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

~~☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the Quarterly Period Ended September 30, ~~2017~~2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~☐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

DAWSON GEOPHYSICAL COMPANY

(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.)

508 West Wall, Suite 800, Midland, Texas79701

(Address of Principal Executive Office) (Zip Code)

Registrant’s Telephone Number, Including Area Code: ~~432-684-3000~~432-684-3000

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Name of Exchange on Which Registered	Trading Symbol
Common Stock, $0.01 par value	The NASDAQ Stock Market	DWSN

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒⌧ No ☐◻

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒⌧ No ☐

◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Accelerated filer ☐	Large accelerated filer ☐◻		~~Accelerated filer~~ Smaller reporting company ☒

Non-accelerated filer ☐⌧		~~Smaller reporting company ☐~~
~~(Do not check if a smaller reporting company)~~

		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.


Title of Each Class		Outstanding at November ~~1, 2017~~2, 2021
Common Stock, $0.01 par value		~~21,718,018~~23,643,934 shares

Table of Contents

DAWSON GEOPHYSICAL COMPANY

INDEX

~~INDEX~~

		Page Number
Part I. FINANCIAL INFORMATION		3
Item 1. Financial Statements		3
Condensed Consolidated Balance Sheets at September 30, ~~2017~~2021 (unaudited) and December 31, ~~2016~~2020		3
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020 (unaudited)		4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020 (unaudited)		5
Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)		6
Notes to Condensed Consolidated Financial Statements (unaudited)		67
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1113
Item 3. Quantitative and Qualitative Disclosures about Market Risk		17
Item 4. Controls and Procedures		18
Part II. OTHER INFORMATION		18
Item 1. Legal Proceedings		18
Item 1A. Risk Factors		18
~~Item 6. Exhibits~~		18
~~Index to Exhibits~~		19
~~Signatures~~Item 6. Exhibits		20
Signatures		21

Table of Contents

PART I. FINANCIAL ~~INFORMATION~~INFORMATION

ITEM 1. FINANCIAL ~~STATEMENTS~~STATEMENTS (UNAUDITED)

DAWSON GEOPHYSICAL COMPANY

CONDENSED CONSOLIDATED BALANCE ~~SHEETS~~SHEETS

(amounts in thousands, except share data)

September 30,

December 31,

2017

2016

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$
30,503

$
14,624

Short-term investments

12,000

40,250

Accounts receivable, net

25,599

16,031

Current maturities of notes receivable

560

—

Prepaid expenses and other current assets

6,205

4,822

Total current assets

74,867

75,727

Property and equipment, net

95,274

110,917

Notes receivable, net of current maturities

975

—

Intangibles

525

487

Long-term deferred tax assets, net

—

535

Total assets

$
171,641

$
187,666

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$
6,272

$
5,617

Accrued liabilities:

Payroll costs and other taxes

1,826

885

Other

4,161

2,983

Deferred revenue

3,644

3,155

Current maturities of notes payable and obligations under capital leases

2,788

2,357

Total current liabilities

18,691

14,997

Long-term liabilities:

Notes payable and obligations under capital leases, net of current maturities

5,829

—

Deferred tax liabilities, net

1,392

146

Other accrued liabilities

169

1,639

Total long-term liabilities

7,390

1,785

Commitments and contingencies

Stockholders’ equity:

Preferred stock-par value $1.00 per share; 4,000,000 shares authorized, none outstanding

—

—

Common stock-par value $0.01 per share; 35,000,000 shares authorized,

21,766,463 and 21,704,851 shares issued, and 21,718,018 and 21,656,406

  shares outstanding at September 30, 2017 and December 31, 2016, respectively

217

217

Additional paid-in capital

143,666

142,998

Retained earnings

2,523

29,265

Treasury stock, at cost; 48,445 shares at September 30, 2017 and December 31, 2016

—

—

Accumulated other comprehensive loss, net

(846)

(1,596)

Total stockholders’ equity

145,560

170,884

Total liabilities and stockholders’ equity

$
171,641

$
187,666


	September 30,		December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	36,018	$	40,955
Restricted cash		5,000		5,000
Short-term investments		583		583
Accounts receivable, net		325		7,343
Prepaid expenses and other current assets		2,516		4,709
Total current assets		44,442		58,590

Property and equipment, net		28,941		38,900

Right-of-use assets		4,703		5,494

Intangibles, net		394		393

Total assets	$	78,480	$	103,377

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,557	$	1,603
Accrued liabilities:
Payroll costs and other taxes		672		1,045
Other		1,491		1,811
Deferred revenue		96		1,779
Current maturities of notes payable and finance leases		246		94
Current maturities of operating lease liabilities		1,006		1,109
Total current liabilities		5,068		7,441

Long-term liabilities:
Notes payable and finance leases, net of current maturities		10		44
Operating lease liabilities, net of current maturities		4,177		4,899
Deferred tax liabilities, net		19		19
Total long-term liabilities		4,206		4,962

Operating commitments and contingencies		—		—

Stockholders’ equity:
Preferred stock-par value $1.00 per share; 4,000,000 shares authorized, NaN outstanding		—		—
Common stock-par value $0.01 per share; 35,000,000 shares authorized,
23,692,379 and 23,526,517 shares issued, and 23,643,934 and 23,478,072 shares
outstanding at September 30, 2021 and December 31, 2020, respectively		237		235
Additional paid-in capital		155,101		154,866
Retained deficit		(85,037)		(62,927)
Treasury stock, at cost; 48,445 shares		—		—
Accumulated other comprehensive loss, net		(1,095)		(1,200)
Total stockholders’ equity		69,206		90,974

Total liabilities and stockholders’ equity	$	78,480	$	103,377

See accompanying notes to the condensed consolidated financial statements (unaudited).

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DAWSON GEOPHYSICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited and amounts in thousands, except share and per share data)

~~(unaudited)~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Operating revenues
$
45,627

$
28,122

$
118,023

$
103,263

Operating costs:

Operating expenses

36,594

28,132

107,639

94,203

General and administrative

3,445

3,656

12,296

13,247

Depreciation and amortization

9,724

10,591

29,750

33,967

49,763

42,379

149,685

141,417

Loss from operations

(4,136)

(14,257)

(31,662)

(38,154)

Other income (expense):

Interest income

87

92

230

226

Interest expense

(25)

(71)

(61)

(239)

Other (expense) income

(103)

263

136

1,829

Loss before income tax

(4,177)

(13,973)

(31,357)

(36,338)

Income tax benefit

1,418

1,557

4,635

3,733

Net loss

(2,759)

(12,416)

(26,722)

(32,605)

Other comprehensive income (loss):

    Net unrealized income (loss) on foreign exchange rate translation, net

395

(48)

750

422

Comprehensive loss
$
(2,364)

$
(12,464)

$
(25,972)

$
(32,183)

Basic loss per share attributable to common stock
$
(0.13)

$
(0.57)

$
(1.23)

$
(1.51)

Diluted loss per share attributable to common stock
$
(0.13)

$
(0.57)

$
(1.23)

$
(1.51)

Weighted average equivalent common shares outstanding

21,701,662

21,622,349

21,681,474

21,603,065

Weighted average equivalent common shares outstanding - assuming dilution

21,701,662

21,622,349

21,681,474

21,603,065


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Operating revenues	$	1,914	$	8,738	$	13,855	$	77,216

Operating costs:
Operating expenses		3,975		9,441		18,247		58,189
General and administrative		2,443		3,270		7,996		11,205
Depreciation and amortization		3,249		4,125		10,083		13,412
		9,667		16,836		36,326		82,806

Loss from operations		(7,753)		(8,098)		(22,471)		(5,590)

Other income (expense):
Interest income		50		106		176		326
Interest expense		(4)		(10)		(16)		(80)
Other (expense) income, net		(158)		177		201		12

Loss before income tax		(7,865)		(7,825)		(22,110)		(5,332)

Income tax expense		—		(15)		—		(15)

Net loss		(7,865)		(7,840)		(22,110)		(5,347)

Other comprehensive (loss) income:
Net unrealized (loss) income on foreign exchange rate translation, net		(307)		374		105		(221)

Comprehensive loss	$	(8,172)	$	(7,466)	$	(22,005)	$	(5,568)

Basic loss per share of common stock	$	(0.33)	$	(0.33)	$	(0.94)	$	(0.23)

Diluted loss per share of common stock	$	(0.33)	$	(0.33)	$	(0.94)	$	(0.23)

Weighted average equivalent common shares outstanding		23,632,112		23,423,437		23,545,693		23,350,204

Weighted average equivalent common shares outstanding - assuming dilution		23,632,112		23,423,437		23,545,693		23,350,204

See accompanying notes to the condensed consolidated financial statements (unaudited).

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DAWSON GEOPHYSICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH ~~FLOWS~~FLOWS

(unaudited and amounts in thousands)


	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(22,110)	$	(5,347)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		10,083		13,412
Operating lease cost		796		916
Non-cash compensation		312		600
Deferred income tax expense		—		79
Change in other long-term liabilities		—		(150)
Gain on disposal of assets		(131)		(3)
Remeasurement and other		20		68
Change in operating assets and liabilities:
Decrease in accounts receivable		7,037		19,373
Decrease in prepaid expenses and other assets		2,194		4,505
Decrease in accounts payable		(365)		(2,957)
Decrease in accrued liabilities		(696)		(2,011)
Decrease in operating lease liabilities		(830)		(930)
Decrease in deferred revenue		(1,683)		(3,107)

Net cash (used in) provided by operating activities		(5,373)		24,448

Cash flows from investing activities:
Capital expenditures, net of non-cash capital expenditures summarized below		(11)		(2,822)
Proceeds from maturity of short-term investments		—		1,767
Proceeds from disposal of assets		384		225
Proceeds from notes receivable		—		26

Net cash provided by (used in) investing activities		373		(804)

Cash flows from financing activities:
Proceeds from notes payable		550		6,374
Principal payments on notes payable		(387)		(8,393)
Principal payments on finance leases		(46)		(2,291)
Tax withholdings related to stock-based compensation awards		(75)		(70)

Net cash provided by (used in) financing activities		42		(4,380)

Effect of exchange rate changes on cash and cash equivalents and restricted cash		21		(113)

Net (decrease) increase in cash and cash equivalents and restricted cash		(4,937)		19,151

Cash and cash equivalents and restricted cash at beginning of period		45,955		31,271

Cash and cash equivalents and restricted cash at end of period	$	41,018	$	50,422

Supplemental cash flow information:
Cash paid for interest	$	16	$	89
Cash paid for income taxes	$	81	$	83
Cash received for income taxes	$	—	$	206

Non-cash operating, investing and financing activities:
Increase (decrease) in accrued purchases of property and equipment	$	318	$	(61)
Increase in right-of-use assets and operating lease liabilities	$	1	$	63
Increase in right-of-use assets for prepaid rent	$	—	$	3
Financed insurance premiums	$	—	$	433

~~(unaudited)~~

Nine Months Ended September 30,


2017

2016

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$
(26,722)

$
(32,605)

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

  Depreciation and amortization

29,750

33,967

  Noncash compensation

706

671

  Deferred income tax expense (benefit)

1,257

(3,676)

  Gain on proceeds from insurance settlements

(375)

(1,029)

  Change in other accrued long-term liabilities

(1,470)

158

  (Gain) loss on disposal of assets

(869)

468

  Other

444

146

Change in current assets and liabilities:

  (Increase) decrease in accounts receivable

(9,568)

22,928

  (Increase) decrease in prepaid expenses and other current assets

(1,135)

2,173

  Increase (decrease) in accounts payable

2,197

(4,420)

  Increase in accrued liabilities

1,987

31

  Increase (decrease) in deferred revenue

489

(4,386)

Net cash (used in) provided by operating activities

(3,309)

14,426

CASH FLOWS FROM INVESTING ACTIVITIES:

  Capital expenditures, net of noncash capital expenditures summarized below

(8,301)

(6,198)

  Proceeds from maturity of short-term investments

50,250

63,500

  Acquisition of short-term investments

(22,000)

(86,750)

  Proceeds from disposal of assets

696

1,848

  Proceeds from flood insurance claims

375

1,029

  Proceeds from notes receivable

97

—

Net cash provided by (used in) investing activities

21,117

(26,571)

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal payments on notes payable

(2,131)

(6,090)

Principal payments on capital lease obligations

(374)

(608)

Tax withholdings related to stock-based compensation awards

(58)

(31)

Net cash used in financing activities

(2,563)

(6,729)

Effect of exchange rate changes on cash and cash equivalents

634

128

Net increase (decrease) in cash and cash equivalents

15,879

(18,746)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

14,624

37,009

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$
30,503

$
18,263

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for interest

$
46

$
227

Cash received for income taxes

$
2,538

$
231

NONCASH INVESTING AND FINANCING ACTIVITIES:

  Decrease in accrued purchases of property and equipment

$
(1,542)

$
—

  Capital lease obligations incurred

$
8,517

$
—

  Financed insurance premiums

$
248

$
—

  Equipment sales financed for buyer

$
(1,500)

$
—

  Sales tax on equipment sales financed for buyer

$
(132)

$
—

See accompanying notes to the condensed consolidated financial statements (unaudited).

Table of Contents

DAWSON GEOPHYSICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited and amounts in thousands, except share data)


								Accumulated
	Common Stock			Additional				Other
	Number			Paid-in		Retained		Comprehensive
	Of Shares	Amount		Capital		Deficit		(Loss) Income		Total
Balance December 31, 2020	23,526,517	$	235	$	154,866	$	(62,927)	$	(1,200)	$	90,974
Net loss							(5,228)				(5,228)
Unrealized income on foreign exchange rate translation									201		201
Stock-based compensation expense					101						101
Balance March 31, 2021	23,526,517		235		154,967		(68,155)		(999)		86,048
Net loss							(9,017)				(9,017)
Unrealized income on foreign exchange rate translation									211		211
Issuance of common stock under stock compensation plans	174,000		2		(2)						—
Stock-based compensation expense					67						67
Issuance of common stock as compensation	11,320				30						30
Shares exchanged for taxes on stock-based compensation	(31,410)				(75)						(75)
Balance June 30, 2021	23,680,427		237		154,987		(77,172)		(788)		77,264
Net loss							(7,865)				(7,865)
Unrealized loss on foreign exchange rate translation									(307)		(307)
Stock-based compensation expense					84						84
Issuance of common stock as compensation	11,952		—		30						30
Balance September 30, 2021	23,692,379	$	237	$	155,101	$	(85,037)	$	(1,095)	$	69,206


								Accumulated
	Common Stock			Additional				Other
	Number			Paid-in		Retained		Comprehensive
	Of Shares	Amount		Capital		Deficit		(Loss) Income		Total
Balance December 31, 2019	23,335,855	$	233	$	154,235	$	(49,731)	$	(1,572)	$	103,165
Net income							993				993
Unrealized loss on foreign exchange rate translation									(1,199)		(1,199)
Stock-based compensation expense					203						203
Balance March 31, 2020	23,335,855		233		154,438		(48,738)		(2,771)		103,162
Net income							1,500				1,500
Unrealized income on foreign exchange rate translation									604		604
Issuance of common stock under stock compensation plans	78,600		1		(1)						—
Stock-based compensation expense					271						271
Shares exchanged for taxes on stock-based compensation	(15,420)				(17)						(17)
Balance June 30, 2020	23,399,035		234		154,691		(47,238)		(2,167)		105,520
Net loss							(7,840)				(7,840)
Unrealized income on foreign exchange rate translation									374		374
Issuance of common stock under stock compensation plans	157,500		2		(2)						—
Stock-based compensation expense					126						126
Shares exchanged for taxes on stock-based compensation	(30,018)		(1)		(52)						(53)
Balance September 30, 2020	23,526,517	$	235	$	154,763	$	(55,078)	$	(1,793)	$	98,127

See accompanying notes to the condensed consolidated financial statements (unaudited).

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DAWSON GEOPHYSICAL COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL ~~STATEMENTS~~STATEMENTS (UNAUDITED)

1. ORGANIZATION AND NATURE OF OPERATIONS

Dawson Geophysical Company (the “Company”) is a leading provider of North American onshore seismic data acquisition services with operations throughout the continental United States (“U.S.”) and Canada. The Company acquires and processes 2-D, 3-D and ~~multi-component~~multicomponent seismic data solely for its clients, ranging from major oil and gas companies to independent oil and gas operators as well as providers of multi-client data libraries.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of the Company. Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Certain prior period amounts in the condensed consolidated financial statements may have been reclassified to conform to the current period’s presentation.

These condensed consolidated financial statements have been prepared using accounting principles generally accepted in the U.S. for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements presented in accordance with accounting principles generally accepted in the U.S. have been omitted.

These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020.

Significant Accounting Policies

Principles of Consolidation. The condensed consolidated financial statements for the three and nine months ended September 30, ~~2017 and 2016~~2021 include the accounts of the Company and its wholly-owned subsidiaries, Dawson Operating LLC, ~~Eagle Canada, Inc.,~~ Dawson Seismic Services Holdings, Inc., Eagle Canada, Inc., Eagle Canada Seismic Services ULC and Exploration Surveys, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

~~Notes Receivable.~~ The Company’s notes receivable consist of one note receivable from the purchaser of certain dynamite energy source drilling equipment sold by the Company in March 2017. This note receivable is stated at unpaid principal balance. No allowance for note losses was deemed necessary at September 30, 2017. Interest is recognized over the term of the note and is calculated using the simple-interest method. Amounts payable to the Company under the note receivable are fully collateralized by the specific dynamite energy source drilling equipment sold to the note payor.

Allowance for Doubtful Accounts. The Company’s allowance for doubtful accounts reflects its current estimate of credit losses expected to be incurred over the life of the financial instrument and is determined based on a number of factors. Management ~~prepares its~~determines the need for any allowance for doubtful accounts receivable based on its review of past-due accounts, its past experience of historical write-offs, ~~and~~ its current client ~~base.~~base, when customer accounts exceed 90 days past due and specific customer account reviews. While the collectability of outstanding client invoices is continually assessed, the inherent volatility of the energy industry’s business cycle can cause swift and unpredictable changes in the financial stability of the Company’s clients. The ~~Company’s~~Company's allowance for doubtful accounts was $250,000 at September 30, ~~2017~~2021 and December 31, ~~2016.~~2020.

Leases. The Company leases certain vehicles, seismic recording equipment, real property and office equipment under lease agreements. The Company evaluates each lease to determine its appropriate classification as a finance lease or an operating lease for financial reporting purposes. The assets and liabilities under finance leases are recorded at the lower of the present value of the minimum lease payments or the fair market value of the related assets. Assets under finance leases are amortized using the straight-line method over the initial lease term. Amortization of assets under finance leases is included in depreciation expense. For operating leases, where readily determinable, the Company uses the implicit interest rate in determining the present value of future minimum lease payments. In the absence of an implicit rate, the Company uses its incremental borrowing rate. The right-of-use assets are amortized to operating lease cost over the lease terms on a straight-line basis and is included in operating expense. Several of the Company’s leases include options to renew and the exercise of lease renewal options is primarily at the Company’s discretion.

Property and Equipment. Property and equipment is capitalized at historical cost or the fair value of assets acquired in a business combination and is depreciated over the useful life of the asset. Management’s estimation of this useful life is based on circumstances that

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exist in the seismic industry and information available at the time of the purchase of the asset. As circumstances change and new information becomes available, these estimates could change.

~~Table of Contents~~

Depreciation is computed using the straight-line method. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the balance sheet, and any resulting gain or loss is reflected in the results of operations for the period.

Impairment of Long-lived Assets. Long-lived assets are reviewed for impairment when triggering events occur suggesting deterioration in the assets’ recoverability or fair value. Recognition of an impairment charge is required if future expected undiscounted net cash flows are insufficient to recover the carrying value of the assets and the fair value of the assets is below the carrying value of the assets. Management’s forecast of future cash flows used to perform impairment analysis includes estimates of future revenues and expenses based on the Company’s anticipated future results while considering anticipated future oil and natural gas prices, which is fundamental in assessing demand for the Company’s services. If the carrying amounts of the assets exceed the estimated expected undiscounted future cash flows, the Company measures the amount of possible impairment by comparing the carrying amount of the assets to the fair value. Although the Company does not anticipate an impairment of its assets, if oil and natural gas prices remain at current levels for an extended period of time or significantly decline, the Company may be exposed to impairment charges in future periods, which could negatively affect the Company’s results of operations.

~~Revenue Recognition~~. Services are provided under cancelable service contracts. These contracts are either “turnkey” or “term” agreements. Under both types of agreements, the Company recognizes revenues when revenue is realizable and services have been performed. Services are defined as the commencement of data acquisition or processing operations. Revenues are considered realizable when earned according to the terms of the service contracts. Under turnkey agreements, revenue is recognized on a per-unit-of-data-acquired rate as services are performed. Under term agreements, revenue is recognized on a per-unit-of-time-worked rate as services are performed. In the case of a cancelled service contract, revenue is recognized and the client is billed for services performed up to the date of cancellation.

The Company receives reimbursements for certain out-of-pocket expenses under the terms of the service contracts. Amounts billed to clients are recorded in revenue at the gross amount, including out-of-pocket expenses that are reimbursed by the client.

In some instances, clients are billed in advance of services performed. In those cases, the Company recognizes the liability as deferred revenue. As services are performed, those deferred revenue amounts are recognized as revenue.

In some instances, the contract contains certain permitting, surveying and drilling costs that are incorporated into the per-unit-of-data-acquired rate. In these circumstances, these set-up costs that occur prior to initiating revenue recognition are capitalized and amortized as data is acquired.

Stock-Based Compensation. The Company measures all stock-based compensation awards, which include stock options, restricted stock, restricted stock units and common stock awards, using the fair value method and recognizes compensation expense, net of actual forfeitures, as operating or general and administrative expense, as appropriate, in the Condensed Consolidated Statements of Operations and Comprehensive Loss on a straight-line basis over the vesting period of the related awards.

Use of Estimates in the Preparation of Financial Statements.Preparation of the accompanying financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Because of the use of assumptions and estimates inherent in the reporting process, actual results could differ from those estimates.

Revenue Recognition. Services are provided under cancelable service contracts which usually have an original expected duration of one year or less. These contracts are either “turnkey” or “term” agreements. Under both types of agreements, the Company recognizes revenues as the services are performed. Revenue is generally recognized based on square miles of data recorded compared to total square miles anticipated to be recorded on the survey using the total estimated revenue for the service contract. In the case of a cancelled service contract, the client is billed and revenue is recognized for any third party charges and square miles of data recorded up to the date of cancellation.

The Company receives reimbursements for certain out-of-pocket expenses under the terms of the service contracts. The amounts billed to clients are included at their gross amount in the total estimated revenue for the service contract.

Clients are billed as permitted by the service contract. Contract assets and contract liabilities are the result of timing differences between revenue recognition, billings and cash collections. If billing occurs prior to the revenue recognition or billing exceeds the revenue recognized, the amount is considered deferred revenue and a contract liability. Conversely, if the revenue recognition exceeds the billing, the excess is considered an unbilled receivable and a contract asset. As services are performed, those deferred revenue amounts are recognized as revenue.

In some instances, third-party permitting, surveying, drilling, helicopter, equipment rental and mobilization costs that directly relate to the contract are utilized to fulfill the contract obligations. These fulfillment costs are capitalized in other current assets and generally amortized based on the total square miles of data recorded compared to total square miles anticipated to be recorded on the survey using the total estimated fulfillment costs for the service contract.

Estimates for total revenue and total fulfillment cost on any service contract are based on significant qualitative and quantitative judgments. Management considers a variety of factors such as whether various components of the performance obligation will be performed internally or externally, cost of third party services, and facts and circumstances unique to the performance obligation in making these estimates.

Recently Issued Accounting Pronouncements

In ~~May 2017,~~October 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2017-09, Compensation – Stock Compensation (Topic 718): Scope~~2020-10, Codification Improvements, which clarifies the Codification or corrects unintended application of ~~Modification Accounting,~~ ~~which provides~~ guidance ~~about which changes~~by improving the consistency of the Codification for disclosure on multiple topics. They are not expected to ~~the terms or conditions of a share-based payment award require an entity to apply modification accounting~~.change current practice. This ASU is effective for the annual period beginning after December 15, ~~2017, and for annual and~~2020, including interim periods ~~thereafter.~~within that annual period and should be applied on a retrospective basis for all periods presented. The Company ~~does~~adopted this guidance in the first quarter of 2021 and it did not ~~believe this ASU will~~ have a material impact on its ~~condensed~~ consolidated financial statements.

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In ~~March 2016,~~December 2019, the FASB issued ASU No. ~~2016-09, Compensation – Stock Compensation (Topic 718)~~2019-12, Income Taxes (“Topic 740”): ~~Improvements to Employee Share-Based Payment~~Simplifying the Accounting for Income Taxes, which ~~is intended to simplify~~simplifies the accounting for ~~share-based payments awarded~~income taxes by eliminating certain exceptions to ~~employees, including income tax consequences, classification of awards as either equity or liabilities,~~the general principles in Topic 740 and ~~classification on the statement of cash flows. This ASU was effective for the annual period beginning after December 15, 2016,~~by clarifying and ~~for annual and interim periods thereafter. The Company adopted ASU 2016-09 in the first quarter of 2017 and elected~~amending existing guidance to ~~account~~ ~~for forfeitures as they occur, rather than estimate expected forfeitures. As a result of adopting this standard, the Company applied the~~ ~~modified retrospective approach and recorded a cumulative-effect adjustment that had~~ ~~no material impact on the Company’s condensed consolidated financial statements.~~

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In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. In January 2017, the FASB issued ASU No. 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments – Equity Method and Joint Ventures (Topic 323), which stated additional qualitative disclosures should be considered to assess the significance of the impact upon adoption.improve consistent application. This ASU is effective for the annual period beginning after December 15, ~~2018, and for annual and~~2020, including interim periods ~~thereafter. Early adoption~~within that annual period. Certain amendments within this ASU are required to be applied on a retrospective basis for all periods presented; others are to be applied using a modified retrospective approach with a cumulative-effect adjustment to retained earnings, if any, as of the beginning of the first reporting period in which the guidance is ~~permitted.~~adopted; and yet others are to be applied using either basis. All other amendments not specified in the ASU should be applied on a prospective basis. The Company ~~is currently evaluating~~adopted this guidance in the ~~new guidance~~first quarter of 2021 prospectively as it relates to ~~determine the~~currency translation adjustments in other comprehensive income and it did not have a material impact ~~it will have~~ on its ~~condensed~~ consolidated financial statements and believes that the most significant change will be to its Condensed Consolidated Balance Sheets as its asset and liability balances will increase for operating leases that are currently off-balance sheet..

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. Entities have the option of using either a full retrospective or modified approach to adopt ASU No. 2014-09. Subsequent amendments to the initial guidance have been issued in March 2016, April 2016, May 2016, December 2016, January 2017, and September 2017 within ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-12, ASU No. 2016-20, ASU No. 2017-03, and ASU No. 2017-13 regarding principal-versus-agent, performance obligations and licensing, assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. These updates do not change the core principle of the guidance under ASU No. 2014-09, but rather provide implementation guidance. In August 2015, ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, was issued and it amended the effective date of ASU No. 2014-09 for public companies to annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but only beginning after December 15, 2016. The Company has completed an initial assessment of the new standard and currently anticipates adopting the standard using the full retrospective method. Under the new standard, the Company expects the recognition of certain miscellaneous revenue to be delayed, but not materially different. These revenues will be estimated and allocated over the life of the contract rather than recognized as services are provided. The Company is continuing to evaluate the effect that the adoption will have on its financial statements, disclosures, and internal controls.

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

At September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, the Company’s financial instruments included cash and cash equivalents, restricted cash, short-term investments in certificates of deposit, accounts receivable, other current assets, accounts payable, other current liabilities, notes payable, finance leases and ~~notes payable. At September 30, 2017, the Company’s financial instruments also included notes receivable.~~operating lease liabilities. Due to the short-term maturities of cash and cash equivalents, restricted cash, accounts receivable, other current assets, accounts payable and other current liabilities, the carrying amounts approximate fair value at the respective balance sheet dates. The carrying value of the notes ~~receivable~~payable, finance leases and ~~notes payable~~operating lease liabilities approximate their fair value based on a comparison with the prevailing market interest rate. Due to the short-term maturities of the Company’s investments in certificates of deposit, the carrying amounts approximate fair value at the respective balance sheet dates. The fair values of the Company’s notes ~~receivable, notes~~ payable and investments in certificates of deposit are level 2 measurements in the fair value ~~hierarchy~~hierarchy.

4. SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION

~~4. DEBT~~

~~Credit Agreement~~

Disaggregated Revenues

The Company has 1 line of business, acquiring and processing seismic data in North America. Our chief operating decision maker (President, Chief Executive Officer and Chairman of the Board) makes operating decisions and assesses performance based on the Company as a whole. Accordingly, the Company is considered to be in a single reportable segment. The following table presents the Company’s ~~existing~~operating revenues (unaudited and in thousands) disaggregated by geographic region:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020			2021	2020
Operating Revenues
United States	$	1,914	$	8,738	$	10,891	$	65,408
Canada		—		—		2,964		11,808
Total	$	1,914	$	8,738	$	13,855	$	77,216

Deferred Costs (in thousands)

Deferred costs were $1,847 and $2,525 at January 1, 2021 and 2020, respectively. The Company’s prepaid expenses and other current assets at September 30, 2021 and 2020 included deferred costs incurred to fulfill contracts with customers of $210 and $417, respectively.

Deferred costs at September 30, 2021 compared to January 1, 2021 and at September 30, 2020 compared to January 1, 2020 decreased primarily as a result of the completion of several projects during those nine month periods that had significant deferred fulfillment costs at January 1, 2021 and 2020, respectively.

The amount of total deferred costs amortized for the three and nine months ended September 30, 2021 was $453 and $4,360, respectively. The amount of total deferred costs amortized for the three and nine months ended September 30, 2020 was $1,128 and $12,023, respectively. There were no material impairment losses incurred during these periods.

Deferred Revenue (in thousands)

Deferred revenue was $1,779 and $3,481 at January 1, 2021 and 2020, respectively. The Company’s deferred revenue at September 30, 2021 and 2020 was $96 and $374, respectively.

Deferred revenue at September 30, 2021 compared to January 1, 2021 and at September 30, 2020 compared to January 1, 2020 decreased primarily as a result of completing projects for clients with large prepayments for third party reimbursables.

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Revenue recognized for the three and nine months ended September 30, 2021 that was included in the contract liability balance at the beginning of 2021 was $0 and $1,779, respectively. Revenue recognized for the three and nine months ended September 30, 2020 that was included in the contract liability balance at the beginning of 2020 was $129 and $3,476, respectively.

5. DEBT

Dominion Loan Agreement

On September 30, 2019, the Company entered into a Loan and Security Agreement with Dominion Bank, a Texas state bank (“Dominion Bank”). On September 30, 2021, the Company entered into a Second Loan Modification Agreement (the “Second Modification”) to the Loan and Security Agreement (as amended ~~and restated credit agreement (the “Credit~~by the Loan Modification Agreement, the “Loan Agreement”) ~~with Veritex Bank (formerly Sovereign Bank, who merged with and into Veritex Bank effective September 11, 2017) includes term loan and revolving loan features, and also allows~~ for the ~~issuance~~purpose of ~~letters~~(a) amending and extending the maturity of its line of credit with Dominion Bank by one year and ~~other promissory notes.~~(b) amending the Company's obligation to maintain a certain tangible net worth. The ~~Company can borrow up to a maximum of $20.0 million pursuant to the Credit Agreement, subject to the terms and limitations discussed below.~~

~~The Credit~~Loan Agreement provides for a revolving ~~loan feature~~credit facility (the ~~“Line of Credit”~~“Revolving Credit Facility”) ~~that permits the Company to borrow, repay and re-borrow, from time to time until June 30, 2018,~~in an amount up to the lesser of (i) ~~$20.0 million~~$15,000,000 or (ii) a sum equal to (a) 80% of the Company’s eligible accounts receivable ~~(less~~plus 100% of the ~~outstanding principal balance~~amount on deposit with Dominion Bank in the Company’s collateral account, consisting of ~~term loans and letters~~a restricted CDARS account of ~~credit~~$5,000,000 (the “Deposit”). As of September 30, 2021, the Company has not borrowed any amounts under the Revolving Credit ~~Agreement) and (b)~~Facility.

Under the Revolving Credit Facility, interest will accrue at an annual rate equal to the lesser of (i) ~~50%~~6.00% and (ii) the greater of the value of certain of the Company’s core equipment or (ii) $12,500,000. The Company has not utilized the Line of Credit since its inception. Because the Company’s ability to borrow funds under the Line of Credit is tied to the amount of the Company’s eligible accounts receivable and value of certain of its core equipment, if the Company’s accounts receivable decrease materially for any reason, including delays, reductions or cancellations by clients, or decreased demand for the Company’s services, or the value of the Company’s pledged core equipment decreases materially, the Company’s borrowing ability to fund operations or other obligations may be reduced.

~~Table of Contents~~

The Credit Agreement also provides for a term loan feature. The Company has no outstanding notes payable under the term loan feature of the Credit Agreement, and any notes outstanding under this feature would count toward the maximum amounts the Company may borrow under the Credit Agreement.

~~The Company paid off the final remaining equipment note payable during the third quarter of 2017. The Company does not currently have any notes payable under the Credit Agreement.~~

The Company’s obligations under the Line of Credit are secured by a security interest in the Company’s accounts receivable and certain of the Company’s core equipment, and the term loans are also secured by certain of the Company’s core equipment. Interest on amounts outstanding under the Credit Agreement accrues at the lesser of 4.5% or(a) the prime rate ~~(as quoted~~as published from time to time in ~~the~~The Wall Street Journal~~), subject to an interest rate floor of 2.5%~~ or (b) 3.50%. The Company will pay a commitment fee of 0.10% per annum on the difference of (a) $15,000,000 minus the Deposit minus (b) the daily average usage of the Revolving Credit Facility. The Loan Agreement contains customary covenants for credit facilities of this type, including limitations on disposition of ~~assets, mergers and other fundamental changes.~~assets. The Company is also obligated to meet certain financial covenants under the Loan Agreement, including ~~(i)~~maintaining a ~~ratio of (x) total liabilities~~ ~~minus~~ ~~subordinated debt to (y) tangible net worth~~ ~~plus~~ ~~subordinated debt not to exceed 1.00:1.00, (ii) a ratio of current assets to current liabilities of at least 1.50:1.00 and (iii) required~~ tangible net worth of not less than ~~$125,000,000.~~ $55,000,000 and specified ratios with respect to current assets and liabilities and debt to tangible net worth. The Company’s obligations under the Loan Agreement are secured by a security interest in the collateral account (including the Deposit) with Dominion Bank and future accounts receivable and related collateral. The maturity date of the Loan Agreement is September 30, 2022.

The Company ~~was in compliance with all covenants~~does not currently have any notes payable under the Revolving Credit ~~Agreement, including specified ratios, as~~Facility.

Dominion Letters of Credit

As of September 30, ~~2017.~~

~~Veritex~~2021, Dominion Bank has ~~also~~ issued ~~two letters~~1 letter of credit asin the amount of ~~September 30, 2017.~~$265,000 to support the Company’s workers compensation insurance. The ~~first~~ letter of credit is ~~in the amount~~secured by a certificate of $1,767,000 in favor of AIG Assurance Company to support payment of certain insurance obligations of the Company. The principal amount of this letter of credit is collateralized by certain of the Company’s core equipment. The second letter of credit is unsecured and in the amount of $75,000 in favor of the City of Midland, Texas, to support certain performance obligations of the Company. Neither letter of credit counts as funds borrowed under the Company’s Line of Credit.deposit with Dominion Bank.

Other Indebtedness

~~The~~As of September 30, 2021, the Company has ~~one outstanding~~1 short-term note ~~in the remaining principal amount of $56,000 at September 30, 2017~~ payable to a finance company for ~~insurance.~~

various insurance premiums totaling $203,000.

In addition, the Company ~~enters into capital lease obligations for~~leases certain seismic recording equipment and vehicles ~~and recording equipment.~~under leases classified as finance leases. The Company’s Condensed Consolidated Balance ~~Sheets~~Sheet as of September 30, ~~2017 include capital lease obligations~~2021 includes finance leases of ~~$8,561,000, which includes $8,001,000 for the acquisition of recording equipment during the quarter ended September 30, 2017.~~$53,000.

Maturities and Interest Rates of Debt

The following tables set forth the aggregate principal amount (in thousands) under the Company’s outstanding notes payable and the interest rates as of September 30, ~~2017~~2021 and December 31, ~~2016.~~2020:


	~~September 30, 2017~~		~~December 31, 2016~~
~~Notes payable to commercial banks~~
~~Aggregate principal amount outstanding~~	$	—	$	~~1,938~~
~~Interest rates~~		—		~~3.50% - 4.50%~~

The aggregate maturities of ~~the notes payable at~~finance leases as of September 30, ~~2017~~2021 are as follows (in thousands):


~~October 2017 - September 2018~~					$	56

~~Table of Contents~~

~~The aggregate maturities of obligations under capital leases at September 30, 2017 are as follows (in thousands):~~

Interest rates on these leases range from ~~3.16%~~4.83% to ~~6.88%~~5.37%.

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6. LEASES

5.The Company leases certain vehicles, seismic recording equipment, real property and office equipment under lease agreements. The Company evaluates each lease to determine its appropriate classification as an operating lease or finance lease for financial reporting purposes. The majority of our operating leases are non-cancelable operating leases for office and shop space in Midland, Plano, Houston, Denver, Oklahoma City and Calgary, Alberta. There have been no material changes to our leases since the Company’s most recent Annual Report on Form 10-K that was filed with the SEC on March 16, 2021.

Maturities of lease liabilities as of September 30, 2021 are as follows (in thousands):


	Operating Leases		Finance Leases
October 2021 - September 2022	$	1,243	$	45
October 2022 - September 2023		1,166		10
October 2023 - September 2024		1,188		—
October 2024 - September 2025		943		—
October 2025 - September 2026		892		—
Thereafter		451		—
Total payments under lease agreements		5,883		55

Less imputed interest		(700)		(2)

Total lease liabilities	$	5,183	$	53

7. OPERATING COMMITMENTS AND CONTINGENCIES

From time to time, the Company is a party to various legal proceedings arising in the ordinary course of business. Although the Company cannot predict the outcomes of any such legal proceedings, management believes that the resolution of pending legal actions will not have a material adverse effect on the Company’s financial condition, results of operations or liquidity, as the Company believes it is adequately indemnified and insured.

We are also party to the following legal proceeding: On April 1, 2019, Weatherford International, LLC and Weatherford U.S., L.P. (collectively, “Weatherford”) filed a petition in state district court for Midland County, Texas, in which the Company and 18 other parties were named as defendants, alleging the Company and/or the other named defendants contributed to or caused contamination of groundwater at and around property owned by Weatherford. Weatherford is seeking declaratory judgment, recovery and contribution for past and future costs incurred in responding to or correcting the contamination at and around the property from each defendant. The Company disputes Weatherford’s allegations with respect to the Company and intends to vigorously defend itself in this case. On October 28, 2020, the trial court granted a plea to jurisdiction in favor the City of Midland, a co-defendant in the case. Weatherford is appealing that decision and the case is stayed, pending the appellate ruling. While the outcome and impact of this legal proceeding on the Company cannot be predicted with certainty, based on currently available information, management believes that the resolution of this proceeding will not have a material adverse effect on our financial condition, results of operations or liquidity.

~~The~~Additionally, the Company experiences contractual disputes with its clients from time to time regarding the payment of invoices or other matters. While the Company seeks to minimize these disputes and maintain good relations with its clients, the Company has experienced in the past, and may experience in the future, disputes that could affect its revenues and results of operations in any period.

~~The Company has non-cancelable operating leases for office and shop space in Midland, Plano, Denison, Houston, Denver, Oklahoma City and Calgary, Alberta.~~

6.8. NET LOSS PER SHARE ~~ATTRIBUTABLE TO COMMON STOCK~~

~~Net~~Basic loss per share attributable to common stock is calculated using the two-class method. The two-class method is an allocation method of calculating loss per share when a company’s capital structure includes participating securities that have rights to undistributed earnings. Historically, the Company’s employees and officers that held unvested restricted stock were entitled to dividends when the Company paid dividends (“participating”). The Company’s employees and officers that hold unvested restricted stock awarded during 2016 or thereafter are not entitled to dividends when the Company pays dividends (“non-participating”). The Company’s basic net loss per share attributable to common stock is computed by reducing the Company’s net loss by the income allocable to unvested restricted stockholders that have a right to participate in earnings. The Company’s employees and officers that hold unvested restricted stock do not participate in losses because they are not contractually obligated to do so. The undistributed earnings are allocated based on the relative percentage of the weighted average unvested participating restricted stock awards. The basic net loss per share attributable to common stock is computed by dividing the net loss ~~attributable to common stock~~ by the weighted average shares outstanding. ~~The Company’s diluted~~Diluted loss per share ~~attributable to common stock~~ is computed by ~~adjusting basic~~dividing the net loss ~~per share attributable to common stock~~ by ~~income allocable to unvested participating restricted stock, if any, divided by~~the weighted average diluted shares outstanding.

~~A reconciliation~~11

Table of ~~the net~~Contents

The computation of basic and diluted loss per share ~~attributable to common stock is as follows~~ (in thousands, except share and per share data): was as follows:

Three Months Ended September 30,

Nine Months Ended September 30,


2017

2016

2017

2016

Net loss

$
(2,759)

$
(12,416)

$
(26,722)

$
(32,605)

Income allocable to unvested participating restricted stock

—

—

—

—

Basic loss attributable to common stock

$
(2,759)

$
(12,416)

$
(26,722)

$
(32,605)

Reallocation of participating earnings

—

—

—

—

Diluted loss attributable to common stock

$
(2,759)

$
(12,416)

$
(26,722)

$
(32,605)

Weighted average common shares outstanding:

Basic

21,701,662

21,622,349

21,681,474

21,603,065

Dilutive common stock options, restricted stock unit awards and non-participating restricted stock awards

—

—

—

—

Diluted

21,701,662

21,622,349

21,681,474

21,603,065

Basic loss attributable to a share of common stock

$
(0.13)

$
(0.57)

$
(1.23)

$
(1.51)

Diluted loss attributable to a share of common stock

$
(0.13)

$
(0.57)

$
(1.23)

$
(1.51)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net loss	$	(7,865)	$	(7,840)	$	(22,110)	$	(5,347)
Weighted average common shares outstanding
Basic		23,632,112		23,423,437		23,545,693		23,350,204
Dilutive common stock options, restricted stock unit awards and restricted stock awards		—		—		—		—
Diluted		23,632,112		23,423,437		23,545,693		23,350,204
Basic loss per share of common stock	$	(0.33)	$	(0.33)	$	(0.94)	$	(0.23)
Diluted loss per share of common stock	$	(0.33)	$	(0.33)	$	(0.94)	$	(0.23)

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The Company had a net loss ~~in each of~~for the three and nine months ended September 30, ~~2017~~2021 and ~~2016.~~2020. As a result, all stock options, restricted stock unit awards and ~~non-participating~~ restricted stock awards were anti-dilutive and excluded from weighted average shares used in determining the diluted loss ~~attributable to a~~per share of common stock for ~~the respective~~those periods.

The following weighted average numbers of stock options, restricted stock unit awards and ~~non-participating~~ restricted stock awards have been excluded from the calculation of diluted loss per share ~~attributable to~~of common stock, as their effect would be anti-dilutive for the three and nine months ended September 30, 2021 and 2020:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Stock options		—		—		—	—
Restricted stock units		167,500		242,478		151,413	332,868
Restricted stock awards		—		—		—	—
Total		167,500		242,478		151,413	332,868

9. INCOME TAXES

For each of the three and nine months ended September 30, ~~2017 and 2016~~:

Three Months Ended September 30,


Nine Months Ended September 30,


2017

2016



2017


2016

Stock options

326,868

414,533

347,599

418,121

Restricted stock unit awards

378,887

278,412

293,613

268,824

Non-participating restricted stock awards

71,167

87,000

74,014

72,711

Total

776,922

779,945

715,226

759,656

~~There were no shares of participating restricted stock awards at September 30, 2017 and 2016 included in common stock outstanding.~~

~~7. INCOME TAXES~~

2021, the Company's effective tax rate was 0.0%. For the three and nine months ended September 30, ~~2017, the Company's effective tax rate was 33.9% and 14.8%, respectively. For the three and nine months ended September 30, 2016,~~2020, the Company’s effective tax rate was ~~11.1%~~-0.2% and ~~10.3%~~-0.3%, respectively. The Company’s ~~quarter to date and year to date~~nominal or no effective tax ~~rates increased compared to~~rate for the ~~corresponding~~ periods ~~from the prior year primarily~~above was due to the ~~processing~~presence of ~~outstanding amended returns that were accepted in~~net operating loss carryovers and adjustments to the ~~first and third quarters of 2017 and the associated refunds received.~~

valuation allowance on deferred tax assets.

The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over ~~the three year period ended December 31, 2016.~~an extended amount of time. Such objective evidence limits the ability to consider other subjective evidence, such as projections for taxable earnings.

~~The~~If the Company had any income tax benefit for the three and nine months ended September 30, ~~2017 does~~2021, it would not include income tax benefits for all of the losses incurred because the Company has recorded valuation allowances against significantly all of its federal, state and foreign deferred tax assets. The Company has recorded valuation allowances against the associated deferred tax assets for the amounts it deems are not more likely than not realizable. Based on management’s belief that not all the net operating losses are realizable, a federal valuation ~~allowances of $1,209,000 and $10,258,000~~allowance and additional state valuation allowances ~~of $94,000 and $681,000~~ were ~~recorded~~maintained during the ~~three and~~ nine months ended September 30, ~~2017, respectively.~~2021 and 2020. In addition, due to the Company’s recent operating losses and valuation allowances, the Company may recognize reduced or no tax benefits on future losses on the condensed consolidated financial statements. The amount of the valuation allowances considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as projections for future growth.

On December 27, 2020, Congress passed the Consolidated Appropriations Act, 2021 which included changes to federal income tax law which did not have a material impact on the Company’s consolidated financial statements.

8.10. SUBSEQUENT EVENTS

On October 25, 2021, the Company announced that it entered into a definitive merger agreement Wilks Brothers, LLC (“Wilks”). Pursuant to the merger agreement, a subsidiary of Wilks commenced a tender offer to acquire all of the Company’s outstanding common

~~None.~~12

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stock for $2.34 per share in cash (the “Offer”) on November 1, 2021. Subject to the closing of the Offer, the merger agreement also contemplates that Wilks will acquire any shares of the Company’s common stock that are not tendered into the Offer at the same price per share through a second-step merger, which will be completed as soon as practicable following the closing of the Offer, subject to the approval of at least 80% of the outstanding shares of the Company’s common stock.

ITEM 2. MANAGEMENT’S DISCUSSION AND ~~ANALYSIS~~ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

Statements other than statements of historical fact included in this Form 10-Q that relate to forecasts, estimates or other expectations regarding future events, including without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding technological advancements, ~~and~~ our financial position, business strategy and plans, ~~and~~ objectives of our management for future operations, including statements related to the expected or potential impact of the novel coronavirus (“COVID-19”) pandemic on our business, financial condition and results of operations, may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). When used in this Form 10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by and information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors. These risks include, but are not limited to, the satisfaction of closing conditions for the acquisition by Wilks (such as the tender of at least 80% of the outstanding shares of capital stock of the Company in order to close the tender offer, and approval of at least 80% of the outstanding shares of the capital stock of the Company in order to consummate the second step merger); the possibility that the merger will not be completed;dependence upon energy industry spending; changes in exploration and production spending by our customers and changes in the level of oil and natural gas exploration and development; the results of operations and financial condition of our customers, particularly during extended periods of low prices for crude oil and natural gas; the volatility of oil and natural gas prices; changes in economic conditions; the severity and duration of the COVID-19 pandemic-related economic repercussions and the resulting negative impact on demand for oil and gas; surpluses in the supply of oil and the ability of the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, to agree on and comply with supply limitations; the duration and magnitude of the unprecedented disruption in the oil and gas industry currently resulting from the impact of the foregoing factors, which is negatively impacting our business; the potential for contract delays; reductions or cancellations of service contracts; limited number of customers; credit risk related to our customers; reduced utilization; high fixed costs of operations and high capital requirements; operational ~~disruptions;~~challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees and remote work arrangements; industry competition; external factors affecting our crews such as weather interruptions and

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inability to obtain land access rights of way; whether we enter into turnkey or dayrate contracts; crew productivity; the availability of capital resources; and disruptions in the global economy. A discussion of these and other factors, including risks and uncertainties, is set forth ~~under “Risk Factors”~~ in our Annual Report on Form 10-K ~~for the year ended December 31, 2016~~ that was filed with the SEC on March ~~13, 2017. These forward-looking statements reflect our current views~~16, 2021 and any subsequent Quarterly Reports on Form 10-Q filed with ~~respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategies and liquidity.~~the SEC. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this paragraph. We disclaim any intention or obligation to revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

We are a leading provider of North American onshore seismic data acquisition services with operations throughout the continental U.S. and Canada. Substantially all of our revenues are derived from the seismic data acquisition services we provide to our ~~clients, mainly oil and natural gas companies of all sizes.~~clients. Our clients consist of major oil and gas companies, independent oil and gas operators, and providers of multi-client data libraries. In recent years, our primary customer base has consisted of providers of multi-client data libraries. Demand for our services depends upon the level of spending by these companies for exploration, production, development and field management activities, which depends, in a large part, on oil and natural gas prices. Significant fluctuations in domestic oil and natural gas exploration and development activities ~~and~~related to commodity prices, as we have recently experienced, have affected, and will continue to affect, demand for our services and our results of operations, and such fluctuations continue to be the single most important factor affecting our business and results of operations.

~~During~~Activity levels during the third quarter of ~~2017,~~2021 remained depressed, as we ~~operated six to eight crews~~had one seismic data acquisition crew operating in the ~~U.S~~lower 48 with extended periods of low utilization. Our one active crew ~~active in Canada~~was idle from early September to mid-October. The near-term outlook for ~~a short period. We experienced increased crew utilization throughout the third quarter, which resulted in improved revenue, and we are currently operating six crews~~seismic data acquisition activity in the U.S. remains challenged, notwithstanding the currently elevated prices for oil and natural gas. Based on currently available information, our one active lower 48 crew resumed operation in mid-October on a small, few thousand channel count project with a duration of approximately seven days, and is further scheduled through early February of 2022 with current projects of various sizes and channel count requirements, the largest of which is 65,000 channels with a duration of approximately 45 days.

The Canadian season should begin earlier than in recent years. We expect to operate two crews in ~~Canada. The~~Canada in the back half of the fourth quarter inof 2021 through the ~~U.S. historically has been challenging due to shorter work days and~~end of the ~~holiday season. We anticipate a temporary decline in utilization during~~winter season which concludes at the ~~mid-fourth quarter in the U.S. due to project readiness issues and expect to~~ end ~~the quarter with six to seven crews in the field. Utilization in the U.S. is expected to increase to six to eight crews through~~of the first quarter of ~~2018. The winter season in Canada has begun early, as we currently~~2022. We have ~~two crews~~or anticipate to be

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awarded several additional mid-sized projects in the ~~field~~lower 48, each of which will be pushed into late 2022 primarily due to land access issues. Bid activity remains at historically low levels and visibility into 2022 is limited in the lower 48. Due to a lack of demand for seismic data acquisition projects in both Canada and the lower 48, prices for our services softened in the last quarter.

In our continuing response to these difficult times, we ~~anticipate~~significantly limited capital budget spending, reduced fixed and variable operating ~~two~~expenses, and implemented a comprehensive equipment maintenance program in preparation for a rapid response to ~~three crews in Canada for most of the fourth quarter. Utilization in Canada is expected~~anticipated increased activity levels. In addition, we maintain our commitment to increase to three to five crews through the first quarter of 2018. While bid activity in North America has remained steady despite recent movement in oil prices, we continue to experience a challenging market environment.our robust Health, Safety and Environmental program, ongoing client relationships and product quality.

~~The majority of our crews are currently working in oil producing basins.~~ While our revenues are mainly affected by the level of client demand for our services, our revenues are also affected by the pricing for our services that we negotiate with our clients and the productivity and utilization level of our data acquisition crews. Factors impacting productivity and utilization levels ~~include~~include: client demand, commodity prices, whether we enter into turnkey or dayrate contracts with our clients, the number and size of crews, the number of recording channels per crew, crew downtime related to inclement weather, delays in acquiring land access permits, agricultural or hunting activity, holiday schedules, short winter days, crew repositioning and equipment failure. To the extent we experience these factors, our operating results may be affected from quarter to quarter. Consequently, our efforts to negotiate more favorable contract terms in our supplemental service agreements, mitigate permit access delays and improve overall crew productivity may contribute to growth in our revenues.

~~Demand for our services has improved in recent months and our third quarter results were positively impacted by increased utilization of our data acquisition crews and an early start to~~ Further, the ~~Canadian winter season. Since the beginning~~ongoing COVID-19 pandemic may further compound one or more of the ~~year, oil prices have dropped from approximately $57 per barrel~~foregoing factors and could directly affect our productivity.

Results of Operations

Operating Revenues. Operating revenues for West Texas Intermediate to below $43 per barrel in the second quarter. The prices have recently rebounded to approximately $54 per barrel and analyst models forecast oil prices to remain between $40 and $65 per barrel, leaving upcoming seismic project timing somewhat uncertain. U.S. active rig count, while significantly increased over levels from a year ago, has slightly declined in recent weeks. It is anticipated that the rig count will remain at or near current levels for the foreseeable future, despite the recent movement in oil prices, which should help to drive demand for our services, although well below demand levels of early 2015.

In response to the lower than anticipated demand for our services, we have continued our cost reduction measures. Our efforts include the sale of our dynamite energy source drilling operation during March 2017. This operation, acquired as part of our February 2015 merger with TGC Industries, was sold to a long-term service provider and resulted in a gain of approximately $1.45 million. We continue an evaluation of all in-house service levels in order to reduce our costs. Due to the additional crews in the field during the third quarter ~~our employee count increased~~of 2021 decreased 78.1% to ~~740 as~~$1,914,000 compared to $8,738,000 in the same period of ~~September 30, 2017.~~

~~Most of our client contracts are turnkey contracts. The percentage of~~2020. Operating revenues ~~derived from turnkey contracts represented approximately three-quarters of our revenues in~~decreased 82.1% to $13,855,000 during the first nine months of ~~2017 and throughout 2016. While turnkey contracts allow us~~2021 compared to ~~capitalize on improved crew productivity, we also bear more risks related to weather and crew downtime. We expect the percentage of turnkey contracts to remain high as we continue our operations~~$77,216,000 in the ~~mid-continent, western and southwestern regions~~same period of ~~the U.S. in which turnkey contracts are more common.~~

Over time, we have experienced continued increases in recording channel capacity on a per crew or project basis and high utilization of cable-less and multicomponent equipment. This increase in channel count demand is driven by client needs and is necessary in order to

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produce higher resolution images, increase crew efficiencies and undertake larger scale projects. In response to project-based channel requirements, we routinely deploy a variable number of channels on a variable number of crews in an effort to maximize asset utilization and meet client needs.

Reimbursable third-party charges related to our use of helicopter support services, permit support services, specialized survey technologies and dynamite energy sources in areas with limited access are other important factors affecting our results. Revenues associated with third-party charges as a percentage of revenues were generally below our historical range2020. The decreased revenue during 2016 and that trend has continued in 2017. We expect that as we continue our operations in the more open terrain of the mid-continent, western and southwestern regions of the U.S., the level of these third-party charges will continue to be generally below our historical range of 25% to 35% of revenue.

While the markets for oil and natural gas have been very volatile and are likely to continue to be so in the future, and we can make no assurances as to future levels of domestic exploration or commodity prices, we believe opportunities exist for us to enhance our market position by responding to our clients’ continuing desire for higher resolution subsurface images. If economic conditions continue to weaken such that our clients continue to reduce their capital expenditures or if the sustained drop in oil and natural gas prices worsens, it could continue to result in diminished demand for our seismic services, could cause downward pressure on the prices we charge and would affect our results of operations.

~~Results of Operations~~

~~Operating Revenues. Operating revenues for~~ the third quarter and first nine months of ~~2017 increased by 62.2% and 14.3%, respectively, to $45,627,000 and $118,023,000~~2021 compared to ~~$28,122,000 and $103,263,000 for~~ the same periods of ~~2016. The revenue increase~~2020 was primarily due to ~~increased crew count~~lower demand and extended periods of low utilization during those periods of 2021.

Operating Expenses. Operating expenses for the third quarter of ~~2017~~2021 decreased 57.9% to $3,975,000 compared to $9,441,000 in the same period of ~~2016.~~

~~Operating Expenses~~.2020. Operating expenses ~~for~~decreased 68.6% to $18,247,000 during the first nine months of 2021 compared to $58,189,000 in the same period of 2020. The decrease in operating expenses during the third quarter and first nine months of ~~2017 increased to $36,594,000 and $107,639,000 respectively,~~2021 compared to ~~$28,132,000 and $94,203,000 for~~ the same periods of ~~2016. The increase in operating expenses~~2020 was primarily ~~a result of increased costs associated with higher~~due to decreased crew ~~count and~~ utilization during ~~the periods.~~those periods of 2021.

General and Administrative Expenses. General and administrative expenses ~~for~~were 127.6% and 57.7% of revenues in the third quarter and first nine months of ~~2017 were 7.6% and 10.4% of revenues,~~2021, respectively compared to ~~13.0%~~37.4% and ~~12.8%~~14.5% of revenues in the same ~~period~~periods of ~~2016.~~2020. General and administrative expenses decreased ~~$211,000~~$827,000 or ~~5.8%~~25.3% to ~~$3,445,000~~$2,443,000 during the third quarter of ~~2017~~2021 from ~~$3,656,000~~$3,270,000 during the same period of ~~2016,~~2020, and decreased ~~$951,000~~$3,209,000 or ~~7.2%~~28.6% to ~~$12,296,000~~$7,996,000 during the first nine months of ~~2017~~2021 from ~~$13,247,000~~$11,205,000 during the same period of ~~2016. The~~2020.The primary ~~factor~~factors for the decrease in general and administrative expenses during the third quarter and first nine months of ~~2017~~2021 compared to the same periods of 2020 was ~~the continuation of our~~due to workforce reductions, salary reductions, and continued cost ~~cutting strategies.~~reduction efforts by management.

Depreciation and Amortization Expense. Depreciation and amortization expense for the third quarter and first nine months of ~~2017~~2021 totaled ~~$9,724,000~~$3,249,000 and ~~$29,750,000,~~$10,083,000, respectively, compared to ~~$10,591,000~~$4,125,000 and ~~$33,967,000~~$13,412,000 for the same periods of ~~2016, respectively.~~2020. Depreciation expense decreased in ~~2017~~2021 compared to ~~2016~~2020 as a result of multiple years of reduced capital expenditures. Our depreciation expense is expected to remain ~~flat during 2017 primarily~~below that of 2020 for the remainder of 2021 due to the anticipated continuation of maintenance levels of capital expenditures ~~during most of the first nine months of 2017,~~ to maintain our existing asset base.

~~Our total~~Total operating costs for the third quarter of ~~2017~~2021 were ~~$49,763,000,~~$9,667,000, representing a ~~17.4% increase~~42.6% decrease from the same period of ~~2016. Our~~2020. The operating costs for the first nine months of ~~2017~~2021 were ~~$149,685,000,~~$36,326,000, representing a ~~5.8% increase~~56.1% decrease from the ~~first nine months~~same period of ~~2016. These increases were primarily due to the factors described above.~~

~~Income Taxes. Income tax benefit~~2020. The decrease in operating costs for the third quarter and first nine months of ~~2017 was $1,418,000 and $4,635,000, respectively,~~2021 compared to ~~$1,557,000 and $3,733,000 for~~2020 was primarily due to the ~~same periods of 2016. These represent effective~~factors described above.

Income Taxes. Income tax ~~rates of 33.9% and 14.8%~~expense for the third quarter and first nine months of ~~2017~~2021 was $0 and $0, respectively, compared to ~~11.1%~~income tax expense of $15,000 and ~~10.3%~~$15,000 for the same periods of 2020. These amounts represent effective tax rates of 0.0% and 0.0% for the third quarter and first nine months of ~~2016. Our~~2021, respectively, compared to -0.2% and -0.3% for the third quarter and ~~year to date~~first nine months of 2020. The Company’s nominal or no effective tax ~~rates increased compared to~~rate for the ~~corresponding~~ periods ~~from the prior year primarily~~above was due to the ~~processing~~presence of ~~outstanding amended returns that were accepted in~~net operating loss carryovers and adjustments to the ~~first and third quarters of 2017 and the associated refunds received.~~

valuation allowance on deferred tax assets.

Our effective tax rates differ from the statutory federal rate of ~~35%~~21.0% for certain items such as state and local taxes, valuation allowances, non-deductible expenses and discrete items. For further information, see Note 79 of the Notes to the Condensed Consolidated Financial Statements.

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Use of EBITDA (a Non-GAAP measure)

We define EBITDA as net income (loss) plus interest expense, interest income, income taxes, and depreciation and amortization expense. Our management uses EBITDA as a supplemental financial measure to assess:

●

the financial performance of our assets without regard to financing methods, capital structures, taxes or historical cost basis;

●

our liquidity and operating performance over time in relation to other companies that own similar assets and that we believe calculate EBITDA in a similar manner; and

●

the ability of our assets to generate cash sufficient for us to pay potential interest costs.

We also understand that such data are used by investors to assess our performance. However, the term EBITDA is not defined under GAAP, and EBITDA is not a measure of operating income, operating performance or liquidity presented in accordance with GAAP. When assessing our operating performance or liquidity, investors and others should not consider this data in isolation or as a substitute for net income (loss), cash flow from operating activities or other cash flow data calculated in accordance with GAAP. In addition, our EBITDA may not be comparable to EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA in the same manner as us. Further, the results presented by EBITDA cannot be achieved without incurring the costs that the measure excludes: interest, taxes, and depreciation and amortization.

The reconciliation of our EBITDA to net loss and to net cash (used in) provided by operating activities, which are the most directly comparable GAAP financial measures, are provided in the following tables (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020			2021		2020
Net loss	$	(7,865)	$	(7,840)	$	(22,110)	$	(5,347)
Depreciation and amortization		3,249		4,125		10,083		13,412
Interest (income) expense, net		(46)		(96)		(160)		(246)
Income tax expense		—		15		—		15
EBITDA	$	(4,662)	$	(3,796)	$	(12,187)	$	7,834

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Net loss

$
(2,759)

$
(12,416)

$
(26,722)

$
(32,605)

Depreciation and amortization

9,724

10,591

29,750

33,967

Interest (income) expense, net

(62)

(21)

(169)

13

Income tax benefit

(1,418)

(1,557)

(4,635)

(3,733)

EBITDA

$
5,485

$
(3,403)

$
(1,776)

$
(2,358)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020			2021	2020
Net cash (used in) provided by operating activities	$	(4,075)	$	15,472	$	(5,373)	$	24,448
Changes in working capital and other items		(205)		(18,831)		(5,706)		(15,098)
Non-cash adjustments to net loss		(382)		(437)		(1,108)		(1,516)
EBITDA	$	(4,662)	$	(3,796)	$	(12,187)	$	7,834

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Net cash (used in) provided by operating activities

(1,433)

(1,798)

(3,309)

14,426

Changes in working capital and other items

7,165

(1,367)

2,239

(16,113)

Noncash adjustments to net loss

(247)

(238)

(706)

(671)

EBITDA

$
5,485

$
(3,403)

$
(1,776)

$
(2,358)

Liquidity and Capital Resources

~~Introduction~~. Our principal sources of cash are amounts earned from the seismic data acquisition services we provide to our clients. Our principal uses of cash are the amounts used to provide these services, including expenses related to our operations and acquiring new equipment. Accordingly, our cash position depends (as do our revenues) on the level of demand for our services. Historically, cash generated from our operations along with cash reserves and borrowings from commercial banks have been sufficient to fund our working capital requirements and, to some extent, our capital expenditures.

Cash Flows. Net cash used in operating activities was ~~$3,309,000~~$5,373,000 for the nine months ended September 30, ~~2017 and~~2021 compared to net cash provided by operating activities ~~was $14,426,000~~of $24,448,000 for the same period of ~~2016. The change of $17,735,000 in cash flow from operations between periods~~2020. This was primarily due to ~~changes in our working capital~~a significantly larger net loss for the first nine months ~~ended September 30, 2017~~of 2021 compared to the ~~nine months ended September 30, 2016.~~

same period of 2020 as well as changes in the balances of our operating assets and liabilities.

Net cash provided by investing activities was ~~$21,117,000~~$373,000 for the nine months ended September 30, ~~2017~~2021 compared to net cash used in investing activities of ~~$26,571,000~~$804,000 for the same period of ~~2016.~~2020. The ~~change~~decrease in cash ~~flow from~~used in investing activities between periods of $1,177,000 was ~~mainly~~primarily due to ~~$28,250,000 of short term investments that were not reinvested~~minimal capital expenditures during the first nine months of ~~2017~~2021 compared to ~~$23,250,000~~capital expenditures of ~~short term~~$2,822,000 for the same period of 2020 offset by proceeds from maturities of short-term investments ~~in excess~~ of ~~maturities during~~$1,767,000 for the ~~first nine months~~same period of ~~2016.~~

2020.

Net cash ~~used in~~provided by financing activities was ~~$2,563,000~~$42,000 for the nine months ended September 30, ~~2017~~2021 and was primarily ~~included~~comprised of proceeds from notes payable of $550,000 offset by principal payments of ~~$2,131,000 on our term notes~~$387,000 and ~~payments of $374,000~~$46,000 under our ~~capital leases.~~notes payable and finance leases, respectively. Net cash used in financing activities for the

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nine months ended September 30, ~~2016~~2020 was ~~$6,729,000~~$4,380,000 and was primarily

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comprised of principal payments of ~~$6,090,000 on term notes~~$8,393,000 and ~~payments of $608,000~~$2,291,000 under our ~~capital leases.~~notes payable and finance leases, respectively, offset by proceeds from notes payable of $6,374,000.

Capital Expenditures. The Board of Directors approved an initial ~~2017~~2021 capital budget in the amount of ~~$10,000,000~~$1,000,000 for capital expenditures, which was limited to necessary maintenance capital requirements and incremental recording channel replacement or increase. ~~During~~For the third quarter, the Board of Directors approved an increase in our 2017 capital budget from $10,000,000 to $16,000,000 in response to an attractive opportunity to acquire seismic data acquisition equipment. The Company had capital expenditures during the quarter of $9,147,000 that included an $8,001,000 strategic capital lease for previously deployed multi-component GSX equipment. Capital expenditures for 2017 were $15,276,000 throughnine months ended September 30, ~~2017.~~2021, we have spent $329,000 on capital expenditures. In recent years, we have funded most of our capital expenditures through cash flow from operations, cash reserves, equipment term loans and ~~capital~~finance leases. In the past, we have also funded our capital expenditures and other financing needs through public equity offerings.

We continually strive to supply our clients with technologically advanced 3-D seismic data acquisition recording services and data processing capabilities. We maintain equipment in and out of service in anticipation of increased future demand for our services.

Capital Resources. Historically, we have primarily relied on cash generated from operations, cash reserves and borrowings from commercial banks to fund our working capital requirements and, to some extent, our capital expenditures. ~~Recently, we~~We have funded some of our capital expenditures through commercial bank borrowings, finance leases and equipment term ~~loans and capital leases.~~loans. From time to time in the past, we have also funded our capital expenditures and other financing needs through public equity offerings. The amount of borrowings available to us under our existing credit facility are determined in part by the amount of our eligible accounts receivable, which have been declining in recent months.

Loan Agreement

Dominion Credit ~~Agreement~~

~~Our Credit~~Facility. On September 30, 2019, we entered into a Loan and Security Agreement with ~~Veritex Bank (formerly Sovereign Bank) includes term loan~~Dominion Bank. On September 30, 2021, we entered into the Second Modification to the Loan and ~~revolving loan features, and also allows~~Security Agreement for the ~~issuance~~purpose of ~~letters~~(a) amending and extending the maturity of our line of credit with Dominion Bank by one year and ~~other promissory notes. We can borrow up~~(b) amending our obligation to maintain a ~~maximum of $20.0 million pursuant to the Credit Agreement, subject to the terms and limitations discussed below.~~

certain tangible net worth. The ~~Credit~~Loan Agreement provides for a ~~revolving loan feature, the Line of~~Revolving Credit ~~that permits us to borrow, repay and re-borrow, from time to time until June 30, 2018,~~Facility in an amount up to the lesser of (i) ~~$20.0 million~~$15,000,000 or (ii) a sum equal to (a) 80% of our eligible accounts receivable ~~(less~~plus 100% of the ~~outstanding principal balance~~amount on deposit with Dominion Bank in our collateral account, consisting of ~~term loans and letters~~a restricted CDARS account of ~~credit~~$5,000,000. As of September 30, 2021, we have not borrowed any amounts under the Revolving Credit ~~Agreement) and (b)~~Facility.

Under the Revolving Credit Facility, interest will accrue at an annual rate equal to the lesser of (i) ~~50%~~6.00% and (ii) the greater of the value of certain of our core equipment or (ii) $12,500,000. We have not utilized the Line of Credit since its inception. Because our ability to borrow funds under the Line of Credit is tied to the amount of our eligible accounts receivable and value of certain of our core equipment, if our accounts receivable decrease materially for any reason, including delays, reductions or cancellations by clients, or decreased demand for our services, or the value of our pledged core equipment decreases materially, our borrowing ability to fund operations or other obligations may be reduced.

The Credit Agreement also provides for a term loan feature. We have no outstanding notes payable under the term loan feature of the Credit Agreement, and any notes outstanding under this feature would count toward the maximum amounts we may borrow under the Credit Agreement.

~~We paid off the final remaining equipment note payable during the third quarter of 2017. We do not currently have any notes payable under our Credit Agreement.~~

Our obligations under the Line of Credit are secured by a security interest in our accounts receivable and certain of our core equipment, and the term loans are also secured by certain of our core equipment. Interest on amounts outstanding under the Credit Agreement accrues at the lesser of 4.5% or(a) the prime rate ~~(as quoted~~as published from time to time in ~~the~~The Wall Street Journal~~), subject to an interest rate floor~~ or (b) 3.50%. We will pay a commitment fee of ~~2.5%.~~0.10% per annum on the difference of (a) $15,000,000 minus the Deposit minus (b) the daily average usage of the Revolving Credit Facility. The ~~Credit~~Loan Agreement contains customary covenants for credit facilities of this type, including limitations on disposition of ~~assets, mergers and other fundamental changes.~~assets. We are also obligated to meet certain financial covenants under the Loan Agreement, including ~~(i)~~maintaining a ~~ratio of (x) total liabilities~~ ~~minus~~ ~~subordinated debt to (y) tangible net worth~~ ~~plus~~ ~~subordinated debt not to exceed 1.00:1.00, (ii) a ratio of current assets to current liabilities of at least 1.50:1.00 and (iii) required~~ tangible net worth of not less than ~~$125,000,000. We were in compliance~~$55,000,000 and specified ratios with ~~all covenants~~respect to current assets and liabilities and debt to tangible net worth. Our obligations under the ~~Credit~~Loan Agreement ~~including specified ratios, as~~are secured by a security interest in the collateral account (including the Deposit) with Dominion Bank and future accounts receivable and related collateral. The maturity date of the Loan Agreement is September 30, ~~2017~~.2022.

We do not currently have any notes payable under the Revolving Credit Facility.

~~Veritex Bank has also issued two letters~~Dominion Letters of ~~credit as~~Credit. As of September 30, ~~2017.~~2021, Dominion Bank has issued one letter of credit in the amount of $265,000 to support our workers compensation insurance. The ~~first~~ letter of credit is ~~in the amount~~secured by a certificate of $1,767,000 in favor of AIG Assurance Company to support payment of our insurance obligations. The principal amount of this letter of credit is collateralized by certain of our core equipment. The second letter of credit is unsecured and in the amount of $75,000 in favor of the City of Midland, Texas, to support certain of our performance obligations. Neither letter of credit counts as funds borrowed under our Line of Credit.deposit with Dominion Bank.

Other Indebtedness

~~We had one outstanding note, in the remaining principal amount~~As of ~~$56,000 at~~ September 30, ~~2017~~2021, we have one short-term note payable to a finance company for ~~insurance.~~

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various insurance premiums totaling $203,000.

In addition, we ~~enter into capital~~ lease ~~obligations for~~ certain seismic recording equipment and vehicles ~~and recording equipment.~~under leases classified as finance leases. Our Condensed Consolidated Balance ~~Sheets~~Sheet as of September 30, ~~2017 include capital lease obligations~~2021 includes finance leases of ~~$8,561,000, which includes $8,001,000 for the acquisition~~$53,000.

Table of ~~recording equipment during the quarter ended September 30, 2017.~~Contents

Maturities and Interest Rates of Debt

The following tables set forth the aggregate principal amount (in thousands) under our outstanding notes payable and the interest rates as of September 30, ~~2017~~2021 and December 31, ~~2016.~~2020:


	~~September 30, 2017~~		~~December 31, 2016~~
~~Notes payable to commercial banks~~
~~Aggregate principal amount outstanding~~	$	—	$	~~1,938~~
~~Interest rates~~		—		~~3.50% - 4.50%~~

The aggregate maturities of ~~the notes payable at~~finance leases as of September 30, ~~2017~~2021 are as follows (in thousands):


~~October 2017 - September 2018~~					$	56

~~The aggregate maturities of obligations under capital leases at September 30, 2017 are as follows (in thousands):~~

Interest rates on these leases range from ~~3.16%~~4.83% to ~~6.88%~~5.37%.

ContractualObligations

~~Contractual Obligations.~~ We believe that our capital resources, including our cash on hand, short-term investments, cash flow from operations, and funds available under our Revolving Credit ~~Agreement, and cash flow from operations~~Facility will be adequate to meet our current operational needs. We believe that we will be able to finance our ~~2017~~2021 capital expenditures through cash flow from operations, ~~cash reserves, equipment term loans, capital leases,~~borrowings from commercial lenders, and the funds available under our Revolving Credit ~~Agreement.~~Facility. However, our ability to satisfy working capital requirements, meet debt repayment obligations, and fund future capital requirements will depend principally upon our future operating performance, which is subject to the risks inherent in our business, and will also depend on the extent to which the current economic climate adversely affects the ability of our ~~clients,~~customers, and/or potential ~~clients,~~customers, to promptly pay amounts owing to us under their service contracts with us.

~~Off-Balance Sheet Arrangements~~

As of September 30, 2017, we had no off-balance sheet arrangements under current GAAP. However, we do have operating leases discussed below in the “Recently Issued Accounting Pronouncements” section.

Critical Accounting Policies

Information regarding our critical accounting policies and estimates is included in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020.

Recently Issued Accounting Pronouncements

In ~~May 2017,~~October 2020, the FASB issued ASU No. ~~2017-09, Compensation – Stock Compensation (Topic 718): Scope~~2020-10, Codification Improvements, which clarifies the Codification or corrects unintended application of ~~Modification Accounting,~~ ~~which provides~~ guidance ~~about which changes~~by improving the consistency of the codification for disclosure on multiple topics. They are not expected to ~~the terms or conditions of a share-based payment award require an entity to apply modification accounting~~.change current practice. This ASU is effective for the annual period beginning after December 15, ~~2017, and for annual and~~2020, including interim periods ~~thereafter.~~within that annual period and should be applied on a retrospective basis for all periods presented. We doadopted this guidance in the first quarter of 2021 and it did not ~~believe this ASU will~~ have a material impact on our ~~condensed~~ consolidated financial statements.

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In ~~March 2016,~~December 2019, the FASB issued ASU No. ~~2016-09, Compensation – Stock Compensation (Topic 718)~~2019-12, Income Taxes (“Topic 740”): ~~Improvements to Employee Share-Based Payment~~Simplifying the Accounting for Income Taxes, which ~~is intended to simplify~~simplifies the accounting for ~~share-based payments awarded~~income taxes by eliminating certain exceptions to ~~employees, including income tax consequences, classification of awards as either equity or liabilities,~~the general principles in Topic 740 and ~~classification on the statement of cash flows. This ASU was effective for the annual period beginning after December 15, 2016,~~by clarifying and ~~for annual and interim periods thereafter. We adopted ASU 2016-09 in the first quarter of 2017 and elected~~amending existing guidance to ~~account~~ ~~for forfeitures as they occur, rather than estimate expected forfeitures. As a result of adopting this standard, we applied the~~ ~~modified retrospective approach and recorded a cumulative-effect adjustment that had~~ ~~no material impact on our condensed consolidated financial statements.~~

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. In January 2017, the FASB issued ASU No. 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments – Equity Method and Joint Ventures (Topic 323), which stated additional qualitative disclosures should be considered to assess the significance of the impact upon adoption.improve consistent application. This ASU is effective for the annual period beginning after December 15, ~~2018, and for annual and~~2020, including interim periods ~~thereafter. Early adoption~~within that annual period. Certain amendments within this ASU are required to be applied on a retrospective basis for all periods presented; others are to be applied using a modified retrospective approach with a cumulative-effect adjustment to retained earnings, if any, as of the beginning of the first reporting period in which the guidance is ~~permitted.~~adopted; and yet others are to be applied using either basis. All other amendments not specified in the ASU should be applied on a prospective basis. We ~~are currently evaluating~~adopted this guidance in the ~~new guidance~~first quarter of 2021 prospectively as it relates to ~~determine the~~currency translation adjustments in other comprehensive income and it did not have a material impact ~~it will have~~ on our ~~condensed~~ consolidated financial statements and believe that the most significant change will be to our Condensed Consolidated Balance Sheets as our asset and liability balances will increase for operating leases that are currently off-balance sheet.statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. Entities have the option of using either a full retrospective or modified approach to adopt ASU No. 2014-09. Subsequent amendments to the initial guidance have been issued in March 2016, April 2016, May 2016, December 2016, January 2017, and September 2017 within ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-12, ASU No. 2016-20, ASU No. 2017-03, and ASU No. 2017-13 regarding principal-versus-agent, performance obligations and licensing, assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. These updates do not change the core principle of the guidance under ASU No. 2014-09, but rather provide implementation guidance. In August 2015, ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, was issued and it amended the effective date of ASU No. 2014-09 for public companies to annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but only beginning after December 15, 2016. We have completed an initial assessment of the new standard and currently anticipate adopting the standard using the full retrospective method. Under the new standard, we expect the recognition of certain miscellaneous revenue to be delayed, but not materially different. These revenues will be estimated and allocated over the life of the contract rather than recognized as services are provided. We are continuing to evaluate the effect that the adoption will have on our financial statements, disclosures, and internal controls.

ITEM 3. QUANTITATIVE AND ~~QUALITATIVE~~QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to certain market risks arising from the use of financial instruments in the ordinary course of business. These risks arise primarily as a result of potential changes to operating concentration of credit risk and changes in interest rates. We have not entered into any hedge arrangements, commodity swap agreements, commodity futures, options or other derivative financial instruments. We also conduct business in Canada, which subjects our results of operations and cash flows to foreign currency exchange rate risk.

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Concentration of Credit Risk.

Our principal market risks include fluctuations in commodity prices, which affect demand for and pricing of our services, and the risk related to the concentration of our clients in the oil and natural gas industry. Since all of our clients are involved in the oil and natural gas industry, there may be a positive or negative effect on our exposure to credit risk because our clients may be similarly affected by changes in economic and industry conditions. As an example, changes to existing regulations or the adoption of new regulations may unfavorably impact us, our suppliers or our clients. In the normal course of business, we provide credit terms to our clients. Accordingly, we perform ongoing credit evaluations of our clients and maintain allowances for possible losses. Our historical experience supports our allowance for doubtful accounts of $250,000 at September 30, ~~2017.~~2021. This does not necessarily indicate that it would be adequate to cover a payment default by one large or several ~~small~~smaller clients.

We generally provide services to certain key clients that account for a significant percentage of our accounts receivable at any given time. Our key clients vary over time. We extend credit to various companies in the oil and natural gas industry, including our key clients, for the acquisition of seismic data, which results in a concentration of credit risk. This concentration of credit risk may be affected by changes in the economic or other conditions of our key clients and may accordingly impact our overall credit risk. If any of these 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, or for any other reason, our results of operations could be affected. Because of the nature of our contracts and clients’

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projects, our largest clients can change from year to year, and the largest clients in any year may not be indicative of the largest clients in any subsequent year.

Interest Rate Risk~~. We~~

From time to time, we are exposed to the impact of interest rate changes on the outstanding indebtedness under our Revolving Credit ~~Agreement~~Facility which has variable interest rates.

We generally have cash in the bank which ~~at times, may exceed~~exceeds federally insured limits. Historically, we have not experienced any losses in such accounts; however, volatility in financial markets may impact our credit risk on cash and short-term investments. At September 30, ~~2017,~~2021, cash, restricted cash and ~~cash equivalents and short-term~~short term investments ~~were $30,503,000 and $12,000,000, respectively, and short-term investments with any given banking institution did not exceed the FDIC insurance limit.~~totaled $41,601,000.

ITEM 4. CONTROLS AND ~~PROCEDURES~~PROCEDURES

Management’s Evaluation of Disclosure Controls and Procedures.

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive and financial officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report. Based upon that evaluation, our President and Chief Executive Officer and our Executive Vice President, Chief Financial Officer, Secretary and Treasurer concluded that, as of September 30, ~~2017,~~2021, our disclosure controls and procedures were effective, in all material respects, with regard to the recording, processing, summarizing and reporting, within the time periods specified in the SEC’s rules and forms, for information required to be disclosed by us in the reports that we file or submit under the Exchange Act. Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our President and Chief Executive Officer and our Executive Vice President, Chief Financial Officer, Secretary and Treasurer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting.

There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended September 30, ~~2017~~2021 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL ~~PROCEEDINGS~~PROCEEDINGS

~~From time~~Refer to ~~time, we are a party to various legal proceedings arising~~Note 7 – Operating Commitments and Contingencies in the ~~ordinary course~~Notes to the Condensed Consolidated Financial Statements (Part I, Item 1 of ~~business. Although we cannot predict~~this Form 10-Q) for a discussion of the ~~outcomes~~Company’s legal proceedings.

Table of any such legal proceedings, our management believes that the resolution of pending legal actions will not have a material adverse effect on our financial condition, results of operations or liquidity as the Company believes that it is adequately indemnified and insured.Contents

ITEM 1A. RISK ~~FACTORS~~

FACTORS

In addition to the other information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2020, which could materially affect our financial condition or results of operations. ~~There have been no material changes in~~

Additionally there are certain risks, listed below, associated with our ~~risk factors from those disclosed in~~pending merger with Wilks. See Note 10 – Subsequent Events, above, for a discussion of this proposed transaction.

Risks Related to the Proposed Merger

Failure to complete the pending tender offer and merger could adversely affect our ~~2016 Annual Report on Form 10-K.~~stock price and our future business and operations.

The merger with Wilks is subject to customary closing conditions, including the tender of at least 80% of the outstanding shares of the Company pursuant to the Offer, and the approval of the merger by at least 80% of the outstanding shares of the Company. Neither we nor Wilks can assure you that the merger will occur. In the event that the merger is not consummated, we will be required to pay certain costs related to the merger, including legal, accounting and advisory fees, which may be required to be paid even if the merger is not completed. In the event that the Offer is not completed, or the merger is not consummated, our business, stock price and results of operations could be negatively impacted.

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ITEM 6. EXHIBITS

~~The information required by this Item 6 is set forth in the Index to Exhibits accompanying this Form 10-Q and is hereby incorporated by reference.~~

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~~INDEX TO EXHIBITS~~




Number			Exhibit

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

3.2			Bylaws, as amended February 11, 2015, filed on March 16, 2015 as Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K and incorporated herein by reference.

3.3			Statement of Resolutions Establishing Series of Shares designated Series A Junior Participating Preferred Stock of Dawson Geophysical Company, filed on April 8, 2021 as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K and incorporated herein by reference.

10.1			Second Loan Modification Agreement to Loan and Security Agreement, by and between Dawson Geophysical Company and Dominion Bank, dated September 30, 2021, filed on October 1, 2021 as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K and incorporated herein by reference.

31.1*			Certification of Chief Executive Officer of Dawson Geophysical Company pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.

31.2*			Certification of Chief Financial Officer of Dawson Geophysical Company pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.

32.1*			Certification of Chief Executive Officer of Dawson Geophysical Company pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code.

32.2*			Certification of Chief Financial Officer of Dawson Geophysical Company pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code.

101*			The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2017,~~2021, formatted in Inline XBRL ~~(Extensible~~( Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, (ii) Condensed Consolidated Balance Sheets at September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, (iii) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, (iv) Condensed Consolidated Statements of Stockholders’ Equity for the three and ~~(iv)~~nine months ended September 30, 2021 and 2020, and (v) Notes to Condensed Consolidated Financial Statements.

104*			Cover Page Interactive Data File (formatted in Inline XBRL and included as Exhibit 101).

* Filed herewith.

+	Management contract or compensatory plan or arrangement.

1920

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SIGNATURES

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DAWSON GEOPHYSICAL COMPANY

DATE: November ~~3, 2017~~4, 2021	By:	/s/ Stephen C. Jumper
		Stephen C. Jumper
		Chairman of the Board of Directors, President and Chief Executive Officer


DATE: November ~~3, 2017~~4, 2021	By:	/s/ James K. Brata
		James K. Brata
		Executive Vice President, Chief Financial Officer, Secretary and Treasurer

2021


	September 30,		December 31,
	2017		2016
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	30,503	$	14,624
Short-term investments		12,000		40,250
Accounts receivable, net		25,599		16,031
Current maturities of notes receivable		560		—
Prepaid expenses and other current assets		6,205		4,822
Total current assets		74,867		75,727

Property and equipment, net		95,274		110,917

Notes receivable, net of current maturities		975		—

Intangibles		525		487

Long-term deferred tax assets, net		—		535

Total assets	$	171,641	$	187,666

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	6,272	$	5,617
Accrued liabilities:
Payroll costs and other taxes		1,826		885
Other		4,161		2,983
Deferred revenue		3,644		3,155
Current maturities of notes payable and obligations under capital leases		2,788		2,357
Total current liabilities		18,691		14,997

Long-term liabilities:
Notes payable and obligations under capital leases, net of current maturities		5,829		—
Deferred tax liabilities, net		1,392		146
Other accrued liabilities		169		1,639
Total long-term liabilities		7,390		1,785

Commitments and contingencies

Stockholders’ equity:
Preferred stock-par value $1.00 per share; 4,000,000 shares authorized, none outstanding		—		—
Common stock-par value $0.01 per share; 35,000,000 shares authorized,
21,766,463 and 21,704,851 shares issued, and 21,718,018 and 21,656,406
shares outstanding at September 30, 2017 and December 31, 2016, respectively		217		217
Additional paid-in capital		143,666		142,998
Retained earnings		2,523		29,265
Treasury stock, at cost; 48,445 shares at September 30, 2017 and December 31, 2016		—		—
Accumulated other comprehensive loss, net		(846)		(1,596)
Total stockholders’ equity		145,560		170,884

Total liabilities and stockholders’ equity	$	171,641	$	187,666



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016

Operating revenues	$	45,627	$	28,122	$	118,023	$	103,263
Operating costs:
Operating expenses		36,594		28,132		107,639		94,203
General and administrative		3,445		3,656		12,296		13,247
Depreciation and amortization		9,724		10,591		29,750		33,967
		49,763		42,379		149,685		141,417

Loss from operations		(4,136)		(14,257)		(31,662)		(38,154)

Other income (expense):
Interest income		87		92		230		226
Interest expense		(25)		(71)		(61)		(239)
Other (expense) income		(103)		263		136		1,829
Loss before income tax		(4,177)		(13,973)		(31,357)		(36,338)

Income tax benefit		1,418		1,557		4,635		3,733

Net loss		(2,759)		(12,416)		(26,722)		(32,605)

Other comprehensive income (loss):
Net unrealized income (loss) on foreign exchange rate translation, net		395		(48)		750		422

Comprehensive loss	$	(2,364)	$	(12,464)	$	(25,972)	$	(32,183)

Basic loss per share attributable to common stock	$	(0.13)	$	(0.57)	$	(1.23)	$	(1.51)

Diluted loss per share attributable to common stock	$	(0.13)	$	(0.57)	$	(1.23)	$	(1.51)

Weighted average equivalent common shares outstanding		21,701,662		21,622,349		21,681,474		21,603,065

Weighted average equivalent common shares outstanding - assuming dilution		21,701,662		21,622,349		21,681,474		21,603,065

September 30, 2021

December 31, 2020

Notes payable to finance company for insurance

Aggregate principal amount outstanding

Interest rate