[Part I. FINANCIAL INFORMATION](index=3&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited Q1 2023 statements show increased revenues and a reduced net loss, retrospectively adjusted for the Breckenridge acquisition [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $65.7 million while total liabilities increased to $32.5 million, resulting in a significant drop in stockholders' equity | | March 31, 2023 (unaudited) | December 31, 2022 (as adjusted) | | :--- | :--- | :--- | | **Total current assets** | $42,866 | $43,826 | | **Total assets** | **$65,653** | **$68,673** | | **Total current liabilities** | $18,989 | $16,194 | | **Total long-term liabilities** | $13,543 | $3,675 | | **Total stockholders' equity** | $33,121 | $48,804 | | **Total liabilities and stockholders' equity** | **$65,653** | **$68,673** | - A new convertible note payable to a controlling shareholder of **$9.88 million** was added to long-term liabilities in Q1 2023[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Operating revenues increased 34.1% year-over-year to $29.4 million, with the net loss improving significantly to $0.41 million | | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 (as adjusted) | | :--- | :--- | :--- | | **Operating revenues** | $29,408 | $21,934 | | **Loss from operations** | ($573) | ($1,438) | | **Net loss** | **($413)** | **($1,385)** | | **Basic and Diluted loss per share** | ($0.02) | ($0.06) | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities improved to $1.8 million, while cash used in investing and financing activities increased | (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 (as adjusted) | | :--- | :--- | :--- | | **Net cash used in operating activities** | ($1,820) | ($9,149) | | **Net cash used in investing activities** | ($2,595) | ($18) | | **Net cash (used in) provided by financing activities** | ($3,224) | $1,647 | | **Net decrease in cash** | ($7,659) | ($7,520) | | **Cash at end of period** | $15,944 | $22,856 | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity decreased from $48.8 million to $33.1 million, primarily due to the accounting for the Breckenridge acquisition - The acquisition of Breckenridge resulted in a charge of **$10.565 million** to additional paid-in capital, representing the excess of purchase price over the net assets acquired[16](index=16&type=chunk)[69](index=69&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the Breckenridge acquisition accounting, disaggregated revenue, debt instruments, and legal contingencies - On March 24, 2023, the Company acquired substantially all seismic data acquisition assets from Breckenridge Geophysical, LLC, a transaction accounted for as a combination of entities under common control with retrospective financial statement revisions[23](index=23&type=chunk)[24](index=24&type=chunk) | Geographic Region | Q1 2023 Revenue (in thousands) | Q1 2022 Revenue (in thousands) | | :--- | :--- | :--- | | United States | $18,796 | $10,758 | | Canada | $10,612 | $11,176 | | **Total** | **$29,408** | **$21,934** | - The company has a **$9.88 million** convertible note payable to Wilks, which can be converted into **5,811,765 shares** of common stock at a price of **$1.70 per share** upon shareholder approval[54](index=54&type=chunk) - The company is a defendant in a lawsuit filed by Weatherford International regarding alleged groundwater contamination, but management believes the resolution will not have a material adverse effect on its financials[60](index=60&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 34.1% revenue increase to improved market conditions and expects high crew activity for the remainder of 2023 - Demand for seismic services is improving but remains below pre-pandemic levels, with high crew activity expected in late 2023 and early 2024[80](index=80&type=chunk) - The first quarter of 2023 was the company's **first profitable quarter since 2020**, excluding the Breckenridge acquisition's contribution, driven by improved market conditions and operational execution[81](index=81&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Q1 2023 operating revenues rose 34.1% due to increased crew utilization, while G&A expenses decreased by 40.4% | Metric | Q1 2023 | Q1 2022 | % Change | | :--- | :--- | :--- | :--- | | **Operating Revenues** | $29,408,000 | $21,934,000 | +34.1% | | **Operating Expenses** | $23,782,000 | $14,403,000 | +65.1% | | **General & Admin Expenses** | $3,499,000 | $5,868,000 | -40.4% | - The decrease in G&A expenses was primarily due to transaction costs of **$715,000** in Q1 2023 related to the Breckenridge purchase, compared to **$2,872,000** in Q1 2022 related to a previously proposed merger[86](index=86&type=chunk) [Use of EBITDA (a Non-GAAP measure)](index=25&type=section&id=Use%20of%20EBITDA%20(a%20Non-GAAP%20measure)) EBITDA, a non-GAAP measure used by the company, increased to $2.18 million in Q1 2023 from $1.70 million in Q1 2022 | (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 (as adjusted) | | :--- | :--- | :--- | | **Net loss** | ($413) | ($1,385) | | Depreciation and amortization | 2,700 | 3,101 | | Interest (income) expense, net | (91) | (15) | | Income tax (benefit) expense | (17) | 1 | | **EBITDA** | **$2,179** | **$1,702** | [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by operations, cash reserves, and a revolving credit facility, with a 2023 capital budget of $5.0 million - Net cash used in operating activities decreased to **$1.82 million** in Q1 2023 from **$9.15 million** in Q1 2022, primarily due to receiving a **$3.035 million** employee retention credit[95](index=95&type=chunk) - The approved 2023 capital budget is **$5.0 million**, with **$1.117 million** spent as of March 31, 2023[98](index=98&type=chunk) - The company's revolving credit facility with Dominion Bank was amended, reducing the commitment from **$10 million to $5 million**, with no amounts borrowed as of March 31, 2023[101](index=101&type=chunk)[103](index=103&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks from commodity prices, credit concentration, interest rates, and foreign currency exchange - The company's principal market risks include fluctuations in commodity prices, concentration of credit risk within the oil and natural gas industry, variable interest rate risk, and foreign currency exchange risk from Canadian operations[113](index=113&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal controls - Based on an evaluation as of March 31, 2023, the President and Chief Executive Officer and the Executive Vice President, Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective**[118](index=118&type=chunk) - There were **no changes** in internal control over financial reporting during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[119](index=119&type=chunk) [Part II. OTHER INFORMATION](index=32&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company is a defendant in a lawsuit regarding alleged groundwater contamination but does not expect a material adverse effect - The company is a defendant in a lawsuit filed by Weatherford International in 2019 concerning alleged groundwater contamination and intends to defend itself vigorously[60](index=60&type=chunk)[121](index=121&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors disclosed in the company's 2022 Annual Report on Form 10-K are reported for the quarter - There are **no material changes** to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022[122](index=122&type=chunk) [Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including agreements related to the Breckenridge acquisition and officer certifications - Key exhibits filed with this report include the Asset Purchase Agreement with Wilks Brothers, LLC and Breckenridge Geophysical, LLC, a Convertible Note, a Voting Agreement, and CEO/CFO certifications[124](index=124&type=chunk)

Table of Contents (Exact name of registrant as specified in its charter) Texas 74-2095844 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From to Commission File No. 001-32472 UNITED STATES SECURITIES AND EXCHANG ...

Table of Contents Texas 74-2095844 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Common Stock, $0.01 par value The NASDAQ Stock Market DWSN UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For t ...

Table of Contents Texas 74-2095844 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Common Stock, $0.01 par value The NASDAQ Stock Market DWSN UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Tr ...

Table of Contents Texas 74-2095844 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Common Stock, $0.01 par value The NASDAQ Stock Market DWSN UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the T ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) The company provides onshore seismic data acquisition services in North America, with demand highly dependent on energy industry spending - The company is a leading provider of North American onshore seismic data acquisition services, serving clients from major oil and gas companies to independent operators[8](index=8&type=chunk) - Demand for services is primarily driven by the exploration and development spending of oil and natural gas companies, which is influenced by commodity prices[10](index=10&type=chunk) - Following a tender offer, Wilks Brothers, LLC acquired approximately **74.46% of the company's common stock**, making Dawson a controlled company[18](index=18&type=chunk)[19](index=19&type=chunk) - As of December 31, 2021, the company operates **112 vibrator energy source units** and approximately **276,000 recording channels**[27](index=27&type=chunk) - The company has a high client concentration, with three clients accounting for approximately **65% of revenues** during the twelve months ended December 31, 2021[30](index=30&type=chunk) - The company's primary competitors include SAExploration Holdings, Inc (SAE), Echo Seismic Ltd (ECHO), Breckenridge Geophysical Inc, and Paragon Geophysical Services, Inc[22](index=22&type=chunk)[36](index=36&type=chunk) [Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) Key risks stem from oil and gas industry volatility, its "controlled company" status, high client concentration, and a history of net losses - The business is highly dependent on the cyclical oil and natural gas industry, with demand for services significantly affected by volatile commodity prices and E&P spending levels[46](index=46&type=chunk)[47](index=47&type=chunk) - As a "controlled company" with Wilks holding **~74.46% of voting power**, Dawson is exempt from certain Nasdaq corporate governance requirements, which may reduce stockholder protections[51](index=51&type=chunk)[52](index=52&type=chunk) - A limited number of clients account for a significant portion of revenues (**three largest clients were ~65% in 2021**), and the loss of any of these clients could adversely affect results[53](index=53&type=chunk)[54](index=54&type=chunk) - The company has a history of financial losses, incurring a net loss of **$29.1 million** for the year ended December 31, 2021, and **$13.2 million** for the year ended December 31, 2020[60](index=60&type=chunk) - The high fixed costs of operations, primarily depreciation and maintenance, can lead to significant operating losses during periods of reduced demand or low productivity[62](index=62&type=chunk) - The business is subject to increasing government regulation related to environmental protection, climate change, and hydraulic fracturing, which could curtail exploration activities[108](index=108&type=chunk)[112](index=112&type=chunk)[120](index=120&type=chunk) [Unresolved Staff Comments](index=29&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[127](index=127&type=chunk) [Properties](index=31&type=section&id=Item%202.%20Properties) The company leases its headquarters in Midland, Texas, owns two other local properties, and leases additional offices in Texas, Oklahoma, and Canada - The company's principal executive offices are located in a leased facility in Midland, Texas[131](index=131&type=chunk) - Owned properties in Midland include a 61,402 sq ft field office and a 6,600 sq ft storage facility[131](index=131&type=chunk) - Leased facilities include sales and operational offices in Houston, Plano, Oklahoma City, and Calgary[132](index=132&type=chunk)[138](index=138&type=chunk) [Legal Proceedings](index=31&type=section&id=Item%203.%20Legal%20Proceedings) Legal proceedings, including lawsuits related to a failed merger and a groundwater contamination case, are detailed in the financial statement notes - Details on legal proceedings are provided in "Note 16, Commitments and Contingencies" of the financial statements[134](index=134&type=chunk) [Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[139](index=139&type=chunk) Part II [Market for Our Common Equity and Related Stockholder Matters](index=31&type=section&id=Item%205.%20Market%20for%20Our%20Common%20Equity%20and%20Related%20Stockholder%20Matters) The company's stock trades on NASDAQ under "DWSN," with no dividends paid and no plans to issue any in the foreseeable future - The company's common stock trades on the NASDAQ under the symbol "DWSN"[135](index=135&type=chunk) - **No cash dividends** were paid in 2021 or 2020, and none are expected for the foreseeable future[136](index=136&type=chunk)[141](index=141&type=chunk) **Equity Compensation Plan Information as of December 31, 2021** | Plan Category | Number of Securities to be Issued Upon Exercise or Vesting | Weighted Average Exercise Price of Outstanding Options | Number of Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | :--- | | Equity compensation plan approved by security holders | 335,000 | — (1) | 1,049,437 | | Total | 335,000 | — | 1,049,437 | (1) Restricted stock unit awards have no exercise price [Selected Financial Data](index=33&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable as the company is a smaller reporting company - Not applicable[145](index=145&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a significant 2021 revenue decline and widened net loss, anticipating limited activity despite high energy prices - The company anticipates limited crew activity in the second and third quarters of 2022, as demand remains weak despite high commodity prices, with E&P companies prioritizing capital discipline[152](index=152&type=chunk) **Results of Operations (Year Ended December 31)** | Metric | 2021 (in thousands) | 2020 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Operating Revenues | $24,695 | $86,100 | -71.3% | | Operating Expenses | $29,016 | $68,998 | -58.0% | | G&A Expenses | $12,046 | $13,920 | -13.5% | | Depreciation Expense | $12,863 | $17,174 | -25.1% | | Net Loss | ($29,091) | ($13,196) | Increased Loss | **EBITDA Reconciliation (Non-GAAP)** | Metric (in thousands) | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net loss | $(29,091) | $(13,196) | | Depreciation and amortization | 12,863 | 17,174 | | Interest (income) expense, net | (199) | (319) | | Income tax (benefit) expense | (26) | 24 | | **EBITDA** | **$(16,453)** | **$3,683** | **Cash Flow Summary (Year Ended December 31)** | Cash Flow (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Net cash (used in) provided by Operating activities | $(16,050) | $19,641 | | Net cash provided by (used in) Investing activities | $264 | $(512) | | Net cash provided by (used in) Financing activities | $95 | $(4,534) | - The company maintains a revolving credit facility with Dominion Bank for up to **$15 million**, secured by accounts receivable and a $5 million restricted deposit; **$10.3 million** was available at year-end 2021[177](index=177&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=45&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Market risk exposure is primarily from credit risk concentration in the oil and gas industry, along with interest rate and foreign currency risks - The principal market risk is the concentration of clients within the volatile oil and natural gas industry; the three largest clients accounted for approximately **65% of revenue** in 2021[204](index=204&type=chunk)[205](index=205&type=chunk) - The company is exposed to interest rate risk on outstanding indebtedness and foreign currency exchange rate risk from its business in Canada[203](index=203&type=chunk)[206](index=206&type=chunk) - The company does not utilize derivative financial instruments to mitigate market risks[203](index=203&type=chunk) [Financial Statements and Supplementary Data](index=46&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates the company's consolidated financial statements and supplementary data by reference - The required financial statements and supplementary data are included on pages F-1 through F-21 of the Form 10-K[207](index=207&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=46&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure matters - None[207](index=207&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls, procedures, and internal control over financial reporting were effective as of year-end 2021 - Management concluded that as of December 31, 2021, the company's disclosure controls and procedures were **effective**[208](index=208&type=chunk) - Management's evaluation concluded that the company's internal control over financial reporting was **effective** as of December 31, 2021, based on the COSO 2013 framework[211](index=211&type=chunk) - **No material changes** in internal control over financial reporting occurred during the fourth quarter of 2021[212](index=212&type=chunk) [Other Information](index=48&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[213](index=213&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=48&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's proxy statement - Information is incorporated by reference from the company's definitive proxy statement[215](index=215&type=chunk) [Executive Compensation](index=48&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's proxy statement - Information is incorporated by reference from the company's definitive proxy statement[216](index=216&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=48&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the company's proxy statement - Information is incorporated by reference from the company's definitive proxy statement[217](index=217&type=chunk) [Certain Relationships and Related Transactions and Director Independence](index=50&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the company's proxy statement - Information is incorporated by reference from the company's definitive proxy statement[219](index=219&type=chunk) [Principal Accounting Fees and Services](index=50&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's proxy statement - Information is incorporated by reference from the company's definitive proxy statement[220](index=220&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=51&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements and an index of all exhibits filed with the report - The consolidated financial statements are filed as part of the report and are located on pages F-1 through F-21[223](index=223&type=chunk) - All financial statement schedules have been omitted because they are not applicable or the required information is included elsewhere[224](index=224&type=chunk) - An index of exhibits is provided, which includes agreements related to the Wilks merger, corporate governance documents, and employment agreements[225](index=225&type=chunk)[236](index=236&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=63&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor, RSM US LLP, issued an unqualified opinion on the financial statements with no critical audit matters identified - RSM US LLP provided an **unqualified audit opinion** on the company's consolidated financial statements[266](index=266&type=chunk) - The auditor determined there were **no critical audit matters** arising from the audit[270](index=270&type=chunk) [Consolidated Financial Statements](index=65&type=section&id=Consolidated%20Financial%20Statements) Financial statements show a significant decrease in total assets, a sharp revenue decline, a widening net loss, and negative operating cash flow **Consolidated Balance Sheet Data (as of Dec 31, in thousands)** | Account | 2021 | 2020 | | :--- | :--- | :--- | | Total current assets | $42,859 | $58,590 | | Property and equipment, net | $26,349 | $38,900 | | **Total assets** | **$74,038** | **$103,377** | | Total current liabilities | $7,591 | $7,441 | | Total long-term liabilities | $3,970 | $4,962 | | **Total stockholders' equity** | **$62,477** | **$90,974** | **Consolidated Statement of Operations Data (Year ended Dec 31, in thousands)** | Account | 2021 | 2020 | | :--- | :--- | :--- | | Operating revenues | $24,695 | $86,100 | | Total operating costs | $53,925 | $100,092 | | Loss from operations | $(29,230) | $(13,992) | | **Net loss** | **$(29,091)** | **$(13,196)** | | **Loss per share (basic & diluted)** | **$(1.23)** | **$(0.56)** | **Consolidated Statement of Cash Flows Data (Year ended Dec 31, in thousands)** | Account | 2021 | 2020 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(16,050) | $19,641 | | Net cash provided by (used in) investing activities | $264 | $(512) | | Net cash provided by (used in) financing activities | $95 | $(4,534) | | **Net change in cash** | **$(15,579)** | **$14,684** | [Notes to Consolidated Financial Statements](index=71&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail key accounting policies, debt facilities, lease obligations, major client concentrations, and ongoing litigation - Revenue is recognized as services are performed, generally based on the proportion of square miles of data recorded for a survey[305](index=305&type=chunk) - The company has a revolving credit facility with Dominion Bank for up to **$15 million**, with availability tied to accounts receivable and a $5 million restricted deposit, maturing September 30, 2022[331](index=331&type=chunk)[333](index=333&type=chunk)[334](index=334&type=chunk) - As of December 31, 2021, the company had total operating lease liabilities of **$4.9 million** and total finance lease liabilities of **$45,000**[343](index=343&type=chunk) - The company recorded a **full valuation allowance** against its foreign, federal, and state deferred tax assets, determining it is more likely than not that these assets will not be realizable[368](index=368&type=chunk) **Major Client Revenue Concentration (Year Ended Dec 31)** | Client | 2021 | 2020 | | :--- | :--- | :--- | | A | 30% | — | | B | 23% | 10% | | C | 12% | — | | D | — | 35% | | E | — | 24% | - The company is a defendant in lawsuits related to the failed merger agreement and a separate case alleging groundwater contamination[379](index=379&type=chunk)[380](index=380&type=chunk)[384](index=384&type=chunk)

Financial Data and Key Metrics Changes - For Q3 2021, the company reported revenues of $1.9 million, a decrease of approximately 78% compared to $8.7 million for Q3 2020 [6][8] - The net loss for Q3 2021 was $7.9 million or $0.33 loss per common share, compared to a net loss of $7.8 million or $0.33 loss per common share for Q3 2020 [6][8] - EBITDA for Q3 2021 was negative $4.7 million compared to negative $3.8 million in Q3 2020 [7][8] - For the nine months ended September 30, 2021, revenues were $13.9 million, a decrease of approximately 82% compared to $77.2 million for the same period in 2020 [9][10] - The net loss for the nine months ended September 30, 2021, was $22.1 million or $0.94 loss per common share, compared to a net loss of $5.3 million or $0.23 loss per common share for the same period in 2020 [10] Business Line Data and Key Metrics Changes - The company operated one seismic data acquisition crew in the Lower 48, with extended periods of low utilization, leading to depressed activity levels [7][12] - The company expects to operate two crews in Canada in the latter half of Q4 2021 through the end of the winter season [7][12] - Bid activity remains at historically low levels, and visibility into 2022 is limited in the Lower 48 [12][18] Market Data and Key Metrics Changes - Prices for seismic services have softened in the last quarter due to a lack of demand for onshore seismic data acquisition projects in both Canada and the Lower 48 [7][12] - Capital spending levels within the North American onshore client base have only slightly improved in 2021 and are not anticipated to increase meaningfully in 2022 [17][26] Company Strategy and Development Direction - The company has entered into a definitive merger agreement with Wilks Brothers, LLC, with a tender offer to acquire all outstanding common shares for $2.34 per share [19][20] - The Board believes the transaction presents a compelling value for shareholders and is in their best interest [22][30] - The company has significantly reduced capital expenditures below typical historic levels due to declining demand for seismic services [15][16] Management's Comments on Operating Environment and Future Outlook - Management indicated that the current environment is unprecedented, with downward pressure on cash and net working capital balances expected to continue [17][28] - The company does not foresee a dramatic increase in demand for North American onshore seismic services in the near future [17][29] - The Board unanimously recommends that shareholders tender their shares in favor of the merger due to the anticipated challenges in capital investments necessary for future growth [42][43] Other Important Information - The company has made only $329,000 of capital expenditures in 2021 against an initial budget of $1 million [16] - The balance sheet includes approximately $41.6 million in cash and short-term investments, with a current ratio of 8.8:1 [11][13] Q&A Session Summary Question: Discussion on alternatives for shareholders and rightsizing plans - Management has attempted to rightsize the company but has faced challenges in maintaining staffing levels necessary for operations [34][36] - The company has significantly reduced costs but further cuts could impact its ability to respond to demand [36][39] Question: Guidance on cash breakeven and future projects - Management refrained from providing specific guidance but acknowledged some short-term positives in Q4 and Q1 [41][42]

Part I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the first nine months of 2021 reflect a significant decline in assets, revenues, and equity, resulting in a substantial net loss [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$78.5 million** by September 30, 2021, driven by reduced cash and property, reflecting net losses and a sharp decline in equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Cash and cash equivalents | $36,018 | $40,955 | ($4,937) | | Accounts receivable, net | $325 | $7,343 | ($7,018) | | Total current assets | $44,442 | $58,590 | ($14,148) | | Property and equipment, net | $28,941 | $38,900 | ($9,959) | | **Total assets** | **$78,480** | **$103,377** | **($24,897)** | | **Liabilities & Equity** | | | | | Total current liabilities | $5,068 | $7,441 | ($2,373) | | Total liabilities | $9,274 | $12,403 | ($3,129) | | Retained deficit | ($85,037) | ($62,927) | ($22,110) | | **Total stockholders' equity** | **$69,206** | **$90,974** | **($21,768)** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Operating revenues dramatically fell to **$13.9 million** for the first nine months of 2021, leading to a widened net loss of **$22.1 million** Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Operating revenues | $1,914 | $8,738 | $13,855 | $77,216 | | Loss from operations | ($7,753) | ($8,098) | ($22,471) | ($5,590) | | Net loss | ($7,865) | ($7,840) | ($22,110) | ($5,347) | | Basic loss per share | ($0.33) | ($0.33) | ($0.94) | ($0.23) | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow reversed to a **$5.4 million** use for the first nine months of 2021, driven by net loss, resulting in a **$4.9 million** decrease in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($5,373) | $24,448 | | Net cash provided by (used in) investing activities | $373 | ($804) | | Net cash provided by (used in) financing activities | $42 | ($4,380) | | **Net (decrease) increase in cash** | **($4,937)** | **$19,151** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail seismic operations, geographic revenue decline, an undrawn credit facility, and a subsequent merger agreement with Wilks Brothers, LLC - The company is a **leading provider of North American onshore seismic data acquisition services**, serving major and independent oil and gas companies in the U.S. and Canada[23](index=23&type=chunk) Operating Revenues by Geographic Region (in thousands) | Region | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | United States | $10,891 | $65,408 | | Canada | $2,964 | $11,808 | | **Total** | **$13,855** | **$77,216** | - The company is involved in a legal proceeding with Weatherford regarding alleged groundwater contamination, but management does **not expect it to have a material adverse effect**[63](index=63&type=chunk) - On October 25, 2021, the company entered into a **definitive merger agreement with Wilks Brothers, LLC**, which commenced a tender offer to acquire all outstanding common stock for **$2.34 per share** in cash[74](index=74&type=chunk)[75](index=75&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes poor Q3 2021 performance to depressed activity and low utilization, with revenues plummeting **82.1%**, offset by cost reductions and an undrawn credit facility [Overview](index=19&type=section&id=Overview) Q3 2021 activity was severely depressed with low crew utilization, reflecting a challenging near-term outlook and prompting capital and operating expense reductions - Activity levels in Q3 2021 were **depressed**, with **one seismic data acquisition crew** operating in the lower 48 states experiencing extended periods of **low utilization**[78](index=78&type=chunk) - The near-term outlook for seismic activity in the U.S. remains **challenged**, and bid activity is at **historically low levels** with **limited visibility into 2022**[78](index=78&type=chunk)[80](index=80&type=chunk) - The company has responded to market conditions by **significantly limiting capital spending**, **reducing operating expenses**, and implementing a comprehensive equipment maintenance program[81](index=81&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Operating revenues for the first nine months of 2021 plummeted **82.1%** to **$13.9 million**, with significant decreases in operating, G&A, and depreciation expenses due to cost-cutting Year-over-Year Financial Performance Comparison (in thousands) | Metric | 9 Months 2021 | 9 Months 2020 | % Change | | :--- | :--- | :--- | :--- | | Operating Revenues | $13,855 | $77,216 | -82.1% | | Operating Expenses | $18,247 | $58,189 | -68.6% | | General & Administrative | $7,996 | $11,205 | -28.6% | | Depreciation & Amortization | $10,083 | $13,412 | -24.8% | - The decrease in G&A expenses was primarily due to **workforce reductions**, **salary reductions**, and continued **cost reduction efforts** by management[85](index=85&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) Net cash used in operating activities reversed to **$5.4 million** for the first nine months of 2021, supported by a minimal **$1.0 million** capital budget and an undrawn **$15 million** credit facility - Net cash used in operating activities was **$5.4 million** for the first nine months of 2021, compared to net cash provided of **$24.4 million** in the same period of 2020, primarily due to a **significantly larger net loss**[95](index=95&type=chunk) - The Board of Directors approved a 2021 capital budget of **$1.0 million**, limited to necessary maintenance and incremental recording channel replacement[100](index=100&type=chunk) - The company extended its Loan and Security Agreement with Dominion Bank, providing a revolving credit facility of up to **$15 million**, with **no amounts borrowed** as of September 30, 2021[103](index=103&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces market risks from commodity price fluctuations, concentrated credit risk in the oil and gas industry, interest rate risk, and foreign currency exposure - The company's principal market risks include **fluctuations in commodity prices**, **concentration of credit risk** within the oil and natural gas industry, **interest rate risk**, and **foreign currency exchange rate risk** from Canadian operations[113](index=113&type=chunk)[116](index=116&type=chunk) - The company's allowance for doubtful accounts was **$250,000** at September 30, 2021, reflecting ongoing credit evaluations of its clients[116](index=116&type=chunk) - As of September 30, 2021, the company had **no outstanding debt** under its variable interest rate Revolving Credit Facility, **mitigating immediate interest rate risk**[118](index=118&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of September 30, 2021, the company's disclosure controls and procedures were **effective** in all material respects[120](index=120&type=chunk) - **No material changes** were made to the company's internal control over financial reporting during the quarter ended September 30, 2021[121](index=121&type=chunk) Part II. OTHER INFORMATION [Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending a lawsuit by Weatherford International regarding alleged groundwater contamination, not expecting a material adverse financial effect - The company is a defendant in a lawsuit filed by Weatherford International regarding alleged groundwater contamination. The company **disputes the allegations** and intends to **defend itself vigorously**[63](index=63&type=chunk)[123](index=123&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) New risk factors include the potential failure to complete the pending merger with Wilks Brothers, LLC, which could adversely affect stock price and operations - A new risk factor relates to the pending merger with Wilks Brothers, LLC. **Failure to complete the transaction** could **negatively impact the company's stock price and future business**[126](index=126&type=chunk)[127](index=127&type=chunk) - The merger's completion is subject to closing conditions, including the tender of at least **80%** of the company's outstanding shares[128](index=128&type=chunk) [Exhibits](index=30&type=section&id=Item%206.%20Exhibits) Exhibits filed with the Form 10-Q include the Second Loan Modification Agreement, officer certifications, and financial statements in Inline XBRL format - Exhibits filed with the report include the **Second Loan Modification Agreement** with Dominion Bank, **CEO/CFO certifications**, and financial statements formatted in **Inline XBRL**[130](index=130&type=chunk)

Dawson Geophysical Co (NASDAQ:DWSN) Q2 2021 Earnings Conference Call August 12, 2021 10:00 AM ET Company Participants Stephen Jumper - Chairman, President & CEO James Brata - CFO, EVP, Secretary & Treasurer Conference Call Participants Bruce Berger - Turnaround Capital John Potratz - Research Investments Jarrod Cohen - JM Cohen & Company Operator Good morning, and welcome to the Dawson Geophysical Second Quarter 2021 Conference Call. Today's conference is being recorded. As a reminder, statements made by ma ...

Part I. FINANCIAL INFORMATION Presents the company's financial statements, management's analysis, market risk disclosures, and internal controls [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents the company's financial statements for Q2 and H1 2021, detailing a significant revenue decline, substantial net loss, and negative operating cash flow [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Details the company's balance sheet as of June 30, 2021, showing a decrease in total assets to **$86.4 million** and stockholders' equity to **$77.3 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$86,379** | **$103,377** | | Total Current Assets | $49,026 | $58,590 | | Property and equipment, net | $31,967 | $38,900 | | **Total Liabilities** | **$9,115** | **$12,403** | | Total Current Liabilities | $4,644 | $7,441 | | **Total Stockholders' Equity** | **$77,264** | **$90,974** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Reports a severe decline in Q2 2021 revenues to **$193,000** and a **$9.0 million** net loss, contrasting sharply with prior-year income Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenues | $193 | $29,499 | $11,941 | $68,478 | | (Loss) Income from Operations | $(9,283) | $1,123 | $(14,718) | $2,508 | | Net (Loss) Income | $(9,017) | $1,500 | $(14,245) | $2,493 | | Diluted (Loss) Income per Share | $(0.38) | $0.06 | $(0.61) | $0.11 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Reports net cash used in operating activities of **$1.3 million** for H1 2021, a reversal from **$9.0 million** provided in H1 2020, driven by net loss Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(1,298) | $8,976 | | Net cash provided by (used in) investing activities | $335 | $(2,545) | | Net cash provided by (used in) financing activities | $211 | $(2,959) | | **Net (decrease) increase in cash** | **$(621)** | **$3,207** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides details on accounting policies, financial instruments, debt, leases, and contingencies, including a significant decline in geographic revenues and a waiver for a loan covenant - The company is a leading provider of North American onshore seismic data acquisition services, serving major and independent oil and gas companies[22](index=22&type=chunk) Operating Revenues by Geographic Region (in thousands) | Region | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | United States | $193 | $29,482 | $8,977 | $56,670 | | Canada | $0 | $17 | $2,964 | $11,808 | | **Total** | **$193** | **$29,499** | **$11,941** | **$68,478** | - The company has a revolving credit facility of up to **$15 million** with Dominion Bank, secured by accounts receivable and a **$5 million** restricted deposit. As of June 30, 2021, no amounts were borrowed under this facility[51](index=51&type=chunk) - The company is a defendant in a lawsuit filed by Weatherford alleging groundwater contamination. Management believes the resolution will not have a material adverse effect on the company's financial condition[61](index=61&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant revenue decline due to low crew utilization, outlines challenging near-term outlook, and details expense reductions and liquidity management, including negative EBITDA for Q2 2021 [Overview](index=17&type=section&id=Overview) Highlights the company's dependence on oil and gas prices, noting Q2 2021 as a low point with no crew operations, and a challenging H2 2021 outlook with potential new carbon capture opportunities - Activity levels hit a low point in Q2 2021, with no seismic data acquisition crews operating in the U.S. or Canada[75](index=75&type=chunk) - The company anticipates operating one crew in the U.S. during the second half of 2021 with periods of low utilization and potentially one crew in Canada in the fourth quarter[75](index=75&type=chunk) - The company is seeing a slight increase in bid activity, including requests for carbon capture projects, which could represent new opportunities[76](index=76&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) Analyzes the dramatic **99.3%** decrease in Q2 2021 operating revenues to **$193,000** due to low crew utilization, alongside significant reductions in operating and G&A expenses Year-over-Year Financial Performance Comparison | Metric | Q2 2021 | Q2 2020 | Change | | :--- | :--- | :--- | :--- | | Operating Revenues | $193,000 | $29,499,000 | -99.3% | | Operating Expenses | $3,330,000 | $19,732,000 | -83.1% | | G&A Expenses | $2,746,000 | $4,261,000 | -35.6% | - Depreciation and amortization expense decreased in 2021 compared to 2020 due to multiple years of reduced capital expenditures[84](index=84&type=chunk) [Use of EBITDA (a Non-GAAP measure)](index=19&type=section&id=Use%20of%20EBITDA%20%28a%20Non-GAAP%20measure%29) Explains the use of EBITDA as a non-GAAP measure, reporting a **$5.7 million** loss for Q2 2021, a sharp reversal from a positive **$5.8 million** in Q2 2020 EBITDA Reconciliation (in thousands) | Period | Net (Loss) Income | EBITDA | | :--- | :--- | :--- | | Three Months Ended June 30, 2021 | $(9,017) | $(5,667) | | Three Months Ended June 30, 2020 | $1,500 | $5,799 | | Six Months Ended June 30, 2021 | $(14,245) | $(7,525) | | Six Months Ended June 30, 2020 | $2,493 | $11,630 | [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's liquidity, noting **$1.3 million** net cash used in operations for H1 2021, a minimal **$1.0 million** capital budget, and an undrawn **$15 million** credit facility with a covenant waiver - Net cash used in operating activities was **$1,298,000** for the first six months of 2021, compared to net cash provided of **$8,976,000** in the same period of 2020[93](index=93&type=chunk) - The 2021 capital budget is limited to **$1,000,000** for necessary maintenance, with no capital expenditures made in the first six months of 2021[96](index=96&type=chunk) - The company received a limited waiver from Dominion Bank for non-compliance with the tangible net worth covenant of its loan agreement for the period ended June 30, 2021[101](index=101&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Details the company's market risks, including credit risk concentration in the oil and gas industry, interest rate risk on its variable-rate credit facility, and foreign currency exchange risk - The company's principal market risks include fluctuations in commodity prices and credit risk concentration, as all clients are in the oil and natural gas industry[112](index=112&type=chunk) - The allowance for doubtful accounts was **$250,000** at June 30, 2021[114](index=114&type=chunk) - The company is exposed to interest rate changes on its variable-rate Revolving Credit Facility and holds cash balances exceeding federally insured limits[116](index=116&type=chunk)[117](index=117&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of June 30, 2021, the President and Chief Executive Officer and the Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[118](index=118&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, internal controls[119](index=119&type=chunk) Part II. OTHER INFORMATION Provides information on legal proceedings, risk factors, and exhibits filed with the report [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) Refers to Note 7 for details on legal proceedings, primarily a lawsuit by Weatherford regarding alleged groundwater contamination, not expected to have a material adverse effect - For a discussion of legal proceedings, the report refers to Note 7 – Operating Commitments and Contingencies in the financial statements[121](index=121&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) States no material changes to the company's risk factors from those disclosed in the 2020 Annual Report on Form 10-K - There have been no material changes in the company's risk factors from those disclosed in the 2020 Annual Report on Form 10-K[122](index=122&type=chunk) [Exhibits](index=28&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and financial statements in Inline XBRL format - Exhibits filed with the report include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL data files (101, 104)[124](index=124&type=chunk)