Note 4 - Fair Value of Financial Instruments

6 Months Ended

Mar. 31, 2025

4. Fair Value of Financial Instruments

The Company’s financial instruments generally include cash and cash equivalents, short-term investments, trade accounts and financing receivables and accounts payable. Due to the short-term maturities of cash and cash equivalents, trade accounts receivable and accounts payable, the carrying amounts of these financial instruments are deemed to approximate their fair value on the respective balance sheet dates. The Company measures its short-term investments at fair value on a recurring basis.

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

	*As of March 31, 2025*
	*(Level 1)*		*(Level 2)*		*(Level 3)*		*Totals*
Short-term investments:
Corporate bonds	$	—	$	9,279	$	—	$	9,279
U.S. treasury securities and securities of U.S. government-sponsored agency		—		2,252		—		2,252
Total	$	—	$	11,531	$	—	$	11,531

	*As of September 30, 2024*
	*(Level 1)*		*(Level 2)*		*(Level 3)*		*Totals*
Recurring:
Short-term investments:
Corporate bonds	$	—	$	21,849	$	—	$	21,849
U.S. treasury securities and securities of U.S. government-sponsored agency		—		8,378		—		8,378
Total	$	—	$	30,227	$	—	$	30,227

Nonrecurring:
Note receivable on sale of subsidiary	$	—	$	—	$	2,600	$	2,600

Assets and liabilities Measured on a Nonrecurring basis

In August 2024, the Company performed a fair value analysis on its $3.5 million promissory note obtained in connection with its subsidiary sale as of the transaction date. The measurements utilized to determine the implied fair value of the note receivable obtained significant unobservable inputs (Level 3). The derivation of discount rate utilized in the analysis was based on comparable market yields. Based on the analysis, the Company recorded a $0.9 million discount to fair value on this note receivable. Also see Note 5 for more information.

At September 30, 2024, the Company performed a recoverability assessment on its long-lived assets of its Emerging Markets asset group in which its carrying value was compared to the estimated undiscounted cash flows over the remaining useful life of the asset group's primarily asset, its developed technology. Accordingly, a fair value analysis was performed. Based on the assessment, the Company determined the fair value of the asset was less than its carrying value and recorded an impairment charge of $2.8 million on this asset group, which impaired its intangible assets in their entirety. The Company determined the fair value of this asset group to be approximately zero. The measurements utilized to determine the implied fair value represented significant unobservable inputs (Level 3).

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

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+ Details

GEOSPACE TECHNOLOGIES CORP 10-Q