7. Rental Equipment

The Company leases equipment to customers which generally range from daily rentals to minimum rental periods of up to one year. All of the Company’s current leasing arrangements for which the Company acts as lessor, are classified as operating leases, except for one sales-type lease. The majority of the Company’s rental revenue is generated from its ocean bottom nodes.

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

At June 30, 2026  and September 30, 2025, the Company’s trade accounts receivable included lease receivables of $0.9 million and $1.0 million, respectively.  At June 30, 2026, the Company had future minimum lease obligations due from leasing customers on operating leases of $1.2 million.

Rental equipment consisted of the following (in thousands):

Rental equipment depreciation expense for the three and nine months ended June 30, 2026 was $1.3 million and $3.7 million, respectively. Rental equipment depreciation expense for the three and nine months ended June 30, 2025 was $1.4 million and $4.8 million, respectively.