Financial Performance - For Q4 2023, the company reported revenues of $24.3 million, a 39% increase from $17.5 million in Q4 2022[4] - The gross margin for Q4 2023 was 20%, compared to 6% in Q4 2022[4] - For the full year 2023, revenues reached $96.8 million, an 88% increase from $51.6 million in 2022[6] - The gross margin for the year ended December 31, 2023, was 14%, up from 11% in 2022[6] - The company reported a net loss of $12.1 million or $0.45 per share for the year 2023, an improvement from a net loss of $18.6 million or $0.75 per share in 2022[7] - Net loss for the three months ended December 31, 2023, was $2,106 million, an improvement from a net loss of $2,769 million in the same period of 2022[20] - EBITDA for the twelve months ended December 31, 2023, was $(2,016) million, compared to $(6,994) million in 2022, indicating a significant reduction in losses[20] Cash and Investments - The company had cash, restricted cash, and short-term investments of $16 million as of December 31, 2023, down from $23.9 million a year earlier[11] - Cash and cash equivalents decreased from $18,603 million in 2022 to $10,772 million in 2023, a decline of about 42.2%[19] - Net cash used in operating activities for the twelve months ended December 31, 2023, was $814 million, an improvement from $(3,269) million in 2022[21] Liabilities and Equity - Total current liabilities increased from $16,194 million in 2022 to $22,418 million in 2023, a rise of approximately 38.3%[19] - Total stockholders' equity decreased from $48,804 million in 2022 to $31,434 million in 2023, a decline of about 35.6%[19] Operational Highlights - The company operated two crews in the U.S. and resumed operations in Canada, maintaining high crew utilization throughout Q4 2023[9] - The capital budget for 2023 was approved at $5 million, with $3.7 million allocated for capital expenditures[10] Special Dividends and Revenue Recognition - The board declared a special cash dividend of $0.32 per share, totaling approximately $9.9 million, payable on May 6, 2024[3] - Deferred revenue increased from $7,380 million in 2022 to $11,829 million in 2023, a growth of approximately 60.0%[19] Accounts Receivable and Expenses - Accounts receivable increased from $7,972 million in 2022 to $12,735 million in 2023, representing a growth of approximately 59.4%[19] - The company generated a net loss of $2.1 million or $0.07 per share in Q4 2023, which included severance expenses of $2.2 million[5] - The company reported a severance expense of $2,208 million for the three months ended December 31, 2023, which was not present in the same period of 2022[20]

MIDLAND, Texas, April 1, 2024 /PRNewswire/ -- Dawson Geophysical Company (NASDAQ: DWSN) (the "Company") today reported unaudited financial results for its fourth quarter and fiscal year ended December 31, 2023. Management Comment Tony Clark, Dawson's President and CEO, commented, "I appreciate the opportunity presented to me, and our team, to bring Dawson back to profitability. The current management team is focused on improving margins on our seismic acquisition services, reducing general and administrativ ...

Financial Performance - Operating revenues for Q3 2023 increased 209.1% to $22,961,000 compared to $7,429,000 in Q3 2022[83] - Operating expenses for Q3 2023 increased 179.1% to $24,144,000 compared to $8,650,000 in Q3 2022[85] - Total operating costs for Q3 2023 were $28,653,000, representing a 97.8% increase from Q3 2022[88] - EBITDA for Q3 2023 was $(3,351,000), an improvement from $(4,154,000) in Q3 2022[92] Cost Management - General and administrative expenses decreased to 10.9% of revenues in Q3 2023 from 40.0% in Q3 2022, reflecting a reduction of $480,000 or 16.1%[86] Tax and Cash Flow - The effective tax rate for Q3 2023 was -0.1%, compared to a benefit of 0.2% in Q3 2022[89] - Net cash provided by operating activities increased to $2,462,000 for the nine months ended September 30, 2023, compared to a net cash used of $1,598,000 for the same period in 2022, primarily due to a $3,035,000 employee retention credit received in 2023[94] Investment and Financing Activities - Net cash used in investing activities rose to $3,450,000 for the nine months ended September 30, 2023, up from $333,000 in 2022, driven by increased capital expenditures of $2,623,000 compared to $637,000 in the prior year[95] - Net cash used in financing activities was $3,726,000 for the nine months ended September 30, 2023, compared to $2,332,000 in 2022, with significant cash distributions of $3,055,000 related to a transaction[96] Capital Expenditures - Capital expenditures for the nine months ended September 30, 2023, totaled $3,427,000, primarily for rolling stock and maintenance, against an approved budget of $5,000,000[97] - The company anticipates funding its 2023 capital expenditures through cash flow from operations, borrowings, and available funds under its Revolving Credit Facility[109] Liquidity and Credit - As of September 30, 2023, the company had approximately $5,000,000 available for withdrawal under its Revolving Credit Facility, with no amounts borrowed to date[100] - The company reported cash, restricted cash, and short-term investments totaling $19,156,000 as of September 30, 2023[116] - The allowance for doubtful accounts stood at $250,000 as of September 30, 2023, reflecting the company's ongoing credit evaluations of clients in the oil and natural gas industry[113] - The company has finance leases totaling $1,527,000 as of September 30, 2023, with interest rates ranging from 4.85% to 8.74%[105] Future Operations - The company anticipates operating two crews with improved channel count utilization through Q4 2023 and into 2024[78] - Canadian operations are expected to ramp up to three crews in Q1 2024, with several larger projects planned[78] - The company is better positioned in early Q4 2023 compared to previous quarters, with high utilization expected to continue[81] - A short-term convertible note payable of approximately $9,880,000 was converted into 5,811,765 shares of common stock following shareholder approval on September 13, 2023[104] - Management believes cash on hand and working capital are sufficient to fund operating and investing cash flow requirements[93]

Financial Performance - Operating revenues for Q2 2023 increased 324.3% to $20,219,000 compared to $4,765,000 in Q2 2022[84] - Operating expenses for Q2 2023 increased 193.4% to $19,906,000 compared to $6,785,000 in Q2 2022[86] - EBITDA for Q2 2023 was $(2,521,000), an improvement from $(4,575,000) in Q2 2022[93] - Total operating costs for Q2 2023 were $24,996,000, representing a 98.0% increase from Q2 2022[89] Expenses Management - General and administrative expenses were 14.7% of revenues in Q2 2023, down from 59.3% in Q2 2022[87] - General and administrative expenses decreased 25.5% to $6,476,000 during the first six months of 2023 compared to $8,696,000 in the same period of 2022[87] Cash Flow and Investments - Net cash provided by operating activities increased to $5,751,000 for the six months ended June 30, 2023, compared to $1,734,000 for the same period in 2022, primarily due to a $3,035,000 employee retention credit[95] - Net cash used in investing activities was $2,990,000 for the six months ended June 30, 2023, an increase of $3,090,000 from a net cash provided of $100,000 in the same period of 2022, driven by capital expenditures rising to $2,021,000[96] - Net cash used in financing activities was $3,454,000 for the six months ended June 30, 2023, compared to $3,174,000 provided in the same period of 2022, with significant cash distributions of $3,055,000 related to a transaction[97] Capital Expenditures - The Board of Directors approved a capital budget of $5,000,000 for 2023, with $2,216,000 spent on capital expenditures in the first half of 2023, primarily for rolling stock and maintenance[98] Credit and Financing - As of June 30, 2023, the company had approximately $5,000,000 available for withdrawal under its Revolving Credit Facility, with no amounts borrowed to date[101] - The company has a short-term convertible note payable of approximately $9,880,000, which can be converted into 5,811,765 shares of common stock at a conversion price of $1.70[104] - The company has finance leases totaling $1,014,000 as of June 30, 2023, with interest rates ranging from 4.85% to 7.66%[107] Market Conditions - The number of active drilling rigs in the lower 48 states dropped from 800 to 675 as of July 15, 2023, with private drillers accounting for 70% of the decline[80] - The company is exposed to market risks, including fluctuations in commodity prices and interest rate changes, which may impact its financial performance[111] Future Outlook - The company anticipates significant increases in carbon capture related seismic activity in 2024[82] - Increased utilization of crews is expected to continue into Q1 2024, with full utilization anticipated in Q4 2023[79] - The order book remains improved with several large projects in West Texas and Eastern New Mexico[81] Financial Position - Cash, restricted cash, and short-term investments totaled $23,352,000 as of June 30, 2023[115] - The company maintains a historical allowance for doubtful accounts of $250,000 as of June 30, 2023, reflecting ongoing credit evaluations of clients in the oil and natural gas industry[112]

[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)