What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-18 compared with 2021-03-16 · 108 added, 122 removed, 644 unchanged (26% of the section changed)

2 unchanged sentences

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 Executive Vice President, Chief Financial Officer, Secretary, and Treasurer concluded that, as of December 31, 2020, 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.

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 Executive Vice President, Chief Financial Officer, Secretary, and Treasurer, as appropriate, to allow timely decisions regarding required disclosure.

Based upon that evaluation, our President and Chief Executive Officer, and our Executive Vice President, Chief Financial Officer, Secretary, and Treasurer concluded that, as of December 31, 2021, 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.

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 Executive Vice President, Chief Financial Officer, Secretary, and Treasurer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

39 unchanged sentences

INDEX TO EXHIBITS

Agreement and Plan of Merger, dated October 25, 2021, by and between the Registrant, Wilks Brothers, LLC and WB Acquisitions Inc., filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on October 25, 2021, and incorporated herein by reference.

Amendment No.

1 to Agreement and Plan of Merger, dated December 14, 2021, by and between the Registrant, Wilks Brothers, LLC and WB Acquisitions Inc., filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on December 17, 2021, and incorporated herein by reference.

Amendment No.

2 to Agreement and Plan of Merger, dated January 4, 2022, by and between the Registrant, Wilks Brothers, LLC and WB Acquisitions Inc., filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on January 5, 2022, and incorporated herein by reference.

Amendment No.

3 to Agreement and Plan of Merger, dated January 10, 2022, by and between the Registrant, Wilks Brothers, LLC and WB Acquisitions Inc., filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on January 10, 2022, and incorporated herein by reference.

Amended and Restated Certificate of Formation, as amended February 11, 2015, filed as Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K, filed on March 16, 2015, and incorporated herein by reference.

Bylaws, as amended February 11, 2015, filed as Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K, filed on March 16, 2015, and incorporated herein by reference.

Statement of Resolutions Establishing Series of Shares designated Series A Junior Participating Preferred Stock of the Registrant, filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed April 8, 2021, and incorporated herein by reference.

Form of Specimen Stock Certificate, filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on February 11, 2015, and incorporated herein by reference.

Description of Securities.

Rights Agreement, dated as of April 8, 2021 between the Registrant and American Stock Transfer & Trust Company, LLC, as Rights Agent, filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed April 8, 2021, and incorporated herein by reference.

Amendment to Rights Agreement, dated October 25, 2021, between the Registrant and American Stock Transfer & Trust Company, LLC, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on October 25, 2021, and incorporated herein by reference.

The Executive Nonqualified “Excess” Plan Adoption Agreement, filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on January 8, 2013, and incorporated herein by reference.

3 unchanged sentences

Jumper, filed as Exhibit 10.5 to the Registrant’s Current Report on Form 8-K, filed on October 9, 2014, and incorporated herein by reference.

Employment Agreement, dated October 8, 2014, by and between the Registrant and Wayne A.

Whitener, filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on October 9, 2014, and incorporated herein by reference.

Letter Agreement, dated June 30, 2019, between Wayne A.

Whitener and the Company, filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on July 1, 2019, and incorporated herein by reference.

Employment Agreement, dated October 8, 2014, by and between the Registrant and C.

7 unchanged sentences

Letter Agreement, dated February 15, 2016, by and between Stephen C.

Jumper and the Company, filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No.

001-32472), filed on February 19, 2016, and incorporated herein by reference.

Jumper and the Company, filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on February 19, 2016, and incorporated herein by reference.

Letter Agreement, dated February 15, 2016, by and between James W.

2 unchanged sentences

Ray Tobias and the Company, filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed on February 19, 2016, and incorporated herein by reference.

Letter Agreement, dated February 15, 2016, by and between Wayne A.

Whitener and the Company, filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K, filed on February 19, 2016, and incorporated herein by reference.

Letter Agreement, dated May 4, 2018, by and between James K.

37 unchanged sentences

Jumper and the Company, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on September 30, 2020, and incorporated herein by reference.

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.

Second Loan Modification Agreement to Loan and Security Agreement, by and between the Registrant 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 Registrant 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.

Subsidiaries of the Registrant.

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+ 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 16 h day of March, 2021.

DAWSON GEOPHYSICAL COMPANY

/s/ Stephen C.

Chairman of the Board of Directors

/s/ Stephen jumper

Stephen Jumper

President and Chief Executive Officer

Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Stephen c.

President, Chief Executive Officer and Chairman of the Board of Directors

/s/ Matthew Wilks

Matthew Wilks

Chairman of the Board of Directors

/s/ Bruce Bradley

Bruce Bradley

/s/ Sergei Krylov

Sergei Krylov

/s/ Ted North

/s/ Mark Vander Ploeg

Mark Vander Ploeg

/s/ Stephen Jumper

Stephen Jumper

President and Chief Executive Officer

(principal executive officer)

/s/ Michael L.

/s/ James Brata

Executive Vice President, Chief Financial Officer, Secretary, and Treasurer

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Consolidated Financial Statements of Dawson Geophysical Company

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 49 )

Consolidated Balance Sheets as of December 31, 2021 and 2020

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Dawson Geophysical Company (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive loss, stockholders' equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

We have audited the accompanying consolidated balance sheets of Dawson Geophysical Company and its subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

6 unchanged sentences

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

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

We determined that there are no critical audit matters.

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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

We determined that there were no critical audit matters.

/s/ RSM US LLP

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at December 31, 2021 and 2020

Current maturities of notes receivable

Prepaid expenses and other current assets

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Right-of-use assets

Notes receivable, net of current maturities

Intangibles, net

Long-term deferred tax assets, net

Liabilities and Stockholders' Equity

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Deferred tax liabilities, net

Other accrued liabilities

Total long-term liabilities

5 unchanged sentences

35,000,000 shares authorized,

23,526,517 and 23,335,855 shares issued, and 23,478,072 and 23,287,410

shares outstanding at December 31, 2020 and 2019, respectively

23,692,379 and 23,526,517 shares issued, and 23,643,934 and 23,478,072 shares

outstanding at December 31, 2021 and December 31, 2020, respectively

Additional paid-in capital

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Interest expense

Other income (expense), net

Other (expense) income, net

Loss before income tax

Income tax (expense) benefit:

Income tax benefit (expense)

Other comprehensive income:

17 unchanged sentences

Stock-based compensation expense

Issuance of common stock as compensation

Shares exchanged for taxes on stock-based compensation

5 unchanged sentences

Stock-based compensation expense

Issuance of common stock as compensation

Shares exchanged for taxes on stock-based compensation

6 unchanged sentences

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

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

Depreciation and amortization

1 unchanged sentence

Non-cash compensation

Deferred income tax expense (benefit)

Deferred income tax expense

Bad debt expense

3 unchanged sentences

Change in operating assets and liabilities:

Decrease in accounts receivable

(Increase) decrease in accounts receivable

Decrease in prepaid expenses and other assets

Decrease in accounts payable

(Decrease) increase in accrued liabilities

Increase (decrease) in accounts payable

Decrease in accrued liabilities

Decrease in operating lease liabilities

Decrease in deferred revenue

Net cash provided by operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities:

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Proceeds from notes receivable

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

3 unchanged sentences

Tax withholdings related to stock-based compensation awards

Net cash used in financing activities

Net cash provided by (used in) financing activities

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

Net increase in cash and cash equivalents and restricted cash

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

Cash and cash equivalents and restricted cash at beginning of period

6 unchanged sentences

Decrease in accrued purchases of property and equipment

Finance leases incurred

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

Decrease in right-of-use assets for accrued rent

Increase in right-of-use assets for prepaid rent

13 unchanged sentences

Cash Equivalents

For purposes of the financial statements, the Company considers demand deposits, certificates of deposit, overnight investments, money market funds and all highly liquid debt instruments purchased with an initial maturity of three months or less to be cash equivalents.

For purposes of the consolidated financial statements, the Company considers demand deposits, certificates of deposit, overnight investments, money market funds and all highly liquid debt instruments purchased with an initial maturity of three months or less to be cash equivalents.

Allowance for Doubtful Accounts

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, requiring entities to measure expected credit losses for certain financial assets using a new, forward-looking current expected credit loss model, CECL, which will result in the earlier recognition of allowances for losses.

CECL is based on historical experience, adjusted for current conditions and reasonable and supportable forecasts.

This ASU requires a modified retrospective approach with a cumulative-effect adjustment to retained earnings for additional loss allowances, if any, as of the beginning of the first reporting period of adoption.

Additional ASU’s were issued subsequently that provided additional guidance.

On January 1, 2020, the Company adopted Topic 326 and had no cumulative-effect adjustment needed to its retained earnings as the Company’s loss allowance was deemed sufficient.

The Company’s financial instruments within the scope of this guidance primarily includes trade receivables and a note receivable.

The Company has made an accounting policy election to write off accrued interest amounts by reversing interest income.

Late in the fourth quarter of 2020, the Company wrote off a note receivable from the purchaser of certain dynamite energy source drilling equipment.

Accrued interest of $ 31,000 on this note receivable was reversed out of interest income.

The Company’s allowance for doubtful accounts reflects its current estimate of credit losses expected to be incurred over the life of the financial instrument and is determined based on a number of factors.

1 unchanged sentence

While the collectability of outstanding client invoices is continually assessed, the inherent volatility of the energy industry’s business cycle can cause swift and unpredictable changes in the financial stability of the Company’s clients.

With the adoption of ASU No.

2016-13 in 2020, the Company made an accounting policy election to write off accrued interest amounts by reversing interest income.

The Company's allowance for doubtful accounts was $ 250,000 at December 31, 2021 and 2020.

4 unchanged sentences

Depreciation is computed using the straight-line method.

When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the balance sheet, and any resulting gain or loss is reflected in the results of operations for the period.

When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the consolidated balance sheet, and any resulting gain or loss is reflected in the results of operations for the period.

Impairment of Long-Lived Assets

2 unchanged sentences

Management’s forecast of future cash flows used to perform impairment analysis includes estimates of future revenues and expenses based on the Company’s anticipated future results, while considering anticipated future oil and natural gas prices which is fundamental in assessing demand for the Company’s services.

If the carrying amounts of the assets exceed the estimated expected undiscounted future cash flows, the Company measures the amount of possible impairment by comparing the carrying amount of the assets to the fair value.

If the carrying amounts

of the assets exceed the estimated expected undiscounted future cash flows, the Company measures the amount of possible impairment by comparing the carrying amount of the assets to the fair value.

No impairment charges were recognized for the years ended December 31, 2021 and 2020.

2 unchanged sentences

The Company is the lessee in a lease contract when we obtain the right to control the asset.

The majority of our operating leases are non-cancelable operating leases for office, shop and warehouse space in Midland, Plano, Houston, Denver, Oklahoma City and Calgary, Alberta.

The majority of our operating leases are non-cancelable operating leases for office, shop and warehouse space in Midland, Plano, Houston, Oklahoma City and Calgary, Alberta.

The assets and liabilities under finance leases are recorded at the lower of the present value of the minimum lease payments or the fair market value of the related assets.

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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.

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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Under both types of agreements, the Company recognizes revenues as the services are performed.

Revenue is generally recognized based on square miles of data recorded compared to total square miles anticipated to be recorded on the survey using the total estimated revenue for the service

Revenue is generally recognized based on square miles of data recorded compared to total square miles anticipated to be recorded on the survey using the total estimated revenue for the service contract.

In the case of a cancelled service contract, the client is billed and revenue is recognized for any third party charges and square miles of data recorded up to the date of cancellation.

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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 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 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.

Estimates for total revenue and total fulfillment cost on any service contract are based on significant qualitative and quantitative judgments.

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All assets and liabilities in the functional currency are then translated into U.S.

Dollars at the exchange rate on the balance sheet date.

Dollars at the exchange rate on the consolidated balance sheet date.

Income and expenses are translated using the exchange rate applicable to each transaction.

2 unchanged sentences

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 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 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

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.

2 unchanged sentences

Use of Estimates in the Preparation of Financial Statements

Preparation of the accompanying 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 contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

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 contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues

and expenses during the reporting period.

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

3 unchanged sentences

The Company had short-term investments at December 31, 2021 and 2020 consisting of certificates of deposit with original maturities greater than three months but less than a year.

Certificates of deposits with any given banking institution did not exceed the FDIC insurance limit at December 31, 2020 or 2019.

Certificates of deposit with any given banking institution did not exceed the FDIC insurance limit at December 31, 2021 or 2020.

Fair Value of Financial Instruments

At December 31, 2020 and 2019, the Company’s financial instruments included cash and cash equivalents, short-term investments in certificates of deposit, restricted cash, accounts receivable, other current assets, accounts payable, other current liabilities, notes payable, finance leases and operating leases.

At December 31, 2019, the Company’s financial instruments also included notes receivable.

At December 31, 2021 and 2020, 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, 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 receivable, notes payable, finance leases and operating leases approximate their fair value based on a comparison with the prevailing market interest rates.

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.

Due to the short-term maturities of the Company’s investments in certificates of deposit, the carrying amounts approximate fair value at the respective balance sheet dates.

The fair values of the Company’s notes receivable, notes payable, finance leases, operating leases and investments in certificates of deposit are level 2 measurements in the fair value hierarchy.

The fair values of the Company’s notes payable, finance leases, operating lease liabilities and investments in certificates of deposit are level 2 measurements in the fair value hierarchy.

Property and Equipment

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The Company has one line of business, acquiring and processing seismic data in North America.

Our chief operating decision maker (President, CEO, and Chairman of the Board) makes operating decisions and assesses performance based on the Company as a whole.

Our chief operating decision maker (President and CEO) makes operating decisions and assesses performance based on the Company as a whole.

Accordingly, the Company is considered to be in a single reportable segment.

15 unchanged sentences

Revenue recognized for the year ended December 31, 2020 that was included in the contract liability balance at the beginning of 2020 was $ 3,476 .

Deferred revenue not recognized during 2020 relates to a project that has not yet started.

Dominion Loan Agreement

On September 30, 2019, the Company entered into a Loan and Security Agreement with Dominion Bank.

On September 30, 2020, the Company entered into a Loan Modification Agreement to the Loan and Security Agreement (as amended by the Loan Modification Agreement, the “Loan Agreement”) for the purpose of amending and extending the maturity of our line of credit with Dominion Bank by one year .

The Loan Agreement provides for a Revolving Credit Facility in an amount up to the lesser of (i) $ 15,000,000 or (ii) a sum equal to (a) 80 % of the Company’s eligible accounts receivable plus 100 % of the amount on deposit with Dominion Bank in the Company’s collateral account, consisting of a restricted CDARS account of $ 5,000,000 .

As of December 31, 2020, the Company has not borrowed any amounts under the Revolving Credit Facility.

On September 30, 2021, the Company entered into the Second Modification to the Loan and Security Agreement for the purpose of (a) amending and extending the maturity of its line of credit with Dominion Bank by one year and (b) amending the Company's obligation to maintain a certain tangible net worth.

The Loan Agreement provides for a revolving credit

facility in an amount up to the lesser of (i) $ 15,000,000 or (ii) a sum equal to (a) 80 % of the Company’s eligible accounts receivable plus 100 % of the amount on deposit with Dominion Bank in the Company’s collateral account, consisting of a restricted IntraFi Network Deposit account of $ 5,000,000 .

As of December 31, 2021, the Company has not borrowed any amounts under the Revolving Credit Facility and has approximately $ 10,300,000 available for withdrawal.

Under the Revolving Credit Facility, interest will accrue at an annual rate equal to the lesser of (i) 6.00 % and (ii) the greater of (a) the prime rate as published from time to time in The Wall Street Journal or (b) 3.50 %.

1 unchanged sentence

The Loan Agreement contains customary covenants for credit facilities of this type, including limitations on disposition of assets.

The Company is also obligated to meet certain financial covenants under the Loan Agreement, including maintaining a tangible net worth of $ 75,000,000 and specified ratios with respect to current assets and liabilities and debt to tangible net worth.

The Company is also obligated to meet certain financial covenants under the Loan Agreement, including maintaining a tangible net worth of not less than $ 55,000,000 and specified ratios with respect to current assets and liabilities and debt to tangible net worth.

The Company received a limited waiver from Dominion Bank with respect to any non-compliance with the tangible net worth covenant for the period ended June 30, 2021.

The Company’s obligations under the Loan Agreement are secured by a security interest in the collateral account (including the Deposit) with Dominion Bank and future accounts receivable and related collateral.

5 unchanged sentences

Other Indebtedness

As of December 31, 2020, the Company has one note payable to a finance company for various insurance premiums totaling $ 40,000 .

As of December 31, 2021, the Company has two notes payable to a finance company for various insurance premiums totaling $ 265,000 .

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

2 unchanged sentences

The Company’s aggregate principal amount (in thousands) of outstanding notes payable and the interest rates and monthly payments as of December 31, 2021 and 2020 are as follows:

December 31, 2020

December 31, 2019

Notes payable to finance company for insurance

1 unchanged sentence

Interest rate

4.05 % - 4.99 %

The Company’s aggregate maturities of finance leases (in thousands) at December 31, 2021 are as follows:

1 unchanged sentence

January 2023 - December 2023

Obligations under finance leases

3 unchanged sentences

The Company is the lessee in a lease contract when we obtain the right to control the asset.

The majority of our operating leases are non-cancelable operating leases for office, shop and warehouse space in Midland, Plano, Houston, Denver, Oklahoma City and Calgary, Alberta.

The majority of our operating leases are non-cancelable operating leases for office, shop and warehouse space in Midland, Plano, Houston, Oklahoma City and Calgary, Alberta.

The components of lease cost (in thousands) for the years ended December 31, 2021 and 2020 were as follows:

62 unchanged sentences

Year Ended December 31,

Restricted stock awards

Restricted stock unit awards

5 unchanged sentences

Restricted Stock Awards

There were no restricted stock grants in the years ended December 31, 2020 and 2019.

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

There were no nonvested restricted stock awards outstanding at December 31, 2020 and 2019 and no unrecognized compensation costs related to nonvested restricted stock awards as of the same period.

The aggregate vesting date fair value of restricted stock for the years ended December 31, 2020 and 2019 was $ 0 and $ 255,000 , respectively.

There was no restricted stock award activity during the years ended December 31, 2021 and 2020.

Restricted Stock Unit Awards

The Company did not grant any restricted stock units awards for the years ended December 31, 2020 or 2019.

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

The Company granted 335,000 restricted stock unit awards during the year ended December 31, 2021 with a weighted average grant date fair value of $ 1.98 .

The Company granted no restricted stock unit awards during the year ended December 31, 2020.

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 to three years or in annual increments over three years .

A summary of the Company’s nonvested restricted stock unit awards as of December 31, 2021 and activity during the year then ended is as follows:

7 unchanged sentences

Common Stock Awards

The Company granted common stock awards with immediate vesting to outside directors and employees during the years ended December 31, 2020 and 2019 as follows:

The Company granted common stock awards with immediate vesting to outside directors during the years ended December 31, 2021 and 2020 as follows:

Number of Common Stock Awards

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Deferred state benefit

Deferred foreign benefit

Income tax (expense) benefit

Income tax benefit (expense)

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

3 unchanged sentences

State income tax benefit, net of federal tax

Foreign (income) loss

Income tax (expense) benefit

Foreign loss (income)

Income tax benefit (expense)

The Coronavirus Aid, Relief, and Economic Security Act (“The CARES Act”) was enacted on March 27, 2020 resulting in tax law changes that impacted the Company by accelerating the AMT credit owed to the Company and allowed for a temporary change in NOL taxable income limitations.

2 unchanged sentences

The Consolidated Appropriations Act, 2021 (“The ACT”) was enacted by Congress on December 27, 2020.

The Company is evaluating the effect of The ACT and does not anticipate a material impact to its consolidated financial statements.

The ACT did not have a material impact to the Company’s consolidated financial statements.

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

4 unchanged sentences

Other comprehensive income

Restricted stock and restricted stock unit awards

Foreign deferred taxes

1 unchanged sentence

Canadian start-up costs

Restricted stock and restricted stock unit awards

Self-insurance

Workers’ compensation

Deferred revenue

Alternative Minimum Tax ("AMT") credit carryforward

Gross deferred tax assets

3 unchanged sentences

Property and equipment

Net deferred tax (liabilities) assets

Domestic deferred tax (liabilities) assets

Net deferred tax liabilities

Domestic deferred tax liabilities

Foreign deferred tax liabilities

Net deferred tax (liabilities) assets

Net deferred tax liabilities

At December 31, 2021, the Company had a gross NOL for U.S.

8 unchanged sentences

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

As one of the Company’s Canadian subsidiaries reported taxable income for 2020 and 2019, the Company will continue to monitor the need for valuation allowance release on that subsidiary’s NOL in upcoming periods.

At December 31, 2021 and 2020, the Company did no t have any uncertain tax positions.

27 unchanged sentences

Year Ended December 31,

Net Propety and Equipment

Net Property and Equipment

United States

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From time to time, the Company is a party to various legal proceedings arising in the ordinary course of business.

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 financial condition, results of operations or liquidity, as the Company believes it is adequately indemnified and insured.

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.

Since November 1, 2021, ten lawsuits related to the Merger Agreement and the transactions contemplated thereby (the “Transactions”) have been filed on behalf of purported Company shareholders, brought as individual actions .

All complaints named or name as defendants the Company and each of the members of the Board, and one complaint also named WB Acquisitions Inc.

and Wilks Brothers, LLC as defendants.

Nine of the ten lawsuits have been dismissed as of March 16, 2022.

The complaints variously alleged or allege that the Company and the members of the Board violated Sections 14(d) and 14(e) of the Exchange Act and Rule 14d-9 and, in some of the dismissed cases , Rule 14a-9 promulgated thereunder by failing to provide in the S olicitation/Recommendation Statement on Schedule 14D-9 that the Company filed on November 1, 2021 (as amended or supplemented, the “Schedule 14D-9”) all material information needed by the public shareholders to make an informed decision whether to tender their shares of Company Common Stock, and that the members of the Board violated Section 20(a) of the Exchange Act by allowing the filing of a materially deficient Schedule 14D-9.

The complaints variously sought or seek, among other relief, an injunction against the Transactions (or, in the alternative, rescission or an award of rescissory damages if the Transactions are completed), an award of attorneys’ and experts’ fees and costs, a declaration that the defendants violated Sections 14(d), 14(e) and 20(a) of the Exchange Act and Rules 14a-9 and 14d-9 promulgated thereunder, and a judgment directing that the defendants account for damages sustained because of the alleged wrongs.

The defendants believe that these complaints lack merit but cannot predict the outcome of these matters.

We are also party to the following legal proceeding:

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Subsequent to the filing of the petition, Weatherford filed for bankruptcy protection on July 1, 2019.

While the outcome and impact of this legal proceeding on the Company cannot be predicted with certainty, based on currently available information, management believes that the resolution of this proceeding will not have a material adverse effect on our financial condition, results of operations or liquidity.

While the outcome and impact of this legal proceeding on the Company cannot be predicted with certainty, based on currently available information, management believes that the resolution of this proceeding will not have a material adverse effect on our consolidated financial condition, results of operations or liquidity.

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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2020-10, Codification Improvements, which clarifies the Codification or corrects unintended application of guidance by improving the consistency of the Codification for disclosure on multiple topics.

They are not expected to change current practice.

This ASU is effective for the annual period beginning after December 15, 2020, including interim periods within that annual period and should be applied on a retrospective basis for all periods presented.

Early adoption is permitted.

The Company is currently implementing the new guidance and it will not have a material impact on its 2021 consolidated financial statements.

The Company adopted this guidance in the first quarter of 2021 and it did not have a material impact on its 2021 consolidated financial statements.

In December 2019, the FASB issued ASU No.

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Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by eliminating certain exceptions to the general principles in Topic 740 and by clarifying and amending existing guidance to improve consistent application.

This ASU is effective for the annual period beginning after December 15, 2020, including interim periods within that annual period.

Certain amendments within this ASU are required to be applied on a retrospective basis for all periods presented;

others are to be applied using a modified retrospective approach with a cumulative-effect adjustment to retained earnings, if any, as of the beginning of the first reporting period in which the guidance is adopted;

and yet others are to be applied using either basis.

All other amendments not specified in the ASU should be applied on a prospective basis.

Early adoption is permitted.

An entity that elects to early adopt in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period.

Additionally, an entity that elects early adoption must adopt all the amendments in the same period.

The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurement by removing, modifying, and adding certain disclosures.

This ASU is effective for the annual period beginning after December 15, 2019, including interim periods within that annual period.

The Company adopted this guidance in the first quarter of 2020 and it did not have a material impact on its consolidated financial statements.

The Company adopted this guidance in the first quarter of 2021 prospectively as it relates to currency translation adjustments in other comprehensive income and it did not have a material impact on its consolidated financial statements.

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