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 management, identify forward-looking statements. Such
forward-looking statements are based on the beliefs of management, as well

as

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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 second quarter of 2022, we did not operate a crew in the U.S. and had
limited crew activity in Canada. Traditionally, activity in Canada is seasonal
and is limited to projects in the fourth and first quarters. We did generate a
small amount of revenue related to rental of equipment. We deployed a small crew
in the U.S in early August and expect the crew will be active through the first
quarter of 2023 on projects of varying sizes and channel count requirements with
the possibility of a second crew being deployed in the late fourth quarter or
early first quarter of 2023.

Activity in Canada is expected to increase in the upcoming season compared to
last season and we anticipate beginning crew operations in the fourth quarter
and potentially build up to three crews operating through the end of the first
quarter of 2023. Visibility beyond the first quarter of 2023 is limited.

Exploration and Production ("E&P") companies continue to maintain their focus on
capital discipline, shareholder buybacks and dividend payouts. E&P capital
spending levels have increased in 2022 and are anticipated to grow into 2023,
primarily related to continued slight increases in rig count, resulting in small
increases in overall production and inflationary costs associated with oil
service activities. We are actively engaging in conversations with prospective
clients for projects beyond the first quarter of 2023 and we are hopeful that
the high-priced oil environment will encourage E&P companies to put capital back
to work in exploration and development.

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

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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 second quarter of 2022 increased
377.2% to $921,000 compared to $193,000 in the same period of 2021. Operating
revenues increased 61.5% to $19,280,000 during the first six months of 2022
compared to $11,941,000 in the same period of 2021. The increased revenue during
the second quarter and first six months of 2022 compared to the same periods of
2021 was primarily due to slightly increased crew utilization during those
periods of 2022.

Operating Expenses. Operating expenses for the second quarter of 2022 increased
20.5% to $4,013,000 compared to $3,330,000 in the same period of 2021. Operating
expenses increased 16.7% to $16,651,000 during the first six months of 2022
compared to $14,272,000 in the same period of 2021. The increase in operating
expenses during the second quarter and first six 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
262.2% and 41.2% of revenues in the second quarter and first six months of 2022,
respectively compared to 1,422.8% and 46.5% of revenues in the same periods of
2021. General and administrative expenses decreased $331,000 or 12.1% to
$2,415,000 during the second quarter of 2022 from $2,746,000 during the same
period of 2021, and increased $2,393,000 or 43.1% to $7,946,000 during the first
six months of 2022 from $5,553,000 during the same period of 2021. The primary
factors for the decrease in general and administrative expenses during the
second quarter of 2022 compared to the same period of 2021 was due to workforce
reductions, salary reductions, and continued cost reduction efforts by
management. The primary factor for the increase in general and administrative
expenses during the first six 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 second quarter and first six months of 2022 totaled $2,451,000 and
$5,085,000, respectively, compared to $3,400,000 and $6,834,000 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 second quarter of 2022 were $8,879,000,
representing a 6.3% decrease from the same period of 2021. The operating costs
for the first six months of 2022 were $29,682,000, representing an 11.3%
increase from the same period of 2021. The decrease in operating costs for the
second quarter and increase during the first six months of 2022 compared to 2021
was primarily due to the factors described above.

Income Taxes. Income tax expense for the second quarter and first six months of
2022 was $16,000 and $16,000, respectively, compared to income tax expense of $0
and $0 for the same periods of 2021. These amounts represent effective tax rates
of -0.2% and -0.2% for the second quarter and first six months of 2022,
respectively, compared to 0.0% and 0.0% for the second quarter and first six
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.

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


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? 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 provided by (used
in) operating activities, which are the most directly comparable GAAP financial
measures, are provided in the following tables (in thousands):

                                   Three Months Ended June 30,           Six Months Ended June 30,
                                     2022                2021                2022              2021
Net loss                        $      (7,678)      $      (9,017)     $     (10,069)     $  (14,245)

Depreciation and amortization            2,451               3,400              5,085           6,834
Interest (income) expense, net            (20)                (50)         

     (34)           (114)
Income tax expense                          16                   -                 16               -
EBITDA                          $      (5,231)      $      (5,667)     $      (5,002)     $   (7,525)


                                           Three Months Ended June 30,            Six Months Ended June 30,
                                             2022                2021                2022             2021
Net cash provided by (used in)
operating activities                    $        10,780     $      (1,126)     $          120    $      (1,298)
Changes in working capital and other
items                                          (15,678)            (4,178)            (4,255)           (5,501)
Non-cash adjustments to net loss                  (333)              (363) 

            (867)             (726)
EBITDA                                  $       (5,231)     $      (5,667)     $      (5,002)    $      (7,525)

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 provided by operating activities was $120,000 for the six
months ended June 30, 2022 compared to net cash used in operating activities of
$1,298,000 for the same period of 2021. This was primarily due to a larger net
loss of $14,245,000 for the first six months of 2021 compared to a net loss of
$10,069,000 over the same period of 2022, as well as changes in the balances of
our operating assets and liabilities.

Net cash provided by investing activities was $47,000 for the six months ended
June 30, 2022 compared to cash provided by investing activities of $335,000 for
the same period of 2021. The decrease in cash provided by investing activities
between periods of $288,000 was primarily due to capital expenditures of $95,000
offset by proceeds from disposal of assets of $142,000 during the first six
months of 2022 compared to proceeds from disposal of assets of $335,000 and no
capital expenditures for the same period of 2021.

Net cash used in financing activities was $697,000 for the six months ended June
30, 2022 and was primarily comprised of principal payments of $713,000 and
$18,000 under our notes payable and finance leases, respectively. Net cash
provided by financing activities for the six months ended June 30, 2021 was
$211,000 and was primarily comprised of proceeds from notes payable of $550,000
offset by principal payments of $237,000 and $27,000 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 six months ended June 30, 2022, we have spent
$95,000 on capital expenditures. 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.

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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, 2021, we entered into
the Second Modification 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 and (b) amending our obligation to maintain a certain tangible net
worth. The Loan Agreement provides for a Revolving Credit Facility in an amount
up to the lesser of (i) $15,000,000 or (ii) a sum equal to (a) 80% of our
eligible accounts receivable plus 100% of the amount on deposit with Dominion
Bank in our collateral account, consisting of a restricted IntraFi Network
Deposit account of $5,000,000. As of June 30, 2022, we have not borrowed any
amounts under the Revolving Credit Facility and have the entire amount available
for withdrawal.

Under the Revolving Credit Facility, interest will accrue at an annual rate
equal to the lesser of (i) 6.00% and (ii) the greater of (a) the prime rate as
published from time to time in The Wall Street Journal or (b) 3.50%. We will pay
a commitment fee of 0.10% per annum on the difference of (a) $15,000,000 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 $55,000,000 and specified ratios with
respect to current assets and liabilities and debt to tangible net worth. We
received a limited waiver from Dominion Bank with respect to any non-compliance
with the tangible net worth covenant for the period ended June 30, 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. The maturity date of the Loan
Agreement is September 30, 2022.

We do not currently have any notes payable under the Revolving Credit Facility.



Dominion Letters of Credit. As of June 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 June 30, 2022, we have two short-term notes payable to a finance company for various insurance premiums totaling $496,000.



In addition, we lease certain seismic recording equipment and vehicles under
leases classified as finance leases. Our Condensed Consolidated Balance Sheet as
of June 30, 2022 includes finance leases of $26,000.

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 June 30, 2022
and December 31, 2021:

                                                     June 30, 2022       December 31, 2021
Notes payable to finance company for insurance
Aggregate principal amount outstanding              $            496    $  

            265
Interest rate                                                  4.99%                  4.99%


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

July 2022 - June 2023             $ 26

Obligations under finance leases $ 26

Interest rates on these leases range from 4.83% to 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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