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What changed in DAWSON GEOPHYSICAL CO's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of DAWSON GEOPHYSICAL CO's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+144 added−143 removedSource: 10-K (2024-04-01) vs 10-K (2023-03-13)

Top changes in DAWSON GEOPHYSICAL CO's 2023 10-K

144 paragraphs added · 143 removed · 110 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe results of seismic surveys conducted for a client belong to that client. It is also our policy that none of our officers, directors or employees actively participate in oil and natural gas ventures. All of our clients’ information is maintained in the strictest confidence. Domestic and Foreign Operations We derive our revenue from domestic and foreign sources.
Biggest changeThe results of seismic surveys conducted for a client belong to that client. All of our clients’ information is maintained in the strictest confidence. Domestic and Foreign Operations We derive revenue from the U.S. and Canadian markets. We consider these two geographical areas as segments for reporting purposes.
Due to the increase in demand for higher channel counts, we continued in recent years to make investments in additional channels. In response to project-based channel requirements, we routinely deploy a variable number of channels on a variable number of crews in an effort to maximize asset utilization and meet client needs.
Due to the increase in demand for higher channel counts, in recent years we continued to make investments in additional channels. In response to project-based channel requirements, we routinely deploy a variable number of channels on a variable number of crews in an effort to maximize asset utilization and meet client needs.
Equipment and Crews In recent years, we have experienced continued increases in recording channel capacity and vibrator energy source units on a per crew or project basis. This increase in channel count and energy source unit demand is driven by client needs and is necessary in order to produce higher resolution images, increase crew efficiencies and undertake larger scale projects.
Equipment and Crews In recent years, we have experienced continued increases in recording channel capacity and vibrator energy source units on a per crew or project basis. This increase in channel count and energy source unit demand is driven by client needs and is necessary to produce higher resolution images, increase crew efficiencies and undertake larger scale projects.
Contracts for such services generally are awarded on the basis of price quotations, crew experience, and the availability of crews to perform in a timely manner, although factors other than price, such as crew safety, performance history, and technological and operational expertise, are often determinative. Our primary competition includes SAE, ECHO, Breckenridge, and Paragon.
Contracts for such services generally are awarded on the basis of price quotations, crew experience, and the availability of crews to perform in a timely manner, although factors other than price, such as crew safety, performance history, and technological and operational expertise, are often determinative. Our primary competition includes SAE, ECHO, and Paragon.
We believe we will realize the benefit of increased channel counts and flexibility of deployment through increased crew efficiencies, higher revenues and margins with improved conditions. In recent years, we have purchased or leased a significant number of cableless recording channels. We utilize this equipment primarily as stand-alone recording systems.
We believe we will realize the benefit of increased channel counts and flexibility of deployment through increased crew efficiencies, higher revenues and improved margins. In recent years, we have purchased or leased a significant number of cableless recording channels. We utilize this equipment primarily as stand-alone recording systems.
Clients Our services are marketed by supervisory and executive personnel who contact clients to determine geophysical needs and respond to client inquiries regarding the availability of crews or processing schedules. These contacts are based principally upon professional relationships developed over a number of years.
Clients Our services are marketed by supervisory and executive personnel who contact clients to determine geophysical needs and respond to client inquiries regarding the availability of crews or processing schedules. These contacts are based principally on professional relationships developed over a number of years.
Over recent years, the size of our surveys and density of recording channels and vibrator energy source units has increased, resulting in an increase in required recording channels and energy source units to perform such surveys.
Over recent years, the size of our surveys and density of recording channels and vibrator energy source units have increased, resulting in an increase in required recording channels and energy source units to perform such surveys.
The recording channels consist of 111,000 single-channel GSR/GSX boxes, 150,000 channels of GSR Multi-channel boxes and a 24,000 channel INOVA Hawk System. Each crew consists of approximately 40 to 100 technicians with associated vehicles, geophones, a seismic recording system, energy sources, cables, and a variety of other equipment.
The recording channels consist of 117,000 single-channel GSR/GSX boxes, 186,000 channels of GSR Multi-channel boxes and a 24,000 channel INOVA Hawk System. Each crew consists of approximately 40 to 100 technicians with associated vehicles, geophones, a seismic recording system, energy sources, cables, and a variety of other equipment.
Currently, as in recent years, most of our projects are operated under turnkey agreements. Turnkey agreements generally provide us more profit potential, but involve more risks because of the potential of crew downtime or operational delays. We attempt to negotiate on a project-by-project basis some level of weather downtime protection within the turnkey 5 Table of Contents agreements.
Currently, as in recent years, most of our projects are operated under turnkey agreements. Turnkey agreements generally provide us more profit potential, but involve more risk because of the potential of crew downtime or operational delays. We attempt to negotiate on a project-by-project basis some level of weather downtime protection within the turnkey agreements.
We acquire and process 2-D, 3-D and multi-component seismic data for our clients, ranging from major oil and gas companies to independent oil and gas operators as well as providers of multi-client data libraries. Our principal business office is located at 508 West Wall, Suite 800, Midland, Texas 79701 (Telephone: 432-684-3000), and our internet address is www.dawson3d.com.
We acquire and process 2-D, 3-D and multi-component seismic data for our clients, ranging from major oil and gas companies to independent oil and gas operators, providers of multi-client data libraries and carbon capture sequestration projects. Our principal business office is located at 508 West Wall, Suite 800, Midland, Texas 79701 (Telephone: 432-684-3000), and our internet address is www.dawson3d.com.
(“SAE”), Echo Seismic Ltd. (“ECHO”), Breckenridge Geophysical, LLC. (“Breckenridge”), and Paragon Geophysical Services, Inc. (“Paragon”), along with other smaller companies which generally run one or two small channel count seismic crews and often specialize in specific regions or types of operations.
(“SAE”), Echo Seismic Ltd. (“ECHO”), and Paragon Geophysical Services, Inc. (“Paragon”), along with other smaller companies that generally run one or two small channel count seismic crews and often specialize in specific regions or types of operations.
Microseismic monitoring is used by clients who use hydraulic fracturing to extract hydrocarbon deposits to monitor their hydraulic fracturing operations. We market and supplement our services in the continental U.S. from our headquarters in Midland, Texas and from additional offices in two other cities in Texas (Houston and Plano) as well as one additional state, Oklahoma (Oklahoma City).
Microseismic monitoring is used by clients who use hydraulic fracturing to extract hydrocarbon deposits to monitor their hydraulic fracturing operations. We market and supplement our services in the continental U.S. from our headquarters in Midland, Texas and from additional offices in two other cities in Texas (Houston and Plano).
Employees As of December 31, 2022, we employed 226 full-time employees, of which 47 consisted of management, sales, and administrative personnel with the remainder being crew and crew support personnel. Our employees are not represented by a collective bargaining agreement. We believe we have good relations with our employees. See “Item 2.
Employees As of December 31, 2023, we employed 281 full-time employees, of which 45 consisted of management, sales, and administrative personnel with the remainder being crew and crew support personnel. Our employees are not represented by a collective bargaining agreement. We believe we have good relations with our employees. See “Item 2.
Our clients range from major oil and gas companies to small independent oil and gas operators and also providers of multi-client data libraries. The services we provide to our clients vary according to the size and needs of each client. During the twelve months ended December 31, 2022, sales to three clients represented approximately 35% of our revenues.
Our clients range from major oil and gas companies to small independent oil and gas operators and providers of multi-client data libraries. The services we provide to our clients vary according to the size and needs of each client. During the twelve months ended December 31, 2023, sales to four clients represented approximately 73% of our revenues.
We believe we will experience continued demand for cableless recording systems and increased channel count in the future. 4 Table of Contents As of December 31, 2022, we operate 112 vibrator energy source units and approximately 285,000 recording channels.
We believe we will experience continued demand for cableless recording systems and increased channel count in the future. 4 Table of Contents As of December 31, 2023, we operate 130 vibrator energy source units and approximately 327,000 recording channels.
Except as otherwise specifically noted herein, references herein to the “Company,” “we,” “us” or “our” refer to Dawson Geophysical Company and its consolidated subsidiaries.
Except as otherwise specifically noted herein, references in this annual report on Form 10-K to the “Company,” “we,” “us” or “our” refer to Dawson Geophysical Company and its consolidated subsidiaries.
Our Board of Directors approved a maintenance capital expenditure budget of $5,000,000 for 2022 of which we utilized $1,778,000 during the 12 months ended December 31, 2022. Our Board of Directors has approved an initial maintenance capital expenditure budget of $5,000,000 for 2023.
Our Board of Directors approved a maintenance capital expenditure budget of $5 million for 2023 of which we utilized $3.7 million during the year ended December 31, 2023. Our Board of Directors has approved an initial maintenance capital expenditure budget of $5 million for 2024.
Refer to “Note 15, Areas of Operation” to the Consolidated Financial Statements incorporated by reference herein for additional details. Contracts Our contracts are obtained either through competitive bidding or as a result of client negotiations. Our services are conducted under general service agreements for seismic data acquisition services which define certain obligations for us and for our clients.
Risk Factors ". 5 Table of Contents Contracts Our contracts are obtained either through competitive bidding or as a result of client negotiations. Our services are conducted under general service agreements for seismic data acquisition services which define certain obligations for us and for our clients.
We anticipate that sales to these clients will represent a similar percentage of our overall revenues during 2023. The remaining balance of our revenues were derived from varied clients and none represented 10% or more of our revenues.
The remaining balance of our revenues were derived from varied clients, none of which represented 10% or more of our revenues.
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The revenue for both of our segments is generated by the same services, which utilize the same type of equipment and personnel. Historically, the chief operating decision maker made operating decisions and evaluated operating results of the Company on a consolidated basis. In December 2023, we appointed a new Chief Executive Officer who is our current chief operating decision maker.
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Currently, our chief operating decision maker reviews the discrete segment financial information on a geographic basis for the US 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.
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We define Adjusted EBITDA as our net income (loss), before (i) interest expense, net, (ii) income tax expense or benefit, (iii) depreciation, depletion and amortization and (iv) other unusual or non-recurring charges, such as severance expenses. As a result, our business has two reportable segments, US operations and Canada Operations.
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We have included disclosures about our two reportable segments for all periods presented herein. For a discussion of financial information by segment refer to “Note 15, Segments” to the Consolidated Financial Statements incorporated by reference herein for additional details. For a description of risks associated with our foreign operations, please see “Item 1A.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlthough the risks described below are the risks that we believe are material, they are not the only risks relating to our business, our industry and our common stock. Additional risks and uncertainties, including those that are not yet identified or that we currently believe are immaterial, may also adversely affect our business, financial condition or results of operations.
Biggest changeAdditional risks and uncertainties, including those that are not yet identified or that we currently believe are immaterial, may also adversely affect our business, financial condition or results of operations. If any of the events described below occur, our business, financial condition or results of operations could be materially adversely affected.
Many factors beyond our control affect oil and natural gas prices, including: ● the cost of exploring for, producing, and delivering oil and natural gas; ● the discovery rate of new oil and natural gas reserves; ● the rate of decline of existing and new oil and natural gas reserves; ● available pipeline and other oil and natural gas transportation capacity; ● the ability of oil and natural gas companies to raise capital and debt financing; ● actions by OPEC+; 7 Table of Contents ● political instability in the Middle East and other major oil and natural gas producing regions; ● economic conditions in the U.S. and elsewhere; ● domestic and foreign tax policy; ● domestic and foreign energy policy including increased emphasis on alternative sources of energy; ● increased attention to environmental, social and governance matters, including climate change; ● weather conditions in the U.S., Canada and elsewhere; ● the pace adopted by foreign governments for the exploration, development, and production of their national reserves; ● the price of foreign imports of oil and natural gas; and ● the overall supply and demand for oil and natural gas.
Many factors beyond our control affect oil and natural gas prices, including: ● the cost of exploring for, producing, and delivering oil and natural gas; ● the discovery rate of new oil and natural gas reserves; ● the rate of decline of existing and new oil and natural gas reserves; ● available pipeline and other oil and natural gas transportation capacity; ● the ability of oil and natural gas companies to raise capital and debt financing; ● actions by OPEC+; ● political instability in the Middle East and other major oil and natural gas producing regions; ● economic conditions in the U.S. and elsewhere; 7 Table of Contents ● domestic and foreign tax policy; ● domestic and foreign energy policy including increased emphasis on alternative sources of energy; ● increased attention to environmental, social and governance matters, including climate change; ● weather conditions in the U.S., Canada and elsewhere; ● the pace adopted by foreign governments for the exploration, development, and production of their national reserves; ● the price of foreign imports of oil and natural gas; and ● the overall supply and demand for oil and natural gas.
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. Our stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the applicable Nasdaq listing requirements.
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. Our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of the applicable Nasdaq listing requirements.
However, our clients can delay, reduce or cancel their service contracts with us on short notice. If the oil and natural gas industry incurs a downturn, it may result in an increase in delays, reductions or cancellations by our clients.
However, our clients can delay, reduce or cancel their service contracts with us on short notice. If the oil and natural gas industry experiences a downturn, it may result in an increase in delays, reductions or cancellations by our clients.
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.
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 13 Table of Contents measures to address the concerns are in various phases of discussion or implementation at the national and state levels.
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.
Fluctuations in our operating results may also be affected by other 8 Table of Contents 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.
As part of rejoining the Paris Agreement, President Biden announced that the U.S. would commit 14 Table of Contents to a 50 to 52 percent reduction from 2005 levels of GHG emissions by 2030 and set the goal of reaching net-zero GHG emissions by 2050.
As part of rejoining the Paris Agreement, President Biden announced that the U.S. would commit to a 50 to 52 percent reduction from 2005 levels of GHG emissions by 2030 and set the goal of reaching net-zero GHG emissions by 2050.
Our stock price is subject to volatility. Overall market conditions, including a decline in oil and natural gas prices and other risks and uncertainties described in this “Risk Factors” section and in our other filings with the SEC, could cause the market price of our common stock to fall.
Overall market conditions, including a decline in oil and natural gas prices and other risks and uncertainties described in this “Risk Factors” section and in our other filings with the SEC, could cause the market price of our common stock to fall.
A limited number of our employees are under employment contracts, and we have no key man insurance. 11 Table of Contents We are subject to Canadian foreign currency exchange rate risk. We conduct business in Canada which subjects us to foreign currency exchange rate risk.
A limited number of our employees are under employment contracts, and we have no key man insurance. We are subject to Canadian foreign currency exchange rate risk. We conduct business in Canada which subjects us to foreign currency exchange rate risk.
Current macroeconomic conditions, including inflationary pressures in the broader U.S. economy, military conflicts between Russia and Ukraine and the COVID-19 pandemic, have had, and are expected to continue to have, an impact on oil and gas commodity prices and, therefore, demand for our services and, depending on the duration and severity, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Current macroeconomic conditions, including inflationary pressures in the broader U.S. economy and military conflicts between Russia and Ukraine and in the Middle East have had, and are expected to continue to have, an impact on oil and gas commodity prices and, therefore, demand for our services and, depending on the duration and severity, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Hydraulic fracturing is an important and commonly used process in the completion of oil and gas wells. Hydraulic fracturing involves the injection of water, sand and chemical additives under pressure into rock formations to stimulate gas production.
Hydraulic fracturing is an important and commonly used process in the completion of oil and gas wells. Hydraulic fracturing involves the injection of water, sand and chemical additives under pressure into rock formations to stimulate 14 Table of Contents gas production.
The broader consequences of the Russian-Ukrainian conflict, 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.
The broader consequences of the Russian-Ukrainian conflict and 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 6 Table of Contents 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.
The high fixed costs of our operations could result in continuing or increasing operating losses. Companies within our industry are typically subject to high fixed costs which consist primarily of depreciation (a non-cash item) and maintenance expenses associated with seismic data acquisition and equipment and crew costs.
The high fixed costs of our operations could result in continuing or increasing operating losses. Companies within our industry are typically subject to high fixed costs, consisting primarily of depreciation (a non-cash expense) and maintenance expenses associated with seismic data acquisition and equipment and crew costs.
This could reduce demand for our services. Regulation that significantly restricts or prohibits hydraulic fracturing, or that requires hydraulic fracturing operations to meet permitting and financial assurance requirements, adhere to certain construction specifications, fulfill monitoring, reporting, and recordkeeping obligations, and meet plugging and abandonment requirements, could have a material adverse impact on our business.
Regulation that significantly restricts or prohibits hydraulic fracturing, or that requires hydraulic fracturing operations to meet permitting and financial assurance requirements, adhere to certain construction specifications, fulfill monitoring, reporting, and recordkeeping obligations, and meet plugging and abandonment requirements, could have a material adverse impact on our business.
If we were to impair our equipment or intangibles, these non-cash asset impairments could negatively affect our financial results in a material manner in the period in which they are recorded, and the larger the amount of any impairment that may be taken, the greater the impact such impairment may have on our financial results.
If we impair our equipment or intangible assets, these non-cash asset impairments could negatively affect our financial results in a material manner in the period in which the impairments are recorded, and the larger the amount of any impairment that may be taken, the greater the impact such impairment may have on our financial results.
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, 2022, our three largest clients accounted for approximately 35% of our revenues.
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, 2023, our four largest clients accounted for approximately 73% of our revenues.
Any such consequence could have a material adverse effect on our business. 13 Table of Contents Our business could be negatively impacted by security threats, including cyber-security threats and other disruptions.
Any such consequence could have a material adverse effect on our business. Our business could be negatively impacted by security threats, including cyber-security threats and other disruptions.
Future events, including our financial performance, sustained decreases in oil and natural gas prices, reduced demand for our services, our market valuation or the market valuation of comparable companies, loss of a significant client’s business, or strategic decisions, could cause us to conclude that impairment indicators exist and ultimately that the asset values associated with our equipment or our intangibles were to be impaired.
Future events, including our financial performance, sustained decreases in oil and natural gas prices, reduced demand for our services, our market valuation or the market valuation of comparable companies, loss of a significant client’s business, or strategic 9 Table of Contents decisions, could cause us to conclude that impairment indicators exist and ultimately that the values associated with our equipment or intangible assets should be impaired.
Item 1A. RISK FACTORS An investment in our common stock is subject to a number of risks, including those discussed below. You should carefully consider these discussions of risk and the other information included in this Form 10-K. These risk factors could affect our actual results and should be considered carefully when evaluating us.
Item 1A. RISK FACTORS An investment in our common stock is subject to a number of risks, including those discussed below. You should carefully consider these discussions of risk and the other information included in this Form 10-K.
In addition, as of March 9, 2023, Wilks and its affiliates own approximately 74.46% of our common stock so the public market for our common stock is more limited, which can lead to increased volatility and low trading volumes. For example, during 2022 our daily trading volume was as low as 0 shares.
In addition, as of December 31, 2023, Wilks and its affiliates own over 80 % of our common stock so the public market for our common stock is more limited, which can lead to increased volatility and low trading volumes. For example, during 2023 our daily trading volume was as low as 0 shares.
In addition, subcontractors may cause injury to our personnel or damage to our property that is not fully covered by insurance. We operate under hazardous conditions that subject us to risk of damage to property or personnel injuries and may interrupt our business. Our business is subject to the general risks inherent in land-based seismic data acquisition activities.
We operate under hazardous conditions that subject us to risk of damage to property or personnel injuries and may interrupt our business. Our business is subject to the general risks inherent in land-based seismic data acquisition activities.
Our high and low sales prices of our common stock for the twelve months ended December 31, 2022 were $2.69 and $1.08, respectively. Further, the high and low sales prices of our common stock for the twelve months ended December 31, 2021 were $4.47 and $1.83, respectively.
Our high and low sales prices of our common stock for the twelve months ended December 31, 2023 were $2.65 and $1.28, respectively. Further, the high and low sales prices of our common stock for the twelve months ended December 31, 2022 were $2.69 and $1.08, respectively.
If our accounts receivable decrease materially for any reason, including delays, reductions or cancellations by clients or decreased demand for our services, our ability to borrow to fund operations or other obligations may be limited. 9 Table of Contents Our financial results could be adversely affected by asset impairments.
If our accounts receivable decrease materially for any reason, including delays, reductions or cancellations by clients or decreased demand for our services, our ability to borrow to fund operations or other obligations may be limited. Our financial results could be adversely affected by asset impairments. We periodically review our portfolio of equipment and our intangible assets for impairment.
Our activities are often conducted in remote areas under dangerous conditions, including the detonation of dynamite. These operations are subject to risk of injury to personnel and damage to equipment. Our crews are mobile, and equipment and personnel are subject to vehicular accidents.
Our business is subject to the general risks inherent in land-based seismic data acquisition activities. Our activities are often conducted in remote areas under dangerous conditions, including the detonation of dynamite. These operations are subject to risk of injury to personnel and damage to equipment. Our crews are mobile, and equipment and personnel are subject to vehicular accidents.
Currently, we do not hold or issue foreign currency forward contracts, option contracts or other derivative financial instruments to mitigate the currency exchange rate risk. Our results of operations and our cash flows could be impacted by changes in foreign currency exchange rates. Our common stock has experienced, and may continue to experience, price volatility and low trading volume.
Currently, we do not hold or issue foreign currency forward contracts, option contracts or other derivative financial instruments to mitigate the 11 Table of Contents currency exchange rate risk. Our results of operations and our cash flows could be impacted by changes in foreign currency exchange rates.
Additionally, while landowners generally are cooperative in granting access rights, some have become more resistant to seismic and drilling activities occurring on their property. In addition, 10 Table of Contents governmental entities do not always grant permits within the time periods expected. Delays associated with obtaining such rights of way could negatively affect our results of operations.
Additionally, while landowners generally are cooperative in granting access rights, some have become more resistant to seismic and drilling activities occurring on their property. In addition, governmental entities do not always grant permits within the time periods expected.
In order to remain competitive, we must continue to invest additional capital to maintain, upgrade and expand our seismic data acquisition capabilities.
Seismic data acquisition and data processing technologies historically have progressed steadily, and we expect this trend to continue. In order to remain competitive, we must continue to invest additional capital to maintain, upgrade and expand our seismic data acquisition capabilities.
Our common stock traded below a price of $5.00 per share for the duration of 2022 and we cannot guarantee that our common stock will trade at a price greater than $5.00 per share.
Our common stock traded below a price of $5.00 per share for the duration of 2023 and we cannot guarantee that our common stock will trade at a price greater than $5.00 per share. We may be subject to liability claims that are not covered by our insurance.
A default in payment from one of our large clients could have a material adverse effect on our operating results for the period involved. We incur losses. We incurred net losses of $20,451,000 for the twelve months ended December 31, 2022 and $29,091,000 for the twelve months ended December 31, 2021.
A default in payment from one of our large clients could have a material adverse effect on our operating results for the period involved. We have historically incurred net losses. We incurred net losses of $12.1 million for the year ended December 31, 2023, and $18.6 million for the year ended December 31, 2022.
In light of concerns about induced seismicity, some state regulatory agencies have already modified their regulations or issued orders to address induced seismicity. 15 Table of Contents The adoption of any future federal, state, foreign, regional or local laws that impact permitting requirements for, result in reporting obligations on, or otherwise limit or ban, the hydraulic fracturing process could make it more difficult to perform hydraulic fracturing.
The adoption of any future federal, state, foreign, regional or local laws that impact permitting requirements for, result in reporting obligations on, or otherwise limit or ban, the hydraulic fracturing process could make it more difficult to perform hydraulic fracturing. This could reduce demand for our services.
We often work as the general contractor on seismic data acquisition surveys and, consequently, engage a number of subcontractors to perform services and provide products. While we obtain contractual indemnification and insurance covering the acts of these subcontractors and require the subcontractors to obtain insurance for our benefit, we could be held liable for the actions of these subcontractors.
We often work as the general contractor on seismic data acquisition surveys and, consequently, engage a number of subcontractors to perform services and provide products.
These and other ongoing or proposed studies could spur initiatives to further regulate hydraulic fracturing and other aspects of the oil and gas industry.
These and other ongoing or proposed studies could spur initiatives to further regulate hydraulic fracturing and other aspects of the oil and gas industry. In light of concerns about induced seismicity, some state regulatory agencies have already modified their regulations or issued orders to address induced seismicity.
Factors which are likely to affect commodity prices in future periods include, but are not limited to, the effect of U.S. energy, monetary and trade policies; U.S. and global economic and political conditions and developments; energy and environmental policies; operating curtailment of the U.S. oil and gas industry; and the severity and duration of the COVID-19 outbreaks, which together have created future uncertainty for the demand and pricing for services, equipment, and raw materials in the petroleum industry.
Additional factors which may affect oil and natural gas prices include, but are not limited to, the effect of U.S. energy, monetary and trade policies; U.S. and global economic and political conditions and developments; U.S. and international energy and environmental policies; and any operating curtailment of the U.S. oil and gas industry.
In addition, the timing of the origination and completion of projects and when projects are awarded and contracted for is also uncertain.
In addition, the timing of the origination and completion of projects and when projects are awarded and contracted for is also uncertain. As a result, our order book as of any particular date may not be indicative of actual demand and revenues for any succeeding period.
As a result, our order book as of any particular date may not be indicative of actual demand and revenues for any succeeding period. 8 Table of Contents Our revenues, operating results and cash flows can be expected to fluctuate from period to period. Our revenues, operating results and cash flows may fluctuate from period to period.
Our revenues, operating results and cash flows can be expected to fluctuate from period to period. Our revenues, operating results and cash flows may fluctuate from period to period.
We are a "controlled company", controlled by Wilks, and as a result, are exempt from certain corporate governance requirements that are designed to provide protection to stockholders of companies that are not controlled companies.
We are a "controlled company", which exempts us from certain corporate governance requirements that are designed to provide protection to stockholders of companies that are not controlled companies. As of December 31, 2023, Wilks Brothers, LLC (“Wilks”) and its affiliates control over 80% of our combined voting power and can elect all of the members of our board of directors.
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. 6 Table of Contents We face various risks related to the COVID-19 pandemic and any future health epidemics, pandemics and similar outbreaks, which may have material adverse effects on our business, financial condition, results of operations and cash flows.
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.
Capital requirements for our operations are large. If we are unable to finance these requirements, we may not be able to maintain our competitive advantage. Seismic data acquisition and data processing technologies historically have progressed steadily, and we expect this trend to continue.
Delays associated with obtaining such rights of way could negatively affect our results of operations. 10 Table of Contents Capital requirements for our operations are large. If we are unable to finance these requirements, we may not be able to maintain our competitive advantage.
And any future health epidemics, pandemics or similar outbreaks could also have a material adverse effect on our business, financial condition, results of operations or cash flows. We derive substantially all of our revenues from providers of multi-client data libraries and companies in the oil and natural gas exploration and development industry.
Together, these factors have created uncertainty for the demand and pricing for services, equipment, and raw materials in the petroleum industry, and may continue to do so in the future. We derive substantially all of our revenues from providers of multi-client data libraries and companies in the oil and natural gas exploration and development industry.
As of March 9,2023, Wilks Brothers, LLC (“Wilks”) and its affiliates control approximately 74.46% of our combined voting power and is able to elect all of the Company’s board of directors. As a result, we are considered a “controlled company” for the purposes of the Nasdaq listing requirements.
As a result, we are considered a “controlled company” for the purposes of the Nasdaq listing requirements.
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If any of the events described below occur, our business, financial condition or results of operations could be materially adversely affected.
Added
These risk factors could affect our actual results and should be considered carefully when evaluating us and an investment in our common stock. Although the risks described below are the risks that we believe are material, they are not the only risks relating to our business, our industry and our common stock.
Removed
Oil demand has deteriorated as a result of multiple global events, including inflationary pressures in the broader U.S. economy relating to the continued economic recovery from the COVID-19 pandemic and corresponding preventative measures taken around the world to contain its spread and mitigate its public health effects, and the ongoing military conflict between Russia and Ukraine.
Added
We are also monitoring the impact of attacks on shipping in the Red Sea as a result of the unrest in the Middle East.
Removed
Our business and financial results may be negatively impacted by health epidemics, pandemics and similar outbreaks.
Added
Our common stock has experienced, and may continue to experience, price volatility and low trading volume. Our stock price is subject to volatility.
Removed
The COVID-19 pandemic and the measures and mandates to try to contain its spread and mitigate its public health effects, such as travel bans and restrictions, quarantines, shelter in place orders, and shutdowns, have impacted our workforce and operations, the operations of our customers, and those of our vendors and suppliers.
Added
While we obtain contractual indemnification and insurance 12 Table of Contents covering the acts of these subcontractors and require the subcontractors to obtain insurance for our benefit, we could be held liable for the actions of these subcontractors. In addition, subcontractors may cause injury to our personnel or damage to our property that is not fully covered by insurance.
Removed
The COVID-19 pandemic continues to evolve, and the extent to which the pandemic may impact our business, financial condition, results of operations and cash flows will depend highly on future developments, which are very uncertain and cannot be predicted. .
Removed
We periodically review our portfolio of equipment and our intangible assets for impairment.
Removed
We do not expect to pay cash dividends on our common stock for the foreseeable future, and, therefore, only appreciation of the price of our common stock may provide a return to shareholders.
Removed
While there are currently no restrictions prohibiting us from paying cash dividends to our shareholders, our Board of Directors, after consideration of economic and market conditions affecting the energy industry in general, and the oilfield services business in particular, determined that we would not pay a cash dividend in respect of our common stock for the foreseeable future.
Removed
Payment of any cash dividends in the future will be at the discretion of our board and will depend on our financial condition, results of operations, capital and legal requirements, and other factors deemed relevant by the board.
Removed
Certain provisions of our amended and restated certificate of formation, or other governing documents and agreements that currently exist or could exist in the future, may make it difficult for a third party to acquire us in the future or may adversely impact your ability to obtain a premium in connection with a future change of control transaction.
Removed
Our amended and restated certificate of formation contains provisions that require the approval of holders of 80% of our issued and outstanding shares before we may merge or consolidate with or into another corporation or entity or sell all, or substantially all, of our assets to another corporation or entity.
Removed
Additionally, if we increase the size of our board to 12 Table of Contents nine directors, we could, by resolution of the Board of Directors, stagger the directors’ terms, and our directors could not be removed without approval of holders of 80% of our issued and outstanding shares.
Removed
These provisions could discourage or impede a tender offer, proxy contest or other similar transaction involving control of us. In addition, our Board of Directors has the right to issue preferred stock upon such terms and conditions as it deems to be in our best interest.
Removed
The terms of such preferred stock may adversely impact the dividend and liquidation rights of our common shareholders without the approval of our common shareholders. We may be subject to liability claims that are not covered by our insurance. Our business is subject to the general risks inherent in land-based seismic data acquisition activities.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed2 unchanged
Biggest changeWe also have additional offices in two other cities in Texas: Houston and Plano. Our Houston sales office is in an 8,161 square foot facility. Our office in Plano, Texas consists of 5,181 square feet of office space. We lease a 2,630 square foot facility in Oklahoma City, Oklahoma as a sales office.
Biggest changeWe also have additional offices in two other cities in Texas: Houston and Plano. Our Houston sales office is in an 8,161 square foot facility. Our office in Plano, Texas consists of 5,181 square feet of office space.
We lease a 15,020 square foot facility in Calgary, Alberta consisting of office, warehouse and shop space. We believe that our existing facilities are being appropriately utilized in line with past experience and are well maintained, suitable for their intended use, and adequate to meet our current and future operating requirements.
We lease a 15,020 square foot facility in Calgary, Alberta consisting of office, warehouse and shop space. 16 Table of Contents We believe that our existing facilities are being appropriately utilized in line with past experience and are well maintained, suitable for their intended use, and adequate to meet our current and future operating requirements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 3. LEGAL PROCEEDINGS For a discussion of certain contingencies and legal proceedings affecting the Company, please refer to “Note 16, Commitments and Contingencies” to the Consolidated Financial Statements incorporated by reference herein. Item 4. MINE SAFETY DISCLOSURES Not applicable. 16 Table of Contents Part II
Biggest changeItem 3. LEGAL PROCEEDINGS For a discussion of certain contingencies and legal proceedings affecting the Company, please refer to “Note 16, Commitments and Contingencies” to the Consolidated Financial Statements incorporated by reference herein. Item 4. MINE SAFETY DISCLOSURES Not applicable. Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+3 added−4 removed0 unchanged
Biggest changeMARKET FOR OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our common stock trades on the NASDAQ under the symbol “DWSN.” The table below represents the high and low sales prices per share for the periods shown. ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended High Low March 31, 2021 ​ $ 4.47 ​ $ 2.07 ​ June 30, 2021 ​ $ 2.80 ​ $ 2.19 ​ September 30, 2021 ​ $ 3.00 ​ $ 1.83 ​ December 31, 2021 ​ $ 2.50 ​ $ 1.97 ​ March 31, 2022 ​ $ 2.61 ​ $ 2.25 ​ June 30, 2022 ​ $ 2.69 ​ $ 1.29 ​ September 30, 2022 ​ $ 2.18 ​ $ 1.08 ​ December 31, 2022 ​ $ 2.28 ​ $ 1.54 ​ As of March 9, 2023, the market price for our common stock was $1.51 per share, and we had 68 common stockholders of record, as reported by our transfer agent.
Biggest changeMARKET FOR OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our common stock trades on the NASDAQ under the symbol “DWSN.” The table below represents the high and low sales prices per share for the periods shown. ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended High Low March 31, 2022 ​ $ 2.61 ​ $ 2.25 ​ June 30, 2022 ​ $ 2.69 ​ $ 1.29 ​ September 30, 2022 ​ $ 2.18 ​ $ 1.08 ​ December 31, 2022 ​ $ 2.28 ​ $ 1.54 ​ March 31, 2023 ​ $ 2.06 ​ $ 1.28 ​ June 30, 2023 ​ $ 2.25 ​ $ 1.55 ​ September 30, 2023 ​ $ 2.65 ​ $ 1.45 ​ December 31, 2023 ​ $ 2.48 ​ $ 1.36 ​ As of March 26, 2024, the market price for our common stock was $1.39 per share, and we had 66 common shareholders of record, as reported by our transfer agent.
No dividends were paid in 2022 or 2021.
No dividends were paid in 2023 or 2022. There are currently no restrictions prohibiting us from paying dividends to our shareholders.
Removed
While there are currently no restrictions prohibiting us from paying dividends to our shareholders, our Board of Directors, after consideration of economic and market conditions affecting the energy industry in general, and the oilfield services business in particular, determined that we would not pay a dividend in respect of our common stock for the foreseeable future.
Added
On March 28, 2024, t he Company’s Board of Directors declared a special cash dividend on the company’s common stock of $0.32 per share, payable on May 6, 2024, to stockholders of record as of the close of business on April 22, 2024. The aggregate payment will be approximately $9.9 million.
Removed
Payment of any dividends in the future will be at the discretion of our board and will depend on our financial condition, results of operations, capital and legal requirements, and other factors deemed relevant by the board. The following table summarizes certain information regarding securities authorized for issuance under our equity compensation plans as of December 31, 2022.
Added
Our Board of Directors considered our financial condition, results of operations, capital and legal requirements, economic and market conditions affecting the energy industry in general, and the oilfield services business in particular, and other factors deemed relevant by the board in determining whether or not to declare a dividend.
Removed
See information and definitions regarding material features of the plans in “Note 8, Stock-Based Compensation” to the Consolidated Financial Statements incorporated by reference herein.
Added
Payment of any dividends in the future will be at the discretion of our board. Item 6. [RESERVED] ​
Removed
Equity Compensation Plan Information ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ ​ Securities to be ​ ​ ​ ​ Number of Securities ​ ​ Issued Upon ​ ​ ​ ​ Remaining Available ​ ​ Exercise or ​ Weighted Average ​ for Future Issuance ​ ​ Vesting of ​ Exercise Price ​ Under the Equity ​ ​ Outstanding ​ of Outstanding ​ Compensation Plan ​ ​ Options, ​ Options, ​ (Excluding Securities ​ ​ Warrants and ​ Warrants and ​ Reflected in Plan Category ​ Rights ​ Rights ​ Column (a)) ​ ​ (a) ​ ​ ​ ​ ​ ​ 2016 Plan ​ ​ ​ ​ ​ ​ ​ ​ Equity compensation plan approved by security holders ​ — ​ $ — ​ 1,264,487 ​ Equity compensation plans not approved by security holders ​ — ​ — — ​ Total ​ — ​ $ — ​ 1,264,487 ​ ​ ​ Item 6.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

41 edited+23 added−15 removed36 unchanged
Biggest changeThe reconciliation of our EBITDA to our net loss and net cash used in operating activities, which are the most directly comparable GAAP financial measures, are provided in the following tables (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 2021 Net loss ​ $ (20,451) ​ $ (29,091) ​ Depreciation and amortization ​ 9,795 ​ 12,863 ​ Interest (income) expense, net ​ (285) ​ (199) ​ Income tax expense (benefit) ​ 107 ​ (26) ​ EBITDA ​ $ (10,834) ​ $ (16,453) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 Net cash used in operating activities ​ $ (8,961) ​ $ (16,050) ​ Changes in working capital and other items ​ (462) ​ 1,142 ​ Non-cash adjustments to net loss ​ (1,411) ​ (1,545) ​ EBITDA ​ $ (10,834) ​ $ (16,453) ​ Liquidity and Capital Resources Introduction.
Biggest changeThe reconciliation of our EBITDA to our net loss and net cash used in operating activities, which are the most directly comparable GAAP financial measures, are provided in the following tables (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 US ​ 2023 CA ​ 2023 Consol. ​ 2022 US ​ 2022 CA ​ 2022 Consol.
To the extent we experience these factors, our operating results may be affected from quarter to quarter. Consequently, our efforts to negotiate more favorable contract terms in our supplemental service agreements, mitigate permit access delays and improve overall crew productivity may contribute to growth in our revenues.
To the extent we experience these factors, our operating results may be affected and vary from quarter to quarter. Consequently, our efforts to negotiate more favorable contract terms in our supplemental service agreements, mitigate permit access delays and improve overall crew productivity may contribute to growth in our revenues.
If the carrying amounts of the assets exceed the estimated expected undiscounted future cash flows, we measure the amount of possible impairment by comparing the carrying amount of the asset to its fair value. No impairment charges were recognized for the years ended December 31, 2022 and 2021. Leases.
If the carrying amounts of the assets exceed the estimated expected undiscounted future cash flows, we measure the amount of possible impairment by comparing the carrying amount of the asset to its fair value. No impairment charges were recognized for the years ended December 31, 2023 and 2022. Leases.
The majority of our operating leases are non-cancelable operating leases for office, shop and warehouse space in Midland, Plano, Houston, Oklahoma City and Calgary, Alberta. 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.
The majority of our operating leases are non-cancelable operating leases for office, shop and warehouse space in Midland, Plano, Houston and Calgary, Alberta. 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.
Unless the context requires otherwise, all references in this Item 7 to the “Company,” “we,” “us” or “our” refer to Dawson Geophysical Company and its consolidated subsidiaries. Overview We are a leading provider of North American onshore seismic data acquisition services with operations throughout the continental U.S. and Canada.
Unless the context requires otherwise, all references in this Item 7 to the “Company,” “we,” “us” or “our” refer to Dawson Geophysical Company and its consolidated subsidiaries. 17 Table of Contents Overview We are a leading provider of North American onshore seismic data acquisition services with operations throughout the continental U.S. and Canada.
We expect the majority of our contracts to be turnkey as we continue our operations in the mid-continent, western and southwestern regions of the U.S. in which turnkey contracts are more common. 18 Table of Contents Over time, we have experienced continued increases in recording channel capacity on a per-crew or project basis and high utilization of cableless and multicomponent equipment.
We expect the majority of our contracts to be turnkey as we continue our operations in the mid-continent, western and southwestern regions of the U.S. in which turnkey contracts are more common. Over time, we have experienced continued increases in recording channel capacity on a per-crew or project basis and high utilization of cableless and multicomponent equipment.
We believe that we will be able to finance our 2023 capital expenditures through cash flow from operations, borrowings from commercial lenders, and the funds available under our Revolving Credit Facility.
We believe that we will be able to finance our 2024 capital expenditures through cash flow from operations, borrowings from commercial lenders, and the funds available under our Revolving Credit Facility.
Our forecast of future cash flows used to perform impairment analysis includes estimates of future revenues and expenses based on our anticipated future results while considering anticipated future oil and gas prices, which is fundamental in assessing demand for our services.
Our forecast of future cash flows used to perform impairment analysis 22 Table of Contents includes estimates of future revenues and expenses based on our anticipated future results while considering anticipated future oil and gas prices, which is fundamental in assessing demand for our services.
From time to time in the past, we have also funded our capital expenditures and other financing needs through public equity offerings. We believe that our capital resources, including our cash and short-term investments, cash flow from operations, and funds available under our Revolving Credit Facility are sufficient to meet our operational needs. Dominion Credit Facility.
From time to time in the past, we have also funded our capital expenditures and other financing needs through public equity offerings. 21 Table of Contents We believe that our capital resources, including our cash and short-term investments, cash flow from operations, and funds available under our Revolving Credit Facility are sufficient to meet our operational needs. Dominion Credit Facility.
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. 19 Table of Contents Use of EBITDA (Non-GAAP measure) We define EBITDA as net income (loss) plus interest expense, interest income, income taxes, and depreciation and amortization expense.
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. Use of EBITDA (Non-GAAP measure) We define EBITDA as net income (loss) plus interest expense, interest income, income taxes, depreciation and amortization expense and severance expenses.
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. Recently Issued Accounting Pronouncements None .
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.
Recognition of an impairment charge is required if future 22 Table of Contents expected undiscounted net cash flows are insufficient to recover the carrying value of the assets, and the fair value of the assets is below the carrying value of the assets.
Recognition of an impairment charge is required if future expected undiscounted net cash flows are insufficient to recover the carrying value of the assets, and the fair value of the assets is below the carrying value of the assets.
The majority of our revenues were derived from turnkey contracts for the years ending December 31, 2022 and 2021. While turnkey contracts allow us to capitalize on improved crew productivity, we also bear more risks related to weather and crew downtime.
The majority of our revenues were derived from turnkey contracts for the years ending December 31, 2023 and 2022. While turnkey contracts allow us to capitalize on improved crew productivity, we also bear more risk related to weather and crew downtime.
We continually strive to supply our clients with technologically advanced 3-D data acquisition recording services and data processing capabilities. We maintain equipment in and out of service in anticipation of increased future demand for our services. Capital Resources .
We continually strive to supply our clients with technologically advanced 3-D data acquisition recording services and data processing capabilities. We maintain equipment in and out of service in anticipation of increased future demand for our services. Risks and Uncertainties.
Our effective tax rate decreased compared to the corresponding period from the prior year primarily due to a change in the valuation allowance on a portion of the NOL’s due to an Internal Revenue Code section 382 limitation.
Our effective tax rate increased compared to the corresponding period from the prior year primarily due to a change in the valuation allowance on a portion of the NOLs due to an Internal Revenue Code section 382 limitation.
Historically, cash generated from our operations along with cash reserves and borrowings from commercial banks have been sufficient to fund our working capital requirements and, to some extent, our capital expenditures. 20 Table of Contents Cash Flows.
Historically, cash generated from our operations along with cash reserves and borrowings from commercial banks have been sufficient to fund our working capital requirements and, to some extent, our capital expenditures. Cash Flows.
Off-Balance Sheet Arrangements As of December 31, 2022, we had no off-balance sheet arrangements.
Off-Balance Sheet Arrangements As of December 31, 2023, we had no off-balance sheet arrangements.
Net cash used in financing activities was $1,567,000 for the year ended December 31, 2022 and includes principal payments of $1,253,000 on our notes and $47,000 on our finance leases and outflows of $301,000 associated with cash settlement of restricted stock units and $79,000 associated with taxes related to stock compensation awards vesting offset by $113,000 received for sale of treasury stock.
Net cash used in financing activities was $2.2 million for the year ended December 31, 2022 and includes principal payments of $1.3 million on our notes and $47,000 on our finance leases and outflows of $301,000 for cash settlement of restricted stock units, $79,000 associated with taxes related to stock compensation awards vesting, and $583,000 associated with the acquisition of Breckenridge assets offset by $113,000 received for sale of treasury stock.
No additional credits are expected to be received. Income Taxes. Income tax expense was $107,000 for the year ended December 31, 2022 compared to income tax benefit of $26,000 for the same period of 2021. The effective tax expense/benefit rates for the years ended December 31, 2022 and 2021 were approximately -0.5% and 0.1%, respectively.
No additional credits are expected to be received. Income Taxes. Income tax benefit was $96,000 for the year ended December 31, 2023 compared to income tax expense of $107,000 for the same period of 2022. The effective tax benefit/expense rates for the years ended December 31, 2023 and 2022 were approximately 0.8% and -0.6%, respectively.
We recognized $2,966,000 as a gain in other income and $69,000 as interest income on the Consolidated Statement of Operations and Comprehensive Loss for the year ended December 31, 2022 and recognized $3,035,000 as an employee retention credit receivable in the Consolidated Balance Sheet as of December 31, 2022. Payments were received in January 2023.
We recognized $3.0 million as a gain in other income and $69,000 as interest income on the Consolidated Statement of Operations and Comprehensive Loss for the year ended December 31, 2022 and recognized $3.0M as an employee retention credit receivable in the 19 Table of Contents Consolidated Balance Sheet as of December 31, 2022. Payments were received in January 2023.
Our depreciation expense is expected to remain flat or decline slightly during 2023 primarily due to limited capital expenditures to maintain our existing asset base. Our total operating costs for the year ended December 31, 2022 were $61,490,000, representing a 14.0% increase from the corresponding period of 2021. This change was primarily due to the factors described above.
Our depreciation expense is expected to remain flat or decline slightly during 2024 primarily due to limited capital expenditures to maintain our existing asset base. Our total operating costs for the year ended December 31, 2023 were $110.2 million, representing a 49% increase from the corresponding period of 2022. This change was primarily due to the factors described above.
On September 30, 2019, we entered into a Loan and Security Agreement with Dominion Bank, a Texas state bank (“Dominion Bank”).
On September 30, 2019, we entered into a Loan and Security Agreement with Dominion Bank.
Net cash used in investing activities was $669,000 for the year ended December 31, 2022 and includes cash capital expenditures of $894,000 offset by $225,000 in proceeds from the disposal of assets.
Net cash used in investing activities was $1.1 million for the year ended December 31, 2022, and includes cash capital expenditures of $1.4 million offset by $340,000 in proceeds from the disposal of assets.
Under both types of agreements, we recognize revenue as the services are performed. Revenue is generally recognized based on square miles of data recorded compared to total square miles anticipated to be recorded on the survey using the total estimated revenue for the service contract.
Under both types of agreements, we recognize revenue as the services are performed. Revenue is generally recognized based on receiver layout and pickup compared to total number of receivers anticipated to be recorded on the survey using the total estimated revenue for the service contract.
Depreciation Expense. Depreciation for the year ended December 31, 2022 was $9,795,000 compared to $12,863,000 for the same period of 2021. The decrease in depreciation expense is a result of limiting capital expenditures to necessary maintenance capital requirements in recent years.
Depreciation for the year ended December 31, 2023, was $8.5 million compared to $11.8 million for the same period of 2022. The decrease in depreciation expense is a result of limiting capital expenditures to necessary maintenance capital requirements in recent years.
Our Consolidated Balance Sheet as of December 31, 2022 includes finance leases of $277,000. Contractual Obligations. We believe that our capital resources, including our short-term investments, cash flow from operations, and funds available under our Revolving Credit Facility, will be adequate to meet our current operational needs.
We believe that our capital resources, including our short-term investments, cash flow from operations, and funds available under our Revolving Credit Facility, will be adequate to meet our current operational needs.
Portions of this document that are not statements of historical or 17 Table of Contents current fact are forward-looking statements that involve risk and uncertainties, such as statements of our plans, business strategy, objectives, expectations and intentions. This discussion contains forward-looking statements that involve risks and uncertainties.
Portions of this document that are not statements of historical or current fact are forward-looking statements that involve risk and uncertainties, such as statements of our plans, business strategy, objectives, expectations and intentions. This discussion contains forward-looking statements that involve risks and uncertainties. Please see “Business,” “Disclosure Regarding Forward-Looking Statements” and “Risk Factors” elsewhere in this Form 10-K.
Please see “Business,” “Disclosure Regarding Forward-Looking Statements” and “Risk Factors” elsewhere in this Form 10-K. You should read this discussion in conjunction with the financial statements and notes thereto included elsewhere in this Form 10-K.
You should read this discussion in conjunction with the financial statements and notes thereto included elsewhere in this Form 10-K.
The letter of credit is secured by a certificate of deposit with Dominion Bank. Other Indebtedness. As of December 31, 2022, we have one note payable to a finance company for various insurance premiums totaling $205,000. In addition, we lease certain seismic recording equipment and vehicles under leases classified as finance leases.
As of December 31, 2023, Dominion Bank has issued one letter of credit in the amount of $265,000 to support our workers compensation insurance. The letter of credit is secured by a certificate of deposit with Dominion Bank. Other Indebtedness. As of December 31, 2023, we have one note payable to a finance company for various insurance premiums totaling $910,000.
The following table shows our sources and uses of cash (in thousands) for the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 2021 Net cash (used in) provided by ​ ​ ​ ​ ​ ​ ​ Operating activities ​ $ (8,961) ​ $ (16,050) ​ Investing activities ​ (669) ​ 264 ​ Financing activities ​ (1,567) ​ 95 ​ Effect of exchange rate changes on cash, cash equivalents and restricted cash ​ (265) ​ 112 ​ Net change in cash and cash equivalents and restricted cash ​ $ (11,462) ​ $ (15,579) ​ Year Ended December 31, 2022 versus Year Ended December 31, 2021 Net cash used in operating activities was $8,961,000 for the year ended December 31, 2022 and $16,050,000 for the same period of 2021.
The following table shows our sources and uses of cash (in thousands) for the years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 Net cash provided by (used in) ​ ​ ​ ​ ​ ​ ​ Operating activities ​ $ 814 ​ $ (3,269) ​ Investing activities ​ (4,504) ​ (1,089) ​ Financing activities ​ (4,204) ​ (2,150) ​ Effect of exchange rate changes on cash, cash equivalents and restricted cash ​ 63 ​ (265) ​ Net change in cash and cash equivalents and restricted cash ​ $ (7,831) ​ $ (6,773) ​ Year Ended December 31, 2023 versus Year Ended December 31, 2022 Net cash provided by operating activities was $814,000 for the year ended December 31, 2023 and net cash used by operating activities was $3.3 million for the same period of 2022.
The increase in revenues for the year ended December 31, 2022 compared to the same period of 2021 was primarily a result of increased demand for our services. Operating Expenses. Operating expenses for the year ended December 31, 2022 increased to $37,910,000 compared to $29,016,000 for the same period of 2021.
Acquisition revenues for the year ended December 31, 2023, were $49.0 million compared to $31.1 million for the same period of 2022. The increase in revenues for the year ended December 31, 2023, compared to the same period of 2022 was primarily a result of increased demand for our services. Canadian Fee Revenues.
Historically, we have primarily relied on cash generated from operations, cash reserves and borrowings from commercial banks to fund our working capital requirements and, to some extent, our capital expenditures. Recently, we have funded some of our capital expenditures through finance leases and equipment term loans.
We believe that our cash flows from operations, and our current financial position are adequate to fund our continued operations. Capital Resources . Historically, we have primarily relied on cash generated from operations, cash reserves and borrowings from commercial banks to fund our working capital requirements and, to some extent, our capital expenditures.
The increase in operating expenses was mainly due to an overall increase in crew production and utilization. General and Administrative Expenses. General and administrative expenses were 36.8% of revenues in the year ended December 31, 2022 compared to 48.8% of revenues in the same period of 2021 primarily due to the increase in operating revenues discussed above.
The increase in operating expenses was mainly due to an overall increase in crew production and utilization. Canadian Fee Operating Expenses. Acquisition expenses for the year ended December 31, 2023, increased slightly to $11.8 million compared to $11.4 million for the same period of 2022.
Net cash provided by investing activities was $264,000 for the year ended December 31, 2021 and includes $318,000 of proceeds from maturities of short-term investments that were not reinvested and $451,000 in proceeds from the disposal of assets offset by cash capital expenditures of $505,000.
Net cash used in investing activities was $4.5 million for the year ended December 31, 2023, and includes cash capital expenditures of $3.7 million and cash acquisition of short–term investments of $1.0 million, offset by $217,000 in proceeds from the disposal of assets.
Our allowance for doubtful accounts was $250,000 at December 31, 2022 and 2021. Impairment of Long-Lived Assets. We review long-lived assets for impairment when triggering events occur suggesting deterioration in the assets’ recoverability or fair value.
Because of the use of assumptions and estimates inherent in the reporting process, actual results could differ from those estimates. Impairment of Long-Lived Assets. We review long-lived assets for impairment when triggering events occur suggesting deterioration in the assets’ recoverability or fair value.
Net cash provided by financing activities was $95,000 for the year ended December 31, 2021 and includes $787,000 of proceeds from notes payable offset by principal payments of $562,000 on our notes and $55,000 on our finance leases and outflows of $75,000 associated with taxes related to stock compensation awards vesting.
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.
As of December 31, 2022, we have not borrowed any amounts under the Revolving Credit Facility and have 21 Table of Contents approximately $9,017,000 available for withdrawal.
Our obligations under the Loan Agreement are secured by a Certificate of Deposit with Dominion Bank for $5 million (the “Deposit”) in our collateral account. As of December 31, 2023, we have not borrowed any amounts under the Revolving Credit Facility and have approximately $5.0M available for withdrawal.
The maturity date of the Loan Agreement is September 30, 2023. We do not currently have any notes payable under the Revolving Credit Facility. Dominion Letters of Credit. As of December 31, 2022, Dominion Bank has issued one letter of credit in the amount of $265,000 to support our workers compensation insurance.
The financial covenant testing shall resume if and when the Financial Covenant Suspension Threshold is no longer satisfied. The maturity date of the Loan Agreement is September 30, 2024. We do not currently have any notes payable under the Revolving Credit Facility. Dominion Letters of Credit.
On September 30, 2022, we entered into a Third Loan Modification Agreement (the “Third Modification”) to the Loan and Security Agreement (as amended by (i) that certain Loan Modification Agreement dated as of September 30, 2020, (ii) that certain Second Loan Modification Agreement dated as of September 30, 2021, and (iii) the Third Modification, the “Loan Agreement”) for the purpose of (a) amending and extending the maturity of our line of credit with Dominion Bank by one year and (b) amending the principal amount under the Loan Agreement, (c) amending the interest rate under the Loan Agreement, (d) amending our obligation to maintain a certain tangible net worth and (e) adding our obligation to maintain a minimum liquidity amount.
On September 30, 2023, we entered into the Fifth Loan Modification Agreement (as amended by (i) that certain Loan Modification Agreement dated as of September 30, 2020, (ii) that certain Second Loan Modification Agreement dated as of September 30, 2021, (iii) that certain Third Loan Modification Agreement dated as of September 30, 2022, (iv) that certain Fourth Modification Agreement dated as of March 21, 2023, and (v) the Fifth Modification Agreement, the “Loan Agreement”) The Loan Agreement now provides for a Revolving Credit Facility in an amount up to the lesser of (I) an amount equal to the Borrowing Base or (II) $5 million.
General and administrative expenses increased to $13,785,000 during the year ended December 31, 2022 from $12,046,000 during the same period of 2021. The primary factors for the increase in general and administrative expenses are related to increases in professional fees and accounting charges in 2022. We anticipate general and administrative charges for 2023 to be similar to those in 2022.
General and Administrative Expenses. General and administrative expenses decreased 26% to $11.4 million for the year ended December 31, 2023 compared to $15.5 million for the same period of 2022. The primary factors for the decrease in general and administrative expenses are related to continued cost management and streamlining procedures.
The decrease in cash used in operating activities was primarily due to a decreased net loss combined with an increase in our operating level of deferred revenue offset by increases in contract assets and other prepaid expenses as of December 31, 2022. The gain from employee retention credit is offset by the increase in employee retention credit receivable.
The decrease in cash used in operating activities was primarily due to a decreased net loss, due to an increase in activity.
Removed
We began the fourth quarter with three small to mid-sized channel count crews operating in the lower 48 in October and dropped to one mid-size crew intermittently in November and a large channel count crew in late December. Project timing was, and continues to be, impacted by delays in securing necessary land access agreements on behalf of our clients.
Added
In the fourth quarter, our Board of Directors terminated our President and Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer. Our current management team is focused on improving margins on our seismic acquisition services, reducing general and administrative expenses, and improving our operating cash flows.
Removed
Activity in Canada began earlier than in recent seasons with up to three small channel count crews operating in the back half of the fourth quarter and continuing to operate today.
Added
We have implemented a mark-up to our customers on reimbursable expenses and permitting costs, adjusting our bidding process to better account for our cost structure, and other cost reduction initiatives to improve our profitability. We had two crews operating throughout the fourth quarter in the United States and resumed our seasonal operations in Canada.
Removed
For the full year, we experienced low utilization rates, particularly during the second and third quarters of 2022 as demand for seismic services remained at historically low levels in North America. Bid activity and client discussions improved in the third and fourth quarter and activity levels improved in the fourth quarter.
Added
High crew utilization in the fourth quarter resulted in improved margins and profitability. In the first quarter, we continued to keep our crews highly utilized in the US and Canada. We are working to keep our crews highly utilized throughout the remainder of the year.
Removed
Visibility continues to improve into 2023 as does project timing related to land access agreements and project readiness. First quarter 2023 activity in the lower 48 began with a large channel count crew operating on a project that began late in the fourth quarter of 2022.
Added
Historically, the chief operating decision maker made operating decisions and evaluated operating results of the Company on a consolidated basis. In December 2023, we appointed a new Chief Executive Officer who is our current chief operating decision maker.
Removed
After completion of that project in January, the operation of a mid-size channel count crew began in February. We are currently operating two mid-sized crews, one of which began operations in early March. Based on currently available information and discussion with our clients, we believe we will continue operation of two mid-sized crews into the third quarter of 2023.
Added
Currently, our chief operating decision maker reviews the discrete segment financial information on a geographic basis for the US operations and Canada Operations. The revenue for both of the Company’s 18 Table of Contents segments is generated by the same services, which utilize the same type of equipment and personnel.
Removed
Client discussions continued to increase early in 2023 and we believe demand for our services is sufficient to maintain one to two mid-sized crews well into the second half of 2023.
Added
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, depletion and amortization and (iv) other unusual or non-recurring charges, such as severance expenses.
Removed
In Canada, we are currently operating four crews of increased capacity from the fourth quarter of 2022 and anticipate operating all four crews through the remainder of the Canadian season which typically ends in late March or early April.
Added
As a result, our business has two reportable segments, US operations and Canada Operations. We have included management’s discussion and analysis about our two reportable segments for all periods presented herein. Results of Operations Year Ended December 31, 2023 versus Year Ended December 31, 2022 US Fee Revenues.
Removed
Results of Operations Year Ended December 31, 2022 versus Year Ended December 31, 2021 Operating Revenues. Operating revenues for the year ended December 31, 2022 were $37,480,000 compared to $24,695,000 for the same period of 2021.
Added
Acquisition revenues for the year ended December 31, 2023, were $12.4 million compared to $15.0 million for the same period of 2022. The decrease in revenues for the year ended December 31, 2023, compared to the same period of 2022 was primarily a result of a slight decrease in demand for our services in Canada. Total Revenues.
Removed
The Loan Agreement provides for a secured revolving credit facility (the “Revolving Credit Facility”) in an amount up to the lesser of (i) $10,000,000 or (ii) a sum equal to (a) 80% of our eligible accounts receivable plus (b) 100% of the amount on deposit with Dominion Bank in our collateral account, including a restricted IntraFi Network Deposit account of $5,000,000 (the “Deposit”).
Added
Revenue for the year ended December 31. 2023, were $96.8 million compared to $51.6 million for the same period of 2022. Total revenues included an increase of $29.8 million in reimbursable revenues. US Fee Operating Expenses. Acquisition expenses for the year ended December 31, 2023, increased to $41.1 million compared to $29.5 million for the same period of 2022.
Removed
We will pay a commitment fee of 0.10% per annum on the difference of (a) $10,000,000 minus the Deposit minus (b) the daily average usage of the Revolving Credit Facility. The Loan Agreement contains customary covenants for credit facilities of this type, including limitations on disposition of assets.
Added
The increase in operating expenses was mainly due to an overall increase in general operating costs. Reimbursable Revenues and Costs . These revenues and expenses passed through to our clients and are job specific and vary significantly from year to year. The costs are agreed to by our clients prior to contracting with outside vendors for the various tasks.
Removed
We are also obligated to meet certain financial covenants under the Loan Agreement, including maintaining a tangible net worth of not less than $38,000,000 and, to be tested as of the end of each calendar quarter, unencumbered liquid assets of not less than $5,000,000, and specified ratios with respect to current assets and liabilities and debt to tangible net worth.
Added
We anticipate general and administrative charges for 2024 to be below those in 2023 due to continued focus on reducing costs and the change in our management team. Severance Expenses.
Removed
We received a limited waiver from Dominion Bank with respect to any non-compliance with the tangible net worth covenant for the period ended December 31, 2022. Our obligations under the Loan Agreement are secured by a security interest in the collateral account (including the Deposit) with Dominion Bank and future accounts receivable and related collateral.
Added
In December 2023, we recorded severance expenses of $2.2 million in connection with the termination of the Company’s (i) President and Chief Executive Officer, (ii) Chief Financial Officer, Executive Vice President, Secretary and Treasurer and (iii) Chief Operating Officer and Executive Vice President. Depreciation Expense.
Removed
Because of the use of assumptions and estimates inherent in the reporting process, actual results could differ from those estimates. Allowance for Doubtful Accounts. Our allowance for doubtful accounts reflects our current estimate of credit losses expected to be incurred over the life of the financial instrument and is determined based on a number of factors.
Added
Net cash used in operating activities $ (236) ​ $ 1,050 ​ $ 814 ​ $ (6,440) ​ $ 3,171 ​ $ (3,269) Changes in working capital and other items ​ (2,627) ​ ​ (1,249) ​ ​ (3,876) ​ ​ (1,529) ​ ​ (785) ​ ​ (2,314) Non-cash adjustments to net loss ​ 1,226 ​ ​ (180) ​ ​ 1,046 ​ ​ (1,267) ​ ​ (144) ​ ​ (1,411) EBITDA $ (1,637) ​ $ (379) ​ $ (2,016) ​ $ (9,236) ​ $ 2,242 ​ $ (6,994) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 US ​ 2023 CA ​ 2023 Consol. ​ 2022 US ​ 2022 CA ​ 2022 Consol.
Removed
We prepare our allowance for doubtful accounts receivable based on our review of past-due accounts, our past experience of historical write-offs, our current client base, when customer accounts exceed 90 days past due and specific customer account reviews.
Added
Net loss $ (10,057) ​ $ (2,090) ​ $ (12,147) ​ $ (18,867) ​ $ 222 ​ $ (18,645) Depreciation and amortization ​ 6,566 ​ ​ 1,926 ​ ​ 8,492 ​ ​ 9,721 ​ ​ 2,109 ​ ​ 11,830 Severance expense ​ 2,208 ​ ​ - ​ ​ 2,208 ​ ​ - ​ ​ - ​ ​ - Interest (income) expense, net ​ (258) ​ ​ (215) ​ ​ (473) ​ ​ (197) ​ ​ (89) ​ ​ (286) Income tax expense (benefit) ​ (96) ​ ​ - ​ ​ (96) ​ ​ 107 ​ ​ - ​ ​ 107 EBITDA $ (1,637) ​ $ (379) ​ $ (2,016) ​ $ (9,236) ​ $ 2,242 ​ $ (6,994) 20 Table of Contents ​ Liquidity and Capital Resources Introduction.
Removed
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 our clients. With the adoption of ASU 2016-13 in 2020, we made an accounting policy election to write off accrued interest amounts by reversing interest income.
Added
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.
Added
We incurred net losses of $12.1 million for the year ended December 31, 2023, and $18.6 million for the year ended December 31, 2022. As of December 31, 2023, we had $15.8 million in cash, and a positive working capital balance of $15 million.
Added
Recently, we have funded some of our capital expenditures through finance leases and equipment term loans.
Added
From and after September 30, 2023 and so long as the Deposit held by Dominion Bank remains greater than or equal to the indebtedness (the “Financial Covenant Suspension Threshold”), the testing of the financial covenants set forth in the Loan Agreement has been suspended.
Added
In addition, we lease certain seismic recording equipment and vehicles under leases classified as finance leases. Our Consolidated Balance Sheet as of December 31, 2023 includes finance leases of $1.8 million. Contractual Obligations.
Added
Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) . ASU 2023-07 seeks to improve disclosures about a public entity’s reportable segments and add disclosures around a reportable segment’s expenses.
Added
The updated guidance is effective for our annual periods beginning January 1, 2024, and interim periods within fiscal years beginning January 1, 2025. As we have two reportable segments, we do not expect the adoption of this ASU to have a material impact on our financial statements and disclosures.
Added
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) . ASU 2023-09 seeks to improve transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disclosures. The updated guidance is effective for us on January 1, 2025.
Added
We do not expect the adoption of ASU 2023-09 to have a material impact on our financial statements and disclosures.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−0 removed7 unchanged
Biggest changeHistorically, we have not experienced any losses in such accounts; however, volatility in financial markets may impact our credit risk on cash and short-term investments. At December 31, 2022, cash, restricted cash and short term investments totaled $19,179,000. For further information, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 1A. Risk Factors.”
Biggest changeHistorically, we have not experienced any losses in such accounts; however, volatility in financial markets may impact our credit risk on cash and short-term investments. At December 31, 2023, cash, restricted cash and short term investments totaled $16.0 million. For further information, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 1A.
The remaining balance of our revenue derived from varied clients and none represented more than 10% of revenue. Interest Rate Risk. From time to time, we are exposed to the impact of interest rate changes on the outstanding indebtedness under our Loan Agreement. 24 Table of Contents We generally have cash in the bank which exceeds federally insured limits.
The remaining balance of our revenue derived from varied clients and none represented more than 10% of revenue. Interest Rate Risk. From time to time, we are exposed to the impact of interest rate changes on the outstanding indebtedness under our Loan Agreement. We generally have cash in the bank which exceeds federally insured limits.
Our historical experience supports our allowance for doubtful accounts of $250,000 at December 31, 2022. This does not necessarily indicate that it would be adequate to cover a payment default by one large or several smaller clients. We generally provide services to certain key clients that account for a significant percentage of our accounts receivable at any given time.
Our historical experience supports our allowance for expected credit losses of $250,000 at December 31, 2023. This does not necessarily indicate that it would be adequate to cover a payment default by one large or several smaller clients. We generally provide services to certain key clients that account for a significant percentage of our accounts receivable at any given time.
This concentration of credit risk may be affected by changes in the economic or other conditions of our key clients and may accordingly impact our overall credit risk.
This concentration of credit risk may be affected by changes in the economic or other conditions of our key clients and 24 Table of Contents may accordingly impact our overall credit risk.
Because of the nature of our contracts and clients’ projects, our largest clients can change from year to year, and the largest clients in any year may not be indicative of the largest clients in any subsequent year. During the twelve months ended December 31, 2022, our three largest clients accounted for approximately 35% of revenue.
Because of the nature of our contracts and clients’ projects, our largest clients can change from year to year, and the largest clients in any year may not be indicative of the largest clients in any subsequent year. During the twelve months ended December 31, 2023, our four largest clients accounted for approximately 73% of revenue.

Other DWSN 10-K year-over-year comparisons