DWSN 10-K & 10-Q changes, risk factors and insider trading

Worldwide political, economic, and military events have contributed to oil and natural gas price volatility and are likely to continue to do so in the future. We are monitoring the military conflict between Russia and Ukraine as well as the related export controls and financial and economic sanctions imposed on certain industry sectors and parties in Russia by the U.S., the U.K., the European Union and others. We are also monitoring the U.S. and Iran conflict and the impact of attacks on shipping in the Middle East, including the Persian Gulf and Red SeaSea, as a result of theongoing unrest in the Middle East. The broader consequences of the Russian-Ukrainian conflictconflict, the U.S. and Iran conflict, and the unrest in the Middle East, which may include further sanctions, embargoes, supply chain disruptions, regional instability and geopolitical shifts, may have adverse effects on global macroeconomic conditions, increase volatility in the price and demand for oil and natural gas, increase exposure to cyberattacks, cause disruptions in global supply chains, increase foreign currency fluctuations, cause constraints or disruption in the capital markets and limit sources of liquidity. We cannot predict the extent of the conflict’s effect on our business and results of operations as well as on the global economy and energy markets.

As of December 31, 2024,2025, Wilks Brothers, LLC (“Wilks”) and its affiliates control approximately 80% of our combined voting power, can elect all of the members of our board of directors and can generally control matters requiring stockholder approval. As a result, we are considered a “controlled company” for the purposes of the Nasdaq listing requirements. As a “controlled company,” we are permitted to, and we may,to opt out of the Nasdaq listing requirements that require (i) a majority of the members of our board of directors to be independent, as defined by Nasdaq rules, (ii) our nominating committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and (iii) our compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. The Nasdaq listing requirements are intended to ensure that directors who meet the independence standards are free of any conflicting interest that could influence their actions as directors. OurTo date, we have availed ourselves of the exemptions regarding the independence of our nominating committee members, and we may avail ourselves of the other permitted exemptions in the future. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of the applicable Nasdaq listing requirements. It is also possible that the interests of Wilks may in some circumstances conflict with our interests and the interests of the holders of our common stock.

We derive a significant amount of our revenues from a relatively small number of oil and gas exploration and development companies and providers of multi-client data libraries. During the twelve months ended December 31, 2024,2025, our two largest clientsclient accounted for approximately 51% of our revenues, and during the twelve months ended December 31, 2024, sales to two clients represented approximately 43% of our revenues. If these clients, or any of our other significant clients,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, experience financial difficulties or for any other reason, our results of operations could be materially adversely affected.

Our revenues, operating results and cash flows can be expected tomay fluctuate from period to period.period, which may make it difficult to forecast our future performance and may result in volatility in our stock price.

Our revenues, operating results and cash flows may fluctuate from period to period.period, making forecasting future performance difficult and resulting in volatility in our stock price. These fluctuations are attributable to a variety of factors, including, without limitation, the level of new business in a particular period, the timing of the initiation, progress or cancellation of significant projects, higher revenues and expenses on our dynamite contracts, and costs we incur to train new crews we may add in the future to meet increased client demand. Fluctuations in our operating results may also be affected by other factors that are outside of our control such as permit delays, weather delays and crew productivity. Oil and natural gas prices have continued to be volatile and have resulted in significant demand fluctuations for our services. There can be no assurance of future oil and gas price levels or stability. Our operations in Canada are also seasonal as a result of the thawing season, and we have historically experienced limited Canadian activity during the second and third quarters of each year. The demand for our services would be adversely affected by a significant reduction in oil and natural gas prices and by climate change legislation or material changes to U.S. energy policy. Because our business has high fixed costs, the negative effect of one or more of these factors could trigger wide variations in our operating revenues, cash flows, EBITDA, margin, and profitability from quarter-to-quarter,quarter to quarter, rendering quarter-to-quarterquarter to quarter comparisons unreliable as an indicator of performance. Due to the factors discussed above, you should not expect sequential growth in our quarterly revenues and profitability.

We have indebtedness from time to time under a credit facilitiesfacility with Equify Financial, a commercialrelated bank,party, and certain of our accounts receivable and aseismic restricted IntraFi Network Deposit accountequipment are pledged as collateral for these obligations. Our ability to borrow may be limited if our accounts receivable decreases.decreases or if Equify Financial is unable or unwilling to extend us credit.

Our common stock is listed on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “DWSN.” However, daily trading volumes for our common stock are, and may continue to be, relatively low compared to other publicly traded securities. In addition, as of December 31, 2024,2025, Wilks and its affiliates own approximately 80% of our common stock, limiting the public market for our common stock, which can lead to increased price volatility and low trading volumes. For example, during 2025 and 2024 our daily trading volume was as low as 0 shares. It may be difficult for you to sell your shares in the public market at any given time at prevailing prices, and the price of our common stock may, therefore, be volatile.

In response to concerns suggesting that emissions of certain gases, commonly referred to as “greenhouse gases” (“GHG”) (including carbon dioxide and methane), may be contributing to global climate change, legislative and regulatory measures to address the concerns are in various phases of discussion or implementation at the national and state levels. ManyIn states,February either2026, individuallythe orTrump throughadministration multi-stateofficially regionalrevoked initiatives,the 2009 EPA "endangerment finding," which declared GHG a threat to public health, stripping federal authority to regulate carbon dioxide and methane emissions from oil and gas wells, tailpipes, smokestacks and other sources that burn fossil fuels under the Clean Air Act. However, environmental groups have alreadyfiled takenlawsuits legal measures intended to reduce GHG emissions, primarily throughagainst the planned development of GHG emission inventories and/or GHG cap and trade programs. Although various climate change legislative measures have periodically been introducedEPA in the U.S.D.C. Congress,Circuit and there has been a wide-ranging policy debate both inchallenging the U.S.rescission and internationally regardingof the impact of these gases and possible means for their regulation, it is not possible at this time to predict whether or when Congress may act on climate change legislation. However, future actionsfinding that requireGHG substantialthreaten reductionspublic in carbon emissions could be costly and difficult to implement.health.

New federal or state laws or regulations focused on GHG emissions or that otherwise seek to address climate change may negatively affect us, our suppliers and our clients. This could cause us to incur additional direct costs in complying with any new environmental regulations, as well as increased indirect costs resulting from our clients, suppliers or both incurring additional compliance costs that get passed on to us. Moreover, passage of climate change legislation, other federal or state legislative or regulatory initiatives, or international agreements that regulate or restrict emissions of GHG may curtail production and demand for fossil fuels such as oil and gas in areas where our clients operate and, thus, adversely affect future demand for our services. Reductions in our revenues or increases in our expenses as a result of climate control initiatives could have adverse effects on our business, financial position, results of operations and cash flows.

Due to public concerns raised regarding potential impacts of hydraulic fracturing on groundwater quality, legislative and regulatory efforts at the federal level and in some states have been initiated to require or make more stringent the permitting and compliance requirements for hydraulic fracturing operations. Several states have adopted more stringent permitting, public disclosure or well construction legislation and/or regulations. ThreeFour states (New York, MarylandMaryland, Washington and Vermont) have banned the use of high-volume hydraulic fracturing. Additionally, the Delaware River Basin Commission adopted a resolution banning high-volume hydraulic fracturing within the Delaware River Basin, which spans parts of Pennsylvania, New York, New Jersey and Delaware. In addition to state laws, some local municipalities have adopted or are considering adopting land use restrictions, such as city ordinances, that may restrict or prohibit the performance of well drilling in general or hydraulic fracturing in particular. There have also been certain governmental reviews that focus on deep shale and other formation completion and production practices, including hydraulic fracturing. Governments may continue to study hydraulic fracturing. We cannot predict the outcome of future studies, but based on the results of these studies to date, federal and state legislatures and agencies may seek to further regulate or even ban hydraulic fracturing activities. These regulatory initiatives could each spur further action toward federal and/or state legislation and regulation of hydraulic fracturing activities. Additional regulation could materially reduce our business opportunities and revenues if our customers decrease their levels of activity in response to such regulation.

Our business has two reportable segments, U.S. operations and Canada operations. Tony Clark, Chief Executive Officer, is our current chief operating decision maker. Mr. Clark reviews the discrete segment financial information on a geographic basis for the U.S. operations and Canada operations. The revenue for both 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, depletiondepreciation and amortization and (iv) (iv) non-recurring and other charges, such as strategic transaction expenses or severance expenses.

Year Ended December 31, 20242025 versus Year Ended December 31, 20232024 U.S. Fee Revenues. AcquisitionFee revenues for the year ended December 31, 2024,2025, were $40.7$46.3 million compared to $49.0$40.7 million for the same period of 2023.2024. The decreaseincrease in revenues for the year ended December 31, 2024, compared to the same period of 2023 was primarily a result of decreasedincreased demand for our services.

Canadian Fee Revenues. AcquisitionFee revenues for the year ended December 31, 2024,2025, were $12.7$15.5 million compared to $12.4$12.7 million for the same period of 2023.2024. The increase in revenues for the year ended December 31, 2024, compared to the same period of 2023 was primarily a result of a slight increase inincreased demand for our services in Canada, and utilization of single node channels in our operations.Canada.

Total Revenues. RevenueRevenues for the year ended December 31.31, 2024,2025, were $74.2$75.6 million compared to $96.8$74.2 million for the same period of 2023. Total revenues included a decrease of $14.7 million in reimbursable revenues.2024.

U.S. Fee Operating Expenses. AcquisitionFee operating expenses for the year ended December 31, 2024,2025, decreasedincreased to $32.8$37.7 million compared to $39.9$32.8 million for the same period of 2023.2024. Acquisition expenses decreasedremained fromapproximately 81%80% of revenues in 20232024 toand 80% of revenues due to cost reduction initiatives throughout the year.2025. The decreaseincrease in operating expenses was due to an overall decreaseincrease in crew production and utilization and to cost reduction initiatives.utilization.

Canadian Fee Operating Expenses. AcquisitionFee operating expenses for the year ended December 31, 2024,2025 decreasedincreased to $9.5$11.1 million compared to $11.6$9.5 million for the same period of 2023.2024. Acquisition expenses decreased from 94%75% of revenues to 75%72% of revenues due to utilization of single node channels in our operations and higher channel count jobs in 2024.2025. The decreaseincrease in operating expenses was mainly due to increased operationaldemand efficienciesfor atour the crew level.services.

General and Administrative Expenses. General and administrative expenses decreased 25%9% to $9.5$9.0 million for the year ended December 31, 2024,2025, compared to $12.6$9.9 million for the same period of 2023.2024. General and administrative expenses in 2025 included $528,000 in strategic transaction costs 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.” The primary factors for the decrease in general and administrative expenses are related to continued cost management and streamlining proceduresprocedures. asGeneral welland asadministrative costexpenses savingsdid relatednot toinclude changesany toseverance expenses for the executiveyear personnelended duringDecember 31, 2025, though we did record $0.5 million of severance expenses for the fourthsame quarterperiod of 2023.2024 in connection with the termination of a portion of our workforce. We anticipate general and administrative expenses to continueremain similar to decrease in 2025 dueduring to2026, continuedexcluding focusadditional onstrategic maintainingtransaction an efficient and cost-effective administrative structure.costs.

Depreciation Expense. Depreciation for the yearyears ended December 31, 2025 and 2024, was $5.7 millionmillion. comparedThe to $8.5 million for the same periodstability of 2023. The decrease inour depreciation expense is a result of limiting capital expenditures to necessary maintenance capital requirements in recent years. Our depreciation expense is expected to remain flat or decline slightlyincrease during 20252026 primarily due to limitedthe asset acquired pursuant to the Equipment Purchase Agreement during the second half of 2025 in addition to our normal maintenance capital expenditures needed to maintain our existing asset base.

Income Tax (expense) benefit. Income tax expense was $7,000$6,000 for the year ended December 31, 2024,2025, compared to income tax benefit of $96,000$7,000 for the same period of 2023.2024. The effective tax rates for the years ended December 31, 2024,2025, and 20232024 were approximately -0.2%-0.3% and 0.8%,-0.2%, respectively. Our effective tax rates differ from the statutory federal rate of 21% for certain items such as state and local taxes, valuation allowances, and non-deductible expenses.

We define Adjusted EBITDA as net income (loss) plus interest expense, interest income, income taxes, depreciationdepreciation, and amortization expenseexpense, 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:

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 sincebecause 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: interest, taxes, and depreciation and amortization.

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,Management believes cash generatedflow from our operations along withoperations, cash reserveson hand and borrowingsamounts fromavailable commercialunder banksour haveRevolving beenCredit Note (defined below) are sufficient to fund ouroperating workingand capitalinvesting requirementscash and,flow torequirements, someas extent,well as our capitalobligations expenditures.under the Geospace Notes.

Year Ended December 31, 20242025 versus Year Ended December 31, 20232024 Net cash provided by operating activities was $14.0 million for the year ended December 31, 2025, and net cash used in operating activities was $1.9 million for the year ended December 31, 2024, and net cash provided by operating activities was $814,000 for the same period of 2023. In 2023, cash provided by operating activities included receipt of $3 million from an employee retention credit under the Coronavirus Aid, Relief, and Economic Security Act (“the CARES Act”).2024. The decreaseincrease in cash provided by operating activities to cash used in operating activities was primarily due to an increase in revenue, improved margins and changes in operating assets and liabilities.

Net cash used in financing activities was $3.7 million for the year ended December 31, 2025, and includes principal payments of $2.7 million on our notes and $934,000 on our finance leases. Net cash used in financing activities was $11.6 million for the year ended December 31, 2024, and includes dividend payment of approximately $9.9 million, principal payments of $947,000 on our notes and $680,000 on our finance leases. Net cash used in financing activities was $4.2 million for the year ended December 31, 2023, and includes principal payments of $896,000 on our notes and $253,000 on our finance leases and outflows of $3.1 million associated with the acquisition of Breckenridge assets.

Risks and Uncertainties. Our ability to be profitable in the future will depend on many factors beyond our control, but primarily on the level of demand for land-based seismic data acquisition services by oil and natural gas exploration and development companies. We incurred net losses of $1.9 million for the year ended December 31, 2025, and $4.1 million for the year ended December 31, 2024, and $12.1 million for the year ended December 31, 2023.2024. As of December 31, 2024,2025, we had $1.4$4.9 million in cash, and a positivenegative working capital balance of $4.6$5.0 million. We believe that our cash flows from operations, and our current financial position are adequate to fund our continued operations and meet our obligations for the next 12 months.

Dominion Letters of Credit. As of December 31, 2024,2025, we have no outstanding letters of credit. Our previously issuedone letter of credit in the amount of $265,000$370,000 wasto notsupport renewedour oninsurance Augustpolicies. 9,The 2024.letter of credit is secured by a certificate of deposit with First Financial Bank.

Other Indebtedness. As of December 31, 2024,2025, we have onetwo notenotes payable to a finance company for various insurance premiums totaling $168,000.$258,000.

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 cashflows expected to be generated by the asset group or the fair of the assets within the asset group exceeds the carrying value of the asset group no impairment would be recognized. During the year ended December 31, 2024, management tested two of its asset groups for impairment through estimating the fair value of certain assets within the asset groups using a market approach or cost approach, as applicable. Because the fair value of these assets collectively exceeded the carrying value of the asset group, no impairment charges were recognized for the year ended December 31, 20242024. orNo 2023.impairment test was required during the year ended December 31, 2025.

Income Taxes. We account for income taxes by recognizing amounts of taxes payable or refundable for the current year, and by using an asset and liability approach in recognizing the amount of deferred tax assets and liabilities for the future tax consequences of events that have been recognized in our financial statements or tax returns. We determine deferred taxes by identifying the types and amounts of existing temporary differences, measuring the total deferred tax asset or liability using the applicable tax rate in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates of deferred tax assets and liabilities is recognized in income in the year of an enacted rate change. The deferred tax asset is reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. Our methodology for recording income taxes requires judgment regarding assumptions and the use of estimates, including determining our annual effective tax rate and the valuation of deferred tax assets, which can create a variance between actual results and estimates and could have a material impact on our provision or benefit for income taxes. Due to recent operating losses and valuation allowances, we may recognize reduced or no tax benefits on future losses on the Consolidated Statements of Operations and Comprehensive Loss. Our effective tax rates differ from the statutory federal rate of 21% for certain items such as state and local taxes, valuation allowances, and non-deductible expenses. The tax years that are open to examination for the U.S. are for years after 2021, for Canada and Texas it is years after 2020.

ThereAs of the date of this report, there have been no material changes in the significant risk factors thatpreviously may affect our business, results of operations or liquidity as describeddisclosed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.

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, includingresults; 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; statements regarding our expectations regarding liquidity; statements regarding the anticipated benefits of our purchased single nodesingle-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 nodesingle-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 transactiontransactions 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 Company may not achieve the anticipated benefits of such investment; risks relating to any potential transaction(s) with our controlling stockholder and/or any of its affiliates, the impact on our stock price of any 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 acquisition transactions, the integration of any such acquisition candidates, the value of those acquisitions to our customers and shareholders, and the financing of such acquisitions; risks related to our indebtedness and compliance with covenants contained in our revolving credit note; the Company’s ability to execute its business strategies and plans for growth; the failure to operationalize the new single nodesingle-node channels in a timely manner or at all; the risk that expected improvements in deployment of the new single-node channels may not result in anticipated operational efficiencies or improved operating and financial performance; disruptions in the global economy, including the Russian-Ukrainian conflict, the U.S. and Iran conflict, and the unrest in the Middle East,East; export controls and financial and economic sanctions imposed on certain industry sectors and parties as a result of the developments and broader consequences of the Russian-Ukrainian conflict, the U.S. and Iran conflict, and the unrest in the Middle EastEast-related related activities,activities; and whether or not a future transaction or other action occurs that causes the Company to be delisted from Nasdaq and no longer be required to make filings with the Securities and Exchange Commission (the “SEC”). The cautionary statements made in this Form 10-Q should be read as applying to all related forward-looking statements wherever they appear in this Form 10-Q. 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. A discussion of these and other factors, including risks and uncertainties, is set forth in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 31, 2026 and any subsequent Quarterly Reports on Form 10-Q filed with the SEC. The Company disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future events or otherwise. A further list and description of risks, uncertainties and assumptions that could cause or contribute to differences in the Company’s future results include the cautionary statements described in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, and in our subsequent periodic filings with the SEC. The Company qualifies all of its forward-looking statements by these cautionary statements.

WeThe hadCompany’s oneseasonal largeCanadian channeloperations crewceased in April 2026 and threeare smallerexpected channelto crews operatingresume in the first quarter in the United States. Our seasonal operations had solid performance in the first quarter, and their operations continued into the secondfourth quarter of 2026. HighThe crewCompany utilizationhas experienced increased bidding activity for larger channel-count projects in the firstCanadian market for the fourth quarter resultedof in improved margins2026 and profitability.into We2027. continueThe Company continues to schedule and bid on larger channelchannel-count count jobsprojects due to our significantits inventory of the new single nodesingle-node channels. Additionally,The weCompany havehas seenalso anexperienced increase inincreased activity related to non-traditional seismic explorationexploration, including geothermal,geothermal Carbonexploration, Capturecarbon Utilizationcapture utilization and Storagestorage (“CCUS”) seismic monitoring, and otherrare-mineral rare minerals.exploration.

As of MarchJune 31,30, 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 $695,000approximately $1.7 million in expenses in the firstsecond quarter of 2026 and approximately $2.4 million in expenses in the six months ended June 30, 2026, which isare included in general and administrative expense in our consolidated statementstatements of operations for the three months ended March 31, 2026.operations.

U.S. Fee Revenues. Fee revenues for the firstsecond quarter of 2026 increased 665%57% to $20.9$13.2 million compared to $2.7$8.4 million for the same period of 2025. The increase was primarily due to an increase in crew production and utilization during the period, including the completion of two large-channel-count projects and the operation of two smaller crews. Fee revenues for the first six months of 2026 increased 206% to $34 million compared to $11.1 million for the same period in 2025. The increase was primarily due to thean purchaseincrease ofin thecrew single node channels.utilization.

Canadian Fee Revenues. Fee revenues for the firstsecond quarter of 2026 decreasedincreased 7%151% to $11.6$0.8 million compared to $12.5$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.

Total Revenues. Revenues for the firstsecond quarter of 2026 were $36.7$17.9 million compared to $16.1$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 $3.4$6.2 million in reimbursable revenues.

U.S. Fee Operating Expenses. Fee operating expenses for the firstsecond quarter of 2026 increased 200%45% to $13.9$9.8 million compared to $4.6$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.

Canadian Fee Operating Expenses. AcquisitionFee operating expenses for the firstsecond quarter of 2026 decreasedincreased 12.6%88% to $5.5$1.6 million compared to $6.3$0.9 million for the same period of 2025. The decreaseincrease was primarily due to anincreased overall decrease in crew production and utilizationactivity during the period.portion of the quarter in which Canadian operations were active. Fee operating expenses for the first six months of 2026 and 2025 were approximately $7.2 million.

General and Administrative Expenses. General and administrative expenses increased during the firstsecond quarter of 2026 compared to the corresponding quarter in 2025, to $2.9$3.7 million from $2$2.3 million. The increase was primarily due to strategic transactionstransaction expenses during the firstsecond 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.

Depreciation and Amortization Expense. Depreciation and amortization expenses for the second quarter and first quartersix months of 2026 and 2025 totaled $2 million and $1.3$4 million, respectively.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 duringstarting thein fourth quarter ofAugust 2025 andthrough first quarter ofJanuary 2026.

Total Operating Costs. Total operating costs for the firstsecond quarter of 2026 were $28.6$20.9 million, representing a 90%71% increase from the same period of 2025. The increase in operating costs for the firstsecond 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.

Interest expense. Interest expense for the second quarter and first quartersix months of 2026 and 2025 totaled $0.5$0.4 million and $0.1$0.9 million, respectively.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.

Income Taxes. Income tax benefitexpense for the firstsecond quarter of 2026 and 2025 was $10,000$15,000, andcompared $3,000,to respectively.an income tax benefit of $7,000 for the second quarter of 2025. These amounts represent effective tax rates of 0.1%approximately -0.4% and 0.3% for the firstsecond quarterquarters of 2026 and 2025, respectively. The Company’s nominal effective tax raterates for the periods above waswere due to the presence of net operating loss carryovers and adjustments to the valuation allowance on deferred tax assets.

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

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, and depreciation and amortization.

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

Our principal sources of cash are amounts earned from the seismic data acquisition services we provide to our clients.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 (defined below) are sufficient to fund operating and investing cash flow requirements, as well as our obligations under the Geospace Notes.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.

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 ofwas $1.8$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 an increasechanges in accountsworking receivable offset by an increase in net income.capital.

Net cash used in investing activities was $1.3$1.5 million for the threesix months ended MarchJune 31,30, 2026.2026, Netcompared cashto provided$0.3 by investing activities was $185,000million for the threesame monthsperiod ended March 31,of 2025. The increase in cash used in investing activities between periods of $1.5 million was primarily due to an increase in cash capital expenditureexpenditures to $1.4$1.7 million for the first threesix months of 2026 compared to capital expenditures of $0$0.7 million for the same period of 2025.

Net cash used in financing activities was $1.7$3.6 million for the threesix months ended MarchJune 31,30, 2026, and was primarily comprised of principal payments of $1.4$3 million and $0.3$0.6 million under our notes payable and finance leases, respectively. Net cash used in financing activities was $0.6$1.5 million for the threesix months ended MarchJune 31,30, 2025, and was primarily comprised of principal payments of $0.4$1.1 million and $0.2$0.4 million under our notes payable and finance leases, respectively.

Capital Expenditures. For the threesix months ended MarchJune 31,30, 2026, we have spent $1.4$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 nodesingle-node channels utilizing vendor financing in the form of the Geospace Notes.

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 threesix months ended MarchJune 31,30, 2026, the Company borrowed and repaid approximately $4.3$6.3 million on this revolving credit note. As of MarchJune 31,30, 20262026, the amount available to draw on this revolving credit note was approximately $4.5$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.

The Company paid cash of approximately $4.8 million upon execution of the Equipment Purchase Agreement, agreed to paypaid approximately $1.2$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 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 MarchJune 31,30, 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 $16.1$14.7 million outstanding at MarchJune 31,30, 2026.

As of MarchJune 31,30, 2026, we have three outstanding short-term notes payable to finance companies for various insurance premiums totaling $260,000.$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.

In addition, we lease certain seismic recording equipment and vehicles under leases classified as finance leases. Our Condensed Consolidated Balance SheetSheets as of MarchJune 31,30, 20262026, and December 31, 2025, include finance leases of $2.6 million and $2.6 million, respectively.

The following tables set forth the aggregate principal amount (in thousands) under our outstanding notes payable and the interest rates as of MarchJune 31,30, 2026, and December 31, 2025:

The aggregate maturities of notes payable as of MarchJune 31,30, 2026, are as follows (in thousands):

The aggregate maturities of finance leases (net of imputed interest) as of MarchJune 31,30, 2026, are as follows (in thousands):

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.

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,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 itsour disclosures.