Forward Looking Statements



Statements other than statements of historical fact included in this Form 10-Q
that relate to forecasts, estimates or other expectations regarding future
events, including without limitation, statements under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" regarding
technological advancements, our financial position, business strategy and plans,
objectives of our management for future operations, including statements related
to the expected or potential impact of the novel coronavirus ("COVID-19")
pandemic on our business, financial condition and results of operations, may be
deemed to be forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934
(the "Exchange Act"). When used in this Form 10-Q, words such as "anticipate,"
"believe," "estimate," "expect," "intend," and similar expressions, as they

relate to us or our

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management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of management, as well as assumptions made by and
information currently available to management. Actual results could differ
materially from those contemplated by the forward-looking statements as a result
of certain factors. These risks include, but are not limited to, the Company's
status as a controlled public company, which exempt the Company from certain
corporate governance requirements; the limited market for the Company's shares,
which could result in the delisting of the Company's shares from Nasdaq and the
Company no longer being required to make filings with the SEC; the impact of
general economic, industry, market or political conditions; dependence upon
energy industry spending; changes in exploration and production spending by our
customers and changes in the level of oil and natural gas exploration and
development; the results of operations and financial condition of our customers,
particularly during extended periods of low prices for crude oil and natural
gas; the volatility of oil and natural gas prices; changes in economic
conditions; the severity and duration of the COVID-19 pandemic, related economic
repercussions and the resulting impact on demand for oil and gas; surpluses in
the supply of oil and the ability of the Organization of the Petroleum Exporting
Countries and its allies, collectively known as OPEC+, to agree on and comply
with supply limitations; the duration and magnitude of the unprecedented
disruption in the oil and gas industry currently resulting from the impact of
the foregoing factors, which is negatively impacting our business; the potential
for contract delays; reductions or cancellations of service contracts; limited
number of customers; credit risk related to our customers; reduced utilization;
high fixed costs of operations and high capital requirements; operational
challenges relating to the COVID-19 pandemic and efforts to mitigate the spread
of the virus, including logistical challenges, protecting the health and
well-being of our employees and remote work arrangements; industry competition;
external factors affecting our crews such as weather interruptions and inability
to obtain land access rights of way; whether we enter into turnkey or dayrate
contracts; crew productivity; the availability of capital resources; and
disruptions in the global economy, including export controls and financial and
economic sanctions imposed on certain industry sectors and parties as a result
of the developments in Ukraine and related activities. A discussion of these and
other factors, including risks and uncertainties, is set forth in our Annual
Report on Form 10-K that was filed with the SEC on March 18, 2022 and any
subsequent Quarterly Reports on Form 10-Q filed with the SEC. All subsequent
written and oral forward-looking statements attributable to us or persons acting
on our behalf are expressly qualified in their entirety by this paragraph. We
disclaim any intention or obligation to revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

Overview



We are a leading provider of North American onshore seismic data acquisition
services with operations throughout the continental U.S. and Canada.
Substantially all of our revenues are derived from the seismic data acquisition
services we provide to our clients. Our clients consist of major oil and gas
companies, independent oil and gas operators, and providers of multi-client data
libraries. In recent years, our primary customer base has consisted of providers
of multi-client data libraries. Demand for our services depends upon the level
of spending by these companies for exploration, production, development and
field management activities, which depends, in a large part, on oil and natural
gas prices. Significant fluctuations in domestic oil and natural gas exploration
and development activities related to commodity prices, as we have recently
experienced, have affected, and will continue to affect, demand for our services
and our results of operations, and such fluctuations continue to be the single
most important factor affecting our business and results of operations.

During the third quarter of 2022, we operated one small crew beginning in August
for most of the quarter with a second small crew deployed for intermittent
periods during the back half of the quarter. The projects completed in the third
quarter were small in size and not in close proximity to one another, which had
a negative effect on operating efficiencies. We did not operate a crew in Canada
in the third quarter.

We expect crew activity levels to increase in both the lower 48 and Canada in
the fourth quarter and extending into the first quarter of 2023. Channel count
utilization on both crews operating in the lower 48 increased in October. Based
on currently available information, we anticipate operating one mid-size channel
count crew in November increasing to a large channel count crew later in the
quarter with intermittent periods of a second small to mid-size channel count
crew in the lower 48. Canadian activity is scheduled to begin earlier than in
recent years with up to two crews of varying sizes operating during the back
half of the fourth quarter.

Visibility into 2023 has improved. In the lower 48, channel utilization is
expected to be at a higher level on one crew with a second smaller crew
operating periodically in the first quarter. Currently, expected projects are
anticipated to support up to two mid to large channel count crews beginning late
first or early second quarter and extending into the third quarter of 2023. We
anticipate activity level sufficient to support up to three crews in Canada
during the first quarter of 2023, with the Canadian season expected to end
around the conclusion of the first quarter.

Historically, the oil and gas industry, when emerging from a downturn, tends to
affect exploration and production ("E&P") companies first, followed by the
oilfield service sector, predominantly drilling operators and completion
companies, and finally, related services such as the seismic sector. That said,
while conditions in the North American seismic market remain challenged, demand
for our services and activity levels continues to improve. Such improvement is
not driven in broad strokes as seen within E&P companies and others in the oil
services sector; rather, demand for our services is currently target specific
and difficult to predict. Bid and crew activity outside of the

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Permian and Delaware basins are beginning to materialize in predominately natural gas driven basins and, to a lesser extent, in areas of interest for carbon capture projects.



In our continuing response to these difficult times, we significantly limited
capital budget spending, reduced fixed and variable operating expenses, and
implemented a comprehensive equipment maintenance program in preparation for a
rapid response to anticipated increased activity levels. In addition, we
maintain our commitment to our robust Health, Safety and Environmental program,
ongoing client relationships and product quality.

While our revenues are mainly affected by the level of client demand for our
services, our revenues are also affected by the pricing for our services that we
negotiate with our clients and the productivity and utilization level of our
data acquisition crews. Factors impacting productivity and utilization levels
include: client demand, commodity prices, whether we enter into turnkey or
dayrate contracts with our clients, the number and size of crews, the number of
recording channels per crew, crew downtime related to inclement weather, delays
in acquiring land access permits, agricultural or hunting activity, holiday
schedules, short winter days, crew repositioning and equipment failure. 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. Further, the ongoing COVID-19 pandemic may further compound one or
more of the foregoing factors and could directly affect our productivity.

Results of Operations



Operating Revenues. Operating revenues for the third quarter of 2022 increased
84.8% to $3,538,000 compared to $1,914,000 in the same period of 2021. Operating
revenues increased 64.7% to $22,818,000 during the first nine months of 2022
compared to $13,855,000 in the same period of 2021. The increased revenue during
the third quarter and first nine months of 2022 compared to the same periods of
2021 was primarily due to increased crew utilization during those periods of
2022.

Operating Expenses. Operating expenses for the third quarter of 2022 increased
59.9% to $6,357,000 compared to $3,975,000 in the same period of 2021. Operating
expenses increased 26.1% to $23,008,000 during the first nine months of 2022
compared to $18,247,000 in the same period of 2021. The increase in operating
expenses during the third quarter and first nine months of 2022 compared to the
same periods of 2021 was primarily due to the increased crew utilization during
those periods of 2022.

General and Administrative Expenses. General and administrative expenses were
72.2% and 46.0% of revenues in the third quarter and first nine months of 2022,
respectively compared to 127.6% and 57.7% of revenues in the same periods of
2021. General and administrative expenses increased $113,000 or 4.6% to
$2,556,000 during the third quarter of 2022 from $2,443,000 during the same
period of 2021, and increased $2,506,000 or 31.3% to $10,502,000 during the
first nine months of 2022 from $7,996,000 during the same period of 2021. The
primary factors for the minor increase in general and administrative expenses
during the third quarter of 2022 compared to the same period of 2021 was due to
general cost increases for goods and services. The primary factor for the
increase in general and administrative expenses during the first nine months of
2022 compared to the same period of 2021 was due to transaction costs of
$2,872,000 incurred related to the previously disclosed proposed merger with a
subsidiary of Wilks Brothers, LLC during the first quarter of 2022.

Depreciation and Amortization Expense. Depreciation and amortization expense for
the third quarter and first nine months of 2022 totaled $2,373,000 and
$7,458,000, respectively, compared to $3,249,000 and $10,083,000 for the same
periods of 2021. Depreciation expense decreased in 2022 compared to 2021 as a
result of multiple years of reduced capital expenditures. Our depreciation
expense is expected to remain below that of 2021 for the remainder of 2022 due
to the anticipated continuation of maintenance levels of capital expenditures to
maintain our existing asset base.

Total operating costs for the third quarter of 2022 were $11,286,000,
representing a 16.7% increase from the same period of 2021. The operating costs
for the first nine months of 2022 were $40,968,000, representing an 12.8%
increase from the same period of 2021. The increase in operating costs for the
third quarter and first nine months of 2022 compared to 2021 was primarily due
to the factors described above.

Income Taxes. Income tax benefit for the third quarter and first nine months of
2022 was $16,000 and $0, respectively, compared to income tax benefit of $0 for
the same periods of 2021. These amounts represent effective tax rates of 0.2%
and 0.0% for the third quarter and first nine months of 2022, respectively,
compared to 0.0% for the third quarter and first nine months of 2021. The
Company's nominal or no effective tax rate for the periods above was due to the
presence of net operating loss carryovers and adjustments to the valuation
allowance on deferred tax assets.

Our effective tax rates differ from the statutory federal rate of 21.0% for certain items such as state and local taxes, valuation allowances, non-deductible expenses and discrete items. For further information, see Note 9 of the Notes to the Condensed Consolidated Financial Statements.



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Use of EBITDA (a Non-GAAP measure)



We define EBITDA as net income (loss) plus interest expense, interest income,
income taxes, and depreciation and amortization expense. Our management uses
EBITDA as a supplemental financial measure to assess:

? the financial performance of our assets without regard to financing methods,

capital structures, taxes or historical cost basis;

our liquidity and operating performance over time in relation to other

? companies that own similar assets and that we believe calculate EBITDA in a

similar manner; and

? the ability of our assets to generate cash sufficient for us to pay potential

interest costs.




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

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

                                  Three Months Ended September 30,

Nine Months Ended September 30,


                                      2022                  2021                  2022                  2021
Net loss                        $        (7,603)      $        (7,865)     $       (17,672)      $       (22,110)
Depreciation and amortization              2,373                 3,249                7,458                10,083
Interest (income) expense, net              (86)                  (46)     

          (120)                 (160)
Income tax benefit                          (16)                     -                    -                     -
EBITDA                          $        (5,332)      $        (4,662)     $       (10,334)      $       (12,187)


                                                Three Months Ended September 30,            Nine Months Ended September 30,
                                                    2022                  2021                   2022               2021

Net cash used in operating activities $ (4,689) $

(4,075) $ (4,569) $ (5,373) Changes in working capital and other items

               (349)                 (205)               (4,604)              (5,706)
Non-cash adjustments to net loss                         (294)             

   (382)               (1,161)              (1,108)
EBITDA                                        $        (5,332)      $        (4,662)     $        (10,334)    $        (12,187)

Liquidity and Capital Resources



Our principal sources of cash are amounts earned from the seismic data
acquisition services we provide to our clients. Our principal uses of cash are
the amounts used to provide these services, including expenses related to our
operations and acquiring new equipment. Accordingly, our cash position depends
(as do our revenues) on the level of demand for our services. Historically, 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. Net cash used in operating activities was $4,569,000 for the nine
months ended September 30, 2022 compared to net cash used in operating
activities of $5,373,000 for the same period of 2021. This was primarily due to
a larger net loss of $22,110,000 for the first nine months of 2021 compared to a
net loss of $17,672,000 over the same period of 2022, as well as changes in the
balances of our operating assets and liabilities.

Net cash used in investing activities was $281,000 for the nine months ended
September 30, 2022 compared to net cash provided by investing activities of
$373,000 for the same period of 2021. The decrease in cash provided by investing
activities between periods of $654,000 was primarily due to an increase in
capital expenditures to $470,000 for the first nine months of 2022 compared to
capital expenditures of $11,000 for the same period of 2021. Capital
expenditures were offset by proceeds from disposal of assets of $189,000 during
the first nine months of 2022 compared to $384,000 for the same period of 2021.

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Net cash used in financing activities was $1,404,000 for the nine months ended
September 30, 2022 and was primarily comprised of principal payments of
$1,103,000 and $34,000 under our notes payable and finance leases, respectively,
and the cash settlement of restricted stock unit awards of $301,000. Net cash
provided by financing activities for the nine months ended September 30, 2021
was $42,000 and was primarily comprised of proceeds from notes payable of
$550,000 offset by principal payments of $387,000 and $46,000 under our notes
payable and finance leases, respectively.

Capital Expenditures. The Board of Directors approved an initial 2022 capital
budget in the amount of $5,000,000 for capital expenditures, which was limited
to necessary maintenance capital requirements and incremental recording channel
replacement or increase. For the nine months ended September 30, 2022, we have
spent $470,000 on capital expenditures, primarily for rolling stock and
maintenance capital requirements. In recent years, we have funded most of our
capital expenditures through cash flow from operations, cash reserves, equipment
term loans and finance leases. In the past, we have also funded our capital
expenditures and other financing needs through public equity offerings.

We continually strive to supply our clients with technologically advanced 3-D
seismic 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. 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. We
have funded some of our capital expenditures through commercial bank borrowings,
finance leases and equipment term loans. From time to time in the past, we have
also funded our capital expenditures and other financing needs through public
equity offerings. The amount of borrowings available to us under our existing
credit facility are determined in part by the amount of our eligible accounts
receivable.

Loan Agreement


Dominion Credit Facility. On September 30, 2019, we entered into a Loan and
Security Agreement with Dominion Bank. On September 30, 2022, we entered into a
Third Loan Modification Agreement to the Loan and Security Agreement for the
purpose of (a) amending and extending the maturity of our line of credit with
Dominion Bank by one year, (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. The Loan Agreement provides
for a secured revolving credit facility in an amount up to the lesser of (i)
$10,000,000 or (ii) a sum equal to (a) 80% of the Company's 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. As of September 30, 2022, we have not borrowed any amounts under the
Revolving Credit Facility and have approximately $7,700,000 available for
withdrawal.

Under the Revolving Credit Facility, interest will accrue at an annual rate
equal to the lesser of (i) 7.75% and (ii) the greater of (a) the prime rate as
published from time to time in The Wall Street Journal or (b) 4.75%. 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. 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. 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. 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 September 30, 2022, 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 September 30, 2022, we have one short-term note payable to a finance company for various insurance premiums totaling $107,000.



In addition, we lease certain seismic recording equipment and vehicles under
leases classified as finance leases. Our Condensed Consolidated Balance Sheet as
of September 30, 2022 includes finance leases of $9,000.

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Maturities and Interest Rates of Debt



The following tables set forth the aggregate principal amount (in thousands)
under our outstanding notes payable and the interest rates as of September

30,
2022 and December 31, 2021:

                                                    September 30, 2022      December 31, 2021
Notes payable to finance company for insurance
Aggregate principal amount outstanding              $               107   

$               265
Interest rate                                                     4.99%                  4.99%

The aggregate maturities of finance leases as of September 30, 2022 are as follows (in thousands):

October 2022 - September 2023     $ 9
Obligations under finance leases  $ 9

Interest rate on this lease is 5.37%.

Contractual Obligations



We believe that our capital resources, including our cash on hand, 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 we will be able to finance our 2022 capital expenditures through
cash flow from operations, borrowings from commercial lenders, and the funds
available under our Revolving Credit Facility. However, our ability to satisfy
working capital requirements, meet debt repayment obligations, and fund future
capital requirements will depend principally upon our future operating
performance, which is subject to the risks inherent in our business, and will
also depend on the extent to which the current economic climate adversely
affects the ability of our customers, and/or potential customers, to promptly
pay amounts owing to us under their service contracts with us.

Critical Accounting Policies

Information regarding our critical accounting policies and estimates is included in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2021.

Recently Issued Accounting Pronouncements

None.

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