What changed in this filing

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Item 9A. Controls and Procedures

2024-04-01 compared with 2023-03-13 · 470 added, 208 removed, 550 unchanged (55% 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, 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.

Based upon that evaluation, our President and Chief Executive Officer, and our Chief Financial Officer concluded that, as of December 31, 2023, 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 Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of management, including our President and Chief Executive Officer, and Executive Vice President, Chief Financial Officer, Secretary, and Treasurer, we evaluated the effectiveness of our internal controls over financial reporting as of December 31, 2022 using the criteria set forth in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

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, 2023 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, 2023, our internal control over financial reporting was effective.

Our internal control over financial reporting as of December 31, 2022 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.

Our internal control over financial reporting

as of December 31, 2023 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.

Changes in Internal Control over Financial Reporting

1 unchanged sentence

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

28 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.

Agreement and Plan of Merger, dated October 25, 2021, by and between the Company, 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.

1 to Agreement and Plan of Merger, dated December 14, 2021, by and between the Company, 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.

2 to Agreement and Plan of Merger, dated January 4, 2022, by and between the Company, 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.

3 to Agreement and Plan of Merger, dated January 10, 2022, by and between the Company, 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.

Asset Purchase Agreement, dated March 24, 2023, by and among the Company, Wilks Brothers, LLC and Breckenridge Geophysical, LLC, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on March 24, 2023, and incorporated herein by reference.

Amended and Restated Certificate of Formation, dated February 9, 2015, filed as Exhibit 3.1 to the Company’s Annual Report on Form 10-K, filed on March 16, 2015, and incorporated herein by reference .

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

Certificate of Amendment to Amended and Restated Certificate of Formation, dated December 1, 2023, filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on December 1, 2023, and incorporated herein by reference.

Second Amended and Restated Bylaws, dated December 1, 2023, filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on December 1, 2023, and incorporated herein by reference.

Statement of Resolutions Establishing Series of Shares designated Series A Junior Participating Preferred Stock of the Company, filed as Exhibit 3.1 to the Company’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 Company’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.

The Executive Nonqualified Excess Plan Document, filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on January 8, 2013, and incorporated herein by reference.

Form of Indemnification Agreement entered with directors and executive officers, filed as Exhibit 10.1 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 Stephen C.

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 C.

Ray Tobias, filed as Exhibit 10.6 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 James K.

Brata, filed as Exhibit 10.3 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 James W.

Thomas, filed as Exhibit 10.8 to the Registrant’s Current Report on Form 8-K, filed on October 9, 2014, and incorporated herein by reference.

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

Brata and the Company, filed as Exhibit 10.1 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 Stephen C.

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.

Thomas and the Company, filed as Exhibit 10.4 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 C.

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 May 4, 2018, by and between James K.

Brata and the Company, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on May 4, 2018, and incorporated herein by reference.

Letter Agreement, dated May 4, 2018, by and between Stephen C.

Jumper and the Company, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on May 4, 2018, and incorporated herein by reference.

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

Thomas and the Company, filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on May 4, 2018, and incorporated herein by reference.

Letter Agreement, dated May 4, 2018, by and between C.

Ray Tobias and the Company, filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed on May 4, 2018, and incorporated herein by reference.

Amended and Restated Dawson Geophysical Company 2006 Stock and Performance Incentive Plan (the “Legacy Dawson Plan”), filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on February 11, 2015, and incorporated herein by reference.

Rights Agreement, dated as of April 8, 2021 between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent, filed as Exhibit 4.1 to the Company’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 Company 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 Company’s Current Report on Form 8-K, filed on January 8, 2013, and incorporated herein by reference.

The Executive Nonqualified Excess Plan Document, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on January 8, 2013, and incorporated herein by reference.

Form of Indemnification Agreement entered with directors and executive officers, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on October 9, 2014, and incorporated herein by reference.

Amended and Restated Dawson Geophysical Company 2006 Stock and Performance Incentive Plan (the “Legacy Dawson Plan”), filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on February 11, 2015, and incorporated herein by reference.

Form of Restricted Stock Agreement for the Legacy Dawson Plan, filed as Exhibit 10.5 to Dawson Operating Company’s (f/k/a Dawson Geophysical Company) Annual Report on Form 10-K, filed on December 11, 2013 (File No.

18 unchanged sentences

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.

Letter Agreement, dated April 15, 2020, 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 April 21, 2020, and incorporated herein by reference.

Letter Agreement, dated April 15, 2020, by and between Stephen C.

Jumper and the Company, filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on April 21, 2020, and incorporated herein by reference.

Letter Agreement, dated April 15, 2020, by and between James W.

Thomas and the Company, filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed on April 21, 2020, and incorporated herein by reference.

Letter Agreement, dated April 15, 2020, by and between C.

Ray Tobias and the Company, filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed on April 21, 2020, and incorporated herein by reference.

Letter Agreement, dated September 30, 2020, by and between Stephen C.

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.

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 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.

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.

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

4 unchanged sentences

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 accounting firm to incorporation of report 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.

Employment Agreement, dated June 16, 2023, by and between Anthony Clark and the Company, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on June 22, 2023, and incorporated herein by reference.

Separation and General Release Agreement, dated November 27, 2023, 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 December 1, 2023, and incorporated herein by reference.

Separation and General Release Agreement, dated November 28, 2023, by and between Stephen C.

Jumper and the Company, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on December 1, 2023, and incorporated herein by reference.

Separation and General Release Agreement, dated November 30, 2023, by and between James Brata and the Company, filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on December 1, 2023, and incorporated herein by reference.

Amended and Restated Employment Agreement, dated December 14, 2023, by and between Anthony Clark and the Company, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on December 20, 2023, and incorporated herein by reference.

Employment Agreement, dated December 14, 2023, by and between Ray Mays and the Company, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on December 20, 2023, and incorporated herein by reference.

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.

Subsidiaries of the Company.

Consent of RSM US LLP, independent registered public accounting firm.

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

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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

Inline XBRL Instance Document.

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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 13 th day of March, 2023.

DAWSON GEOPHYSICAL COMPANY

/s/ Stephen jumper

Stephen Jumper

/s/ William A.

President and Chief Executive Officer

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Sergei Krylov

/s/ Stephen Jumper

Stephen Jumper

/s/ William A.

President and Chief Executive Officer

(principal executive officer)

/s/ James Brata

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

Chief Financial Officer

(principal financial and accounting officer)

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In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, 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.

Business Combination among Entities under Common Control

As discussed in Notes 1 and 12 to the financial statements, the Company completed a purchase of assets treated as a business combination among entities under common control.

The Company’s financial statements as of and for the year ended December 31, 2022 have been adjusted to show the combined results as if the business combination had occurred on January 14, 2022, the date on which both entities were under common control.

Basis for Opinion

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

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:

(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 were no critical audit matters.

Critical Audit Matter

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 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.

Business combination among entities under common control:

As discussed in Note 1 to the financial statements, on March 24, 2023, the Company entered into an asset purchase agreement with Wilks Brothers, LLC (Wilks) and Breckenridge Geophysical, LLC (Breckenridge), a wholly owned subsidiary of Wilks.

Pursuant to the asset 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 payable.

While this acquisition was structured as an asset purchase, it was determined that the appropriate accounting treatment required implementation of business combination guidance in a manner similar to a pooling of interests.

The Company’s financial presentation reflects combined results of the two companies as if the combination occurred on January 14, 2022, the earliest date on which Wilks became the majority shareholder of both entities in the reporting period.

We identified the business combination among entities under common control as a critical audit matter as management’s assessment of the accounting principles related to such transactions is complex and requires that management make significant judgments, including determining whether the assets acquired from Breckenridge constituted a business;

complying with relevant presentation and disclosure guidance applicable to transactions among entities under common control;

determining the date on which Wilks was in control of both Dawson and Breckenridge;

and whether Dawson or Breckenridge was the receiving entity.

Testing management's judgments in these matters required a high degree of auditor judgment and increased audit effort, including the involvement of subject matter experts to assist in evaluating management's conclusions.

Our audit procedures related to the Company’s accounting for the business combination with entities under common control included the following, among others:

We evaluated the Company’s determination that there was a transaction among entities under common control by considering the following factors:

(1) if the Company is considered the receiving entity in the transaction and (2) the date on which the entities were deemed under common control.

We evaluated the appropriateness of the financial presentation for a transaction between entities under common control by reading management’s audit evidence, including relevant accounting policies, and by considering how the application of US GAAP affected management’s judgments and conclusions.

/s/ RSM US LLP

1 unchanged sentence

Houston, Texas

March 13, 2023

April 1, 2024

DAWSON GEOPHYSICAL COMPANY

1 unchanged sentence

(amounts in thousands, except share data)

2022 (as adjusted)

Current assets:

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Accumulated deficit

Treasury stock, at cost;

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

Equity of Breckenridge prior to acquisition

Accumulated other comprehensive loss, net

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Year Ended December 31,

2022 (as adjusted)

Operating revenues:

Reimbursable Revenue

Operating costs:

Operating expenses

Fee operating expenses

Reimbursable operating expenses

General and administrative

Severance expense

Depreciation and amortization

3 unchanged sentences

Interest expense

Other income (expense), net

Other income, net

Gain from employee retention credit

1 unchanged sentence

Income tax benefit (expense):

Other comprehensive (loss) income:

Net unrealized (loss) income on foreign exchange rate translation

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

(Loss) Income

Prior to Acquisition

Income (Loss)

Balance January 1, 2022

Unrealized income 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

Balance December 31, 2021

Net income (loss)

Unrealized loss on foreign exchange rate translation

Income tax benefit (expense)

Other comprehensive loss

Issuance of common stock under stock compensation plans

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Treasury stock sale

Deemed contribution of Breckenridge net assets

Breckenridge cash distributions prior to acquisition

Balance December 31, 2022 (as adjusted)

Unrealized income 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

Deemed distribution of Breckenridge net assets not acquired

Issuance of stock for convertible note

Balance December 31, 2023

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Year Ended December 31,

2022 (as adjusted)

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

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

Depreciation and amortization

1 unchanged sentence

Non-cash compensation

Deferred income tax expense

Gain on disposal of assets

Deferred income tax (benefit) expense

Bad debt expense

(Gain) loss on disposal of assets

Remeasurement and other

Change in operating assets and liabilities:

Decrease (increase) in accounts receivable

Increase in employee retention credit receivable

(Increase) decrease in accounts receivable

(Increase) decrease in employee retention credit receivable

(Increase) decrease in prepaid expenses and other assets

Increase in accounts payable

Increase (decrease) in accounts payable

Increase (decrease) in accrued liabilities

Decrease in operating lease liabilities

Increase (decrease) in operating lease liabilities

Increase (decrease) in deferred revenue

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

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

Proceeds from maturity of short-term investments

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

Acquisition of short-term investments

Proceeds from disposal of assets

Net cash (used in) provided by investing activities

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from notes payable

Principal payments on notes payable

3 unchanged sentences

Sale of treasury stock

Net cash (used in) provided by financing activities

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

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Cash paid for interest

Cash paid for income taxes

Cash received for income taxes

Non-cash operating, investing and financing activities:

Increase in accrued purchases of property and equipment

(Decrease) increase in accrued purchases of property and equipment

Finance leases incurred

1 unchanged sentence

Financed insurance premiums

Deemed distribution of Breckenridge net assets not acquired

Deemed contribution of Breckenridge net assets

Acquisition of net assets of Breckenridge

See accompanying notes to the consolidated financial statements.

7 unchanged sentences

and in Canada.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company.

Intercompany accounts and transactions have been eliminated.

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

The preparation of these condensed consolidated financial statements in conformity with U.S.

generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes.

Actual results could differ materially from those estimates.

Certain prior period amounts in the condensed consolidated financial statements may have been reclassified to conform to the current period’s presentation.

These consolidated financial statements have been prepared using accounting principles generally accepted in the U.S.

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 and are thus marked “(as adjusted)”.

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 and Exploration Surveys, Inc.

Additionally, Breckenridge has been consolidated on the Company’s statements for the period from January 14, 2022 (the date on which Wilks gained control of Dawson) to December 31, 2022, and for the period from January 1, 2023 to March 24, 2023.

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

1 unchanged sentence

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

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.

Management determines the need for any allowance for doubtful accounts receivable based on its review of past-due accounts, its past experience of historical write-offs, its current client base, when customer accounts exceed 90 days past due and specific customer account reviews.

Allowance for Current Expected Credit Loss

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

Management determines the need for any allowance for credit losses on accounts receivable based on its review of past-due accounts, its past experience of historical write-offs, its current client base, when customer accounts exceed 90 days past due and specific customer account reviews.

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.

1 unchanged sentence

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, 2022 and 2021.

The Company's allowance for credit losses was $ 250,000 at December 31, 2023 and 2022.

Employee Retention Credit Receivable

1 unchanged sentence

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.

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.

No additional credits are expected to be received.

Property and Equipment

8 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, 2023 and 2022.

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, 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 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.

17 unchanged sentences

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 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.

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.

11 unchanged sentences

Additionally, the Company’s policy includes (i) ignoring the financing component when estimating the transaction price for service contracts completed within one year , (ii) excluding sales tax collected from the customer when determining the transaction price, and (iii) expensing incremental costs to obtain a customer contract if the amortization period for those costs would otherwise be one year or less.

Historically, the chief operating decision maker made operating decisions and evaluated operating results of the Company on a consolidated basis.

In December 2023, we appointed a new Chief Executive Officer who is our current chief operating decision maker.

Currently, 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 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.

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

We have included disclosures about our two reportable segments for all periods presented herein.

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

Stock-Based Compensation

18 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.

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.

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

Severance Expense

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

Our ability to be profitable in the future will depend on many factors beyond our control, but primarily on the level of demand for land-based seismic data acquisition services by oil and natural gas exploration and development companies.

We incurred net losses of $ 12.1 million for the year ended December 31, 2023, and $ 18.6 million for the year ended December 31, 2022.

As of December 31, 2023, we had $ 15.8 million in cash, and a positive working capital balance of $ 15 million.

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

Short-Term Investments

8 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:

Property and equipment, together with the related estimated useful lives at December 31, 2023 and 2022, were as follows (in thousands):

2022 (as adjusted)

Land, building and other

8 unchanged sentences

Supplemental Consolidated Financial Statement Information

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:

Other Current Assets and Other Current Liabilities

Prepaid expenses and other current assets consist of the following at December 31, 2023 and 2022 (in thousands):

2022 (as adjusted)

Contract assets

1 unchanged sentence

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.

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.

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

Year Ended December 31,

Operating Revenues

United States

Deferred Costs (in thousands)

Deferred costs were $ 972 and $ 1,847 at January 1, 2022 and 2021, respectively.

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.

Other current liabilities consisted of the following at December 31, 2023 and 2022 (in thousands):

2022 (as adjusted)

Accrued self-insurance reserves

Other accrued expenses and current liabilities

Other current liabilities

Related Party Transactions

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.

The Company did not have any related party transactions during the year ended December 31, 2022.

As of December 31, 2023, the Company had approximately $ 11,000 of outstanding related party accounts payable and no outstanding related party accounts receivable.

For the years ended December 31, 2023, and December 31, 2022, Breckenridge incurred related party expenses totaling approximately $ 110,000 and $ 567,000 , respectively.

For the year ended December 31, 2023, these charges by various commonly controlled companies of Wilks Brothers, LLC consisted of trucking charges of $ 60,000 , management charges of $ 44,000 , and payroll administration charges of $ 6,000 .

For the year ended December 31, 2022, these charges by various commonly controlled companies of Wilks Brothers, LLC consisted of trucking charges of $ 92,000 , management charges of $ 432,000 , and payroll administration charges of $ 43,000 .

Deferred Costs

Deferred costs were $ 5.4 million and $ 1 million at January 1, 2023 and 2022, respectively.

The Company’s prepaid expenses and other current assets at December 31, 2023 and 2022 included deferred costs incurred to fulfill contracts with customers of $ 4.3 million and $ 5.4 million, respectively.

Deferred costs at December 31, 2023 compared to January 1, 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 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.

The amount of total deferred costs amortized for the years ended December 31, 2023 and 2022 was $ 38.3 million and $ 6.8 million, respectively.

There were no material impairment losses incurred during these periods.

Deferred Revenue (in thousands)

Deferred revenue was $ 1,344 and $ 1,779 at January 1, 2022 and 2021, respectively.

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

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

Deferred revenue was $ 7.4 million and $ 1.3 million at January 1, 2023 and 2022, respectively.

The Company’s deferred revenue at December 31, 2023 and 2022 was $ 11.8 million and $ 7.4 million, respectively.

Deferred revenue at December 31, 2023 and 2022 compared to January 1, 2023 and 2022, increased primarily as a result of various new projects for clients with large third party reimbursables where data has not yet been recorded.

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.

Revenue recognized for the year ended December 31, 2022 that was included in the contract liability balance at the beginning of 2022 was $ 1.1 million.

Deferred revenue not recognized during 2023 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, 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.

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 now provides 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 are secured by a Certificate of Deposit with Dominion Bank for $ 5.0 M (the “Deposit”) in the

Company’s collateral account.

As of December 31, 2023, the Company has not borrowed any amounts under the Revolving Credit Facility and has approximately $ 5 million available for withdrawal.

Under the Revolving Credit Facility, interest will accrue at an annual rate equal to the lesser of (i) 7.75 % and (ii) the greater of (a) the prime rate as published from time to time in The Wall Street Journal or (b) 4.75 %.

The Company will pay a commitment fee of 0.10 % per annum on the difference of (a) $ 10,000,000 minus the Deposit minus (b) the daily average usage of the Revolving Credit Facility.

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 $ 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.

From and after September 30, 2023 and so long as the Deposit held by Dominion Bank remains greater than or equal to the indebtedness (the “Financial Covenant Suspension Threshold”), the testing of the financial covenants set forth in the Loan Agreement has been suspended.

The financial covenant testing shall resume if and when the Financial Covenant Suspension Threshold is no longer satisfied.

The maturity date of the Loan Agreement is September 30, 2024.

5 unchanged sentences

As of December 31, 2023, the Company has one note payable to a finance company for various insurance premiums totaling $ 910,000 .

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.

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, 2023 and 2022 include finance leases of $ 1.8 million and $ 277,000 , respectively.

Maturities of Debt

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:

The Company’s aggregate principal amount of outstanding notes payable and the interest rates and monthly payments as of December 31, 2023 and 2022 are as follows (in thousands):

December 31, 2023

3 unchanged sentences

Interest rate

The Company’s aggregate maturities of finance leases (in thousands) at December 31, 2022 are as follows:

The Company’s aggregate maturities of finance leases at December 31, 2023 are as follows (in thousands):

January 2024 - December 2024

1 unchanged sentence

January 2026 - December 2026

January 2027 - December 2027

Obligations under finance leases

2 unchanged sentences

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

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, Oklahoma City and Calgary, Alberta.

The components of lease cost (in thousands) for the years ended December 31, 2022 and 2021 were as follows:

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 and Calgary, Alberta.

The components of lease cost for the years ended December 31, 2023 and 2022 were as follows (in thousands):

Year Ended December 31,

6 unchanged sentences

Total lease cost

Supplemental cash flow information related to leases (in thousands) for the years ended December 31, 2022 and 2021 was as follows:

Supplemental cash flow information related to leases for the years ended December 31, 2023 and 2022 was as follows (in thousands):

Year Ended December 31,

6 unchanged sentences

Finance leases

Supplemental balance sheet information related to leases (in thousands) as of December 31, 2022 and 2021 was as follows:

Supplemental balance sheet information related to leases as of December 31, 2023 and 2022 was as follows (in thousands):

Operating leases

16 unchanged sentences

Finance leases

Maturities of lease liabilities (in thousands) at December 31, 2022 are as follows:

Maturities of lease liabilities at December 31, 2023 are as follows (in thousands):

Operating Leases

13 unchanged sentences

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.

5 unchanged sentences

Impact of Stock-Based Compensation

The following table summarizes stock-based compensation expense (in thousands), which is included in operating or general and administrative expense, as appropriate, in the Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2022 and 2021:

The following table summarizes stock-based compensation expense, which is included in operating or general and administrative expense, as appropriate, in the Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022 (in thousands):

Year Ended December 31,

8 unchanged sentences

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 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, 2022 and activity during the year then ended is as follows:

Number of Restricted Stock Unit Awards

Weighted Average Grant Date Fair Value

Nonvested as of December 31, 2021

Cash Settlement

Nonvested as of December 31, 2022

The Company did no t grant any restricted stock unit awards during the years ended December 31, 2023 or 2022.

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

3 unchanged sentences

Common Stock Awards

The Company granted common stock awards with immediate vesting to outside directors during the years ended December 31, 2022 and 2021 as follows:

Number of Common Stock Awards

Weighted Average Grant Date Fair Value

Year ended December 31, 2022

Year ended December 31, 2021

The Company did not issue any stock dividends during calendar years 2022 or 2021.

The Company has not paid cash dividends during calendar years 2022 and 2021.

While there are currently no restrictions prohibiting the Company from paying cash dividends, the Board of Directors, after consideration of economic and market conditions affecting the energy industry in general, and the oilfield services business in particular, determined that the Company would not pay a cash dividend in respect of the Company’s common stock for the foreseeable future.

Payment of any type of dividend in the future will be at the discretion of the Company’s board and will depend on the Company’s financial condition, results of operations, capital and legal requirements, and other factors deemed relevant by the board.

The Company did no t grant any common stock awards with immediate vesting to outside directors during the years ended December 31, 2023 and 2022.

Employee Benefit Plans

1 unchanged sentence

The Company elected to match 100 % of the employee contributions up to a maximum of 6 % of the participant’s applicable compensation under its 401(k) plan for the years ended December 31, 2023 and 2022.

The Company’s matching contributions under its 401(k) plan for the years ended December 31, 2022 and 2021 were approximately $ 537,000 and $ 483,000 , respectively.

The Company’s matching

contributions under its 401(k) plan for the years ended December 31, 2023 and 2022 were approximately $ 648,000 and $ 537,000 , respectively.

Advertising Costs

1 unchanged sentence

Advertising costs for the years ended December 31, 2023 and 2022 totaled $ 32,000 and $ 29,000 , respectively.

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

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

Year Ended December 31,

Loss before income tax

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

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

Year Ended December 31,

Current federal benefit

Current state benefit

Deferred federal 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:

Current state expense

Deferred federal benefit (expense)

Deferred state benefit (expense)

Income tax benefit (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,

1 unchanged sentence

Change in valuation allowance

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

State income tax expense, 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

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

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

Income tax benefit (expense)

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

Deferred tax assets:

Federal tax net operating loss ("NOL") carryforward

Foreign tax NOL carryforward

Deferred revenue

State tax NOL carryforward

Intangible Assets - Breckenridge

Accrued severance

Other comprehensive income

Deferred revenue

Foreign deferred taxes

1 unchanged sentence

Canadian start-up costs

Restricted stock and restricted stock unit awards

Self-insurance

24 unchanged sentences

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,

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

Deemed contribution of Breckenridge net assets

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 reconciles the previously reported Balance Sheet at December 31, 2022 to the current Balance Sheet for the same period (in thousands):

December 31, 2022

Previously Reported

Current assets:

Cash and cash equivalents

Restricted cash

Short-term investments

Accounts receivable, net

Employee retention credit receivable

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Right-of-use assets

Intangibles, net

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

Accrued liabilities:

Payroll costs and other taxes

Deferred revenue

Current maturities of notes payable and finance leases

Current maturities of operating lease liabilities

Total current liabilities

Long-term liabilities:

Notes payable and finance leases, net of current maturities

Operating lease liabilities, net of current maturities

Deferred tax liabilities, net

Total long-term liabilities

Stockholders' equity:

Additional paid-in capital

Accumulated earnings (deficit)

Equity of Breckenridge prior to acquisition

Accumulated other comprehensive income (loss), net

Total stockholders' equity

Total liabilities and stockholders' equity

The following tables reconcile the previously reported Statement of Operations for the year ended December 31, 2022 to the current Statement of Operations for the same periods (in thousands):

Year Ended December 31, 2022

Eliminations and

Previously Reported

Other Adjustments

Operating revenues

Reimbursable revenue

Operating costs:

Operating expenses

Fee operating expenses

Reimbursable operating expenses

General and administrative

Depreciation and amortization

Income (loss) from operations

Other income (expense):

Interest income

Interest expense

Other income (expense), net

Gain from employee retention credit

Income (loss) before income tax

Income tax benefit (expense)

Net income (loss)

Other comprehensive income (loss):

Net unrealized income (loss) on foreign exchange rate translation

Comprehensive (loss) income

Basic income (loss) per share of common stock

Diluted income (loss) per share of common stock

Weighted average equivalent common shares outstanding

- assuming dilution

The following table reconciles the previously reported Statement of Cash Flows for the year ended December 31, 2022 to the current Statement of Cash Flows for the same period (in thousands):

Year ended December 31, 2022

Previously Reported

Cash flows from operating activities:

Net (loss) income

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

Depreciation and amortization

Operating lease cost

Non-cash compensation

Deferred income tax expense

Gain on disposal of assets

Remeasurement and other

Change in operating assets and liabilities:

(Increase) decrease in accounts receivable

Increase in employee retention credit receivable

(Increase) decrease in prepaid expenses and other assets

Increase (decrease) in accounts payable

Increase (decrease) in accrued liabilities

Increase (decrease) in operating lease liabilities

Increase (decrease) in deferred revenue

Net cash (used in) provided by operating activities

Cash flows from investing activities:

Capital expenditures

Proceeds from disposal of assets

Net cash used in investing activities

Cash flows from financing activities:

Principal payments on notes payable

Principal payments on finance leases

Tax withholdings related to stock-based compensation awards

Cash settlement of RSUs

Sale of treasury stock

Breckenridge cash contributions prior to acquisition

Net cash used in 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

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

Supplemental cash flow information:

Cash paid for interest

Cash received for income taxes

Non-cash operating, investing and financing activities:

Increase in accrued purchases of property and equipment

Financed leases incurred

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

Financed insurance premiums

Deemed contribution of Breckenridge net assets

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)

Net Loss per Share

1 unchanged sentence

Diluted loss per share is computed by dividing the net loss by the weighted average diluted shares outstanding.

The computation of basic and diluted loss per share (in thousands, except share and per share data) was as follows:

The computation of basic and diluted loss per share was as follows (in thousands, except share and per share data):

Year Ended December 31,

2022 (as adjusted)

Net income (loss)

Weighted average common shares outstanding

Dilutive common stock options, restricted stock unit awards and restricted stock awards

Basic loss per share of common stock

Diluted loss per share of common stock

Basic income (loss) per share of common stock

Diluted income (loss) per share of common stock

The Company had a net loss in the years ended December 31, 2023 and 2022.

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 stock options, restricted stock unit awards, and restricted stock 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, 2022 and 2021:

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, 2023 and 2022:

Year Ended December 31,

Stock options

2022 (as adjusted)

Convertible Note

Restricted stock units

Restricted stock awards

Major Clients

The Company operates in only one business segment, contract seismic data acquisition and processing services.

The Company operates in two business segments, contract seismic data acquisition and processing services.

Sales to these clients, as a percentage of operating revenues that exceeded 10%, were as follows:

Year Ended December 31,

Areas of Operation

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 (in thousands) by area of operation:

and Canada are the only operating segments for the Company.

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

Year Ended December 31,

2022 (as adjusted)

Operating Revenues

1 unchanged sentence

Year Ended December 31,

2022 (as adjusted)

Net Property and Equipment

1 unchanged sentence

Year Ended December 31,

2022 (as adjusted)

Right-of-use Assets

United States

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

Twelve Months Ended December 31, 2023

USA Operations

Canada Operations

Operating revenues

Reimbursable revenue

Operating costs:

Fee operating expenses

Reimbursable operating expenses

Operating expenses

General and administrative

Severance expense

Depreciation and amortization

Loss from operations

Other income (expense):

Interest income

Interest expense

Other income, net

Gain from employee retention credit

Loss before income tax

Income tax benefit

Other comprehensive income:

Net unrealized income on foreign exchange rate translation

Comprehensive loss

Twelve Months Ended December 31, 2022

USA Operations

Canada Operations

Operating revenues

Reimbursable revenue

Operating costs:

Fee operating expenses

Reimbursable operating expenses

Operating expenses

General and administrative

Depreciation and amortization

(Loss) income from operations

Other income (expense):

Interest income

Interest expense

Other income, net

Gain from employee retention credit

(Loss) income before income tax

Income tax expense

Net (loss) income

Other comprehensive (loss):

Net unrealized loss on foreign exchange rate translation

Comprehensive loss

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

Year Ended December 31,

United States

Commitments and Contingencies

11 unchanged sentences

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”) .

ASU 2023-07 seeks to improve disclosures about a public entity’s reportable segments and add disclosures around a reportable segment’s expenses.

The updated guidance is effective for the Company for annual periods beginning January 1, 2024, and interim periods within fiscal years beginning January 1, 2025.

As the Company has two reportable segments, the Company does not expect the adoption of this ASU to have a material impact on its financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”) .

ASU 2023-09 seeks to improve transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disclosures.

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.

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