DAWSON GEOPHYSICAL CO

1. ORGANIZATION AND NATURE OF OPERATIONS

Dawson Geophysical Company, and its consolidated subsidiaries (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 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

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, 2025. The December 31, 2025, balance sheet information was derived from our audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

Significant Accounting Policies

*Principles of Consolidation.*The condensed consolidated financial statements as of June 30, 2026, and for the three and six months ended June 30, 2026, and 2025, include the accounts of the Company and its wholly-owned subsidiaries, Dawson Operating LLC, 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.

Dividends*.* The Company records dividends declared as an addition to accumulated deficit when declaration of such dividends is not subject to restrictions in the jurisdictions in which the Company operates, or in conflict with information in the Company’s bylaws.

Allowance* for Current Expected Credit Losses.*The Company’s allowance for credit losses reflects its current estimate expected to be incurred over the life of the financial instrument and is determined based on a number of factors. Management determines the need for any allowance for credit losses on accounts receivable based on its review of past-due accounts, its past experience of historical write-offs, its current client 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. With the adoption of ASU No. 2016-13 in 2020, the Company made an accounting policy election to write off accrued interest amounts by reversing interest income. For the three and six months ended June 30, 2026, the Company incurredno credit losses. For the three and six months ended June 30, 2025, the Company incurred credit losses of $0 and $177,000, respectively. The Company’s allowance for credit losses was $250,000 at June 30, 2026 and December 31, 2025.

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 in a manner that results in straight-line operating lease cost 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 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. 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 tested for impairment at the asset group level when events or changes in circumstances indicate the carrying value of the asset group may not be recoverable. Recognition of an impairment charge is required if future expected undiscounted net cash flows are insufficient to recover the carrying value of the asset group and the fair value of the asset group is below its carrying value. Depending upon the facts and circumstances, when indicators of asset impairment exist, management will test the asset group for impairment through developing a forecast of future undiscounted cash flows expected to be generated by the asset group or by estimating the fair value of assets within the asset group in lieu of detailed cash flow projections. If either the future undiscounted cash flows expected to be generated by the asset group or the fair value of the assets within the asset group exceeds the carrying value of the asset group no impairment would be recognized. No impairment test was required during the quarter ended June 30, 2026, or the year ended December 31, 2025 andno impairment charges were recognized during those periods.

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 receivers laid out and picked up compared to total receivers 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 revenue recognized exceeds billings, the excess represents an unbilled receivable, which is classified as a contract asset and included in prepaid expenses and other current assets on the condensed consolidated balance sheets. See Note 11, “Deferred Costs and Unbilled Receivables,” for additional information.

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 included in prepaid expenses and 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 certain 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.

Additionally, the Company’s policy includes (i) ignoring the financing component when estimating the transaction price for service contracts completed withinone year, (ii) excluding sales tax collected from the customer when determining the transaction price, and (iii) expensing incremental costs to obtain a customer contract if the amortization period for those costs would otherwise be one year or less. See Note 5 for additional disclosures related to disaggregated revenue.

*Share-based compensation.*We measure and record compensation expense for share-based payment awards to employees and outside directors based on estimated grant date fair values. Grant date fair value is determined by averaging the high and low stock price on the grant date. We recognize compensation costs for awards granted over the requisite service period based on the grant date fair value in fee operating expenses and general and administrative expenses on our consolidated statements of operations. During the three and six months ended June 30, 2026, we granted 4,000 shares to employees with an aggregate grant date fair value of $23,000. During the three and six months ended June 30, 2025, we granted 5,050 shares to employees with an aggregate grant date fair value of $8,000. For the three months ended June 30, 2026, we recognized expense related to restricted stock unit awards of $18,000 and $28,000 in fee operating expenses and general and

administrative expenses, respectively. For the six months ended June 30, 2026, we recognized expense related to restricted stock unit awards of $37,000 and $56,000 in fee operating expenses and general and administrative expenses, respectively. Additionally, we recognize forfeitures of share-based compensation as they occur.

Risks and Uncertainties. The Company’s ability to be profitable in the future will depend on many factors beyond its control, but primarily on the level of demand for land-based seismic data acquisition services by oil and natural gas exploration and development companies. The Company incurred net losses of $3.4 million and $2.3 million for the three months ended June 30, 2026, and 2025, respectively. The Company generated net income of $4.2 million and incurred net loss of $1.4 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, the Company had $5.8 million in cash and a working capital deficit of $2.9 million. We believe that our cash flows from operations and our current financial position are adequate to fund our continued operations.

Recently Issued Accounting Pronouncements

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. The Company is currently evaluating the impact of this standard on its disclosures.

In July 2025, the FASB issued ASU 2025-05,Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU introduces a practical expedient to simplify the application of Topic 326, Financial Instruments - Credit Losses, to current accounts receivable and current contract assets arising from revenue transactions accounted for under Topic 606, Revenue from Contracts with Customers. This ASU was implemented January 1, 2026, and did not have a material impact on our disclosures.

In December 2025, the FASB issued ASU 2025-11,Interim Reporting (Topic 270): Narrow-Scope Improvements. This ASU intends to improve the guidance for interim reporting and clarify when that guidance is applicable. ASU 2025-11 provides a comprehensive list of required disclosures and also requires entities to disclose events since the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025-11 on its financial statements and related disclosures.

3**. EQUIPMENT PURCHASE AGREEMENT**

In August 2025, Dawson Operating LLC (“Dawson Operating”), a wholly-owned subsidiary of Dawson Geophysical Company, entered into an equipment purchase agreement with GTC, Inc. (“GTC”), a wholly-owned subsidiary of Geospace Technologies Corporation (“Geospace”), pursuant to which, among other things, Dawson Operating agreed to acquire new single point node channels from GTC for an aggregate purchase price of approximately $24.2 million (the “Equipment Purchase Agreement”) subject to the terms and conditions thereof. 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 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.

During the six months ended June 30, 2026, we paid the remaining cash payment of $0.9 million and entered into the final Geospace note for $2.7 million. As of June 30, 2026, the Company has taken delivery of all the contracted equipment and issuedsix Geospace Notes with an aggregate principal of approximately $18.2 million, with $14.7 million outstanding at June 30, 2026.

4**. FAIR VALUE OF FINANCIAL INSTRUMENTS**

At June 30, 2026 and December 31, 2025, the Company’s financial instruments included cash and cash equivalents, short-term investments, accounts receivable, other current assets, accounts payable, other current liabilities, notes payable, finance leases and operating lease liabilities. Due to the short-term maturities of cash and cash equivalents, short-term investments, 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 payable approximate their fair value based on comparisons with the prevailing market interest rate. The fair values of the Company’s notes payable are level 2 measurements in the fair value hierarchy.

5**. OPERATING SEGMENTS**

The Company’s chief operating decision maker (President and Chief Executive Officer) reviews the discrete segment financial information on a geographic basis for the United States (“USA”) operations and Canada (“CA”) operations. As a result, our business hastwo reportable segments, USA Operations and Canada Operations. The revenue for both of the Company’s segments is generated by the same services, which utilize the same type of equipment and personnel. The performance of our segments is evaluated primarily on Adjusted EBITDA. We define Adjusted EBITDA as our net income (loss), before (i) interest expense, net, (ii) income tax expense or benefit, (iii) depreciation and amortization and (iv) non-recurring and other charges, such as strategic transaction expenses or severance expenses.

A portion of the management charges incurred by the U.S. segment were allocated to the Canadian segment based upon an activity level determined to be appropriate by management. These charges totaled approximately $70,000 and $55,000 for the three months ended June 30, 2026 and 2025, respectively and approximately $208,000 and $215,000 for the six months ended June 30, 2026 and 2025, respectively.

The following tables present the Company’s income statements by operating segment (in thousands):

The following tables present the Company’s total assets, net property and equipment, capital expenditures and operating right of use assets disaggregated by operating segment (in thousands):

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

6**. DEBT**

Equify Revolving Credit Note (related party)

On October 31, 2025, Dawson Geophysical Company (the “Company”) and Dawson Operating LLC, a Texas limited liability company and a wholly owned subsidiary of the Company (“Dawson Operating” and together with the Company, the “Borrowers”), entered into a Revolving Credit Note (the “Revolving Credit Note”) in favor of Equify Financial, as lender (the “Lender”). Dan Wilks and Farris Wilks, together with certain of their affiliates, collectively hold a controlling interest in the Company and in Equify.

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 inthirty-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%.

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 and six months ended June 30, 2026, the Company borrowed and repaid approximately $2.0 million and $6.3 million, respectively, under the Revolving Credit Note. As of June 30, 2026, the amount available to draw under the Revolving Credit Note was approximately $4.1 million, and there wereno amounts outstanding. See Note 11 for additional information regarding related-party interest expense associated with the Revolving Credit Note. The Borrowers may prepay up to 75% of the then outstanding principal and accrued but unpaid interest at any time without a prepayment fee.

The obligations under the Revolving Credit Note are secured by a lien on the Company’s vibrator energy source vehicles, pursuant to a Security Agreement by and between the Company and Equify, dated as of October 31, 2025.

Letters of Credit

As of June 30, 2026, the Company hasone letter of credit in the amount of $370,000 to support our insurance policies. The letter of credit is secured by a certificate of deposit with First Financial Bank.

Other Indebtedness

As of June 30, 2026, the Company hassix Geospace Notes payable related to equipment purchases discussed in Note 3, totaling $14.7 million. As of June 30, 2026, the Company hasthree notes payable to finance companies for various insurance premiums totaling $131,000.

In addition, the Company leases certain seismic recording equipment and vehicles under leases classified as finance leases. The Company’s Consolidated Balance Sheets as of June 30, 2026, and December 31, 2025, include finance lease liabilities of $2.6 million and $2.6 million, respectively.

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 June 30, 2026, and December 31, 2025:

The aggregate maturities of notes payable as of June 30, 2026, are as follows (in thousands):

The aggregate maturities of finance leases (net of imputed interest) as of June 30, 2026, are as follows (in thousands):

Interest rates on these leases range from 4.86% to 13.33%.

7. 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 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 and Plano, Texas,

and Calgary, Alberta. There have been no material changes to our other leases since the Company’s most recent Annual Report on Form 10-K that was filed with the SEC on March 31, 2026.

Maturities of lease liabilities as of June 30, 2026, are as follows (in thousands):

8**. 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.

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.

9**. NET INCOME PER SHARE**

Basic income per share is computed by dividing the net income by the weighted average shares outstanding. Diluted income per share is computed by dividing the net income by the weighted average diluted shares outstanding.

The computation of basic and diluted income per share (in thousands, except share and per share data) was as follows:

The Company had a net loss for the three months ended June 30, 2026, and 2025, and for the six months ended June 30, 2025. As a result, all stock options, restricted stock unit awards and restricted stock awards were anti-dilutive and excluded from weighted average shares used in determining the diluted loss per share of common stock for those periods.

The following weighted average numbers of stock options, restricted stock unit awards and restricted stock awards have been excluded from the calculation of diluted loss per share of common stock, as their effect would have been anti-dilutive for the three and six months ended June 30, 2026 and 2025.

10**. INCOME TAXES**

For the three and six months ended June 30, 2026, the Company’s effective tax rates were -0.4% and 0.6%, respectively and for three and six months ended June 30, 2025, the Company’s effective tax rates were 0.3%. 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.

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 an extended amount of time. Such objective evidence limits the ability to consider other subjective evidence, such as projections for taxable earnings.

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 allowance and additional state valuation allowances were maintained during the three and six months ended June 30, 2026, and 2025. 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.

11**. SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION**

Deferred Revenue

Following is a summary of balances of and changes in deferred revenue (in thousands):

Deferred Costs and unbilled receivables

Contract assets, which include unbilled receivables and deferred costs, are included in prepaid expenses and other current assets on the condensed consolidated balance sheets. Following is a summary of balances of and changes in contract assets, which include unbilled receivables and deferred costs (in thousands):

Accounts Receivable

Following is a summary of balances of accounts receivable (in thousands):

Related Party Transactions

For the three and six months ended June 30, 2026, the Company incurred related-party expenses totaling approximately $23,700 and $109,500, respectively. These expenses represent charges by various companies under common control with Wilks Brothers, LLC, the holder of approximately 80% of the Company’s outstanding common stock. Of the approximately $109,500 incurred during the six months ended June 30, 2026, $8,500 related to customer entertainment expenses, with the remainder consisting of interest charges related to the Company’s Equify revolving credit note, as further discussed in Note 6. As of June 30, 2026, the Company hadno outstanding related-party accounts payable.

For the three and six months ended June 30, 2025, the Company incurred related-party expenses totaling approximately $21,000 and $95,000. All transactions consisted of trucking charges.