Dawson Geophysical Co 10-Q for FY2023 Q3

About this 10-Q

Headline figures

Dawson Geophysical Co (DWSN)

10-Q 2023-11-09 For: 2023-09-30

Added on April 10, 2026

Dawson Geophysical Co filed this 10-Q on November 9, 2023, covering the quarter ended September 30, 2023 (FY2023 Q3).

September 30, 2023

December 31, 2022

Notes payable to finance company for insurance

Aggregate principal amount outstanding

Interest rate of 7.99%

Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $22.96M; up 209.1% from $7.43M a year earlier
Net loss: $5.2M; compared with a net loss of $6.91M a year earlier
Diluted EPS: -$0.20; compared with -$0.28 a year earlier

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Texas		74-2095844
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)


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


Accelerated filer ☐	Large accelerated filer ◻	Smaller reporting company ☒

Non-accelerated filer ⌧	Emerging growth company ☐


Title of Each Class		Outstanding at November 7, 2023
Common Stock, $0.01 par value		30,812,329 shares

		Page Number
Part I. FINANCIAL INFORMATION		3
Item 1. Financial Statements		3
Condensed Consolidated Balance Sheets at September 30, 2023 (unaudited) and December 31, 2022 (unaudited)		3
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)		4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (unaudited)		5
Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)		6
Notes to Condensed Consolidated Financial Statements (unaudited)		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3. Quantitative and Qualitative Disclosures about Market Risk		22
Item 4. Controls and Procedures		22
Part II. OTHER INFORMATION		23
Item 1. Legal Proceedings		23
Item 1A. Risk Factors		23
Item 6. Exhibits		24
Signatures		25


	September 30,		December 31,
	2023		2022 (as adjusted)
	(unaudited)		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	13,891	$	18,603
Restricted cash		5,000		5,000
Short-term investments		265		265
Accounts receivable, net		5,953		7,972
Employee retention credit receivable		—		3,035
Prepaid expenses and other current assets		7,507		8,951
Total current assets		32,616		43,826

Property and equipment, net		16,451		20,468

Right-of-use assets		3,466		4,010

Intangibles, net		368		369

Total assets	$	52,901	$	68,673

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	5,458	$	4,140
Accrued liabilities:
Payroll costs and other taxes		718		2,001
Other		1,064		1,280
Deferred revenue		6,748		7,380
Current maturities of notes payable and finance leases		511		275
Current maturities of operating lease liabilities		1,190		1,118
Total current liabilities		15,689		16,194

Long-term liabilities:
Notes payable and finance leases, net of current maturities		1,139		207
Operating lease liabilities, net of current maturities		2,654		3,331
Deferred tax liabilities, net		15		137
Total long-term liabilities		3,808		3,675

Commitments and contingencies		—		—

Stockholders’ equity:
Preferred stock-par value $1.00 per share; 4,000,000 shares authorized, none outstanding		—		—
Common stock-par value $0.01 per share; 35,000,000 shares authorized,
30,812,329 and 23,812,329 shares issued, and 30,812,329 and 23,812,329 shares
outstanding at September 30, 2023 and December 31, 2022, respectively		308		238
Additional paid-in capital		156,678		155,413
Accumulated earnings (deficit)		(121,534)		(112,469)
Equity of Breckenridge prior to acquisition		—		7,695
Accumulated other comprehensive income (loss), net		(2,048)		(2,073)
Total stockholders’ equity		33,404		48,804

Total liabilities and stockholders’ equity	$	52,901	$	68,673


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022 (as adjusted)		2023		2022 (as adjusted)
Operating revenues	$	22,961	$	7,429	$	72,588	$	34,128

Operating costs:
Operating expenses		24,144		8,650		67,832		29,838
General and administrative		2,495		2,975		8,971		11,671
Depreciation and amortization		2,014		2,861		6,827		8,972
		28,653		14,486		83,630		50,481

Income (loss) from operations		(5,692)		(7,057)		(11,042)		(16,353)

Other income (expense):
Interest income		192		91		436		147
Interest expense		(22)		(4)		(53)		(24)
Other income (expense), net		327		42		522		354

Income (loss) before income tax		(5,195)		(6,928)		(10,137)		(15,876)

Income tax benefit (expense):		(3)		16		96		—

Net income (loss)		(5,198)		(6,912)		(10,041)		(15,876)

Other comprehensive income (loss):
Net unrealized income (loss) on foreign exchange rate translation		(218)		(566)		25		(1,238)

Comprehensive income (loss)	$	(5,416)	$	(7,478)	$	(10,016)	$	(17,114)

Basic income (loss) per share of common stock	$	(0.20)	$	(0.28)	$	(0.40)	$	(0.64)

Diluted income (loss) per share of common stock	$	(0.20)	$	(0.28)	$	(0.40)	$	(0.64)

Weighted average equivalent common shares outstanding		26,137,648		25,000,564		25,383,757		24,904,495

Weighted average equivalent common shares outstanding - assuming dilution		26,137,648		25,000,564		25,383,757		24,904,495


	Nine Months Ended September 30,
	2023		2022 (as adjusted)
Cash flows from operating activities:
Net income (loss)	$	(10,041)	$	(15,876)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		6,827		8,972
Operating lease cost		827		748
Non-cash compensation		—		413
Deferred income tax (benefit) expense		(121)		—
Bad debt expense		68		—
(Gain) loss on disposal of assets		(72)		581
Remeasurement and other		(2)		(19)
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable		960		3,439
(Increase) decrease in employee retention credit receivable		3,035		—
(Increase) decrease in prepaid expenses and other assets		1,882		(2,642)
Increase (decrease) in accounts payable		2,052		1,557
Increase (decrease) in accrued liabilities		(1,431)		(492)
Increase (decrease) in operating lease liabilities		(888)		(760)
Increase (decrease) in deferred revenue		(634)		2,481

Net cash provided by (used in) operating activities		2,462		(1,598)

Cash flows from investing activities:
Capital expenditures, net of non-cash capital expenditures summarized below (if applicable)		(2,623)		(637)
Acquisition of short-term investments		(1,000)		—
Proceeds from disposal of assets		173		304

Net cash provided by (used in) investing activities		(3,450)		(333)

Cash flows from financing activities:
Principal payments on notes payable		(521)		(1,103)
Principal payments on finance leases		(150)		(34)
Tax withholdings related to stock-based compensation awards		—		(79)
Cash settlement of RSUs		—		(301)
Sale of treasury stock		—		113
Breckenridge cash contributions (distributions) prior to acquisition		(3,055)		(928)

Net cash provided by (used in) financing activities		(3,726)		(2,332)

Effect of exchange rate changes on cash and cash equivalents and restricted cash		2		(523)

Net increase (decrease) in cash and cash equivalents and restricted cash		(4,712)		(4,786)

Cash and cash equivalents and restricted cash at beginning of period		23,603		30,376

Cash and cash equivalents and restricted cash at end of period	$	18,891	$	25,590

Supplemental cash flow information:
Cash paid for interest	$	55	$	25
Cash received for income taxes	$	—	$	7

Non-cash operating, investing and financing activities:
Increase (decrease) in accrued purchases of property and equipment	$	(605)	$	—
Finance leases incurred	$	1,409	$	—
Increase in right-of-use assets and operating lease liabilities	$	283	$	598
Financed insurance premiums	$	440	$	944
Deemed distribution of Breckenridge net assets not acquired	$	2,329	$	—
Deemed contribution of Breckenridge net assets	$	—	$	(6,472)
Acquisition of net assets of Breckenridge	$	(1,335)	$	—


		Equity								Accumulated
		Attributable	Common Stock			Additional		Accumulated		Other
		to Breckenridge	Number			Paid-in		Earnings		Comprehensive
		Prior to Acquisition	Of Shares	Amount		Capital		(Deficit)		Income (Loss)		Total
Balance January 1, 2023 (as adjusted)	$	7,695	23,812,329	$	238	$	155,413	$	(112,469)	$	(2,073)	$	48,804
Net income (loss)		(976)							563				(413)
Unrealized income (loss) on foreign exchange rate translation											(6)		(6)
Issuance of stock for Breckenridge acquisition		(1,335)	1,188,235		12		2,008						685
Excess of purchase price over net assets acquired							(10,565)						(10,565)
Breckenridge cash distributions prior to acquisition		(3,055)											(3,055)
Deemed distribution of Breckenridge net assets not acquired		(2,329)											(2,329)
Balance March 31, 2023		—	25,000,564		250		146,856		(111,906)		(2,079)		33,121
Net income (loss)									(4,430)				(4,430)
Unrealized income (loss) on foreign exchange rate translation											249		249
Balance June 30, 2023		—	25,000,564		250		146,856		(116,336)		(1,830)		28,940
Net income (loss)									(5,198)				(5,198)
Unrealized income (loss) on foreign exchange rate translation											(218)		(218)
Issuance of stock for convertible note			5,811,765		58		9,822						9,880
Balance September 30, 2023	$	—	30,812,329	$	308	$	156,678	$	(121,534)	$	(2,048)	$	33,404


	Operating Leases		Finance Leases
October 2023 - September 2024	$	1,362	$	475
October 2024 - September 2025		1,129		476
October 2025 - September 2026		1,084		566
October 2026 - September 2027		591		193
October 2027 - September 2028		40		—
Thereafter		—		—
Total payments under lease agreements		4,206		1,710

Less imputed interest		(362)		(183)

Total lease liabilities	$	3,844	$	1,527


Deemed Distribution (Contribution)	Nine Months Ended September 30,
	2023		2022
Deemed distribution (contribution) of short-term investments	$	1,000	$	—
Deemed distribution (contribution) of accounts receivable		1,015		(2,605)
Deemed distribution (contribution) of prepaids and other		1		(133)
Deemed distribution (contribution) of land and buildings		514		(4,726)
Deemed (distribution) contribution of accounts payable		(132)		196
Deemed (distribution) contribution of accrued liabilities		(69)		228
Deemed (distribution) contribution of deferred revenue		—		568
Deemed distribution of Breckenridge net assets not acquired	$	2,329
Deemed contribution of Breckenridge net assets			$	(6,472)


Historical Carrying Value of Assets Acquired	March 24, 2023
Accounts receivable, net	$	67
Prepaid expenses and other current assets		56
Property and equipment, net		1,322
Other accrued liabilities		(16)
Deferred revenue		(94)
Acquisition of Breckenridge net assets	$	1,335


Consideration Paid	March 24, 2023
Common stock issued	$	2,020
Note payable issued		9,880
Purchase price	$	11,900

	DAWSON GEOPHYSICAL COMPANY

DATE: November 9, 2023	By:	/s/ Stephen C. Jumper
		Stephen C. Jumper
		President and Chief Executive Officer


DATE: November 9, 2023	By:	/s/ James K. Brata
		James K. Brata
		Executive Vice President, Chief Financial Officer, Secretary and Treasurer


	BORROWER:

	DAWSON GEOPHYSICAL COMPANY,
	a Texas corporation

	By:	/s/ James Brata
	Name:	James K. Brata
	Title:	Executive Vice President – Chief Financial Officer


	LENDER:

	DOMINION BANK

	By:	/s/ Brad North
	Name:	Brad North
	Title:	Senior Vice President


Excess Purchase Price	March 24, 2023
Purchase price	$	11,900
Historical carrying value of assets acquired		(1,335)
Excess purchase price	$	10,565


	December 31, 2022
	Dawson		Breckenridge		Dawson
	Previously Reported				As Adjusted
			(unaudited)		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	13,914	$	4,689	$	18,603
Restricted cash		5,000		—		5,000
Short-term investments		265		—		265
Accounts receivable, net		6,945		1,027		7,972
Employee retention credit receivable		3,035		—		3,035
Prepaid expenses and other current assets		8,876		75		8,951
Total current assets		38,035		5,791		43,826

Property and equipment, net		18,127		2,341		20,468
Right-of-use assets		4,010		—		4,010
Intangibles, net		369		—		369
Total assets	$	60,541	$	8,132	$	68,673

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	4,015	$	125	$	4,140
Accrued liabilities:
Payroll costs and other taxes		1,973		28		2,001
Other		1,178		102		1,280
Deferred revenue		7,199		181		7,380
Current maturities of notes payable and finance leases		275		—		275
Current maturities of operating lease liabilities		1,118		—		1,118
Total current liabilities		15,758		436		16,194

Long-term liabilities:
Notes payable and finance leases, net of current maturities		207		—		207
Operating lease liabilities, net of current maturities		3,331		—		3,331
Deferred tax liabilities, net		136		1		137
Total long-term liabilities		3,674		1		3,675

Stockholders' equity:
Common stock		238		—		238
Additional paid-in capital		155,413		—		155,413
Accumulated earnings (deficit)		(112,469)		—		(112,469)
Equity of Breckenridge prior to acquisition		—		7,695		7,695
Accumulated other comprehensive income (loss), net		(2,073)		—		(2,073)
Total stockholders' equity		41,109		7,695		48,804

Total liabilities and stockholders' equity	$	60,541	$	8,132	$	68,673


	Three Months Ended September 30, 2022
	Dawson		Breckenridge		Eliminations and		Dawson
	Previously Reported				Other Adjustments		As Adjusted

Operating revenues	$	3,538	$	4,275	$	(384)	$	7,429

Operating costs:
Operating expenses		6,357		2,677		(384)		8,650
General and administrative		2,556		419		—		2,975
Depreciation and amortization		2,373		488		—		2,861
		11,286		3,584		(384)		14,486

Income (loss) from operations		(7,748)		691		—		(7,057)

Other income (expense):
Interest income		90		1		—		91
Interest expense		(4)		—		—		(4)
Other income (expense), net		43		(1)		—		42
Income (loss) before income tax		(7,619)		691		—		(6,928)
Income tax benefit (expense)		16		—		—		16
Net income (loss)		(7,603)		691		—		(6,912)
Other comprehensive income (loss):
Net unrealized income (loss) on foreign exchange rate translation		(566)		—		—		(566)

Comprehensive (loss) income	$	(8,169)	$	691	$	—	$	(7,478)
Basic income (loss) per share of common stock	$	(0.32)	$	—	$	0.04	$	(0.28)
Diluted income (loss) per share of common stock	$	(0.32)	$	—	$	0.04	$	(0.28)
Weighted average equivalent common shares outstanding		23,812,329		—		1,188,235		25,000,564
Weighted average equivalent common shares outstanding
- assuming dilution		23,812,329		—		1,188,235		25,000,564


	Nine Months Ended September 30, 2022
	Dawson		Breckenridge		Eliminations and		Dawson
	Previously Reported				Other Adjustments		As Adjusted

Operating revenues	$	22,818	$	13,226	$	(1,916)	$	34,128

Operating costs:
Operating expenses		23,008		8,746		(1,916)		29,838
General and administrative		10,502		1,169		—		11,671
Depreciation and amortization		7,458		1,514		—		8,972
		40,968		11,429		(1,916)		50,481

Income (loss) from operations		(18,150)		1,797		—		(16,353)

Other income (expense):
Interest income		144		3		—		147
Interest expense		(24)		—		—		(24)
Other income (expense), net		358		(4)		—		354
Income (loss) before income tax		(17,672)		1,796		—		(15,876)
Income tax benefit (expense)		—		—		—		—
Net income (loss)		(17,672)		1,796		—		(15,876)
Other comprehensive income (loss):
Net unrealized income (loss) on foreign exchange rate translation		(1,238)		—		—		(1,238)

Comprehensive (loss) income	$	(18,910)	$	1,796	$	—	$	(17,114)
Basic income (loss) per share of common stock	$	(0.74)	$	—	$	0.10	$	(0.64)
Diluted income (loss) per share of common stock	$	(0.74)	$	—	$	0.10	$	(0.64)
Weighted average equivalent common shares outstanding		23,772,843		—		1,131,652		24,904,495
Weighted average equivalent common shares outstanding
- assuming dilution		23,772,843		—		1,131,652		24,904,495


	Three Months Ended		Nine Months Ended
	September 30, 2023		September 30, 2023

Operating revenues	$	—	$	782

Operating costs:
Operating expenses		—		806
General and administrative		—		438
Depreciation and amortization		—		505
		—		1,749

Income (loss) from operations		—		(967)

Other income (expense):
Interest income		—		2
Interest expense		—		—
Other income (expense), net		—		(11)
Income (loss) before income tax		—		(976)
Income tax benefit (expense)		—		—
Net income (loss)	$	—	$	(976)




Number			Exhibit

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

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

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

10.4*			Fifth Loan Modification Agreement, dated as of September 30, 2023, by and between Dawson Geophysical Company and Dominion Bank.

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

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

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

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

101*			The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022, (ii) Condensed Consolidated Balance Sheets at September 30, 2023 and December 31, 2022, (iii) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022, (iv) Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022, and (v) Notes to Condensed Consolidated Financial Statements.

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


Dated: November 9, 2023

	/s/ Stephen C. Jumper
	Stephen C. Jumper
	President and Chief Executive Officer
	(principal executive officer)


	/s/ James K. Brata
	James K. Brata
	Executive Vice President,
	Chief Financial Officer, Secretary and Treasurer
	(principal financial and accounting officer)