What changed in this filing

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Item 9A. Controls and Procedures

2026-03-31 compared with 2025-04-02 · 215 added, 257 removed, 632 unchanged (43% of the section changed)

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We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive, financial and accounting officers, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report.

Based upon that evaluation, our President and Chief Executive Officer, and our Chief Financial Officer concluded that, as of December 31, 2024, our disclosure controls and procedures were effective, in all material respects, with regard to the recording, processing, summarizing and reporting, within the time periods specified in the SEC’s rules and forms, for information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

Based upon that evaluation, our President and Chief Executive Officer, and our Chief Financial Officer concluded that, as of December 31, 2025, our disclosure controls and procedures were effective with regard to the recording, processing, summarizing and reporting, within the time periods specified in the SEC’s rules and forms, for information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

Notwithstanding the material weakness in internal control over financial reporting described below, management concluded that the Company’s disclosure controls and procedures were effective because the Company separately maintained effective controls and procedures to ensure that information required to be disclosed was accumulated and communicated to management in a timely manner to allow for appropriate disclosure decisions.

Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our President and Chief Executive Officer, and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

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Under the supervision and with the participation of management, including our President and Chief Executive Officer, and our Chief Financial Officer, we evaluated the effectiveness of our internal controls over financial reporting as of December 31, 2025 using the criteria set forth in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Based on this evaluation, we have concluded that, as of December 31, 2024, our internal control over financial reporting was effective.

Our internal control over financial reporting as of December 31, 2024 has not been audited by RSM US LLP, the independent registered public accounting firm who audited our financial statements as this audit is not required because the company qualifies for smaller reporting company filing status.

Based on this evaluation, we have concluded that, as of December 31, 2025, our internal control over financial reporting was not effective due to the material weakness in our internal control over financial reporting described below.

As a non-accelerated filer, as defined in Rule 12b-2 under the Exchange Act, our independent registered public accounting firm is not required under Section 404(b) of the Sarbanes-Oxley Act to issue an attestation report on our internal control over financial reporting.

Material Weakness in Internal Control Over Financial Reporting

We identified a material weakness in our internal control over financial reporting as of December 31, 2025.

Specifically, the Company did not design and maintain effective controls to ensure the accurate classification of revenue between Fee Revenue and Reimbursable Revenue, and classification of expenses between Fee Operating Expenses and Reimbursable Operating Expenses within the consolidated statement of operations and comprehensive loss.

Specifically, a material error in classification was identified that our internal control over financial reporting failed to prevent or detect.

While the total amount of operating revenues and operating expenses recognized for the periods presented were not materially misstated, the misclassification resulted in a material error in fee revenue, reimbursable revenue, fee operating expenses, and reimbursable operating expenses in the Company’s consolidated statement of operations and comprehensive loss.

No other financial statement line items were affected by this error.

The misstatements were corrected in the consolidated statement of operations and comprehensive loss presented herein.

Management’s Plan to Remediate the Material Weakness

Management is implementing remediation steps to address the material weakness and to improve internal control over financial reporting.

Specifically, management is designing and implementing a review control to perform a look back analysis related to uncompleted customer contracts at the end of the reporting period to ensure the correct classification of revenue earned and expenses incurred in satisfying performance obligations under contracts with customers.

Management believes these actions, when fully implemented and operating for a sufficient period of time, will remediate the material weakness.

However, until the remediation efforts are fully completed and tested, the material weakness will continue to exist.

However, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that, notwithstanding the identified material weakness in our internal control over financial reporting, the financial statements presented herein fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with U.S.

Changes in Internal Control over Financial Reporting

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Amended and Restated Dawson Geophysical Company 2016 Stock and Performance Incentive Plan, effective as of April 24, 2020, filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed on May 14, 2021, and incorporated herein by reference.

Loan and Security Agreement, by and between Dawson Geophysical Company and Dominion Bank, dated September 30, 2019, filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on October 1, 2019, and incorporated herein by reference.

Loan Modification Agreement to Loan and Security Agreement, by and between Dawson Geophysical Company and Dominion Bank, dated September 30, 2020, filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on September 30, 2020, and incorporated herein by reference.

Second Loan Modification Agreement to Loan and Security Agreement, by and between the Company and Dominion Bank, dated September 30, 2021, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on October 1, 2021, and incorporated herein by reference.

Waiver Acknowledgement, dated January 10, 2022, by and between the Company and Stephen C.

Jumper, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on January 10, 2022, and incorporated herein by reference.

Third Loan Modification Agreement to Loan and Security Agreement, by and between the Company and Dominion Bank, dated September 30, 2022, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on October 4, 2022, and incorporated herein by reference.

Fourth Loan Modification Agreement to Loan and Security Agreement, by and between the Company and Dominion Bank, dated March 21, 2023, filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on March 24, 2023, and incorporated herein by reference.

Separation and General Release Agreement, dated November 27, 2023, by and between C.

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Employment Agreement, dated December 14, 2023, by and between Ian Shaw and the Company, filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on December 20, 2023, and incorporated herein by reference.

Insider Trading Policy.

Equipment Purchase Agreement, dates as of August 8, 2025, by and between Dawson Operating LLC and GTC, Inc., filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed on August 13, 2025, and incorporated herein by reference,

Purchase Money Security Agreement, dated as of August 8, 2025, by and between Dawson Operating LLC and GTC, Inc., filed as Exhibit 10.2 to the Company’s Quarterly report on Form 10-Q, filed on August 13, 2025, and incorporated herein by reference.

Form of Secured Promissory Note among Dawson Operating LLC, Dawson Geophysical Company and GTC, Inc., filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed on August 13, 2025, and incorporated herein by reference.

Revolving Credit Note dated October 31, 2025, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November 6, 2025, and incorporated herein by reference.

Security Agreement, dated October 31, 2025, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on November 6, 2025, and incorporated herein by reference.

Insider Trading Policy, filed as Exhibit 19.1 to the Company’s Annual Report on Form 10-K, filed on April 2, 2025, and incorporated herein by reference.

Subsidiaries of the Company.

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Policy for the Recovery of Erroneously Awarded Compensation .

Policy for the Recovery of Erroneously Awarded Compensation, filed as Exhibit 97.1 to the Company’s Annual Report on Form 10-K, filed on April 2, 2025, and incorporated herein by reference.

Inline XBRL Instance Document.

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* Filed herewith.

Furnished herewith.

Portions of this exhibit have been omitted in compliance with Regulation S-K Item 601(b)(10)(iv) because the Company has determined that the information is not material and is the type that the Company treats as private or confidential.

Management contract or compensatory plan or arrangement.

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Midland, and the State of Texas, on the 2 nd day of April 2025.

DAWSON GEOPHYSICAL COMPANY

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Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ( PCAOB ) and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opini on.

Critical Audit Matter

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment Testing of Long-Lived Assets

As discussed in Note 2 to the financial statements, long-lived assets are tested for impairment at the asset group level when events or changes in circumstances indicate the carrying value of the asset group may not be recoverable.

Recognition of an impairment charge is required if future expected undiscounted net cash flows are insufficient to recover the carrying value of the asset group and the fair value of the asset group is below its carrying value.

Depending upon the facts and circumstances, when indicators of asset impairment exist, management will test the asset group for impairment through developing a forecast of future undiscounted cash flows expected to be generated by the asset group or by estimating the fair value of assets within the asset group in lieu of detailed cash flow projections.

If either the future undiscounted cash flows expected to be generated by the asset group or the fair of the assets within the asset group exceeds the carrying value of the asset group no impairment would be

During the year ended December 31, 2024, management tested two of its asset groups for impairment through estimating the fair value of certain assets within the asset groups using a market approach or cost approach, as applicable.

Because the fair value of these assets collectively exceeded the carrying value of the asset groups, no impairment charges were recognized for the year ended December 31, 2024.

We identified management’s impairment testing of long-lived assets as a critical audit matter because of the significant assumptions management used in estimating the fair value of certain assets within the asset groups.

Auditing management’s assumptions involved a high degree of auditor judgment and an increase in audit effort, including the use of our valuation specialists, due to the impact these assumptions could have on the accounting estimate.

Our audit procedures related to the Company’s impairment testing of long-lived assets included the following, among others:

We tested the completeness and accuracy of the underlying data used by management by agreeing it to the underlying support.

We utilized our valuation specialists to assist in the following procedures:

Corroborated management’s estimates through obtaining publicly available market data for certain assets within the population.

Developed an independent estimate of fair value for certain assets within the asset groups, utilizing publicly available market data and other information, and compared our independent estimate to the carrying value of the asset groups.

The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition – Revenue Recognized Over Time Under Uncompleted Contracts

As described in Note 1 to the financial statements, the Company recognizes revenue for services under cancelable service contracts with customers as the services are performed, using an output method, based on receivers laid out and picked up compared to total receivers anticipated to be recorded on the survey using the total estimated revenue for the service contract.

As described in Note 6 to the financial statements, the Company recognized $8.4 million of revenue for the year ended December 31, 2025, on contracts that were uncompleted as of December 31, 2025.

We identified the revenue recognized for the year ended December 31, 2025, under contracts that were uncomplete as of December 31, 2025, as a critical audit matter because of the significant inputs used by management in determining the amount of revenue to recognize prior to completion of all the performance obligations included in

such contracts.

Auditing management’s inputs involved an increase in audit effort due to the impact these inputs could have on the accounting estimate.

Our audit procedures related to revenue recognized for the year ended December 31, 2025, under contracts that were uncompleted as of December 31, 2025, included the following, among others:

We selected a sample of uncompleted contracts as of December 31, 2025, and we performed the following:

We compared the number of receivers laid out and picked up to logs of such activities prepared by the personnel conducting the surveys, compared the number of total receivers anticipated to be recorded on the surveys to information in the customer contract, recomputed the percentage of completion of the contracts at December 31, 2025, and recomputed the amount of revenue recognized through December 31, 2025.

We evaluated management’s estimate of the total revenues expected to be recognized upon completion of all performance obligations in the contracts by comparing to actual amounts recognized subsequent to December 31, 2025, and other information available subsequent to December 31, 2025.

We sent confirmations of certain contract details to the Company’s customers, including total contract price, receivers laid out and picked up through December 31, 2025, and total receivers anticipated to be recorded upon completion of the contract.

/s/ RSM US LLP

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Houston, Texas

April 2, 2025

March 31, 2026

DAWSON GEOPHYSICAL COMPANY

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Cash and cash equivalents

Restricted cash

Short-term investments

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Deferred tax liabilities, net

Total long-term liabilities

Commitments and contingencies

Total liabilities

Commitments and contingencies (Note 16)

Stockholders’ equity:

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31,052,840 and 30,983,437 shares issued and outstanding at December 31, 2025

and 2023, respectively

and December 31, 2024, respectively

Additional paid-in capital

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General and administrative

Severance expense

Depreciation and amortization

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Loss before income tax

Income tax (expenses) benefit

Other comprehensive (loss) income:

Net unrealized (loss) income on foreign exchange rate translation

Income tax expense

Other comprehensive income (loss):

Net unrealized income (loss) on foreign exchange rate translation

Comprehensive loss

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(amounts in thousands, except share data)

to Breckenridge

Comprehensive

Prior to Acquisition

(Loss) Income

Balance January 1, 2024

Unrealized income on foreign exchange rate translation

Unrealized loss on foreign exchange rate translation

Income tax benefit (expense)

Other comprehensive income

Issuance of stock for Breckenridge acquisition

Excess of purchase price over net assets acquired

Breckenridge cash distributions prior to acquisition

Other comprehensive loss

Issuance of common stock as compensation

Deemed distribution of Breckenridge net assets not acquired

Issuance of stock for convertible note

Shares exchanged for taxes on stock-based compensation

Stock-based compensation expense

Balance December 31, 2024

Unrealized loss on foreign exchange rate translation

Unrealized income on foreign exchange rate translation

Income tax benefit (expense)

Other comprehensive loss

Other comprehensive income

Stock-based compensation expense

Issuance of common stock as compensation

Shares exchanged for taxes on stock-based compensation

Unvested stock-based compensation expense

Balance December 31, 2025

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Cash flows from operating activities:

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

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Non-cash compensation

Deferred income tax expense (benefit)

Deferred income tax expense

Bad debt expense

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Change in operating assets and liabilities:

Decrease (increase) in accounts receivable

Decrease in employee retention credit receivable

Decrease in prepaid expenses and other assets

(Decrease) increase in accounts payable

(Decrease) increase in accrued liabilities

Decrease in accounts receivable

(Increase) decrease in prepaid expenses and other assets

Increase (decrease) in accounts payable

Decrease in accrued liabilities

Decrease in operating lease liabilities

(Decrease) increase in deferred revenue

Net cash (used in) provided by operating activities

Increase (decrease) in deferred revenue

Net cash provided by (used in) operating activities

Cash flows from investing activities:

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Principal payments on finance leases

Borrowings on line of credit (related party)

Repayments on line of credit (related party)

Tax withholdings related to stock based compensation awards

Dividends paid

Breckenridge cash distributions prior to acquisition

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents and restricted cash

Net decrease in cash and cash equivalents and restricted cash

Net increase (decrease) in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

Cash and cash equivalents at end of period

Supplemental cash flow information:

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Non-cash operating, investing and financing activities:

Decrease in accrued purchases of property and equipment

Increase (decrease) in accrued purchases of property and equipment

Finance leases incurred

Increase in right-of-use assets and operating lease liabilities

Financed equipment purchases

Financed insurance premiums

Deemed distribution of Breckenridge net assets not acquired

Acquisition of Breckenridge net assets

See accompanying notes to the consolidated financial statements.

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for interim financial information and the instructions to Form 10-K and applicable rules of Regulation S-X of the Securities and Exchange Commission (the “SEC”).

Asset Purchase Agreement .

On March 24, 2023, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Wilks Brothers, LLC (“Wilks”) and Breckenridge Geophysical, LLC (“Breckenridge”), a wholly owned subsidiary of Wilks.

Pursuant to the Purchase Agreement, the Company completed the purchase of substantially all of the Breckenridge assets related to seismic data acquisition services other than its multi-client data library, in exchange for a combination of equity consideration and a convertible note (the “Transaction”).

While the Transaction was structured as an asset purchase, the Company’s financial presentation reflects combined results of the two companies as if the combination occurred on January 14, 2022, the date Wilks became the majority shareholder of the Company.

This is due to the fact that both the Company and Breckenridge were under Wilks’ control from January 14, 2022 forward.

The presentation is required as a combination of entities under common control.

As part of the Purchase Agreement, in addition to the 1,188,235 shares of our common stock issued to Wilks at closing, we entered into a convertible note to deliver approximately 5.8 million shares of common stock to Wilks after the Company receives shareholder approval of the proposal to issue the shares upon conversion of the convertible note in accordance with NASDAQ Listing Rule 5635 (the “Convertible Note”).

The shareholders approved conversion of the Convertible Note during a special meeting held on September 13, 2023.

Pursuant to the Purchase Agreement, the Convertible Note in the amount of $ 9,880,000.50 was automatically converted into 5,811,765 newly-issued shares of the Company’s common stock following the requisite shareholder approval, and the Convertible Note was thereby extinguished.

The Purchase Agreement has been accounted for as a transfer of net assets between entities under common control in a manner similar to a pooling of interests.

The Company’s historical consolidated financial statements have been retrospectively revised to reflect the effects on financial position, cash flows, and results of operations attributable to the activities of Breckenridge for all periods presented.

The effects of transactions in Breckenridge’s equity prior to the Transaction have been presented as a separate component of stockholders’ equity on the Condensed Consolidated Balance Sheets and on the Condensed Consolidated Statements of Stockholders’ Equity to demonstrate the effects of those transactions on the Company’s historical consolidated financial statements.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Dawson Operating LLC, Dawson Seismic Services Holdings, Inc., Eagle Canada, Inc., Eagle Canada Seismic Services ULC, Exploration Surveys, Inc.

and Breckenridge.

All significant intercompany balances and transactions have been eliminated in consolidation.

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The Company's allowance for credit losses was $ 250,000 at January 1, 2024, December 31, 2024, and December 31, 2025.

There were no changes recorded during the years ending December 31, 2023, and December 31, 2024.

Employee Retention Credit Receivable

Under the provisions of the CARES Act, the Company was eligible and, in April 2022, applied for a refundable employee retention credit subject to program conditions and requirements.

The Company recognizes these credits as a gain when all uncertainties have been met and the amounts are realizable in accordance with similar gain contingencies.

The Company recognized $ 3.0 million as a gain in other income and $ 69,000 as interest income in the Consolidated Statement of Operations and Comprehensive Loss for the year ended December 31, 2022 and recognized $ 3.0 million as an employee retention credit receivable in the Consolidated Balance Sheet as of December 31, 2022.

Payments were received in January 2023.

The table below reflects all allowance for credit loss activity recorded during the years ending December 31, 2025, and December 31, 2024 (in thousands):

Year Ended December 31,

Beginning balance

Additional provisions to allowance

Write-offs against allowance - A/R

Recoveries collected

Ending balance

Property and Equipment

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If either the future undiscounted cashflows expected to be generated by the asset group or the fair of the assets within the asset group exceeds the carrying value of the asset group no impairment

would be recognized.

If either the future undiscounted cashflows expected to be generated by the asset group or the fair of the assets within the asset group exceeds the carrying value of the asset group no impairment would be recognized.

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The Company gives consideration to its outstanding debt, as well as publicly available data for instruments with similar characteristics when calculating its incremental borrowing rates.

The ROU assets are amortized to operating lease cost over the lease terms on a straight-line basis and is included in operating expense.

The ROU assets are amortized to operating lease cost over the lease terms on a straight-line

basis and is included in operating expense.

The Company does not recognize leases with an initial term of 12 months or less and does not separate lease and non-lease components.

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In some instances, third-party permitting, surveying, drilling, helicopter, equipment rental and mobilization costs that directly relate to the contract are utilized to fulfill the contract obligations.

These fulfillment costs are capitalized in other current assets and generally amortized based on the total square miles of data recorded compared to total square miles anticipated to be recorded on the survey using the total estimated fulfillment costs for the service contract.

These fulfillment costs are capitalized in other current assets and generally amortized based on receivers laid out and picked up compared to total receivers anticipated to be recorded on the survey using the total estimated fulfillment costs for the service contract.

Estimates for total revenue and total fulfillment cost on any service contract are based on certain qualitative and quantitative judgments supported by underlying facts.

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Our chief operating decision maker reviews the discrete segment financial information on a geographic basis for the US operations and Canada Operations.

The revenue for both of the Company’s segments is generated by the same services, which utilize the same type of equipment and personnel.

The revenue for both of the Company’s segments is generated by the same services, which utilize the same

type of equipment and personnel.

The performance of our segments is evaluated primarily on Adjusted EBITDA.

We define Adjusted EBITDA as our net income (loss), before (i) interest expense, net, (ii) income tax expense or benefit, (iii) depreciation, depletion and amortization and (iv) other unusual or non-recurring charges, such as severance expenses.

We define Adjusted EBITDA as our net income (loss), before (i) interest expense, net, (ii) income tax expense or benefit, (iii) depreciation and amortization and (iv) non-recurring and other charges, such as strategic transaction costs or severance expenses.

As a result, our business has two reportable segments, US operations and Canada Operations.

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See Note 15 for additional disclosures related to our reportable segments.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires public business entities to disclose on an annual and interim basis, 1) significant segment expenses that are regularly provided to the Chief Operating Decision Maker (the “CODM”) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”) and 2) an amount for other segment items representing the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss.

This ASU also requires public entities to provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods, clarifies that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit or loss but at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles under GAAP.

This ASU also requires disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources, and requires a public entity that has a single reportable segment to provide all the disclosures required by the amendments in this ASU and all existing segment disclosures in Topic 280.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

We adopted this ASU 2023-07 for the fiscal year ended December 31, 2024, as required under this standard.

Stock-Based Compensation

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Realized foreign currency transaction gains (losses) are included in the Consolidated Statements of Operations and Comprehensive Loss as other income (expense).

The Company accounts for income taxes by recognizing amounts of taxes payable or refundable for the current year, and by using an asset and liability approach in recognizing the amount of deferred tax assets and liabilities for the future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns.

Management determines deferred taxes by identifying the types and amounts of existing temporary differences, measuring the total deferred tax asset or liability using the applicable tax rate in effect for the year in which those temporary differences are expected to be recovered or settled.

The Company determines deferred taxes by identifying the types and amounts of existing temporary differences, measuring the total deferred tax asset or liability using the applicable tax rate in effect for the year in which those temporary differences are expected to be recovered or settled.

The effect of a change in tax rates of deferred tax assets and liabilities is recognized in income in the year of an enacted rate change.

The deferred tax asset is reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized.

Management’s methodology for recording income taxes requires judgment regarding assumptions and the use of estimates, including determining the annual effective tax rate and the valuation of deferred tax assets, which can create variances between actual results and estimates and could have a material impact on the Company’s provision or benefit for income taxes.

The Company’s methodology for recording income taxes requires judgment regarding assumptions and the use of estimates, including determining our annual effective tax rate and the valuation of deferred tax assets, which can create a variance between actual results and estimates and could have a material impact on its provision or benefit for income taxes.

Due to recent operating losses and valuation allowances, the Company may recognize reduced or no tax benefits on future losses on the Consolidated Statements of Operations and Comprehensive Loss.

The Company’s effective tax rates differ from the statutory federal rate of 21 % for certain items such as state and local taxes, valuation allowances, non-deductible expenses and discrete items.

The Company’s effective tax rates differ from the statutory federal rate of 21 % for certain items such as state and local taxes, valuation allowances, and non-deductible expenses.

The tax years that are open to examination for the U.S.

are for years after 2021, for Canada and Texas it is years after 2020.

Use of Estimates in the Preparation of Financial Statements

Preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of certain assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The most sensitive estimates involve the Company’s estimates for total revenues and total fulfillment costs on service contracts.

The most sensitive estimates involve the Company’s estimates of the valuation allowance recorded against deferred tax assets, which include consideration of historical and forecasted operating results, and in the case of an indication of impairment of long-lived assets, the estimated fair value of asset groups for which impairment is indicated.

Because of the use of assumptions and estimates inherent in the reporting process, actual results could differ from those estimates.

Severance Expense

In 2024, we recorded severance expenses of $ 0.5 million in connection with the termination of a portion of our workforce.

In December 2023, we recorded severance expenses of $ 2.2 million in connection with the termination of the Company’s (i) President and Chief Executive Officer, (ii) Chief Financial Officer, Executive Vice President, Secretary and Treasurer and (iii) Chief Operating Officer and Executive Vice President.

This severance is included on the balance sheet within accrued liabilities in payroll costs and other taxes.

This severance will be paid out in bi-weekly payments for (ii) and (iii) until February of 2025, and bi-weekly payments for (i) until December of 2025.

Risks and uncertainties

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We incurred net losses of $ 1.9 million for the year ended December 31, 2025, and $ 4.1 million for the year ended December 31, 2024.

As of December 31, 2024, we had $ 1.4 million in cash, and a positive working capital balance of $ 4.6 million.

We believe that our cash flows from operations, and our current financial position are adequate to fund our continued operations.

As of December 31, 2025, we had $ 4.9 million in cash, and a negative working capital balance of $ 5.0 million.

We believe that our cash flows from operations, and our current financial position are adequate to fund our obligations and continued operations.

Subsequent events

We have considered and concluded there were none.

Management has considered subsequent events after December 31, 2025 and through the date on which these financial statements were issued.

Significant subsequent events have been reflected within Note 3.

Short-Term Investments

The Company had no short-term investments at December 31, 2024, and had short-term investments at December 31, 2023, of $ 265,000 consisting of certificates of deposit with original maturities greater than three months but less than a year .

The Company had short-term investments at December 31, 2025, of $ 370,000 consisting of certificates of deposit with original maturities greater than three months but less than a year .

These certificates of deposit are pledged as collateral under an outstanding letter of credit.

See Note 7 for more information regarding the Company’s debt.

The Company had no short-term investments at December 31, 2024.

Equipment Purchase Agreement

In August 2025, Dawson Operating LLC (“Dawson Operating”), a wholly-owned subsidiary of Dawson Geophysical Company, entered into an equipment purchase agreement with GTC, Inc.

(“GTC”), a wholly-owned subsidiary of Geospace Technologies Corporation (“Geospace”), pursuant to which, among other things, Dawson Operating agreed to acquire new single point node channels from GTC for an aggregate purchase price of approximately $ 24.2 million (the “Equipment Purchase Agreement”) subject to the terms and conditions thereof.

The Company paid cash of approximately $ 4.8 million upon execution of the Equipment Purchase Agreement, agreed to pay approximately $ 1.2 million in cash upon final delivery, and agreed to finance approximately $ 18.2 million through separate promissory notes to be issued in connection with each delivery of equipment (each, a “Geospace Note” and collectively, the “Geospace Notes”).

Each Geospace Note is payable by Dawson Geophysical Company and Dawson Operating, jointly and severally, to GTC.

The Geospace Notes will each have a term of 36 months , bear a fixed interest rate of 8.75 % annually and may be prepaid in whole or in part at any time without penalty.

As of December 31, 2025, we have taken delivery of $ 20.9 million of equipment and issued five Geospace Notes with an aggregate principal of approximately $ 15.5 million.

In January of 2026, the Company received the sixth and final delivery of equipment and executed the sixth and final promissory note for approximately $ 2.7 million.

Fair Value of Financial Instruments

At December 31, 2024 and 2023, the Company’s financial instruments included cash and cash equivalents, restricted cash, short-term investments in certificates of deposit, accounts receivable, other current assets, accounts payable, other current liabilities, notes payable, finance leases and operating lease liabilities.

Due to the short-term maturities of cash and cash equivalents, restricted cash, accounts receivable, employee retention credit receivable, other current assets, accounts payable and other current liabilities, the carrying amounts approximate fair value at the respective balance sheet dates.

At December 31, 2025 and 2024, the Company’s financial instruments included cash and cash equivalents, short-term investments in certificates of deposit, accounts receivable, other current assets, accounts payable, other current liabilities, notes payable, finance leases and operating lease liabilities.

Due to the short-term maturities of cash and cash equivalents, accounts receivable, other current assets, accounts payable and other current liabilities, the carrying amounts approximate fair value at the respective balance sheet dates.

The carrying value of the notes payable, finance leases and operating lease liabilities approximate their fair value based on a comparison with the prevailing market interest rates.

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Related Party Transactions

For the year ending December 31, 2024, the Company incurred related party expenses of $ 187,000 related to hauling charges, $ 9,000 related to entertainment expenses and $ 6,000 related to the merger expenses paid to various commonly controlled companies of Wilks Brothers, LLC, the holder of approximately 80 % of the Company’s outstanding stock.

For the year ended December 31, 2024, the Company recorded approximately $ 30,000 of related party revenue from a commonly controlled company of Wilks Brothers, LLC.

As of December 31, 2024, the Company had approximately $ 26,000 of outstanding related party accounts payable and no outstanding related party accounts receivable.

For the year ending December 31, 2023, the Company incurred related party expenses totaling approximately $ 120,000 related to hauling charges paid to various commonly controlled companies of Wilks Brothers, LLC, the holder of approximately 80 % of the Company’s outstanding stock.

For the year ended December 31, 2023, the Company recorded approximately $ 10,000 of related party revenue from a commonly controlled company of Wilks Brothers, LLC.

For the year ending December 31, 2025, the Company incurred related party expenses of $ 217,000 related to hauling charges.

During the year ended December 31, 2025, the Company maintained a revolving credit note with a related party finance company, further discussed in Note 7.

These transactions occurred with various commonly controlled companies of Wilks Brothers, LLC, the holder of approximately 80 % of the Company’s outstanding stock.

As of December 31, 2025, the Company had approximately $ 32,000 of outstanding related party accounts payable.

For the year ending December 31, 2024, the Company incurred related party expenses of $ 187,000 related to hauling charges, $ 9,000 related to entertainment expenses and $ 6,000 related to the merger expenses paid to various commonly controlled companies of Wilks Brothers, LLC, For the year ended December 31, 2024, the Company recorded approximately $ 30,000 of related party revenue from a commonly controlled company of Wilks Brothers, LLC.

As of December 31, 2024, the Company had approximately $ 26,000 of outstanding related party accounts payable and no outstanding related party accounts receivable.

Deferred Costs

Contract assets consist of deferred costs which were $ 4.3 million and $ 5.4 million at January 1, 2024 and 2023, respectively.

The Company’s prepaid expenses and other current assets at December 31, 2024 and 2023 included deferred costs incurred to fulfill contracts with customers of $ 0.4 million and $ 4.3 million, respectively.

Deferred costs at December 31, 2024 and 2023, compared to January 1, 2024 and 2023, decreased primarily as a result of the completion of several projects for clients with significant deferred fulfillment costs at the beginning of the year.

Deferred Costs and unbilled receivables

Following is a summary of balances of and changes in contract assets, which include unbilled receivables and deferred costs (in thousands):

Beginning Balance

Billings and costs recognized in the current year that were included in the beginning balance

Unbilled receivables and deferred costs incurred related to uncompleted contracts at year end

Ending Balance

The amount of total deferred costs amortized for the years ended December 31, 2025 and 2024, was $ 15.8 million and $ 24.9 million, respectively.

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Deferred Revenue

Deferred revenue was $ 11.8 million and $ 7.4 million at January 1, 2024 and 2023, respectively.

The Company’s deferred revenue at December 31, 2024 and 2023, was $ 1.6 million and $ 11.8 million, respectively.

Deferred revenue at December 31, 2024 compared to January 1, 2024 decreased primarily as a result of completing multiple large projects for clients in 2024.

Deferred revenue at December 31, 2023 compared to January 1, 2023 increased primarily as a result of various new projects for clients with large third party reimbursables where data had not yet been recorded.

Revenue recognized for the year ended December 31, 2024 that was included in the contract liability balance at the beginning of 2024 was $ 11.8 million.

Revenue recognized for the year ended December 31, 2023 that was included in the contract liability balance at the beginning of 2023 was $ 7.3 million.

Deferred revenue not recognized during 2024 relates to projects that have not yet started or are in process at period end.

Following is a summary of balances of and changes in deferred revenue (in thousands):

Beginning Balance

Revenue recognized in the current year that was included in the beginning balance

Current period unearned revenue related to uncompleted contracts at year end

Ending Balance

As work is performed, revenue is recognized and the corresponding liability balance of deferred revenue is reduced.

During the years ended December 31, 2025 and 2024, the Company recognized revenue of $ 8.4 million and $ 7.6 million, respectively, related to uncompleted contracts at December 31, 2025 and 2024, respectively.

Accounts Receivable

Accounts receivable related to contracts with customers was $ 12.5 million and $ 6.7 million at January 1, 2024 and 2023, respectively.

The accounts receivable balance at January 1, 2023 excluded a $ 3.0 million employee retention credit receivable.

Accounts receivable related to contracts with customers was $ 9.9 million and $ 12.5 million at December 31, 2024 and 2023, respectively.

Dominion Loan Agreement

On September 30, 2019, the Company entered into a Loan and Security Agreement with Dominion Bank, a Texas state bank (“Dominion Bank”).

On September 30, 2023, the Company entered into a Fifth Loan Modification Agreement (the “Fifth Modification Agreement”) to the Loan and Security Agreement (as amended by (i) that certain Loan Modification Agreement dated as of September 30, 2020, (ii) that certain Second Loan Modification Agreement dated as of September 30, 2021, (iii) that certain Third Loan Modification Agreement dated as of September 30, 2022, (iv) that certain Fourth Modification Agreement dated as of March 21, 2023, and (v) the Fifth Modification Agreement, the “Loan Agreement”).

The Loan Agreement provided for a secured revolving credit facility (the “Revolving Credit Facility”) in an amount up to the lesser of (I) an amount equal to the Borrowing Base or (II) $ 5 million.

The Company’s obligations under the Loan Agreement were secured by a Certificate of Deposit with Dominion Bank for $ 5 million (the “Deposit”) in the Company’s collateral account.

On May 2, 2024, the collateral deposit of $ 5 million was released and the Loan Agreement was terminated.

Dominion Letters of Credit

As of December 31, 2024, the Company has no outstanding letters of credit.

The previously issued letter of credit in the amount of $ 265,000 was not renewed on August 9, 2024.

Following is a summary of balances of accounts receivable (in thousands):

Beginning Balance

Ending Balance

Equify Revolving Credit Note (related party)

On October 31, 2025, Dawson Geophysical Company (the “Company”) and Dawson Operating LLC, a Texas limited liability company and a wholly owned subsidiary of the Company (“Dawson Operating” and together with the Company, the “Borrowers”), entered into a Revolving Credit Note (the “Revolving Credit Note”) in favor of Equify Financial, as lender (the “Lender”).

Dan Wilks and Farris Wilks, together with certain of their affiliates, collectively hold a controlling interest in the Company and in Equify.

Pursuant to the Revolving Credit Note, the Borrowers, jointly and severally, may, from time to time until November 20, 2028, request loans from the Lender for up to an aggregate principal amount of $ 5,035,032 .

The loans outstanding under the Revolving Credit Note are payable by the Borrowers in thirty-six (36) monthly installments of principal in the amount of $ 139,862 , together with all accrued and unpaid interest on the outstanding principal balance thereunder, commencing on December 20, 2025, and continuing thereafter until the maturity date.

The interest rate applicable to loans outstanding under the Revolving Credit Note is a rate per annum equal to 13 %.

The maximum borrowing limit under the Revolving Credit Note is initially $ 5,035,032 , and such amount is reduced by $ 139,862 on each monthly payment date.

During the year ended December 31, 2025, the Company borrowed and repaid approximately $ 3.5 million on this revolving credit note.

As of December 31, 2025 the Company accrued interest of $ 40,000 associated with this borrowing.

As of December 31, 2025 the amount available to draw on this revolving credit note was approximately $ 4.9 million, and there were no amounts outstanding.

The Borrowers may prepay up to 75 % of the then outstanding principal and accrued but unpaid interest at any time without a prepayment fee.

The obligations under the Revolving Credit Note are secured by a lien on the Company’s vibrator energy source vehicles, pursuant to a Security Agreement by and between the Company and Equify, dated as of October 31, 2025.

Letters of Credit

As of December 31, 2025, the Company had one letter of credit in the amount of $ 370,000 to support insurance policies for the Company.

The letter of credit is secured by a certificate of deposit with First Financial Bank.

Other Indebtedness

As of December 31, 2024, the Company has one note payable to a finance company for various insurance premiums totaling $ 168,000 .

As of December 31, 2025 the Company has five Geospace notes payable related to equipment purchases discussed in Note 3, totaling $ 14.7 million.

As of December 31, 2025, the Company has two notes payable to finance companies for various insurance premiums totaling $ 258,000 .

In addition, the Company leases certain seismic recording equipment and vehicles under leases classified as finance leases.

The Company’s Consolidated Balance Sheets as of December 31, 2024 and 2023 include finance leases of $ 2.4 million and 1.8 million, respectively.

The Company’s Consolidated Balance Sheets as of December 31, 2025 and 2024 include finance lease liabilities of $ 2.6 million and $ 2.4 million, respectively.

The company did no t have any restricted cash during the year ended December 31, 2025.

During the year ended December 31, 2024 the Company had a restricted cash deposit of $ 5 million that was released on May 2, 2024.

Maturities of Debt

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December 31, 2024

Geospace Notes payable

Aggregate principal amount outstanding

Interest rate

December 31, 2025

December 31, 2024

Notes payable to finance company for insurance

Aggregate principal amount outstanding

Interest rates 6.35 % and 8.75 %

Interest rates range from 6.35 % to 9.47 %

The Company’s aggregate maturities of notes payable at December 31, 2025 are as follows (in thousands):

January 2026 - December 2026

January 2027 - December 2027

January 2028 - December 2028

Obligations under notes payable

The Company’s aggregate maturities of finance leases at December 31, 2025 are as follows (in thousands):

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January 2029 - December 2029

January 2030 - December 2030

Obligations under finance leases

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Operating leases

Finance leases

Supplemental balance sheet information related to leases as of December 31, 2025 and 2024 was as follows (in thousands):

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In 2016, the Company adopted the 2016 Plan, which provides for the issuance of up to 1,000,000 shares of authorized Company common stock, which authorized amount was increased to 1,050,000 as a result of the 5 % stock dividend approved by the Board on May 1, 2018.

At the annual shareholders’ meeting on June 9, 2020, the Company’s

shareholders approved a restated version of the 2016 Plan (the “Restated 2016 Plan”), which authorized an additional 1,000,000 shares.

At the annual shareholders’ meeting on June 9, 2020, the Company’s shareholders approved a restated version of the 2016 Plan (the “Restated 2016 Plan”), which authorized an additional 1,000,000 shares.

The total aggregate numbers of shares of Common Stock reserved under the Restated 2016 Plan is 2,050,000 shares.

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The Company granted 250,000 restricted stock unit awards during the year ended December 31, 2025 with a weighted average grant date fair value of $ 2.24 .

The fair value of restricted stock unit awards equals the market price of the Company's stock on the grant date and generally vest immediately or in one year .

The Company did no t grant any restricted stock unit awards during the year ended December 31, 2023.

The Company granted 96,700 restricted stock unit awards during the year ended December 31, 2024 with a weighted average grant date fair value of $ 1.94 .

The fair value of restricted stock unit awards equals the market price of the Company's stock on the grant date and generally vest in one year , or in annual increments over three years .

As of December 31, 2025, there were approximately $ 528,000 of unrecognized compensation costs related to nonvested restricted stock unit awards.

These costs are expected to be recognized over a weighted average period of 2.82 years.

As of December 31, 2023, there were no unrecognized compensation costs related to nonvested restricted stock unit awards.

Common Stock Awards

The Company granted no common stock awards to outside directors during the year ended December 31, 2025.

The Company granted 76,660 common stock awards with immediate vesting to outside directors with a weighted average grant date fair value of $ 1.63 during the year ended December 31, 2024.

The Company did no t grant any common stock awards with immediate vesting to outside directors during the year ended December 31, 2023.

Employee Benefit Plans

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Advertising costs for the years ended December 31, 2025 and 2024 totaled $ 61,000 and $ 40,000 , respectively.

The Company’s components of (loss) income before income tax, with the year ended December 31, 2023 being reported exclusive of Breckenridge, were as follows (in thousands):

Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures , as described in Note 17, Recently Issued Accounting Policies, cash paid for income taxes, net of refunds, during the year ended December 31, 2025 was as follows (in thousands):

Total cash (received) paid for income taxes, net of refunds

The Company’s components of (loss) income before income tax, were as follows (in thousands):

Year Ended December 31,

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Current state expense

Deferred federal benefit

Deferred state (expense) benefit

Income tax (expense) benefit

Deferred federal (expense) benefit

Deferred state benefit (expense)

Income tax expense

The income tax provision differs from the amount computed by applying the statutory federal income tax rate to loss before income tax as follows (in thousands):

Year Ended December 31,

Tax benefit computed at statutory rate of 21 %

Breckenridge Earnings not subject to tax

Change in valuation allowance

State income tax expense, net of federal tax

Foreign losses

Income tax (expense) benefit

U.S Federal statutory tax rate

State Income Tax Expense, net of federal benefit including change in Valuation Allowance (a)

Change in Valuation Allowance (b)

Nontaxable or nondeductible items

Meals and Entertainment

Income tax expense

(a) State tax in New Mexico and Texas made up the majority (greater than 50% ) of the tax effect in this category.

(b) Valuation allowance is inclusive of Canadian operations, which is classified as a foreign disregarded entity for U.S.

federal tax purposes.

The principal components of the Company’s net deferred tax assets (liabilities) (in thousands) were as follows:

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Foreign tax NOL carryforward

Deferred revenue

State tax NOL carryforward

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Foreign deferred taxes

Right-of-use assets

Canadian start-up costs

Self-insurance

Workers’ compensation

Restricted stock and restricted stock unit awards

Property and equipment

Gross deferred tax assets

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Deferred tax liabilities:

Right-of-use assets

Property and equipment

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At December 31, 2025, the Company had a gross NOL for U.S.

federal income tax purposes of approximately $ 173,807,000 but expects approximately $ 94,779,000 to expire unused with the remaining NOL beginning to expire in 2027.

federal income tax purposes of approximately $ 174 million but expects approximately $ 94.8 million to expire unused with the remaining NOL beginning to expire in 2027.

Losses incurred after the year ended December 31, 2017 have no expiration.

The Company will carry forward the tax benefits related to federal net NOL of approximately $ 16,596,000 .

The Company also had state net NOLs that will affect state taxes of approximately $ 2,630,000 at December 31, 2024.

The Company will carry forward the tax benefits related to federal net NOL of approximately $ 16.6 million.

The Company also had state net NOLs that will affect state taxes of approximately $ 3.8 million at December 31, 2025.

State NOLs began to expire in 2015 and continue to expire each year.

The Company also had a Canadian gross NOL of $ 24,394,000 that will begin to expire in 2037.

The Company also had a Canadian gross NOL of $ 22.7 million that will begin to expire in 2037.

In evaluating the possible sources of taxable income during 2025 and 2024, the Company determined it is more likely than not that the remaining deferred tax assets will not be realizable.

As a result, the Company recorded and maintained a full valuation allowance against foreign deferred tax assets and its federal and state deferred tax assets with the exception of its trademark intangible.

As a result, the Company recorded and maintained a full valuation allowance against foreign deferred tax assets and its federal and state deferred tax assets with

the exception of its trademark intangible.

The change in valuation allowance amounted to $ 0.4 million and $ 1.1 million for the years ended December 31, 2025 and 2024, respectively, including amounts recorded as a component of other comprehensive income or loss.

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The Company’s policy is to recognize interest and penalties related to an uncertain tax position in income tax expense.

Supplemental Purchase Agreement Transaction Information

Historical financial information for Breckenridge was derived from Breckenridge’s financial statements.

In the opinion of the Company’s management, the financial information of Breckenridge reflects all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.

The non-cash items associated with the Purchase Agreement shown on the Condensed Consolidated Statements of Cash Flows consist of “Deemed distribution (contribution)” and “Acquisition of Breckenridge net assets” and are derived as follows (in thousands):

Deemed Distribution (Contribution)

Year Ended December 31, 2023

Deemed distribution (contribution) of short-term investments

Deemed distribution (contribution) of accounts receivable

Deemed distribution (contribution) of prepaids and other

Deemed distribution (contribution) of land and buildings

Deemed (distribution) contribution of accounts payable

Deemed (distribution) contribution of accrued liabilities

Deemed (distribution) contribution of deferred revenue

Deemed distribution of Breckenridge net assets not acquired

Historical Carrying Value of Assets Acquired

March 24, 2023

Accounts receivable, net

Prepaid expenses and other current assets

Property and equipment, net

Other accrued liabilities

Deferred revenue

Acquisition of Breckenridge net assets

Total consideration for the asset purchase is as follows (in thousands):

Consideration Paid

March 24, 2023

Common stock issued

Note payable issued

Purchase price

Because the Transaction constitutes a transaction among entities under common control, the excess purchase price over the historical carrying value of the net assets acquired was recorded as a charge to additional paid in capital.

The excess purchase price over the historical carrying value of the assets at the acquisition date is as follows (unaudited and in thousands):

Excess Purchase Price

March 24, 2023

Purchase price

Historical carrying value of assets acquired

Excess purchase price

The following table details the standalone Breckenridge Statement of Operations for the period from January 1, 2023 through March 24, 2023 (in thousands):

December 31, 2023

Operating revenues

Operating costs:

Operating expenses

General and administrative

Depreciation and amortization

Income (loss) from operations

Other income (expense):

Interest income

Interest expense

Other income (expense), net

Income (loss) before income tax

Income tax benefit (expense)

Net income (loss)

The Company did no t have any material income tax interest or penalties for the years ended December 31, 2025 and 2024.

Net Loss per Share

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As a result, all stock options, restricted stock unit awards, and restricted stock awards were anti-dilutive and excluded from weighted average shares used in determining the diluted loss per share of common stock for the respective periods.

The following weighted average numbers of shares related to the convertible note and restricted stock unit awards, have been excluded from the calculation of diluted loss per share of common stock, as their effect would be anti-dilutive for the years ended December 31, 2024 and 2023:

The following weighted average potentially dilutive securities have been from the calculation of diluted loss per share of common stock, as their effect would be anti-dilutive for the years ended December 31, 2025 and 2024:

Year Ended December 31,

Restricted stock units

Convertible Note

Major Clients

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The CODM manages and assesses the performance of the reportable segments by their adjusted EBITDA.

We define adjusted EBITDA as our net income (loss), before (i) interest expense, net, (ii) income tax expense or benefit, (iii) depreciation, depletion and amortization and (iv) other unusual or non-recurring charges, such as severance expenses.

The Company defines adjusted EBITDA as our net income (loss), before (i) interest expense, net, (ii) income tax expense or benefit, (iii) depreciation and amortization and (iv) non-recurring and other charges, such as strategic transaction costs or severance expenses.

The CODM reviews the adjusted EBITDA of the Company’s reportable segments, which drives the evaluation of the performance of the Company’s reportable segments and allocation of resources to those segments.

Beginning in the year ended December 31, 2024, and retroactively applied to the year ended December 31, 2023, a portion of the management charges incurred by the U.S.

The significant expense categories reviewed by the CODM are those presented on the face of the consolidated statement of operations.

Beginning in the year ended December 31, 2024, a portion of the management charges incurred by the U.S.

segment were allocated to the Canadian segment based upon an activity level determined to be appropriate by management.

These charges totaled approximately $ 0.3 million and $ 0.3 million for the years ended December 31, 2025 and 2024, respectively.

The following tables present the Company’s operating revenues, net property and equipment, capital expenditures and right-of-use assets by operating segment (in thousands):

Year Ended December 31,

Operating Revenues

United States

Net Property and Equipment

United States

Capital Expenditures

United States

Total Capital Expenditures

Operating Lease Right-of-use Assets

United States

Disclosures of net property and equipment, capital expenditures and right-of-use assets are excluded because such information is not regularly reviewed by the CODM in making resource allocation decisions.

The following tables present the Company’s income statements by operating segment (in thousands):

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General and administrative

Severance expense

Depreciation and amortization

(Loss) income from operations

Income (loss) from operations

Other income (expense):

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Other income (expense), net

(Loss) income before income tax

Income (loss) before income tax

Income tax expense

Net (loss) income

Net income (loss)

Adjusted EBITDA

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General and administrative

Severance expense

Depreciation and amortization

Loss from operations

(Loss) income from operations

Other income (expense):

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Other income (expense), net

Loss before income tax

Income tax benefit

(Loss) income before income tax

Income tax benefit (expense)

Net (loss) income

Adjusted EBITDA

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Depreciation and amortization

Interest income, net

Income tax expense (benefit)

Interest expense (income), net

Income tax expense

Strategic transaction costs

Severance expense

Adjusted EBITDA

The following table present the Company’s total assets by operating segment (in thousands):

The following table presents the Company’s total assets by operating segment (in thousands):

United States

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Although the Company cannot predict the outcomes of any such legal proceedings, management believes that the resolution of pending legal actions will not have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity, as the Company believes it is adequately indemnified and insured.

The Company is also party to the following legal proceeding:

On April 1, 2019, Weatherford International, LLC and Weatherford U.S., L.P.

(collectively, “Weatherford”) filed a petition in state district court for Midland County, Texas,

in which the Company and eighteen other parties were named as defendants, alleging the Company and/or the other named defendants contributed to or caused contamination of groundwater at and around property owned by Weatherford.

Weatherford is seeking declaratory judgment, recovery and contribution for past and future costs incurred in responding to or correcting the contamination at and around the property from each defendant.

The Company disputed Weatherford’s allegations with respect to the Company, and the lawsuit was dismissed in October 2024.

Additionally, the Company experiences contractual disputes with its clients from time to time regarding the payment of invoices or other matters.

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The updated guidance is effective for the Company on January 1, 2025.

The Company does not expect the adoption of ASU 2023-09 to have a material impact on its financial statements and disclosures.

The Company adopted this ASU 2023-09 for the fiscal year ended December 31, 2025, as required under this standard.

See footnote 12.

In November 2024, the FASB issued ASU No.

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The Company is currently evaluating the impact of this standard on our disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets .

This ASU introduces a practical expedient to simplify the application of Topic 326, Financial Instruments - Credit Losses, to current accounts receivable and current contract assets arising from revenue transactions accounted for under topic 606, Revenue from Contracts with Customers.

This ASU is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods.

Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance.

The Company is currently evaluating the impact of this standard on its disclosures.

Concentrations of Credit Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures