What changed in this filing

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Item 9A. Controls and Procedures

2023-03-13 compared with 2022-03-18 · 113 added, 107 removed, 645 unchanged (25% 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, 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.

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, 2022, 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.

116 unchanged sentences

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 Registrant 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.

Letter Agreement, dated November 11, 2022, by and between C.

Ray Tobias and the Company, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November 16, 2022, and incorporated herein by reference.

Letter Agreement, dated November 11, 2022, by and between James K.

Brata and the Company, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on November 16, 2022, and incorporated herein by reference.

Letter Agreement, dated February 14, 2023, by and between Stephen C.

Jumper and the Company, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on February 21, 2023, and incorporated herein by reference.

Subsidiaries of the Registrant.

Consent of RSM US LLP, independent registered public accountants to incorporation of report by reference.

Consent of RSM US LLP, independent registered public accounting firm to incorporation of report by reference.

Certification of Chief Executive Officer pursuant to 18 U.S.C.

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Bruce Bradley

/s/ Albert Conly

/s/ Jose Carlos Fernandes

Jose Carlos Fernandes

/s/ Sergei Krylov

Sergei Krylov

/s/ Ted North

/s/ Mark Vander Ploeg

Mark Vander Ploeg

/s/ Stephen Jumper

34 unchanged sentences

Critical Audit Matters

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:

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:

(1) relate 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 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.

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at December 31, 2022 and 2021

Employee retention credit receivable

Prepaid expenses and other current assets

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Total long-term liabilities

Operating commitments and contingencies

Commitments and contingencies

Stockholders’ equity:

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Additional paid-in capital

Retained deficit

Accumulated deficit

Treasury stock, at cost;

48,445 shares

0 and 48,445 shares at December 31, 2022 and 2021, respectively

Accumulated other comprehensive loss, net

15 unchanged sentences

Interest expense

Other (expense) income, net

Other income (expense), net

Gain from employee retention credit

Loss before income tax

Income tax benefit (expense):

Other comprehensive income:

Net unrealized income on foreign exchange rate translation, net

Other comprehensive (loss) income:

Net unrealized (loss) income on foreign exchange rate translation

Comprehensive loss

11 unchanged sentences

Unrealized income on foreign exchange rate translation

Income tax expense

Other comprehensive income

Issuance of common stock under stock compensation plans

Stock-based compensation expense

Issuance of common stock as compensation

Shares exchanged for taxes on stock-based compensation

Balance December 31, 2021

Unrealized income on foreign exchange rate translation

Income tax expense

Other comprehensive income

Unrealized loss on foreign exchange rate translation

Issuance of common stock under stock compensation plans

Stock-based compensation expense

Issuance of common stock as compensation

Shares exchanged for taxes on stock-based compensation

Cash settlement of RSUs

Treasury stock sale

Balance December 31, 2022

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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 used in operating activities:

Depreciation and amortization

2 unchanged sentences

Deferred income tax expense

Bad debt expense

Change in other accrued long-term liabilities

Gain on disposal of assets

1 unchanged sentence

Change in operating assets and liabilities:

(Increase) decrease in accounts receivable

Decrease in prepaid expenses and other assets

Increase (decrease) in accounts payable

Decrease in accrued liabilities

Decrease (increase) in accounts receivable

Increase in employee retention credit receivable

(Increase) decrease in prepaid expenses and other assets

Increase in accounts payable

Increase (decrease) in accrued liabilities

Decrease in operating lease liabilities

Decrease in deferred revenue

Net cash (used in) provided by operating activities

Increase (decrease) in deferred revenue

Net cash used in operating activities

Cash flows from investing activities:

Capital expenditures, net of non-cash capital expenditures summarized below

Capital expenditures, net of non-cash capital expenditures summarized below (if applicable)

Proceeds from maturity of short-term investments

Acquisition of short-term investments

Proceeds from disposal of assets

Proceeds from notes receivable

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

3 unchanged sentences

Tax withholdings related to stock-based compensation awards

Net cash provided by (used in) financing activities

Cash settlement of RSUs

Sale of treasury stock

Net cash (used in) provided by financing activities

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

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

Net decrease in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

5 unchanged sentences

Non-cash operating, investing and financing activities:

Decrease in accrued purchases of property and equipment

Increase in accrued purchases of property and equipment

Finance leases incurred

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

Increase in right-of-use assets for prepaid rent

Financed insurance premiums

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The Company's allowance for doubtful accounts was $ 250,000 at December 31, 2022 and 2021.

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 $ 2,966,000 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 $ 3,035,000 as an employee retention credit receivable in the Consolidated Balance Sheet as of December 31, 2022.

Payments were received in January 2023.

No additional credits are expected to be received.

Property and Equipment

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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, 2022 and 2021.

The Company leases certain vehicles, seismic recording equipment, real property and office equipment under lease agreements.

The Company evaluates each lease to determine its appropriate classification as an operating lease or finance lease for financial reporting purposes.

The Company evaluates each lease to determine its appropriate classification as an operating lease or a finance lease for financial reporting purposes.

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

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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 contract.

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

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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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.

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

Management considers a variety of factors such as whether various components of the performance obligation will be performed internally or externally, cost of third party services, and facts and circumstances unique to the performance obligation in making these estimates.

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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.

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

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 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.

Reclassifications

Certain reclassifications have been made to the 2020 consolidated financial statements or associated disclosures to conform to the 2021 presentation.These reclassifications had no impact on the consolidated financial statements.

Short-Term Investments

2 unchanged sentences

Fair Value of Financial Instruments

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.

At December 31, 2022 and 2021, the Company’s financial instruments included cash and cash equivalents, restricted cash, short-term investments in certificates of deposit, accounts receivable, employee retention credit 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.

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.

2 unchanged sentences

Property and Equipment

Net book value of property and equipment (in thousands) decreased $ 8,222 or 31.1 % from December 31, 2021 to December 31, 2022.

This is primarily due to capital expenditure purchases of $ 1,778 during the year ended December 31, 2022 offset by depreciation expense of $ 9,795 for the same period.

Property and equipment (in thousands), together with the related estimated useful lives at December 31, 2022 and 2021, were as follows:

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Supplemental Consolidated Financial Statement Information

The activity in the allowance for doubtful accounts (in thousands) for the years ended December 31, 2021 and 2020 was as follows:

Year Ended December 31,

Beginning balance

Additional provisions to allowance

Write-offs against allowance - A/R

Write-offs against allowance - N/R

Recoveries collected

Ending balance

Other current liabilities (in thousands) consist of the following at December 31, 2021 and 2020:

Accrued self-insurance reserves

Other accrued expenses and current liabilities

Other current liabilities

Disaggregated Revenues

Other Current Assets and Other Current Liabilities (in thousands)

Prepaid expenses and other current assets consist of the following at December 31, 2022 and 2021:

Contract assets

Prepaid expenses

Other current assets

The Company did not have any specific account within other current liabilities that accounted for more than 5% of total current liabilities at December 31, 2022.

The Company had accrued self-insurance reserves of approximately $ 599 and other accrued expenses and current liabilities of $ 739 at December 31, 2021.

Related Party Transactions (in thousands)

As of December 31, 2022, the Company had accounts receivable due from related parties of $ 121 .

This receivable is due from Breckenridge Geophysical, LLC, which is a wholly owned subsidiary of Wilks Brothers, LLC, the holder of approximately 74.46 % of the Company’s outstanding common stock.

This receivable is primarily related to rental of seismic equipment to Breckenridge.

For the year ended December 31, 2022, the Company received approximately $ 2,200 of related party revenue from Breckenridge.

All outstanding receivables from Breckenridge have been received as of the filing of this 10-K.

During 2021, the Company did not have any related party revenue.

Disaggregated Revenues (in thousands)

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

1 unchanged sentence

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

The following table presents the Company’s operating revenues (unaudited and in thousands) disaggregated by geographic region:

The following table presents the Company’s operating revenues disaggregated by geographic region:

Year Ended December 31,

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The Company’s prepaid expenses and other current assets at December 31, 2022 and 2021 included deferred costs incurred to fulfill contracts with customers of $ 5,433 and $ 972 , respectively.

Deferred costs at December 31, 2021 compared to January 1, 2021 and at December 31, 2020 compared to January 1, 2020 decreased primarily as a result of the completion of several projects for clients with significant deferred fulfillment costs at the beginning of each of the years.

Deferred costs at December 31, 2022 compared to January 1, 2022 increased primarily as a result of new projects for clients with significant deferred fulfillment costs at December 31, 2022.

Deferred costs at December 31, 2021 compared to January 1, 2021 decreased primarily as a result of the completion of several projects for clients with significant deferred fulfillment costs at the beginning of 2021.

The amount of total deferred costs amortized for the years ended December 31, 2022 and 2021 was $ 6,824 and $ 6,563 , respectively.

3 unchanged sentences

The Company’s deferred revenue at December 31, 2022 and 2021 was $ 7,199 and $ 1,344 , respectively.

Deferred revenue at December 31, 2021 compared to January 1, 2021 and at December 31, 2020 compared to January 1, 2020 decreased primarily as a result of completing multiple large projects for clients throughout each of the years.

Deferred revenue at December 31, 2022 compared to January 1, 2022 increased primarily as a result of new projects for clients with large third party reimbursables where data has not yet been recorded.

Deferred revenue at December 31, 2021 compared to January 1, 2021 decreased primarily as a result of completing multiple large projects for clients throughout 2021.

Revenue recognized for the year ended December 31, 2022 that was included in the contract liability balance at the beginning of 2022 was $ 1,092 .

Revenue recognized for the year ended December 31, 2021 that was included in the contract liability balance at the beginning of 2021 was $ 1,779 .

Deferred revenue not recognized during 2022 relates to projects that have not yet started or were cancelled.

Dominion Loan Agreement

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

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 .

On September 30, 2022, the Company entered into a Third Loan Modification Agreement 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 , (b) amending the principal amount under the Loan Agreement, (c) amending the interest rate under the Loan Agreement, (d) amending the Company’s obligation to maintain a certain tangible net worth and (e) adding the Company’s obligation to maintain a minimum liquidity amount.

The Loan Agreement provides for a secured revolving credit facility in an amount up to the lesser of (i) $ 10,000,000 or (ii) a sum equal to (a) 80 % of the Company’s eligible accounts receivable plus (b) 100 % of the amount on deposit with Dominion Bank in the Company’s collateral account, including a restricted IntraFi Network Deposit account of $ 5,000,000 .

As of December 31, 2022, the Company has not borrowed any amounts under the Revolving Credit Facility and has approximately $ 9,017,000 available for withdrawal.

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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 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 is also obligated to meet certain financial covenants under the Loan Agreement, including maintaining a tangible net worth of not less than $ 38,000,000 and, to be tested as of the end of each calendar quarter, unencumbered liquid assets of not less than $ 5,000,000 , 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 December 31, 2022.

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.

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Other Indebtedness

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.

As of December 31, 2022, the Company has one note payable to a finance company for various insurance premiums totaling $ 205,000 .

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, 2022 and 2021 include finance leases of $ 277,000 and $ 45,000 , respectively.

1 unchanged sentence

The Company’s aggregate principal amount (in thousands) of outstanding notes payable and the interest rates and monthly payments as of December 31, 2022 and 2021 are as follows:

December 31, 2022

December 31, 2021

Notes payable to finance company for insurance

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January 2024 - December 2024

January 2025 - December 2025

Obligations under finance leases

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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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Restricted Stock Unit Awards

The Company did no t grant any restricted stock unit awards during the year ended December 31, 2022.

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 .

3 unchanged sentences

Nonvested as of December 31, 2021

Cash Settlement

Nonvested as of December 31, 2022

As of December 31, 2021, there were approximately $ 413,000 of unrecognized compensation costs related to nonvested restricted stock unit awards.

These costs are expected to be recognized over a weighted average period of 0.62 years.

As of December 31, 2022, there was no unrecognized compensation cost related to nonvested restricted stock unit awards.

The aggregate vesting date fair value of restricted stock units for the years ended December 31, 2022 and 2021 was $ 351,000 and $ 416,000 , respectively.

The aggregate cash settlement date fair value of restricted stock units for the years ended December 31, 2022 and 2021 was $ 301,000 and $ 0 , respectively.

An additional 5 % over fair value of restricted stock units was issued for those who chose the cash settlement option with an aggregate value for the years ended December 31, 2022 and 2021 of $ 15,000 and $ 0 , respectively.

Common Stock Awards

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Loss before income tax

The Company’s components of income tax (expense) benefit (in thousands) were as follows:

The Company’s components of income tax benefit (expense) (in thousands) were as follows:

Year Ended December 31,

Current federal benefit

Current state expense

Current state benefit

Deferred federal expense

Deferred state benefit

Income tax benefit (expense)

Deferred state (expense) benefit

Income tax (expense) benefit

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:

2 unchanged sentences

Change in valuation allowance

State income tax benefit, net of federal tax

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.

State income tax (expense) benefit, net of federal tax

Foreign losses

Section 382 limited NOL

Income tax (expense) benefit

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.

For tax years beginning January 1, 2018 and those prior to 2021, an NOL deduction equal to 100% of taxable income is allowed.

Tax years 2021 and forward will revert back to the 80% limitation established by the 2017 Tax Cuts and Jobs Act.

Tax years 2021 and forward will revert back to the 80% limitation established by the 2017 Tax Cuts and Jobs

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

6 unchanged sentences

Other comprehensive income

Deferred revenue

Foreign deferred taxes

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At December 31, 2022, the Company had a gross NOL for U.S.

federal income tax purposes of approximately $ 145,949,000 .

This NOL will begin to expire in 2027.

federal income tax purposes of approximately $ 158,460,000 but expects approximately $ 94,779,000 to expire unused due to the 382 event discussed below.

The remaining NOL will begin to expire in 2027.

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

1 unchanged sentence

The Company also had state net NOLs that will affect state taxes of approximately $ 1,398,000 at December 31, 2022.

State NOLs began to expire in 2015.

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

The Company also had a Canadian gross NOL of $ 24,702,000 that will begin to expire in 2037.

On January 14, 2022, the Company was subject to an Internal Revenue Code section 382 event that limited some of our NOL utilization in future periods.

The 382 limitation rendered a substantial portion of the NOLs unusable and caused the Company to write off approximately $ 19,904,000 of the federal net NOLs against the valuation allowance.

It also caused the Company to adjust the valuation allowance so we are still in a naked credit position domestically, but it did not have a material impact on tax expense.

In evaluating the possible sources of taxable income during 2022, the Company determined it is more likely than not that the remaining deferred tax assets will not be realizable.

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and Canada are the only countries of operation for the Company.

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

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

Year Ended December 31,

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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.

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:

The Company is also party to the following legal proceeding:

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

6 unchanged sentences

While the Company seeks to minimize these disputes and maintain good relations with its clients, the Company has experienced in the past, and may experience in the future, disputes that could affect its revenues and results of operations in any period.

As of December 31, 2021, Dominion Bank has issued one letter of credit under the Dominion Loan Agreement.

The letter of credit is in the amount of $ 265,000 to support the Company’s workers compensation insurance and is secured by a certificate of deposit with Dominion Bank.

Recently Issued Accounting Pronouncements

In October 2020, the FASB issued ASU No.

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.

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.

2019-12, Income Taxes (“Topic 740”):

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.

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

8 unchanged sentences

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