DAWSON GEOPHYSICAL CO

Previous wording

channels; and statements regarding any potential transaction(s) with our controlling stockholder and any of its affiliates. In some cases, you can identify forward-looking statements by terms such as “aim,” “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “continues,” “could,” “intends,” “goals,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts” or “potential” or the negative of these terms or other similar expressions. Such forward-looking statements are based on the beliefs of our 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 factors include, but are not limited to, risks relating to the Company’s ability to execute its business strategies and plans for growth; the efficacy of the purchased single node channels; the failure to operationalize the acquired equipment in a timely manner or at all; risks associated with the Company’s ability to finance the transaction contemplated by the Equipment Purchase Agreement; risks relating to any potential transaction(s) with our controlling stockholder and any of its affiliates, the impact on our stock price of such potential transaction(s), our ability to consummate any such transaction, and our ability to achieve the anticipated benefits of any such potential transaction(s); our status as a controlled public company, which exempts us from certain corporate governance requirements; the limited market for our common stock; the impact of general economic, industry, market or political conditions, including tariffs; 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 and markets; changes in economic conditions; surplus 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 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; industry competition; external factors affecting the Company’s crews such as weather interruptions and inability to obtain land access rights of way; whether the Company enters into turnkey or day rate contracts; crew productivity; risks that the Company’s cash reserves, liquidity or capital resources may be insufficient; risks associated with the identification of suitable acquisition candidates and the successful, efficient execution of acquisi…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q are forward-looking statements, including without limitation statements regarding our forecasts, estimates or other expectations regarding future events, operations or financial results; statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding potential technological advancements and their potential impact on demand for the Company’s services; our financial position, business strategy, and the plans and objectives of our management for future operations; our expectations regarding liquidity; the anticipated benefits of our purchased single-node channels; and our ability to identify areas of improvement in the deployment of the new single-node channels and the expected operational efficiencies resulting therefrom; statements regarding the Company’s investment in compute power and the anticipated benefits to be derived therefrom for the Company and its customers; statements regarding our financial performance and our ability to capitalize on current market opportunities; and statements regarding any potential transaction(s) with our controlling stockholder and/or any of its affiliates. In some cases, you can identify forward-looking statements by terms such as “aim,” “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “continues,” “could,” “intends,” “goals,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts” or “potential” or the negative of these terms or other similar expressions. These forward-looking statements speak only as of the date of filing of this Form 10-Q and, except as required by applicable law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of any new information, future events or otherwise. Such forward-looking statements are based on the beliefs of our 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 factors include, but are not limited to, risks relating to the Company’s ability to execute its business strategies and plans for growth; the efficacy of the purchased single-node channels; the failure to operationalize the acquired equipment in a timely manner or at all; risks associated with the Company’s ability to finance the transactions contemplated by the purchase agreement to acquire the single-node channels (the “Equipment Purchase Agreement”); risks relating to the Company’s investment in compute power, including risks that the Compan…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

As of March 31, 2026, Wilks Brothers, LLC (“Wilks”) and its affiliates control approximately 80% of our common stock. We have been in discussion with Wilks and certain of its affiliates with respect to one or more transactions involving assets owned by Wilks and/or certain of its affiliates, which may include, among other things, asset contributions or sales, a business combination transaction or other similar transactions. In connection with these discussions, we incurred $695,000 in expenses in the first quarter of 2026, which is included in general and administrative expense in our consolidated statement of operations for the three months ended March 31, 2026.

Current wording

As of June 30, 2026, Wilks Brothers, LLC (“Wilks”) and its affiliates control approximately 80% of our common stock. We have been in discussion with Wilks and certain of its affiliates with respect to one or more transactions involving assets owned by Wilks and/or certain of its affiliates, which may include, among other things, asset contributions or sales, a business combination transaction or other similar transactions. In connection with these discussions, we incurred approximately $1.7 million in expenses in the second quarter of 2026 and

Previous wording

*Canadian Fee Revenues.*Fee revenues for the first quarter of 2026 decreased 7% to $11.6 million compared to $12.5 million for the same period of 2025. The decrease was primarily due to a decrease in crew utilization.

Current wording

*Canadian Fee Revenues.*Fee revenues for the second quarter of 2026 increased 151% to $0.8 million compared to $0.3 million for the same period of 2025. The increase was primarily due to increased activity during the portion of the quarter in which Canadian operations were active. Canadian seasonal operations ceased in April 2026. Fee revenues for the first six months of 2026 decreased 3% to $12.5 million compared to $12.9 million for the same period in 2025. The decrease was primarily due to a decrease in crew utilization.

Previous wording

*Total Revenues.*Revenues for the first quarter of 2026 were $36.7 million compared to $16.1 million for the same period of 2025. Total revenues included an increase of $3.4 million in reimbursable revenues.

Current wording

*Total Revenues.*Revenues for the second quarter of 2026 were $17.9 million compared to $9.9 million for the same period of 2025. Total revenues included reimbursable revenues of $3.9 million and $1.1 million for the second quarters of 2026 and 2025, respectively. Revenues for the first six months of 2026 were $54.6 million compared to $25.9 million for the same period of 2025. Total revenues included an increase of $6.2 million in reimbursable revenues.

Previous wording

*U.S. Fee Operating Expenses.*Fee operating expenses for the first quarter of 2026 increased 200% to $13.9 million compared to $4.6 million for the same period of 2025. The increase was primarily due to an overall increase in crew production and utilization during the period.

Current wording

*U.S. Fee Operating Expenses.*Fee operating expenses for the second quarter of 2026 increased 45% to $9.8 million compared to $6.7 million for the same period of 2025. The increase was primarily due to an overall increase in crew production and utilization during the period. Fee operating expenses for the first six months of 2026 increased 108% to $23.7 million from $11.4 million for the same period of 2025. The increase was primarily due to increased crew utilization.

Previous wording

General and Administrative Expenses. General and administrative expenses increased during the first quarter of 2026 compared to the corresponding quarter in 2025, to $2.9 million from $2 million. The increase was primarily due to strategic transactions expenses during the first quarter of 2026 related to a potential transaction(s) with our largest shareholder, Wilks Brothers, LLC, and/or any of its affiliates, as described above under “Discussions with Controlling Stockholder.”

Current wording

General and Administrative Expenses. General and administrative expenses increased during the second quarter of 2026 compared to the corresponding quarter in 2025, to $3.7 million from $2.3 million. The increase was primarily due to strategic transaction expenses during the second quarter of 2026 related to a potential transaction(s) with our largest shareholder, Wilks Brothers, LLC, and/or any of its affiliates, as described above under “Discussions with Controlling Stockholder.” During the first six months of 2026 general and administrative expenses increased 52% to $6.6 million compared to $4.3 million for the same period of 2025. The increase was due to $2.4 million of strategic transaction expenses during the six months ended June 30, 2026.

Previous wording

Depreciation and Amortization Expense. Depreciation and amortization expenses for the first quarter of 2026 and 2025 totaled $2 million and $1.3 million, respectively. Depreciation expenses increased in 2026 compared to 2025 as a result of purchases of new recording equipment during the fourth quarter of 2025 and first quarter of 2026.

Current wording

Depreciation and Amortization Expense. Depreciation and amortization expenses for the second quarter and first six months of 2026 totaled $2 million and $4 million, respectively, compared to $1.2 million and $2.4 million for the same periods in 2025. Depreciation expenses increased in 2026 compared to 2025 as a result of purchases of new recording equipment starting in August 2025 through January 2026.

Previous wording

Total Operating Costs. Total operating costs for the first quarter of 2026 were $28.6 million, representing a 90% increase from the same period of 2025. The increase in operating costs for the first quarter of 2026 compared to 2025 was primarily due to the factors described above.

Current wording

Total Operating Costs. Total operating costs for the second quarter of 2026 were $20.9 million, representing a 71% increase from the same period of 2025. The increase in operating costs for the second quarter of 2026 compared to 2025 was primarily due to the factors described above. The operating costs for the first six months of 2026 were $49.5 million, representing an 82% increase from the same period of 2025. The increase in operating costs for the second quarter and first six months of 2026 compared to 2025 was primarily due to the factors described above.

Previous wording

*Interest expense.*Interest expense for the first quarter of 2026 and 2025 totaled $0.5 million and $0.1 million, respectively. The increase in interest expenses is primarily due to the additional interest expense on the Geospace Notes.

Current wording

*Interest expense.*Interest expense for the second quarter and first six months of 2026 totaled $0.4 million and $0.9 million, respectively, compared to $58,000 and $134,000 for the same periods in 2025. The increase in interest expenses is primarily due to the additional interest expense on the Geospace Notes.

Previous wording

Income Taxes. Income tax benefit for the first quarter of 2026 and 2025 was $10,000 and $3,000, respectively. These amounts represent effective tax rates of 0.1% and 0.3% for the first quarter of 2026 and 2025, respectively. The Company’s nominal effective tax rate for the periods above was due to the presence of net operating loss carryovers and adjustments to the valuation allowance on deferred tax assets.

Current wording

Income Taxes. Income tax expense for the second quarter of 2026 was $15,000, compared to an income tax benefit of $7,000 for the second quarter of 2025. These amounts represent effective tax rates of approximately -0.4% and 0.3% for the second quarters of 2026 and 2025, respectively. The Company’s nominal effective tax rates for the periods above were due to the presence of net operating loss carryovers and adjustments to the valuation allowance on deferred tax assets.

Previous wording

We define Adjusted EBITDA as net income (loss) plus interest expense, interest income, income taxes, depreciation, and amortization expense, and non-recurring and other charges, such as strategic transaction expenses or severance expenses. Our management uses Adjusted EBITDA as a supplemental financial measure to assess:

Current wording

We define Adjusted EBITDA as net income (loss) plus interest expense (income), net; income tax expense (benefit); depreciation and amortization; and other charges that we believe are not indicative of our core operating performance, such as strategic transaction costs. Our management uses Adjusted EBITDA as a supplemental financial measure to assess:

Previous wording

We also understand that such data are used by investors to assess our performance. However, the term Adjusted EBITDA is not defined under generally accepted accounting principles (“GAAP”), and Adjusted EBITDA is not a measure of operating income or operating performance presented in accordance with GAAP. When assessing our operating performance, 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 Adjusted EBITDA may not be comparable to Adjusted EBITDA or similarly titled measures utilized by other companies because other companies may not calculate Adjusted EBITDA in the same manner as us. Further, the results presented by Adjusted EBITDA cannot be achieved without incurring the costs that the measure excludes, such as interest, taxes, and depreciation and amortization.

Current wording

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

Previous wording

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

Current wording

The reconciliation of our Adjusted EBITDA to our net (loss) income, which is the most directly comparable GAAP operating performance measure, and net cash provided by (used in) operating activities, which is the most directly comparable GAAP liquidity measure, are provided in the following tables (in thousands):

Previous wording

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. Management believes cash flow from operations, cash on hand and amounts available under our Revolving Credit Note (defined below) are sufficient to fund operating and investing cash flow requirements, as well as our obligations under the Geospace Notes.

Current wording

Our principal sources of cash are amounts earned from the seismic data acquisition services we provide to our clients and our Revolving Credit Note (defined below). 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. Management believes cash flow from operations, cash on hand and amounts available under our Revolving Credit Note are sufficient to fund operating and investing cash flow requirements, as well as our obligations under the Geospace Notes (defined below), our other indebtedness, and any continued strategic transaction expenses, for at least the next twelve months from the date of the filing of this report.

Previous wording

Cash Flows. Net cash used in operating activities was $0.5 million for the three months ended March 31, 2026, compared to net cash provided by operating activities of $1.8 million for the same period of 2025. This decrease was primarily due to an increase in accounts receivable offset by an increase in net income.

Current wording

Cash Flows. Net cash provided by operating activities was $6.0 million for the six months ended June 30, 2026, compared to $16.6 million for the same period of 2025. This decrease was primarily due to changes in working capital.

Previous wording

Net cash used in investing activities was $1.3 million for the three months ended March 31, 2026. Net cash provided by investing activities was $185,000 for the three months ended March 31, 2025. The increase in cash used in investing activities between periods of $1.5 million was primarily due to an increase in cash capital expenditure to $1.4 million for the first three months of 2026 compared to capital expenditures of $0 for the same period of 2025.

Current wording

Net cash used in investing activities was $1.5 million for the six months ended June 30, 2026, compared to $0.3 million for the same period of 2025. The increase in cash used in investing activities was primarily due to an increase in cash capital expenditures to $1.7 million for the first six months of 2026 compared to capital expenditures of $0.7 million for the same period of 2025.

Previous wording

Net cash used in financing activities was $1.7 million for the three months ended March 31, 2026, and was primarily comprised of principal payments of $1.4 million and $0.3 million under our notes payable and finance leases, respectively. Net cash used in financing activities was $0.6 million for the three months ended March 31, 2025, and was primarily comprised of principal payments of $0.4 million and $0.2 million under our notes payable and finance leases, respectively.

Current wording

Net cash used in financing activities was $3.6 million for the six months ended June 30, 2026, and was primarily comprised of principal payments of $3 million and $0.6 million under our notes payable and finance leases, respectively. Net cash used in financing activities was $1.5 million for the six months ended June 30, 2025, and was primarily comprised of principal payments of $1.1 million and $0.4 million under our notes payable and finance leases, respectively.

Previous wording

Capital Expenditures. For the three months ended March 31, 2026, we have spent $1.4 million in cash on capital expenditures, primarily for new node channels and rolling stock and maintenance capital requirements. Historically, we have funded most of our capital expenditures through cash flow from operations, cash reserves, equipment term loans and finance leases. Under the Purchase Agreement, we are partially funding our purchase of new single node channels utilizing vendor financing in the form of the Geospace Notes.

Current wording

Capital Expenditures. For the six months ended June 30, 2026, we have spent $1.7 million in cash on capital expenditures, primarily for new node channels and rolling stock and maintenance capital requirements. Historically, we have funded most of our capital expenditures through cash flow from operations, cash reserves, equipment term loans and finance leases. Under the Equipment Purchase Agreement, we are partially funding our purchase of new single-node channels utilizing vendor financing in the form of Geospace Notes.

Previous wording

Pursuant to the Revolving Credit Note, the Borrowers, jointly and severally, may, from time to time until November 20, 2028, request loans from the Lender for up to an aggregate principal amount of $5,035,032. The loans outstanding under the Revolving Credit Note are payable by the Borrowers in thirty-six (36) monthly installments of principal in the amount of $139,862, together with all accrued and unpaid interest on the outstanding principal balance thereunder, commencing on December 20, 2025, and continuing thereafter until the maturity date. The interest rate applicable to loans outstanding under the Revolving Credit Note is a rate per annum equal to 13%.

Current wording

Pursuant to the Revolving Credit Note, the Borrowers, jointly and severally, may, from time to time until November 20, 2028, request loans from the Lender for up to an aggregate principal amount of $5,035,032. The loans outstanding under the Revolving Credit Note are payable by the Borrowers in thirty-six (36) monthly installments of principal in the amount of $139,862, together with all accrued and unpaid interest on the outstanding principal balance thereunder, commencing on December 20, 2025, and continuing thereafter until the

Previous wording

The maximum borrowing limit under the Revolving Credit Note is initially $5,035,032, and such amount is reduced by $139,862 on each monthly payment date. During the three months ended March 31, 2026, the Company borrowed and repaid approximately $4.3 million on this revolving credit note. As of March 31, 2026 the amount available to draw on this revolving credit note was approximately $4.5 million, and there were no amounts outstanding. The Borrowers may prepay up to 75% of the then outstanding principal and accrued but unpaid interest at any time without a prepayment fee.

Current wording

The maximum borrowing limit under the Revolving Credit Note is initially $5,035,032, and such amount is reduced by $139,862 on each monthly payment date. During the six months ended June 30, 2026, the Company borrowed and repaid approximately $6.3 million on this revolving credit note. As of June 30, 2026, the amount available to draw on this revolving credit note was approximately $4.1 million, and there were no amounts outstanding. The Borrowers may prepay up to 75% of the then outstanding principal and accrued but unpaid interest at any time without a prepayment fee.

Previous wording

The Company paid cash of approximately $4.8 million upon execution of the Equipment Purchase Agreement, agreed to pay approximately $1.2 million in cash upon final delivery, and agreed to finance approximately $18.2 million through separate promissory notes to be issued in connection with each delivery of equipment (each, a “Geospace Note” and collectively, the “Geospace Notes”). Each Geospace Note is payable by Dawson Geophysical Company and Dawson Operating, jointly and severally, to GTC. The Geospace Notes will each have a term of 36 months, bear a fixed interest rate of 8.75% annually and may be prepaid in whole or in part at any time without penalty. As of March 31, 2026, the Company has taken delivery of all contracted equipment and issued six Geospace Notes with an aggregate principal of approximately $18.2 million, with $16.1 million outstanding at March 31, 2026.

Current wording

The Company paid cash of approximately $4.8 million upon execution of the Equipment Purchase Agreement, paid approximately $0.9 million in cash upon final delivery, and agreed to finance approximately $18.2 million through separate promissory notes to be issued in connection with each delivery of equipment (each, a “Geospace Note” and collectively, the “Geospace Notes”). Each Geospace Note is payable by Dawson Geophysical Company and Dawson Operating, jointly and severally, to GTC. The Geospace Notes each have a term of 36 months, bear a fixed interest rate of 8.75% annually and may be prepaid in whole or in part at any time without penalty. As of June 30, 2026, the Company has taken delivery of all contracted equipment and issued six Geospace Notes with an aggregate principal of approximately $18.2 million, with $14.7 million outstanding at June 30, 2026.

Previous wording

As of March 31, 2026, we have three outstanding short-term notes payable to finance companies for various insurance premiums totaling $260,000. As of December 31, 2025, we had one outstanding short-term note payable to a finance company for various insurance premiums totaling $258,000.

Current wording

As of June 30, 2026, we have three outstanding short-term notes payable to finance companies for various insurance premiums totaling $131,000. As of December 31, 2025, we had one outstanding short-term note payable to a finance company for various insurance premiums totaling $258,000.

Previous wording

In addition, we lease certain seismic recording equipment and vehicles under leases classified as finance leases. Our Condensed Consolidated Balance Sheet as of March 31, 2026 and December 31, 2025, include finance leases of $2.6 million and $2.6 million, respectively.

Current wording

In addition, we lease certain seismic recording equipment and vehicles under leases classified as finance leases. Our Condensed Consolidated Balance Sheets as of June 30, 2026, and December 31, 2025, include finance leases of $2.6 million and $2.6 million, respectively.

Previous wording

We believe that our capital resources, including our cash on hand, short-term investments, funds available from our Revolving Credit Note and cash flow from operations will be adequate to meet our current operational needs, including any continued strategic transaction expenses. We believe that we will be able to finance our 2026 capital expenditures through cash flow from operations, borrowings from commercial lenders and the Geospace Notes. However, our ability to satisfy working capital requirements, meet debt repayment obligations,

Current wording

We believe that our capital resources, including our cash on hand, short-term investments, funds available from our Revolving Credit Note and cash flow from operations will be adequate to meet our current operational needs, including any continued strategic transaction expenses. We believe that we will be able to finance our 2026 capital expenditures through cash flow from operations, borrowings under our Revolving Credit Note or from other commercial lenders and the Geospace Notes. 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 customers, and/or potential customers, to promptly pay amounts owing to us under their service contracts with us.

Previous wording

In November 2024, the FASB issued ASU No. 2024-03,Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, ASU 2024-03 enhances the disclosures required for certain expense captions in the Company's annual and interim consolidated financial statements. This ASU is effective prospectively or retrospectively for fiscal years beginning after December 15, 2026, and for interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of this standard on its disclosures.

Current wording

In November 2024, the FASB issued ASU No. 2024-03,Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 enhances the disclosures required for certain expense captions in the Company's annual and interim consolidated financial statements. This ASU is effective prospectively or retrospectively for fiscal years beginning after December 15, 2026, and for interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of this standard on our disclosures.