding our Oil and Gas Markets business segment, demand for our products are subject to volatile fluctuations in crude oil prices.
Management ’ s Current Outlook and Assumptions As further discussed above, there remains uncertainties regarding the duration and to what extent the COVID-19 pandemic will ultimately impact the demand for our products and services or with our supply chain. Regarding our Oil and Gas Markets business segment, demand for our products are subject to volatile fluctuations in crude oil prices.
See Note 18 to our consolidated financial statements in this Annual Report on Form 10-K for more information on our contractual contingencies.
See Note 17 to our consolidated financial statements in this Annual Report on Form 10-K for more information on our contractual contingencies.
We believe our OBX rental revenue will increase substantially in fiscal year 2023 as a result of rental contracts executed during fiscal year 2022 and anticipated new rental contracts, but we can make no assurance in this regard.
We believe our OBX rental revenue will increase in fiscal year 2024 as a result of rental contracts executed during fiscal year 2023 and anticipated new rental contracts, but we can make no assurance in this regard.
We expect fiscal year 2023 revenue from our Adjacent Markets products to increase over fiscal year 2022 levels due to our acquisition of Aquana and intergration of Aquana's products into our business and optimisim that demand for our industrial, imaging products and contract manufacturing services will continue to increase in fiscal year 2023.
We expect fiscal year 2024 revenue from our Adjacent Markets products to increase over fiscal year 2023 levels due to our acquisition of Aquana and intergration of Aquana's products into our business and optimism that demand for our industrial, imaging products and contract manufacturing services will continue to increase in fiscal year 2024.
We currently believe that our cash, cash equivalents and short-term investments will be sufficient to finance any future operating losses and planned capital expenditures through the next twelve months.
We currently believe that our cash and cash equivalents will be sufficient to finance any future operating losses and planned capital expenditures through the next twelve months.
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.
In 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 Russia.
We expect fiscal year 2023 cash investments in property, plant and equipment will be approximately $1 million during fiscal year 2023. Our capital expenditures are expected to be funded from our cash on hand, internal cash flows, cash flows from our rental contracts or, if necessary, borrowings under our new credit agreement.
We expect fiscal year 2024 cash investments in our property, plant and equipment will be approximately $4 million. Our capital expenditures are expected to be funded from our cash on hand, internal cash flows, cash flows from our rental contracts or, if necessary, borrowings under our new credit agreement.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following is management’s discussion and analysis of the major elements of our consolidated financial statements.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations The following is management’s discussion and analysis of the major elements of our consolidated financial statements.
Armed Conflict Between Russia and Ukraine A portion of our oil and gas product manufacturing is conducted through our wholly-owned subsidiary, Geospace Technologies Eurasia LLC, which is based in the Russian Federation. Consequently, our oil and gas business could be directly affected by the current war between Russia and Ukraine.
Armed Conflict Between Russia and Ukraine A portion of our oil and gas product manufacturing is conducted through GTE, which is based in the Russian Federation. Consequently, our oil and gas business could be directly affected by the current war between Russia and Ukraine.
During the third quarter of fiscal year 2022, we experienced increased rental demand for our marine nodal products in the form of additional rental contracts and requests for quotes from existing and new customers.
During the third quarter of fiscal year 2022, we began to experience an increase in rental demand for our marine nodal products in the form of additional rental contracts and requests for quotes from existing and new customers.
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, except as required by applicable securities laws and regulations.
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.
There is no maximum limit to the contingent cash payments that could be made. The merger agreement with Aquana requires the continued employment of a certain key employee and former member of Aquana for the first four years of the six year earn-out period in order for any of Aquana’s former members to be eligible to receive any earn-out payments.
The merger agreement with Aquana requires the continued employment of a certain key employee and former member of Aquana for the first four years of the six year earn-out period in order for any of Aquana’s former members to be eligible to receive any earn-out payments.
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 and cash equivalent and short-term investments decreased $6.6 million during fiscal year 2022.
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 increased $17.0 million during fiscal year 2023.
As difficult market conditions continue for the products in our Oil and Gas Markets segment, we are recording additional expenses for inventory obsolescence and will continue to do so in the future until product demand and/or resulting inventory turnover return to acceptable levels.
Although the Oil and Gas Markets segment is seeing a recovery after experiencing difficult market conditions, we have been recording additional expenses for inventory obsolescence and will continue to do so in the future until product demand and/or resulting inventory turnover return to acceptable levels.
Consolidated operating expenses for fiscal year 2022 were $41.2 million, an increase of $8.0 million, or 24.2%, from fiscal year 2021.
Consolidated operating expenses for fiscal year 2023 were $41.7 million, an increase of $0.5 million, or 1.2%, from fiscal year 2022.
Summary financial data by business segment follows (in thousands): YEAR ENDED SEPTEMBER 30, 2022 2021 Oil and Gas Markets Traditional exploration product revenue $ 6,597 $ 4,518 Wireless exploration product revenue 40,667 45,751 Reservoir product revenue 1,877 1,983 Total revenue 49,141 52,252 Operating loss (7,539 ) (16,229 ) Adjacent Markets Industrial product revenue 25,640 21,335 Imaging product revenue 13,531 11,084 Total revenue 39,171 32,419 Operating income 6,021 6,423 Emerging Markets Revenue 711 10,193 Operating income (loss) (9,128 ) 5,033 Corporate Revenue 230 — Operating loss (12,490 ) (12,098 ) Consolidated Totals Revenue 89,253 94,864 Operating loss (23,136 ) (16,871 ) Overview Although in an already depressed oil and gas industry, demand further decreased in February 2020 because of the oversupply of crude oil due to failed OPEC negotiations that led to a dramatic drop in crude oil prices when combined with the impact of the COVID-19 pandemic.
Summary financial data by business segment follows (in thousands): YEAR ENDED SEPTEMBER 30, 2023 2022 Oil and Gas Markets Traditional exploration product revenue $ 12,183 $ 6,597 Wireless exploration product revenue 60,848 40,667 Reservoir product revenue 962 1,877 Total revenue 73,993 49,141 Operating income (loss) 15,759 (7,539 ) Adjacent Markets Industrial product revenue 36,859 25,640 Imaging product revenue 12,180 13,531 Total revenue 49,039 39,171 Operating income 11,490 6,021 Emerging Markets Revenue 1,234 711 Operating loss (4,003 ) (9,128 ) Corporate Revenue 243 230 Operating loss (11,918 ) (12,490 ) Consolidated Totals Revenue 124,509 89,253 Operating income (loss) 11,328 (23,136 ) Overview Although in an already depressed oil and gas industry, demand further decreased in February 2020 because of the oversupply of crude oil due to failed OPEC negotiations that led to a dramatic drop in crude oil prices when combined with the impact of the COVID-19 pandemic.
The increase was primarily due to higher demand for water meter products and contract manufacturing services. • Imaging Product Revenue – Revenue from our imaging products increased $2.4 million, or 22.1%, from the prior fiscal year. The increase was primarily due to higher demand for our imaging equipment.
The increase was primarily due to higher demand for our water meter products. ● Imaging Product Revenue – Revenue from our imaging products decreased $1.4 million, or 10.0%, from the prior fiscal year. The decrease was primarily due to lower demand for our imaging equipment.
Emerging Markets Revenue Revenue from our Emerging Markets products for fiscal year 2022 was $0.7 million, compared to $10.2 million from the prior fiscal year. The decrease was due to $10.1 million of revenue recognized on our contract with the CBP during the prior fiscal year.
Emerging Markets Revenue Revenue from our Emerging Markets products for fiscal year 2023 was $1.2 million, compared to $0.7 million from the prior fiscal year. The increase in revenue was primarily due to revenue of $0.7 million recognized on a security related contract completed with a commercial customer.
Recently, crude oil prices have rebounded and held above February 2020 levels; however, a lag in time typically occurs between higher oil prices and greater demand for our Oil and Gas Markets segment products.
Crude oil prices held above $65 per barrel throughout 2022 and through September 2023; however, a lag in time typically occurs between higher oil prices and greater demand for our Oil and Gas Markets segment products.
Please see “Part I—Item 1A.—Risk Factors” for more information. 22 Coronavirus (COVID-19) The ongoing COVID-19 pandemic has negatively impacted worldwide economic activity and continues to create challenges in our markets, such as uncertainties regarding the duration and extent to which the COVID-19 pandemic will ultimately have a negative impact on the demand for our products and services or on our supply chain.
Please see “Part I—Item 1A.—Risk Factors” for more information. 22 Coronavirus (COVID-19) The ongoing COVID-19 pandemic has negatively impacted worldwide economic activity and continues to create challenges in our markets.
The components of this increases were as follows: • Industrial Product Revenue and Services – Revenue from our industrial products increased $4.3 million, or 20.2%, from the prior fiscal year.
Adjacent Markets Revenue Revenue from our Adjacent Markets products for fiscal year 2023 increased $9.9 million, or 25.2%, from the prior fiscal year. The components of this increase were as follows: ● Industrial Product Revenue and Services – Revenue from our industrial products increased $11.2 million, or 43.8%, from the prior fiscal year.
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.
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. 26 Contractual Obligations Contingent Compensation Costs In connection with the acquisition of Aquana in July 2021, we are subject to additional contingent cash payments to the former members of Aquana over a six-year earn-out period.
The increase in gross profit primarily resulted from (i) higher gross profit attributable to the increased utilization of our OBX rental fleet and (ii) the higher profit margins generated on wireless exploration product sales. The increase was partially offset by the reduction in revenue and related gross profit from our contract with the CBP discussed above.
The increase in gross profit was primarily due to higher gross profits from the increased utilization of our OBX rental fleet and the increase in industrial product revenue and related gross profits. The increase was partially offset by the decrease in wireless exploration product revenue and related gross profits.
The decrease in operating loss was primarily due to (i) higher wireless rental revenue and related gross profits due to improved utilization of our OBX rental fleet and (ii) a $3.6 million increase to a favorable non-cash adjustment to the estimated fair value of contingent consideration related to our OptoSeis ® acquisition when compared to the same period of the prior fiscal year.
The improvement in operating income was partially offset by a (i) decrease in wireless product revenue and related gross profits and (ii) $4.4 million favorable non-cash adjustment reported in the prior fiscal year related to the estimated fair value of contingent consideration related to our OptoSeis® acquisition.
The vast majority of our oil and gas rental revenue in fiscal year 2022 was derived from short-term rentals of our OBX ocean-bottom recorder.
We expect fiscal year 2024 demand for our land-based traditional seismic products may increase slightly over fiscal year 2023 levels. 28 The vast majority of our oil and gas rental revenue in fiscal year 2023 was derived from short-term rentals of our OBX ocean-bottom recorder.
The increase primarily reflects higher demand for our sensor and marine products. • Wireless Exploration Product Revenue – Revenue from our wireless exploration products decreased $5.1 million, or 11.1%, from the prior fiscal year.
The increase primarily reflects higher demand for our sensor and marine products. ● Wireless Exploration Product Revenue – Revenue from our wireless exploration products increased $20.2 million, or 49.6%, from the prior fiscal year. The increase was primarily due to increased rental revenue attributable to higher utilization of our OBX rental fleet.
We expect to remain in compliance with this requirement in fiscal year 2023. At September 30, 2022, we had no borrowings outstanding and were compliant with all covenants under the Agreement. Our borrowing availability at September 30, 2022 was $8.5 million.
At September 30, 2023, we had no outstanding borrowings under the Agreement and our borrowing base availability under the Agreement was $13.1 million after consideration of a $0.1 million outstanding letter of credit. We were in compliance with all covenants under the Agreement.
The decrease in operating income was primarily due (i) a $1.3 million increase in research and development expense, (ii) $1.0 million in incremental operating costs attributable to our acquisition of Aquana and (iii) a $0.4 million impairment charge on our manufacturing equipment. The decrease was largely offset by an increase in revenue and related gross profits for fiscal year 2022.
The increase was partially offset by (i) an increase in operating expenses resulting from the increased revenue and (ii) higher research and development expense. Operating income for the prior fiscal year included a $0.4 million impairment charge on our manufacturing equipment.
The decrease in operating income (loss) was also due (i) a non-cash goodwill impairment charge of $4.3 million and (ii) a $2.0 million decrease to a favorable non-cash adjustment to the estimated fair value of contingent consideration related to our Quantum acquisition when compared to the same period of the prior fiscal year.
The decrease in operating loss was partially offset by a $0.7 million decrease to a favorable non-cash adjustment to the estimated fair value of contingent consideration related to our Quantum acquisition when compared to the same period of the prior fiscal year. 24 Liquidity and Capital Resources Fiscal Year 2023 At September 30, 2023, we had approximately $33.7 million in cash, cash equivalents and short-term investments.
The increase was partially offset by a $1.5 million increase in a favorable non-cash adjustment to the estimated fair value of contingent consideration related to our Quantum and OptoSeis ® acquisitions when compared to the prior fiscal year. Consolidated other income for fiscal year 2022 was $0.5 million compared to $3.4 million from fiscal year 2021.
The increase was primarily due to a (i) $5.0 million favorable non-cash adjustment reported in the prior year period resulting from a change in the estimated fair value of contingent consideration related to our Quantum and OptoSeis® acquisitions and (ii) an increase in incentive compensation attributable to the increase in revenue.
Operating Income (Loss) Operating income (loss) from our Emerging Markets products for fiscal year 2022 was $(9.1) million, compared to $5.0 million from the prior fiscal year. The decrease for fiscal year 2022 was primarily due to the revenue and related gross profit recognized on our contract with the CBP in the prior fiscal year.
Operating Loss Operating loss from our Emerging Markets products for fiscal year 2023 was $4.0 million, compared to $9.1 million from the prior fiscal year.
For the fiscal year ended September 30, 2022, we generated cash of $14.1 million in investing activities. Sources of cash included (i) net proceeds of $8.5 million from the sale of short-term investments and (ii) proceeds of $11.6 million from the sale of used rental equipment.
For the fiscal year ended September 30, 2023, we used cash of $11.9 million in investing activities. Uses of cash included (i) $4.0 million for additions to our property, plant and equipment, (ii) $9.9 million for additions to our equipment rental fleet and (iii) net disbursements of $13.9 million for purchases of short-term investments.
In May 2022, we entered into a credit agreement (the “Agreement”) with Amerisource Funding, Inc., as administrative agent and as a lender, and Woodforest National Bank, as a lender. Available borrowings under the Agreement are determined by a borrowing base with a maximum availability of $10 million.
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 $15 million.
Contingent Compensation Costs In connection with the acquisition of Aquana in July 2021, we are subject to additional contingent cash payments to the former members of Aquana over a six-year earn-out period. 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.
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.
If a large scale PRM order were received in fiscal year 2023, it could significantly impact our fiscal year 2023 or fiscal year 2024 revenue and profits.
If a large scale PRM order were received in fiscal year 2024, revenue would likely not be recognized until fiscal year 2025 and 2026.
The borrowing base is determined based upon certain of our domestic assets which include (i) 70% loan to value of our property located at 6410 Langfield Road in Houston, Texas (the “Property”), (ii) 50% of forced liquidation value of equipment, (iii) 80% of certain accounts receivable and (iv) 50% of forced liquidation value of certain inventory (inventory borrowing base limited to 100% of borrowing base credit given toward accounts receivable).
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.
The decrease in operating loss was partially offset by an increase in research and development costs. Adjacent Markets Revenue Revenue from our Adjacent Markets products for fiscal year 2022 increased $6.8 million, or 20.8%, from the prior fiscal year.
Operating Income Operating income from our Adjacent Markets products for fiscal year 2023 was $11.5 million, an increase of $5.5 million, or 90.8% from the prior fiscal year. The increase in operating income was primarily due to the increase in revenue and related gross profits.
The decrease in revenue was partially offset by increased rental revenue from our OBX rental fleet and higher sales of our industrial and imaging products. Consolidated gross profit for fiscal year 2022 was $18.0 million, an increase of $1.7 million, or 10.7%, from fiscal year 2021.
The increase in revenue was largely due to higher rental revenue from our Oil and Gas Markets segment due to increased utilization of our OBX rental fleet and an increase in demand for our industrial products from our Adjacent Markets segment. The increase was partially offset by a decrease in sales of wireless exploration products.
The decrease in other income was primarily due to (i) a gain recognized on the sale of our investment in a debt security in fiscal year 2021, (ii) an increase in foreign exchanges losses and (iii) a decrease in interest income. Consolidated income tax expense for fiscal year 2022 was $0.2 million compared to $0.6 million from fiscal year 2021.
The sale was part of our plan to streamline operations and reduce costs. Consolidated other income for fiscal year 2023 was $1.2 million compared to $0.5 million from fiscal year 2022. The increase in other income was primarily due to a increase in net foreign currency transaction gains.
The Agreement is for a two-year term with all funds borrowed due at the expiration of the term. The interest rate on borrowed funds is the Wall Street prime rate (with a minimum of 3.25%) plus 4.00%. We are required to make monthly interest payments on borrowed funds.
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.
Our available cash and cash equivalents and short-term investments totaled $17.0 million at September 30, 2022, which included $2.6 million of cash and cash equivalents held by our foreign subsidiaries and branch offices, of which $1.8 million was held by our subsidiary in the Russian Federation. .
For the fiscal year ended September 30, 2023, we used cash of $0.5 million from financing activities consisting of (i) $0.4 million for debt issuance costs related to our new credit agreement and (ii) $0.2 million for final contingent consideration payments to the former shareholders of Quantum. 25 Our available cash, cash equivalents and short-term investments was $33.7 million at September 30, 2023, which included $3.8 million of cash and cash equivalents held by our foreign subsidiaries and branch offices, of which $2.5 million was held by our subsidiary in the Russian Federation.
Segment Results of Operations Fiscal Year 2022 Compared to Fiscal Year 2021 Oil and Gas Markets Revenue Revenue from our Oil and Gas Markets products for fiscal year 2022 decreased $3.1 million, or 6.0%, from fiscal year 2021.
The increase was partially offset by a decrease in interest income attributable to lower note receivable balances between periods. Segment Results of Operations Fiscal Year 2023 Compared to Fiscal Year 2022 Oil and Gas Markets Revenue Revenue from our Oil and Gas Markets products for fiscal year 2023 increased $24.9 million, or 50.6%, from fiscal year 2022.
Offsetting these sources were (i) $1.1 million for additions to our property, plant and equipment and (ii) $4.8 million for additions to our equipment rental fleet. We expect our cash investments in our rental fleet to be approximately $6 million in fiscal year 2023.
These uses of cash were partially offset by proceeds of (i) $11.5 million from the sale of used rental equipment and (ii) $4.4 million from the sale of property and equipment. We expect fiscal year 2024 cash investments into our rental fleet will be approximately $9 million.
Our net loss of $22.9 million was offset by 24 net non-cash charges of $24.6 million resulting from deferred income taxes, depreciation, amortization, asset impairments, accretion, inventory obsolescence, stock-based compensation, bad debt expense and changes in the estimated fair value of contingent consideration.
For the fiscal year ended September 30, 2023, we generated $15.6 million of cash from operating activities. Sources of cash included our net income of $12.2 million and net non-cash charges of $19.6 million resulting from deferred income taxes, depreciation, amortization, accretion, inventory obsolescence, stock-based compensation and bad debt recovery.
The increase was due to (i) a $4.3 million goodwill impairment charge related to our Quantum acquisition, (ii) a $1.8 million increase in research and development project costs, (iii) a $1.4 million increase in personnel costs, (iv) $1.1 million in incremental operating costs associated with our acquisition of Aquana and (v) a $0.9 million increase in sales, marketing and other general business expenses.
The increase in operating expenses were partially offset by a (i) $4.3 million non-cash goodwill impairment charge reported in the prior fiscal year related to our Quantum acquisition, (ii) reduction in personnel costs attributable to our workforce reduction, (iii) lower research and development project expenditures and (iv) decrease in bad debt expense resulting from collections of previously reserved past due receivables.
Our product and rental revenue in this segment continues to be negatively impacted by a lack of spending by oil and gas exploration companies despite higher crude oil prices. The components of this decrease were as follows: • Traditional Exploration Product Revenue – Revenue from our traditional products increased $2.1 million, or 46.0% from the prior fiscal year.
The components of this increase were as follows: ● Traditional Exploration Product Revenue – Revenue from our traditional products increased $5.6 million, or 84.7% from the prior fiscal year.
The decrease in revenue was primarily due to lower reservoir monitoring service revenue. The decrease was largely offset by higher demand for our borehole products. Operating Loss Operating loss from our Oil and Gas Markets products for fiscal year 2022 was $(7.5) million, a decrease of $(8.7) million, or 53.5%, from the prior fiscal year.
Wireless product revenue for fiscal year 2023 also included the $4.0 million from a rental equipment customer as compensation for lost OBX nodes. 23 Operating Income (Loss) Operating income associated with our Oil and Gas Markets products for fiscal year 2023 was $15.8 million, compared to an operating loss of $(7.5) million from the prior fiscal year.
Removed
We continue to closely monitor the situation as information becomes readily available. During the fiscal year ended September 30, 2022, our operations have, for the most part, remained open globally and the impact of the effects of COVID-19 to our personnel and operations has been limited.
Added
The increase in demand has led to near full utilization of our marine wireless rental fleet, yet we continue to experience low levels of demand for our land-based wireless products.
Removed
Our supply chain has become increasingly strained due to increased pricing for raw material and supplies coupled with longer than expected lead times. We initially experienced a reduction in demand for the rental of our OBX marine nodal products, which we believed was primarily the result of the pandemic; however, demand has increased in fiscal year 2022.
Added
During the first quarter of fiscal year 2023, we implemented a plan to discontinue the manufacture of certain low margin, low revenue products and reconfigure our production facilities to lower our costs and raise efficiencies. As part of the plan, reductions were made to our workforce which are expected to yield an annual savings of more than $2 million.
Removed
We also believe our Adjacent Markets business segment has entered into a period of recovery from the initial effects of the COVID-19 pandemic, but we continue to be cautious about the pandemic’s effect on our other business segments and our supply chain.
Added
In connection with the plan, we incurred costs of $0.6 million in the first quarter of fiscal year 2023, primarily termination costs related to the workforce reduction. The costs were recorded both to cost of revenue and operating expenses in the consolidated statement of operations. No significant future costs are expected.
Removed
As a result, we continually communicate with our suppliers and customers as information is available to best manage this difficult situation. Fiscal Year 2022 Compared to Fiscal Year 2021 Consolidated revenue for fiscal year 2022 was $89.3 million, a decrease of $5.6 million, or 5.9%, from fiscal year 2021.
Added
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.
Removed
The decrease in revenue was primarily due to a reduction in revenue from our Emerging Markets segment related to our contract with the CBP and a decrease in revenue from sales of our wireless seismic products.
Added
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.
Removed
This decrease in income tax expense was primarily the result of a decrease in rental revenue earned in foreign jurisdictions requiring tax withholding.
Added
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. Fiscal Year 2023 Compared to Fiscal Year 2022 Consolidated revenue for fiscal year 2023 was $124.5 million, an increase of $35.3 million, or 39.5%, from fiscal year 2022.
Removed
We are currently unable to record any tax benefits from the tax losses we incur in the U.S., Canada and Russian Federation due to the uncertainty surrounding our ability to utilize such losses in the future to offset taxable income.
Added
Wireless exploration product revenue for fiscal year 2023 also included $4.0 million from a rental customer as compensation for lost OBX nodes. Consolidated gross profit for fiscal year 2023 was $51.7 million, an increase of $33.6 million, or 186.5%, from fiscal year 2022.
Removed
The decrease was primarily due to the recognition of $12.5 million of revenue related to a land-based wireless system in the second quarter of fiscal year 2021 and a $9.9 million sale of used OBX rental 23 equipment in the first quarter of fiscal year 2021.
Added
In February 2023, we sold our real property located at 7310 Langfield Road in Houston, Texas for a cash sales price of $3.7 million, net of closing costs of $0.3 million. We recognized a gain of $1.3 million from the sale of this property in the second quarter of fiscal year 2023.
Removed
The decrease was partially offset by a $10.0 million sale of used OBX rental equipment in the second quarter of fiscal year 2022 and increased OBX rental revenue during fiscal year 2022. • Reservoir Product Revenue – Revenue from our reservoir products decreased $0.1 million, or 5.3%, from the prior fiscal year.
Added
The increase was partially offset by a decrease in wireless product sales.
Removed
While we experienced an increase in the demand for our Adjacent Markets products and services during fiscal year 2022 despite the global supply chain shortages, we cannot reasonably determine the lasting effects of the supply chain shortage on this operating segment.
Added
The increase in operating income was primarily due to higher wireless rental revenue and related gross profits due to improved utilization of our OBX rental fleet.
Removed
Operating Income Operating income from our Adjacent Markets products for fiscal year 2022 was $6.0 million, a decrease of $0.4 million, or 6.3% from the prior fiscal year.

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