4. Trade Accounts and Financing Receivables

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

The Company determines the allowance for credit losses through a review of several factors, including historical collection experience, customer credit worthiness, current aging of customer accounts and current financial conditions of its customers. Trade accounts receivable balances are charged off against the allowance whenever it is probable that the receivable balance will not be recoverable.

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

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

In January 2026, the Company entered into a $0.3 million promissory note with a customer related to a product sale.  The note bears interest at 10.00% per annum and matures in January 2027. Principal and interest installments of $28,000 are due monthly until maturity.  The note is collateralized by the product sold.

In January 2026, the Company entered into a $2.7 million promissory note with a customer related to a product sale.  The note bears interest at 8.75% per annum and matures in January 2029.  Principal and interest installments of $0.1 million are due monthly until maturity.  The note is collateralized by the product sold.

During the first quarter of fiscal year 2026, the Company entered into three promissory notes totaling $7.9 million with a customer related to product sales.  The notes bear interest at 8.75% per annum and mature during the first quarter of fiscal year 2029. Principal and interest installments totaling $0.3 million are due monthly until maturity.  The notes are collateralized by the products sold.

During the fourth quarter of fiscal year 2025, The Company entered into two promissory notes totaling $7.5 million with a customer related to product sales.  The notes bear interest at 8.75% per annum and mature during the fourth quarter of fiscal year 2028.  Principal and interest installments totaling $0.2 million are due monthly until maturity.  The notes are collateralized by the products sold. 

In November 2024, the Company entered into a sales-type lease with a customer on ocean bottom equipment from its rental fleet.  The lease, which matured in October 2025, had a remaining unpaid principal balance of $1.0 million at June 30, 2026.  Ownership of the equipment will transfer to the customer when the unpaid principal has been paid.  Interest income recognized on the lease for the fiscal year ended  September 30, 2025 and for the nine months ended June 30, 2026 was $0.6 million and $6,000, respectively.

In August 2024, the Company entered into a $9.4 million promissory note with a customer related to a product sale.  The note bears interest at 9.5% per annum and matures in November 2026.  Principal and interest installments of $0.9 million are due monthly beginning in January 2025. The note is collateralized by the product sold.

In August 2024, the Company entered into a $3.5 million promissory note with the buyer of its Russian subsidiary.  The note bears interest at 5% per annum and is for a 10-year term. Principal and interest installments of $37,000 are due monthly beginning in November 2024.  Based on a fair value analysis performed at the date of sale, a discount to fair value of $0.9 million was placed on the note. Interest income on the amortization of the discount is being recognized under the effective interest method.

Credit quality indicators used for the financing receivables consisted of historical collection experience, internal credit risk grades and collateral.  The Company determined the allowance for credit losses through a review of several factors, including historical collection experience, customer credit worthiness, current aging of customer accounts and current financial conditions of its customers.