What changed in this filing

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Item 1A. Risk Factors

2025-04-02 compared with 2024-04-01 · 46 added, 64 removed, 223 unchanged (33% of the section changed)

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We are also monitoring the impact of attacks on shipping in the Red Sea as a result of the unrest in the Middle East.

demand for oil and natural gas, increase exposure to cyberattacks, cause disruptions in global supply chains, increase foreign currency fluctuations, cause constraints or disruption in the capital markets and limit sources of liquidity.

The broader consequences of the Russian-Ukrainian conflict and unrest in the Middle East, which may include further sanctions, embargoes, supply chain disruptions, regional instability and geopolitical shifts, may have adverse effects on global macroeconomic conditions, increase volatility in the price and demand for oil and natural gas, increase exposure to cyberattacks, cause disruptions in global supply chains, increase foreign currency fluctuations, cause constraints or disruption in the capital markets and limit sources of liquidity.

We cannot predict the extent of the conflict’s effect on our business and results of operations as well as on the global economy and energy markets.

Additional factors which may affect oil and natural gas prices include, but are not limited to, the effect of U.S.

energy, monetary and trade policies;

energy, monetary and trade policies, including the imposition of tariffs;

and global economic and political conditions and developments;

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and elsewhere;

● domestic and foreign tax policy;

● domestic and foreign trade policy;

● domestic and foreign energy policy including increased emphasis on alternative sources of energy;

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We are a "controlled company", which exempts us from certain corporate governance requirements that are designed to provide protection to stockholders of companies that are not controlled companies.

As of December 31, 2023, Wilks Brothers, LLC (“Wilks”) and its affiliates control over 80% of our combined voting power and can elect all of the members of our board of directors.

As of December 31, 2024, Wilks Brothers, LLC (“Wilks”) and its affiliates control approximately 80% of our combined voting power, can elect all of the members of our board of directors and can generally control matters requiring stockholder approval.

As a result, we are considered a “controlled company” for the purposes of the Nasdaq listing requirements.

As a “controlled company,” we are permitted to, and we may, opt out of the Nasdaq listing requirements that would require (i) a majority of the members of our board of directors to be independent, (ii) that we establish a compensation committee and a nominating and governance committee, each comprised entirely of independent directors, or (iii) an annual performance evaluation of the nominating and governance and compensation committees.

As a “controlled company,” we are permitted to, and we may, opt out of the Nasdaq listing requirements that require (i) a majority of the members of our board of directors to be independent, as defined by Nasdaq rules, (ii) our nominating committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;

and (iii) our compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

The Nasdaq listing requirements are intended to ensure that directors who meet the independence standards are free of any conflicting interest that could influence their actions as directors.

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We derive a significant amount of our revenues from a relatively small number of oil and gas exploration and development companies and providers of multi-client data libraries.

During the twelve months ended December 31, 2023, our four largest clients accounted for approximately 73% of our revenues.

During the twelve months ended December 31, 2024, our two largest clients accounted for approximately 43% of our revenues.

If these clients, or any of our other significant clients, were to terminate their contracts or fail to contract for our services in the future because they are acquired, alter their exploration or development strategy, experience financial difficulties or for any other reason, our results of operations could be adversely affected.

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These fluctuations are attributable to the level of new business in a particular period, the timing of the initiation, progress or cancellation of significant projects, higher revenues and expenses on our dynamite contracts, and costs we incur to train new crews we may add in the future to meet increased client demand.

Fluctuations in our operating results may also be affected by other

factors that are outside of our control such as permit delays, weather delays and crew productivity.

Fluctuations in our operating results may also be affected by other factors that are outside of our control such as permit delays, weather delays and crew productivity.

Oil and natural gas prices have continued to be volatile and have resulted in significant demand fluctuations for our services.

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We periodically review our portfolio of equipment and our intangible assets for impairment.

decisions, could cause us to conclude that impairment indicators exist and ultimately that the values associated with our equipment or intangible assets should be impaired.

If we impair our equipment or intangible assets, these non-cash asset impairments could negatively affect our financial results in a material manner in the period in which the impairments are recorded, and the larger the amount of any impairment that may be taken, the greater the impact such impairment may have on our financial results.

Future events, including our financial performance, sustained decreases in oil and natural gas prices, reduced demand for our services, our market valuation or the market valuation of comparable companies, loss of a significant client’s business, or strategic decisions, could cause us to conclude that impairment indicators exist and ultimately that the values associated with our equipment or intangible assets should be impaired.

If we impair our equipment or intangible assets, these non-cash asset impairments could have a material adverse effect on our financial results in the period in which the impairments are recorded.

Our profitability is determined, in part, by the utilization level and productivity of our crews and is affected by numerous external factors that are beyond our control.

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Further, the barriers to entry in the seismic industry are substantial but not prohibitive.

The recent increase in channel count and number of energy source units required for larger projects makes it more costly and timely for new seismic companies or those outside of the U.S.

The recent increase in channel count and number of energy source units required for larger projects increases the cost and time commitment required for new seismic companies or those outside of the U.S.

to enter the domestic market and compete with us.

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Delays associated with weather conditions could adversely affect our results of operations.

For example, weather delays could affect our operations on a particular project or an entire region and could lengthen the time to complete data acquisition projects.

In addition, even if we negotiate weather protection provisions in our contracts, we may not be fully compensated by our clients for delays caused by inclement weather.

For example, weather delays could affect our operations on a particular project or an entire region and could lengthen the time to complete projects.

even if we negotiate weather protection provisions in our contracts, we may not be fully compensated by our clients for delays caused by inclement weather.

Our operations are subject to delays related to obtaining land access rights of way from third parties, which could affect our results of operations.

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In recent years, it has become more difficult, costly and time-consuming to obtain access rights of way as drilling activities have expanded into more populated areas.

Additionally, while landowners generally are cooperative in granting access rights, some have become more resistant to seismic and drilling activities occurring on their property.

In addition, governmental entities do not always grant permits within the time periods expected.

Delays associated with obtaining such rights of way could negatively affect our results of operations.

Additionally, some landowners have become more resistant to seismic and drilling activities occurring on their property.

Increased costs and delays associated with obtaining such rights of way could negatively affect our results of operations.

Capital requirements for our operations are large.

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In the past, we have also funded our capital expenditures and other financing needs through public equity offerings.

If we were to expand our operations at a rate exceeding operating cash flow, if current demand or pricing of geophysical services were to decrease substantially, or if technical advances or competitive pressures required us to acquire new equipment faster than our cash flow could sustain, additional financing could be required.

If we were not able to obtain such financing or renew our existing revolving line of credit when needed, it could have a negative impact on our ability to pursue expansion and maintain our competitive advantage.

Technological change in our business creates risks of technological obsolescence and requirements for future capital expenditures.

If we expand our operations at a rate exceeding operating cash flow, if current demand or pricing of geophysical services decrease substantially, or if technical advances or competitive pressures require us to acquire new equipment faster than our cash flow could sustain, additional financing could be required.

If we are not able to obtain such financing or renew our existing revolving line of credit when needed, it could have a negative impact on our ability to pursue expansion and maintain our competitive advantage.

Consistent technological change in our business creates obsolescence risks and requires capital expenditures to maintain market share.

If we are unable to keep up with these technological advances, we may not be able to compete effectively.

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A number of our employees are highly skilled scientists and highly trained technicians.

The loss, whether by death, departure or illness, of our senior executives or other key employees or our failure to continue to attract and retain skilled and technically knowledgeable personnel could adversely affect our ability to compete in the seismic services industry.

The loss of our senior executives or other key employees or our failure to continue to attract and retain skilled and technically knowledgeable personnel could adversely affect our ability to compete in the seismic services industry.

We may experience significant competition for such personnel, particularly during periods of increased demand for seismic services.

A limited number of our employees are under employment contracts, and we have no key man insurance.

A limited number of our employees are under employment contracts, and we do not maintain key man insurance.

We are subject to Canadian foreign currency exchange rate risk.

We conduct business in Canada which subjects us to foreign currency exchange rate risk.

Currently, we do not hold or issue foreign currency forward contracts, option contracts or other derivative financial instruments to mitigate the

currency exchange rate risk.

Currently, we do not hold or issue foreign currency forward contracts, option contracts or other derivative financial instruments to mitigate the currency exchange rate risk.

Our results of operations and our cash flows could be impacted by changes in foreign currency exchange rates.

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Further, the high and low sales prices of our common stock for the twelve months ended December 31, 2023 were $2.65 and $1.28, respectively.

Our common stock is listed on The NASDAQ Stock Market LLC (“NASDAQ”) under the symbol “DWSN.” However, daily trading volumes for our common stock are, and may continue to be, relatively small compared to many other publicly traded securities.

In addition, as of December 31, 2023, Wilks and its affiliates own over 80 % of our common stock so the public market for our common stock is more limited, which can lead to increased volatility and low trading volumes.

Our common stock is listed on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “DWSN.” However, daily trading volumes for our common stock are, and may continue to be, relatively low compared to other publicly traded securities.

In addition, as of December 31, 2024, Wilks and its affiliates own approximately 80% of our common stock, limiting the public market for our common stock, which can lead to increased price volatility and low trading volumes.

For example, during 2024 our daily trading volume was as low as 0 shares.

It may be difficult for you to sell your shares in the public market at any given time at prevailing prices, and the price of our common stock may, therefore, be volatile.

Our common stock traded below $5.00 per share for the past year, and when it trades below $5.00 per share it may be considered a low-priced stock and may be subject to regulations that limit or restrict the potential market for the stock.

Our common stock may be considered a low-priced stock pursuant to rules promulgated under the Exchange Act, if it continues to trade below a price of $5.00 per share.

Under these rules, broker-dealers participating in transactions in low-priced securities must first deliver a risk disclosure document which describes the risks associated with such stock, the broker-dealer’s duties, the client’s rights and remedies, and certain market and other information, and make a suitability determination approving the client for low-priced stock transactions based on the client’s financial situation, investment experience and objectives.

Broker-dealers must also disclose these restrictions in writing and provide monthly account statements to the client, and obtain specific written consent of the client.

With these restrictions, the likely effect of designation as a low-price stock would be to decrease the willingness of broker-dealers to make a market for our common stock, to decrease the liquidity of the stock, and to increase the transaction costs of sales and purchases of such stocks compared to other securities.

Our common stock traded below a price of $5.00 per share for the duration of 2023 and we cannot guarantee that our common stock will trade at a price greater than $5.00 per share.

We may be subject to liability claims that are not covered by our insurance.

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We often work as the general contractor on seismic data acquisition surveys and, consequently, engage a number of subcontractors to perform services and provide products.

While we obtain contractual indemnification and insurance

covering the acts of these subcontractors and require the subcontractors to obtain insurance for our benefit, we could be held liable for the actions of these subcontractors.

While we obtain contractual indemnification and insurance covering the acts of these subcontractors and require the subcontractors to obtain insurance for our benefit, we could be held liable for the actions of these subcontractors.

In addition, subcontractors may cause injury to our personnel or damage to our property that is not fully covered by insurance.

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We are heavily dependent on our information systems and computer-based programs, including our seismic information, electronic data processing and accounting data.

If any of such programs or systems were to fail or create erroneous information in our hardware or software network infrastructure, or if we were subject to cyberspace breaches or attacks, possible consequences include our loss of communication links, loss of seismic data and inability to automatically process commercial transactions or engage in similar automated or computerized business activities.

If any of such programs or systems were to fail or create erroneous information, or if we were subject to cyberspace breaches or attacks, possible consequences include loss of communication links, loss of seismic data and inability to automatically process commercial transactions or engage in similar automated or computerized business activities.

Any such consequence could have a material adverse effect on our business.

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If any of these events were to materialize, they could lead to losses of sensitive information, critical infrastructure, personnel or capabilities essential to our operations and could have a material adverse effect on our reputation, financial position, results of operations or cash flows.

Our business is subject to government regulation, which may adversely affect our future operations.

Our operations are subject to a variety of federal, state, provincial and local laws and regulations, including laws and regulations relating to the protection of the environment and archeological sites and those that may result from climate change legislation or executive orders that could negatively impact the exploration and production of oil and gas.

Our business is subject to significant government regulation, which may adversely affect our operations.

Our operations are subject to a variety of federal, state, provincial and local laws and regulations, including laws and regulations relating to the protection of the environment and archeological sites, such as obtaining permits from governmental entities to allow survey and drilling activities, as well as those that may result from climate change legislation or executive orders that could negatively impact the exploration and production of oil and gas.

Canadian operations have been historically cyclical due to governmental restrictions on seismic acquisition during certain periods.

In addition, governmental entities do not always grant permits within the expected time period.

As a result, there is a risk that there will be a significant amount of unused equipment during those periods.

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The adoption of laws and regulations that have the effect of reducing or curtailing exploration and development activities by energy companies could also adversely affect our operations by reducing the demand for our services.

Current and future legislation or regulation relating to climate change could negatively affect the exploration and production of oil and gas and adversely affect demand for our services.

measures to address the concerns are in various phases of discussion or implementation at the national and state levels.

Many states, either individually or through multi-state regional initiatives, have already taken legal measures intended to reduce GHG emissions, primarily through the planned development of GHG emission inventories and/or GHG cap and trade programs.

Legislation or regulation relating to greenhouse gas emissions could negatively affect the exploration and production of oil and gas and adversely affect demand for our services.

In response to concerns suggesting that emissions of certain gases, commonly referred to as “greenhouse gases” (“GHG”) (including carbon dioxide and methane), may be contributing to global climate change, legislative and regulatory measures to address the concerns are in various phases of discussion or implementation at the national and state levels.

Many states, either individually or through multi-state regional initiatives, have already taken legal measures intended to

reduce GHG emissions, primarily through the planned development of GHG emission inventories and/or GHG cap and trade programs.

Although various climate change legislative measures have periodically been introduced in the U.S.

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These and other lawsuits relating to GHG emissions may result in decisions by state and federal courts and agencies that could impact our operations.

In addition, the U.S.

was actively involved in the United Nations Conference on Climate Change in Paris, which led to the creation of the Paris Agreement.

In April 2016, the U.S.

signed the Paris Agreement, which requires countries to review and “represent a progression” in their nationally determined contributions, which set emissions reduction goals, every five years.

In November 2020, the U.S.

officially withdrew from the Paris Agreement.

However, on January 20, 2021, President Biden signed an “Acceptance on Behalf of the United States of America” that will allow the U.S.

to rejoin the Paris Agreement.

The acceptance, deposited with the United Nations on January 20, reverses the prior withdrawal.

officially rejoined the Paris Agreement on February 19, 2021.

The Paris Agreement requires countries to review and “represent a progression” in their nationally determined contributions, which set emissions reduction goals, every five years beginning in 2020.

As part of rejoining the Paris Agreement, President Biden announced that the U.S.

would commit to a 50 to 52 percent reduction from 2005 levels of GHG emissions by 2030 and set the goal of reaching net-zero GHG emissions by 2050.

In addition, shortly after taking office in January 2021, President Biden issued a series of executive orders designed to address climate change.

For example, the Executive Order on “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis” sought to adopt new regulations and policies to address climate change and suspend, revise, or rescind, prior agency actions that were identified as conflicting with the Biden Administration’s climate policies.

The United States Environmental Protection Agency has proposed strict new methane emission regulations for certain oil and gas facilities and the Inflation Reduction Act of 2022 establishes a charge on methane emissions above certain limits from the same facilities.

Additional legislation or regulation by states and regions, the EPA, and/or any international agreements to which the U.S.

may become a party that control or limit GHG emissions or otherwise seek to address climate change could adversely affect our operations.

The increasing governmental focus on GHG emissions may result in new environmental laws or regulations that may negatively affect us, our suppliers and our clients.

Additionally, in March 2024, the EPA issued final standards under the Clean Air Act to sharply reduce methane emissions and other harmful air pollution from new and existing oil and gas operations.

● The Inflation Reduction Act of 2022 establishes a charge on methane emissions above certain limits from the same facilities.

● On March 21, 2022, the SEC proposed new rules relating to the disclosure of a range of climate-related risks, and the final rules were adopted in March 2024.

Although the climate-related disclosure rules have been stayed by the SEC pending litigation challenging the rules, if the rules are implemented, we may incur increased costs relating to the assessment and disclosure of climate-related risks.

has historically been actively involved in the United Nations Conference on Climate Change in Paris, which led to the creation of the Paris Agreement.

However, on January 20, 2025, President Trump signed an executive order to withdraw the U.S.

from the Paris Agreement, marking a significant shift in U.S.

climate policy.

It remains unclear what further actions President Trump may take with respect to domestic and international programs and initiatives, what support the Trump administration would have for any potential changes to such legislative programs and initiatives in the U.N.

or Congress and what the impact of any such changes might be.

New laws or regulations focused on GHG emissions or that otherwise seek to address climate change may negatively affect us, our suppliers and our clients.

This could cause us to incur additional direct costs in complying with any new environmental regulations, as well as increased indirect costs resulting from our clients, suppliers or both incurring additional compliance costs that get passed on to us.

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Hydraulic fracturing is an important and commonly used process in the completion of oil and gas wells.

Hydraulic fracturing involves the injection of water, sand and chemical additives under pressure into rock formations to stimulate

gas production.

Several political and regulatory authorities and governmental bodies have studied hydraulic fracturing and considered potential regulations, and certain environmental and other groups have devoted resources to campaigns aimed at restricting or eradicating hydraulic fracturing.

Hydraulic fracturing involves the injection of water, sand and chemical additives under pressure into rock formations to stimulate gas production.

Several political and regulatory authorities and governmental bodies have studied hydraulic fracturing and

considered potential regulations, and certain environmental and other groups have devoted resources to campaigns aimed at restricting or eradicating hydraulic fracturing.

Due to public concerns raised regarding potential impacts of hydraulic fracturing on groundwater quality, legislative and regulatory efforts at the federal level and in some states have been initiated to require or make more stringent the permitting and compliance requirements for hydraulic fracturing operations.

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

What changed 10-K

Item 1A. Risk Factors