UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10–Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

September 30, ~~2019~~2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission File Number 001-35471

SAExploration Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

27-4867100

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

~~1160 Dairy Ashford Road, Suite 160, Houston,~~13645 N. Promenade Blvd., Stafford, Texas, ~~77079~~77477

(Address of principal executive offices)

(Zip Code)

(281) 258-4400

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

~~Title of each class~~		~~Trading Symbol(s)~~		~~Name of each exchange on which registered~~
~~Common stock, par value $0.0001~~		~~SAEX~~		~~NASDAQ Capital Market~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non–accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated ~~filer,”~~filer”, “accelerated ~~filer,”~~filer”, “smaller reporting ~~company,”~~company” and ~~“emerging~~"emerging growth ~~company”~~company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~January 27,~~November 6, 2020, the registrant has ~~4,299,670~~6,612,332 shares of common stock outstanding.

~~EXPLANATORY NOTE~~

SAExploration Holdings, Inc. (together with its subsidiaries, “we,” “our” or “us”) has filed an amendment to our Annual Report on Form 10–K for the year ended December 31, 2018 (the “Form 10–K/A”), to amend and restate our consolidated financial statements and related footnote disclosures as of December 31, 2018 and 2017 and for the years ended December 31, 2018 and 2017 (including the unaudited quarterly periods within 2018 and 2017). The Form 10–K/A also includes under “Item 6. Selected Financial Data” restated selected consolidated statement of operations data for the years ended December 31, 2016, 2015 and 2014 and restated selected consolidated balance sheet data as of December 31, 2016, 2015 and 2014. Accordingly, this Form 10–Q for the quarterly period ended September 30, 2019 (this “Form 10–Q”) contains our restated unaudited condensed consolidated financial statements and related disclosures as of December 31, 2018 and for the three–month and nine–month periods ended September 30, 2018. These unaudited condensed consolidated financial statements include our accounts and those of our subsidiaries that are wholly–owned, controlled by us or a variable interest entity (“VIE”).

Please see the “Explanatory Note” to the Form 10–K/A and “Note 3. Restatement of Previously Reported Consolidated Financial Statements” and “Note 24. Quarterly Data” to our consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” of the Form 10–K/A for additional information about the restatement. We delayed the filing of this Form 10–Q pending the restatement described therein.

For a description of the effect of the restatement as of December 31, 2018 and for the three–month and nine–month periods ended September 30, 2018, see “Note 2. Restatement of Previously Reported Unaudited Condensed Consolidated Financial Statements” to our consolidated financial statements in “Item 1. Financial Statements” contained herein. In connection with the restatement of our consolidated financial statements in the Form 10–K/A, management determined that material weaknesses exist in our internal control over financial reporting and that our disclosure controls and procedures were ineffective during the Non–Reliance Periods. For a description of the material weaknesses identified by management and management’s implemented and planned remediations for those material weaknesses, please see “Item 4. Controls and Procedures” contained herein.

~~(i)~~

TABLE OF CONTENTS



		Page
Part I. FINANCIAL INFORMATION		1
Item 1. Financial Statements		1
Condensed Consolidated Balance Sheets as of ~~September~~September 30, ~~2019~~2020 and December 31, ~~2018~~2019		1
Condensed Consolidated Statements of Operations for the Three Months and ~~Nine~~Nine Months Ended ~~September~~September 30, 2020 and 2019 ~~and 2018~~		2
Condensed Consolidated Statements of Comprehensive Loss for the Three Months and ~~Nine~~Nine Months Ended ~~September~~September 30, ~~2019~~2020 and ~~2018~~2019		3
Condensed Consolidated Statement of Changes in Stockholders’ Deficit for the ~~Nine~~Three Months and Nine Months Ended ~~September~~September 30, ~~2019~~2020 and ~~2018~~2019		4
Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Nine Months Ended ~~September~~September 30, ~~2019~~2020 and ~~2018~~2019		65
Notes to Unaudited Condensed Consolidated Financial Statements		76
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		2623
Item 4. Controls and Procedures		3130
Part II. OTHER INFORMATION		34
Item 1. Legal Proceedings		34
Item 1A. Risk Factors		34
Item 3. Defaults upon Senior Securities		34
~~Item 5. Other Events~~		3438
Item 6. Exhibits		3539
Signatures		3841

PART I. ~~FINANC~~FINANCI~~IAL~~AL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Condensed Consolidated Balance Sheets

(In ~~thousands, except number of shares)~~thousands)

(Unaudited)

	September 30, 2019			December 31, 2018
				(Restated)			September 30, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	13,378		$	7,579		$	21,987		$	5,441
Restricted cash		257			271			75			74
Accounts receivable, net		27,140			26,463			6,891			51,582
Deferred costs on contracts		5,360			3,746			343			14,966
Prepaid expenses and other current assets		4,102			2,843			6,903			5,324
Total current assets		50,237			40,902			36,199			77,387

Property and equipment, net of accumulated depreciation and amortization of $89,372 and $81,904, respectively		27,881			35,334
Property and equipment, net of accumulated depreciation and amortization of $98,011 and $92,204, respectively								28,730			37,289
Multiclient seismic data library, net		3,684			4,733			—			2,719
Operating lease right-of-use assets		6,976			—			5,505			6,421
Goodwill		1,736			1,687			1,720			1,766
Intangible assets, net of accumulated amortization of $1,157 and $932, respectively		3,828			4,066
Intangible assets, net of accumulated amortization of $1,522 and $1,270, respectively								3,487			3,751
Tax credits receivable, net		12,104			13,198			—			12,104
Deferred income taxes		56			2,160
Other assets		270			267			777			778
Total assets	$	106,772		$	102,347		$	76,418		$	142,215

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	10,691		$	10,103		$	1,485		$	30,966
Accrued liabilities		7,724			10,498			3,506			6,526
Income and other taxes payable		2,600			3,331			928			5,410
Operating lease liabilities		3,056			—			1,517			2,576
Current portion of long-term debt and finance leases		582			7,837			28,326			112,401
Deferred revenue		5,432			4,357			633			8,724
Total current liabilities		30,085			36,126			36,395			166,603

Long-term debt and finance leases		103,358			83,205			—			7,145
Other long-term liabilities		4,318			380			4,107			4,280

Liabilities subject to compromise								99,755			—

Commitments and contingencies

Stockholders' deficit:
Common stock, 4,299,670 and 3,100,496 shares outstanding, respectively		—			—
Common stock								—			—
Additional paid-in capital		235,583			232,661			239,677			240,068
Accumulated deficit		(266,453	)		(249,349	)		(301,495	)		(274,535	)
Accumulated other comprehensive loss		(2,435	)		(3,035	)		(209	)		(2,912	)
Treasury stock, at cost, 208,009 and 111,245 shares, respectively		(2,232	)		(1,866	)
Treasury stock								(2,232	)		(2,232	)
SAExploration stockholders’ deficit		(35,537	)		(21,589	)		(64,259	)		(39,611	)
Noncontrolling interest		4,548			4,225			420			3,798
Total stockholders’ deficit		(30,989	)		(17,364	)		(63,839	)		(35,813	)
Total liabilities and stockholders’ deficit	$	106,772		$	102,347		$	76,418		$	142,215

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			Three Months Ended September 30,						Nine Months Ended September 30,
				(Restated)						(Restated)			2020			2019			2020			2019
Revenue from services	$	23,274		$	15,003		$	205,866		$	69,009		$	2,171		$	23,274		$	163,370		$	205,866
Cost of services		17,075			16,193			162,122			61,908			7,873			17,075			121,298			162,122
Depreciation and amortization		2,930			2,951			9,405			7,667			3,096			2,930			12,038			9,405
Gross profit (loss)		3,269			(4,141	)		34,339			(566	)
Gross (loss) profit														(8,798	)		3,269			30,034			34,339

Operating expenses:
Selling, general and administrative expenses		13,698			14,576			33,806			28,628			5,917			13,698			27,329			33,806
Misappropriation of funds		55			265			328			626			—			55			—			328
Total operating expenses		13,753			14,841			34,134			29,254			5,917			13,753			27,329			34,134

Operating (loss) income		(10,484	)		(18,982	)		205			(29,820	)		(14,715	)		(10,484	)		2,705			205

Other (expense) income, net:
Interest expense, net		(3,714	)		(4,738	)		(10,843	)		(10,225	)		(2,635	)		(3,714	)		(9,950	)		(10,843	)
Foreign exchange loss, net		(1,351	)		(331	)		(851	)		(2,510	)
Foreign exchange gain (loss), net														109			(1,351	)		(4,665	)		(851	)
Other income, net		1,875			1,372			2,788			1,609			242			1,875			1,344			2,788
Reorganization expenses														(12,940	)		—			(12,940	)		—
Total other expense, net		(3,190	)		(3,697	)		(8,906	)		(11,126	)		(15,224	)		(3,190	)		(26,211	)		(8,906	)

Loss before income taxes		(13,674	)		(22,679	)		(8,701	)		(40,946	)		(29,939	)		(13,674	)		(23,506	)		(8,701	)

Income taxes		(689	)		(48	)		5,830			(83	)		76			(689	)		847			5,830
																							—
Net loss		(12,985	)		(22,631	)		(14,531	)		(40,863	)		(30,015	)		(12,985	)		(24,353	)		(14,531	)

Less: net income attributable to noncontrolling interest		—			10			2,573			904			—			—			2,607			2,573

Net loss attributable to SAExploration	$	(12,985	)	$	(22,641	)	$	(17,104	)	$	(41,767	)	$	(30,015	)	$	(12,985	)	$	(26,960	)	$	(17,104	)

Loss per common share (basic and diluted)	$	(1.64	)	$	(8.41	)	$	(2.19	)	$	(45.34	)	$	(3.01	)	$	(1.64	)	$	(2.55	)	$	(2.19	)

Weighted average common shares outstanding (basic and diluted)		7,930			3,384			7,818			2,090			9,969			7,930			10,582			7,818

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			Three Months Ended September 30,						Nine Months Ended September 30,
				(Restated)						(Restated)			2020			2019			2020			2019
Net loss	$	(12,985	)	$	(22,631	)	$	(14,531	)	$	(40,863	)	$	(30,015	)	$	(12,985	)	$	(24,353	)	$	(14,531	)
Other comprehensive (loss) income:
Other comprehensive income:
Foreign currency translation adjustment		990			192			600			2,005			113			990			2,703			600
Comprehensive loss		(11,995	)		(22,439	)		(13,931	)		(38,858	)		(29,902	)		(11,995	)		(21,650	)		(13,931	)
Less: comprehensive income attributable to noncontrolling interest		—			10			2,573			904			—			—			2,607			2,573
Comprehensive loss attributable to SAExploration	$	(11,995	)	$	(22,449	)	$	(16,504	)	$	(39,762	)	$	(29,902	)	$	(11,995	)	$	(24,257	)	$	(16,504	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Condensed Consolidated Statements of Changes in Stockholders’ Deficit

(In thousands)

(Unaudited)

Three Months Ended September 30, ~~2019~~2020

	Common Stock		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock			Total SAExploration Stockholders’ Deficit			Noncontrolling Interest			Total Stockholders’ Deficit
Balances at June 30, 2020	$	—	$	240,366		$	(271,480	)	$	(322	)	$	(2,232	)	$	(33,668	)	$	423		$	(33,245	)
Net loss		—		—			(30,015	)		—			—			(30,015	)		—			(30,015	)
Other comprehensive loss		—		—			—			113			—			113			—			113
Equity-based compensation cost		—		(689	)		—			—			—			(689	)		—			(689	)
Distributions to noncontrolling interest		—		—			—			—			—			—			(3	)		(3	)
Balances at September 30, 2020	$	—	$	239,677		$	(301,495	)	$	(209	)	$	(2,232	)	$	(64,259	)	$	420		$	(63,839	)

Three Months Ended September 30, ~~2018~~2019

	Common Stock		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock			Total SAExploration Stockholders’ Deficit			Noncontrolling Interest			Total Stockholders’ Deficit
Balances at June 30, 2019	$	—	$	235,638		$	(253,468	)	$	(3,425	)	$	(2,232	)	$	(23,487	)	$	5,298		$	(18,189	)
Net loss		—		—			(12,985	)		—			—			(12,985	)		—			(12,985	)
Other comprehensive income		—		—			—			990			—			990			—			990
Equity-based compensation cost		—		(55	)		—			—			—			(55	)		—			(55	)
Distributions to noncontrolling interest		—		—			—			—			—			—			(750	)		(750	)
Balances at September. 30, 2019	$	—	$	235,583		$	(266,453	)	$	(2,435	)	$	(2,232	)	$	(35,537	)	$	4,548		$	(30,989	)

~~SAExploration Holdings, Inc.~~Nine Months Ended September 30, 2020

~~Condensed Consolidated Statements of Changes in Stockholders’ Deficit (continued)~~

~~(In thousands)~~

~~(Unaudited)~~

	Common Stock		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock			Total SAExploration Stockholders’ Deficit			Noncontrolling Interest			Total Stockholders’ Deficit
Balances at December 31, 2019	$	—	$	240,068		$	(274,535	)	$	(2,912	)	$	(2,232	)	$	(39,611	)	$	3,798		$	(35,813	)
Net (loss) income		—		—			(26,960	)		—			—			(26,960	)		2,607			(24,353	)
Other comprehensive income		—		—			—			2,703			—			2,703			—			2,703
Equity-based compensation cost		—		(391	)		—			—			—			(391	)		—			(391	)
Distributions to noncontrolling interest		—		—			—			—			—			—			(5,985	)		(5,985	)
Balances at September 30, 2020	$	—	$	239,677		$	(301,495	)	$	(209	)	$	(2,232	)	$	(64,259	)	$	420		$	(63,839	)

Nine Months Ended September 30, 2019

	Common Stock		Additional Paid-In Capital		Accumulated Deficit (Restated)			Accumulated Other Comprehensive Loss			Treasury Stock			Total SAExploration Stockholders’ Deficit (Restated)			Noncontrolling Interest			Total Stockholders’ Deficit (Restated)			Common Stock		Additional Paid-In Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Treasury Stock			Total SAExploration Stockholders’ Deficit			Noncontrolling Interest			Total Stockholders’ Deficit
Balances at December 31, 2018	$	—	$	232,661	$	(249,349	)	$	(3,035	)	$	(1,866	)	$	(21,589	)	$	4,225		$	(17,364	)	$	—	$	232,661	$	(249,349	)	$	(3,035	)	$	(1,866	)	$	(21,589	)	$	4,225		$	(17,364	)
Net (loss) income		—		—		(17,104	)		—			—			(17,104	)		2,573			(14,531	)		—		—		(17,104	)		—			—			(17,104	)		2,573			(14,531	)
Other comprehensive income		—		—		—			600			—			600			—			600			—		—		—			600			—			600			—			600
Issuance of common stock		—		578		—			—			—			578			—			578			—		578		—			—			—			578			—			578
Purchase of treasury stock		—		—		—			—			(366	)		(366	)		—			(366	)		—		—		—			—			(366	)		(366	)		—			(366	)
Equity-based compensation cost		—		2,344		—			—			—			2,344			—			2,344			—		2,344		—			—			—			2,344			—			2,344
Distributions to noncontrolling interest		—		—		—			—			—			—			(2,250	)		(2,250	)		—		—		—			—			—			—			(2,250	)		(2,250	)
Balances at September 30, 2019	$	—	$	235,583	$	(266,453	)	$	(2,435	)	$	(2,232	)	$	(35,537	)	$	4,548		$	(30,989	)	$	—	$	235,583	$	(266,453	)	$	(2,435	)	$	(2,232	)	$	(35,537	)	$	4,548		$	(30,989	)

~~Nine Months Ended September 30, 2018~~

Common
Stock

Additional
Paid-In
Capital

Accumulated
Deficit
(Restated)

Accumulated
Other
Comprehensive
Loss

Treasury
Stock

Total
SAExploration
Stockholders’
Deficit (Restated)

Noncontrolling
Interest

Total
Stockholders’
Deficit (Restated)

Balances at December 31, 2017

$
—

$
133,742

$
(189,178
)

$
(5,082
)

$
(113
)

$
(60,631
)

$
4,570

$
(56,061
)
Adoption of ASU 2016-16

—

—

294

—

—

294

—

294

Net (loss) income

—

—

(41,767
)

—

—

(41,767
)

904

(40,863
)
Other comprehensive income

—

—

—

2,005

—

2,005

—

2,005

Equity-based compensation cost

—

9,114

—

—

—

9,114

—

9,114

Purchase of treasury stock

—

—

—

—

(1,753
)

(1,753
)

—

(1,753
)
Common stock issued in debt
  exchange

—

472

—

—

—

472

—

472

Discount on Series A preferred
  stock issued in debt exchange

—

61,971

—

—

—

61,971

—

61,971

Accretion of discount on Series
  A preferred stock

—

(61,971
)

—

—

—

(61,971
)

—

(61,971
)
Accretion of Series A preferred
  stock to redemption value

—

21,376

—

—

—

21,376

—

21,376

Dividend on Series A preferred
  stock

—

(1,614
)

—

—

—

(1,614
)

—

(1,614
)
Conversion of Series A
  preferred stock

—

(15,427
)

—

—

—

(15,427
)

—

(15,427
)
Common stock and Series E
  warrants issued in conversion
  of Series A preferred stock

—

54,045

—

—

—

54,045

—

54,045

Series B preferred stock issued
  in debt exchange

—

10,791

—

—

—

10,791

—

10,791

Discount on Series B preferred
  stock issued in debt exchange

—

(10,791
)

—

—

—

(10,791
)

—

(10,791
)
Accretion of discount on Series
  B preferred stock

—

10,791

—

—

—

10,791

—

10,791

Conversion of Series B preferred
  stock

—

(22,981
)

—

—

—

(22,981
)

—

(22,981
)
Common stock and Series D
  warrants issued in conversion
  of Series B preferred stock

—

22,981

—

—

—

22,981

—

22,981

Series C warrants issued in debt
  exchange

—

4,810

—

—

—

4,810

—

4,810

Stock issuance costs

—

(1,026
)

—

—

—

(1,026
)

—

(1,026
)
Conversion option related to
  6% convertible notes due
  2023, net of allocated costs

—

15,361

—

—

—

15,361

—

15,361

Distribution to noncontrolling
  interest

—

—

—

—

—

—

(500
)

(500
)
Balances at September 30, 2018

$
—

$
231,644

$
(230,651
)

$
(3,077
)

$
(1,866
)

$
(3,950
)

$
4,974

$
1,024

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2019			2018			Nine Months Ended September 30,
				(Restated)			2020			2019
Cash flows from operating activities:
Net loss	$	(14,531	)	$	(40,863	)	$	(24,353	)	$	(14,531	)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Tax credits returned to State of Alaska								9,396			—
Reserve for potential tax credits monetization								2,708			—
Tax credits used to offset production taxes								—			1,094
Depreciation and amortization		9,886			7,960			12,503			9,886
Tax credits used to offset production taxes		1,094			—
Reserve for potential tax credits monetization		—			1,700
Reserve for doubtful accounts		1,619			135
Equity-based compensation cost		2,344			9,114			(391	)		2,344
Gain on disposal of property and equipment		(648	)		(335	)
Provision for doubtful accounts								1,645			1,619
Gain on sale of disposal and equipment								(284	)		(648	)
Amortization of loan issuance costs and debt discounts		2,835			4,115			2,785			2,835
Gain on debt extinguishment		—			(53	)
Unrealized loss on foreign currency transactions		610			2,420			4,709			610
Noncash reorganization expenses								11,885			—
Deferred taxes		2,023			148			—			2,023
Changes in operating assets and liabilities		(6,607	)		(6,920	)		13,325			(6,607	)
Net cash used in operating activities		(1,375	)		(22,579	)
Net cash provided by (used in) operating activities								33,928			(1,375	)

Cash flows from investing activities:
Asset purchase		—			(21,749	)
Purchase of property and equipment		(1,158	)		(1,044	)
Proceeds from sale of property and equipment		696			677
Purchases of property and equipment								(1,150	)		(1,158	)
Proceeds from disposal of property and equipment								514			696
Net cash used in investing activities		(462	)		(22,116	)		(636	)		(462	)

Cash flows from financing activities:
Long-term debt and finance lease repayments		(7,604	)		(56,271	)		(16,890	)		(7,604	)
Long-term debt borrowings		17,666			123,411			6,801			17,666
Debt issuance costs		—			(1,602	)
Proceeds from issuance of common stock		100			—			—			100
Stock issuance costs		—			(1,712	)
Purchase of treasury stock		(366	)		(1,753	)		—			(366	)
Distribution to noncontrolling interest		(2,250	)		(500	)		(5,985	)		(2,250	)
Net cash provided by financing activities		7,546			61,573
Net cash (used in) provided by financing activities								(16,074	)		7,546

Effect of exchange rate changes on cash, cash equivalents and restricted cash		76			(219	)		(671	)		76
Net change in cash, cash equivalents and restricted cash		5,785			16,659			16,547			5,785
Cash, cash equivalents and restricted cash at the beginning of year		7,850			3,734			5,515			7,850
Cash, cash equivalents and restricted cash at the end of period	$	13,635		$	20,393		$	22,062		$	13,635

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 1. ~~BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

GENERAL

Description of the Business

~~We are~~SAExploration Holdings, Inc. (“we,” “our,” “us” or “SAEX”) is a full–service provider of seismic data acquisition, logistical support and processing services in North America, South America, Asia Pacific, West Africa and the Middle East to customers in the oil and natural gas industry.

Our chief operating decision maker regularly reviews financial data by country to assess performance and allocate resources, resulting in the conclusion that each country in which we operate represents a reporting unit. As these reporting units are similar in terms of economic characteristics, nature of products, processes and type of customers, we have concluded that our seismic data contract services operations comprise one single reportable segment.

Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code

On August 27, 2020 (the “Petition Date”), we and certain of our wholly–owned direct and indirect subsidiaries (collectively, the “Debtors”) filed voluntary petitions (collectively, the “Petition” and the cases commenced thereby, the “Chapter 11 Cases”) seeking relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”) to pursue a Chapter 11 plan of reorganization (as amended, the “Plan”). The Chapter 11 Cases have been consolidated for procedural purposes only and are being administered jointly under the caption In re: SAExploration Holdings, Inc., et. al. (Case No. 20–34306).

In connection with the Chapter 11 filing, we entered into a Restructuring Support Agreement (as amended, the “RSA”) with lenders of 100% of the principal amount outstanding under our credit facility, lenders of approximately 82.4% of the principal amount outstanding under our senior loan facility and holders of 100% of our 6.0% Senior Secured Convertible Notes due 2023 (the “2023 Notes”) (such lenders and holders referred to herein as the “Supporting Parties”) and a Backstop Commitment Agreement (as amended, the “BCA”) with the Supporting Parties (the “Backstop Parties”). On November 1, 2020, we entered into an Amendment to the RSA with certain of the Supporting Parties party thereto and an Amendment to the BCA with certain of the Backstop Parties party thereto.

As amended, the RSA contemplates the restructuring (the “Restructuring”) of the Debtors pursuant to the Plan, which contemplates (i) the entry into a new first lien exit facility in an aggregate principal amount of $15.0 million with lenders under our existing credit facility and senior loan facility; (ii) the conversion of the existing credit facility into a new second lien exit facility in an aggregate principal amount of $20.5 million with the existing lenders; (iii) the elimination of $89.0 million of principal plus accrued interest with respect to our existing senior loan facility and 2023 Notes; and (iv) a rights offering (the “Rights Offering”) pursuant to which all eligible holders of loans under our existing credit facility and senior loan facility will be offered the opportunity to purchase loans to be advanced under the new first lien exit facility and shares of new common stock to be issued by reorganized SAEX for an aggregate purchase price of $15.0 million that will represent 95% of the outstanding new common stock to be issued by reorganized SAEX. Pursuant to the BCA, the Rights Offering will be backstopped by certain Backstop Parties who will receive a backstop commitment premium payable in new common stock that will represent 2.5% of the outstanding new common stock to be issued by reorganized SAEX as consideration for backstopping the Rights Offering or, if the BCA is terminated in certain circumstances, payable in the amount of approximately $0.9 million in cash. The new common stock to be issued by reorganized SAEX will be subject to further dilution by new common stock to be issued by reorganized SAEX in connection with a management incentive plan. The Plan also provides that holders of general unsecured claims and holders of our existing common stock and warrants to purchase our existing common stock will not receive any distribution in respect of such claims or common stock and warrants, respectively.

Subject to Bankruptcy Court approval of the Plan and the satisfaction of certain conditions to the Plan and related transactions, we have proposed to consummate the Plan and emerge from Chapter 11 before the end of December 2020. There can be no assurances that the Plan will be approved or confirmed by the Bankruptcy Court by that time, or at all.

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

As a result of the filing of the Chapter 11 Cases, the principal and interest due under our credit facility, our senior loan facility and our 2023 Notes became immediately due and payable. However, any efforts to enforce such payment obligations with respect to our credit facility, our senior loan facility and our 2023 Notes are automatically stayed as a result of the filing of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect of such debt instruments will be subject to the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

We expect to continue our operations without interruption during the pendency of the Chapter 11 Cases. For the duration of the Restructuring and after the Chapter 11 Cases, our operations and our ability to develop and execute our business plan are subject to risks and uncertainties associated with the Restructuring and Chapter 11 Cases.

Accounting Standards Codification 852–10, Reorganizations (“ASC 852–10”), applies to entities that have filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. In accordance with ASC 852–10, transactions and events directly associated with the Chapter 11 Cases are required to be distinguished from the ongoing operations of the business. In addition, ASC 852–10 requires changes in the accounting and presentation of liabilities, as well as expenses and income directly associated with the Chapter 11 Cases.

Liabilities Subject to Compromise

Liabilities subject to compromise in our condensed consolidated financial statements include pre–petition liabilities that may be affected by a Chapter 11 plan at the amounts expected to be allowed, even if they may be settled for lesser amounts. If there is uncertainty about whether a secured claim is undersecured, or will be impaired under the Chapter 11 plan, the entire amount of the claim is included in liabilities subject to compromise. Difference between liabilities we have estimated and the claims to be filed will be investigated and resolved in connection with the claims resolution process in the Chapter 11 Cases. We will continue to evaluate these liabilities throughout the Chapter 11 Cases and adjust amounts as necessary. Such adjustments may be material.

The components of “Liabilities subject to compromise” included in our unaudited condensed consolidated balance sheets are as follows:

	September 30, 2020
Long-term debt	$	95,829
Accrued liabilities		3,034
Accounts payable		892
Total	$	99,755

Costs of Reorganization

The Debtors have incurred and will continue to incur significant costs associated with the Chapter 11 Cases. The amount of these costs, which are being expensed as incurred, are expected to significantly affect our results. The following table summarizes the components included in “Reorganization expenses” in our unaudited condensed consolidated statements of operations for the three months and nine months ended September 30:

	2020
Long-term debt discounts and issuance costs	$	11,885
Advisory and professional fees		1,055
Total	$	12,940

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Debtor Financial Statements

Unaudited condensed consolidated financial statements of the Debtors are set forth below. All intercompany balances due between Debtor entities have been eliminated in consolidation. Intercompany balances between the Debtors and non–debtor affiliates have not been eliminated in the Debtors’ unaudited condensed consolidated financial statements.

Unaudited Condensed Consolidated Balance Sheet

		September 30, 2020
ASSETS
Current assets:
Cash and cash equivalents		$	15,308
Restricted cash			31
Accounts receivable, net			3,611
Deferred costs on contracts			105
Prepaid expenses and other current assets			5,113
Total current assets			24,168

Property and equipment, net			27,754
Operating lease right-of-use assets			4,589
Intangible assets, net			3,116
Other assets			237
Accounts receivable from non-debtor affiliates	��		56,212
Investment in non-debtor affiliate			404
Total assets		$	116,480

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable		$	735
Accrued liabilities			2,308
Income and other taxes payable			1,846
Operating lease liabilities			1,244
Current portion of long-term debt			28,326
Deferred revenue			633
Total current liabilities			35,092

Other long-term liabilities			3,348

Liabilities subject to compromise			99,755

Commitments and contingencies

Stockholders' deficit			(21,715	)
Total liabilities and stockholders' deficit		$	116,480

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Unaudited Condensed Consolidated Statement of Operations

	Nine Months Ended September 30,
	2020
Revenue from services	$	96,448
Cost of services		67,691
Depreciation and amortization		8,891
Gross profit		19,866

Operating expenses - selling, general and administrative		22,626

Operating loss		(2,760	)

Other expense, net		(20,398	)

Loss before income taxes and equity in income of non-debtor affiliate		(23,158	)

Income taxes		312

Loss before equity in income of non-debtor affiliate		(23,470	)

Equity in income of non-debtor affiliate		2,504

Net loss	$	(20,966	)

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Unaudited Condensed Consolidated Statement of Cash Flows

	Nine Months Ended September 30,
	2020
Cash flows from operating activities:
Net loss	$	(20,966	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		9,248
Equity-based compensation cost		(391	)
Gain on sale of disposal and equipment		(131	)
Amortization of loan issuance costs and debt discounts		2,785
Unrealized loss on foreign currency transactions		148
Noncash reorganization expenses		11,885
Equity in earnings of affiliate		(2,504	)
Distributions from non-debtor affiliate		5,750
Changes in operating assets and liabilities		16,942
Net cash provided by operating activities		22,766

Cash flows from investing activities:
Purchases of property and equipment		(994	)
Proceeds from disposal of property and equipment		362
Investment in non-debtor affiliate		(31	)
Net cash used in investing activities		(663	)

Cash flows from financing activities:
Long-term debt and finance lease repayments		(16,890	)
Long-term debt borrowings		6,801
Intercompany lending		271
Net cash used in financing activities		(9,818	)

Effect of exchange rate changes on cash, cash equivalents and restricted cash		(91	)
Net change in cash, cash equivalents and restricted cash		12,194
Cash, cash equivalents and restricted cash at the beginning of year		3,145
Cash, cash equivalents and restricted cash at the end of period	$	15,339

Going Concern Uncertainty

Given the uncertainty surrounding the Chapter 11 Cases, there is substantial doubt about our ability to continue as a going concern. The accompanying unaudited condensed consolidated financial statements included herein have been prepared on a going concern basis in accordance with generally accepted accounting principles in the United States. The going concern basis assumes that we will continue in operation for the next 12 months and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business. Our unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. If we cannot continue as a going concern, adjustments to the carrying values and classification of our assets and liabilities and the reported amounts of income and expenses could be required and could be material.

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Basis of Presentation

Our unaudited condensed consolidated financial statements included herein include our accounts and those of our subsidiaries that are wholly–owned, controlled by us or a ~~VIE~~variable interest entity (“VIE”) where we are the primary beneficiary, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. We believe that the presentations and disclosures herein are adequate to make the information not misleading. The unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) for a fair presentation of the interim periods. The results of operations for the interim ~~period~~periods are not necessarily indicative of the results of operations to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in Item 8 of our Annual Report on Form 10–~~K/A~~K for the year ended December 31, ~~2018.~~

2019.

All intercompany accounts and transactions have been eliminated in consolidation. In the Notes to Unaudited Condensed Consolidated Financial Statements, all dollar and share amounts in tabulations are in thousands of dollars and shares, respectively, unless otherwise indicated.

~~Recently Adopted Accounting Pronouncements~~

~~On January 1, 2019, we adopted Accounting Standards Update (“ASU”) No. 2016–02,~~ ~~Leases, as amended by~~ ~~ASU 2018–10,~~ ~~Codification Improvements~~Certain amounts in our prior period unaudited condensed consolidated financial statements and related footnote disclosures have been reclassified to ~~Topic 842,~~ ~~ASU 2018–11,~~ ~~Targeted Improvements,~~ ~~and 2019–01,~~ ~~Codification Improvements. These ASUs required~~conform to the recognition of lease assets and lease liabilities for virtually all leases and required disclosure of key information about leasing arrangements. We elected to adopt these new standards using the modified retrospective method of transition for all leases existing at or commencing after the date of initial application.

The new standards provide for certain practical expedients when adopting the new guidance. We have elected the practical expedient package outlined in ASU No. 2016–02 under which we can carryforward our previous classification of a lease as either an operating or capital lease, and we do not have to reassess previously recorded initial direct costs. Additionally, we made policy elections allowing us to exclude leases with original terms of 12 months or less from lease assets and liabilities and to not separate nonlease components from the associated lease component and instead account for both as a single lease component for all asset classes. We did not elect the practical expedient allowing us to use hindsight to determine the lease term and to assess any impairment of lease assets during the lookback period.

~~The adoption of the new standards~~current year presentation. This reclassification had ~~a material~~no impact on our unaudited condensed consolidated balance sheet, with the most significant being the recognition of operating lease right–of-use (“ROU”) assets and operating lease liabilities of $9.9 million and $9.9 million, respectively. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. The standard did not materially impact our unaudited condensed consolidated statementfinancial condition, results of operations ~~and unaudited condensed consolidated statement of~~or cash flows.

COVID–19 Pandemic and Market Conditions

Our operations continue to be disrupted due to the circumstances surrounding the COVID–19 pandemic. The closure of non–essential business facilities and restrictions on travel put in place by governments around the world have significantly reduced economic activity.

The oil and natural gas industry has experienced unprecedented price disruptions during 2020, due in part to significantly decreased demand as a result of the COVID–19 pandemic, as activity declined in the face of depressed oil pricing. As customers continue to revise their capital budgets in order to adjust spending levels in response to lower commodity prices, we have experienced a significant decline in demand for our services.

Low oil prices and industry volatility are likely to continue through the near and long-term. As the global outbreak of the COVID–19 pandemic continues to rapidly evolve, management expects it to continue to materially and adversely affect our revenue, financial condition, profitability, and cash flow for an indeterminate period of time.

New Accounting Standards to be Adopted

No new accounting pronouncements issued or effective during the ~~nine~~three months ended September 30, ~~2019~~2020 have had or are expected to have a material impact on our unaudited condensed consolidated financial statements.

NOTE 2. TAX CREDITS RECEIVABLE, NET

7In January 2020, we and Alaskan Seismic Ventures, LLC (“ASV”) sold certain seismic data and related assets for a purchase price payable as follows: (i) $15.0 million paid in cash on the closing date and (ii) earnout payments in an amount of up to $5.0 million to be paid based on the licensing fees related to the licensing of certain seismic data following the closing date in an amount in excess of $15.0 million of licensing fees. As required by the terms of the sale, we notified the Alaska Department of Revenue (the “DOR”) that we were withdrawing our application for $9.4 million of tax credits, net relating to the seismic data sold. We and ASV also entered into an agreement that provides that we will receive all the proceeds paid or payable pursuant to the sale, which proceeds will be credited by us towards outstanding amounts owed to us by ASV.

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

~~NOTE 2. RESTATEMENT OF PREVIOUSLY REPORTED UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Background of~~Changes in the ~~Restatement~~

As previously disclosed, the SEC has been conducting an investigation of certain matters, including with respect to revenue recognition, accounts receivable and tax credits. The Department of Justice (the “DOJ”) is conducting a parallel investigation with the SEC. We have been cooperating and will continue to cooperate with the SEC and the DOJ in their investigations.

On August 5, 2019, our Board of Directors (the “Board”) established a special committee of independent directors (the “Special Committee”) to oversee an internal investigation with respect to the SEC investigation and any related matters. In turn, the Special Committee engaged its own legal and forensic accounting advisors, in addition to certain consulting services providers. Also in August 2019, the Audit Committee undertook an assessment of the accuracycarrying value of our ~~historical financial statements and related disclosures that were contained in previously filed periodic reports.~~

On August 14, 2019, the Audit Committee and the Board concluded that our previously issued consolidated financial statements and financial information relating to each of the fiscal years ended December 31, 2015, 2016, 2017 and 2018 and our condensed consolidated financial statementstax credits receivable, net are as follows for the quarters and year–to–date periods ended June 30, 2015 through March 31, 2019 (collectively, the “Non–Reliance Periods”) contained errors, should no longer be relied upon and should be restated, and that other financial information, any earnings releases, investor presentations or other communications related thereto covering the Non–Reliance Periods should also no longer be relied upon. The Audit Committee’s and the Board’s decision to restate our consolidated financial statements for the Non–Reliance Periods arose from our re–evaluation of our relationship with Alaskan Seismic Ventures, LLC (“ASV”), which had not been consolidated into our financial statements. In August 2019, we determined that ASV is a variable interest entity (“VIE”), that we had a controlling financial interest in ASV, and that we are the primary beneficiary of ASV, which, among other factors, required us to consolidate ASV during the Non-Reliance Periods in accordance with GAAP.

The Special Committee’s investigation identified that Global Equipment Solutions LLC (“Global Equipment”), one of our vendors in 2015 and 2016, was formed by Brent Whiteley, our former Chief Financial Officer and General Counsel, and controlled by Mr. Whiteley and/or Jeff Hastings, our former Chief Executive Officer. In 2015 and 2016, we paid an aggregate of approximately $12.0 million to Global Equipment pursuant to the following agreements. In August 2011, we entered into an agreement (the “Transfer Agreement”) with NES, LLC (“NES”), pursuant to which NES retained a transfer fee (the “Transfer Fee”) in connection with the transfer of a customer contract from NES to us. NES is a legal entity that was previously owned and/or controlled by Mr. Hastings that we subsequently acquired in October 2011. The Transfer Fee was assigned to a separate legal entity controlled by Mr. Hastings prior to our acquisition of NES in October 2011 and was subsequently assigned to Global Equipment. The authenticity of the Transfer Agreement and the subsequent assignments of the Transfer Fee have not been confirmed. Furthermore, the foregoing arrangements and the obligation to pay the Transfer Fee to NES, Global Equipment and/or Mr. Hastings was not disclosed. The payments made to Global Equipment in satisfaction of the purported Transfer Fee were previously recorded as rental expense in 2015 and 2016. These amounts have now been reclassified in our consolidated statement of operations as loss from misappropriation of funds in 2015 and 2016.

Of the approximately $12.0 million paid to Global Equipment, approximately $5.9 million was transferred through entities formed and/or controlled by Mr. Hastings and Mr. Whiteley to ASV as capital contributions in December 2015. This investment in ASV was not disclosed. ASV was formed as a seismic data library company in 2015, and the Company previously reported revenue from ASV of approximately $57.3 million in 2016 and approximately $83.8 million in 2015. The remaining approximately $6.1 million paid to Global Equipment was transferred to Mr. Hastings and Mr. Whiteley and/or to entities formed and/or controlled by them. These payments were not disclosed.

The Special Committee’s investigation also identified the misappropriation of approximately $4.1 million by Mr. Whiteley from 2012 to 2019, which amount has been reclassified in our consolidated statement of operations as a loss from a misappropriation of funds for such periods. A portion of these funds were paid to RVI Consulting, Inc. (“RVI”), a legal entity owned and/or controlled by Mr. Whiteley. The payments made to RVI were not disclosed. The majority of the payments to RVI were previously recorded as legal and professional expenses in the prior periods.

~~SAExploration Holdings, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

~~Effects of the Restatement~~

As a result of the determination that ASV is a VIE, in which we have a controlling financial interest and are the primary beneficiary, we are consolidating ASV for all periods beginning in 2015. The consolidation of ASV as of December 31, 2018 resulted in a reduction of stockholders’ equity of approximately $34.0 million due to the consolidation and elimination of inter-company transactions. The assets of ASV consist of a seismic data library in Alaska for which we provided the seismic data acquisition services, tax credits received from the State of Alaska under the rebatable oil and gas production tax credit regime and cash on hand. The tax credits were recorded as a reduction in the value of the seismic data library as a reimbursement of the costs incurred to acquire the data library. ASV has no significant liabilities other than its payable to us for the seismic data acquisition services and has approximately $5.9 million in capital contributions as described above. As of September 30, 2019, considering the approximately $34.0 million reduction in stockholders equity discussed above, the consolidation of ASV resulted in a decrease in stockholders’ equity of approximately $1.1 million.

~~We have reclassified certain items~~ in our consolidated statement of operations as loss from a misappropriation of funds disclosed above, of which approximately $55 thousand, $328 thousand, $265 thousand and $626 thousand, respectively, are related to the misappropriation of funds by Mr. Whiteley in the three and nine months ended September ~~30, 3019 and 2018, respectively.~~30:

	2020			2019
Balance at beginning of year	$	12,104		$	13,198
Returned to State of Alaska		(9,396	)		—
Reserve for potential monetization		(2,708	)		—
Balance at end of period	$	—		$	13,198

In ~~addition, we are restating our consolidated financial statements to correct for unrelated material accounting errors in prior periods, including the following:~~

~~Three Months Ended September 30, 2018~~

We identified an error related to the recording of deferred taxes in our Colombia and Bolivia subsidiaries. Based upon our internal review of the decision to record a 100% valuation allowance in 2018 related to these subsidiaries, we determined that the factors leading to the full valuation allowance of the deferred tax assets were present in previous periods and were not appropriately considered. As of result of this error, we have decreased income tax expense by approximately $1.4 million in the three months ended September 30, ~~2018.~~

~~We failed~~2020, we increased the allowance on the remaining tax credits receivable balance by $2.7 million in order to record royalty income related to our acquisition of certain assets of Geokinetics, Inc. We acquired a royalty agreement relating to a multiclient seismic data library, which was sold by Geokinetics to a third party prior to our acquisitionfully reserve the receivable, as we believe that the monetization of the Geokinetics assets. The royalty agreement provided for a royalty of 20% of future sales of the multiclient seismic data library for a three-year period, not to exceed $5.0 million in royalty income. To correct this error, we have recorded royalty income related to this agreement of approximately $1.3 million in the quarter ended September 30, 2018. The royalty incometax credits is ~~included in accounts receivable and other income in the accompanying financial statements, which resulted in an increase to our current assets and a decrease to our net loss.~~

~~Nine Months Ended September 30, 2018~~

In the nine months ended September 30, 2018, we recorded an allowance for doubtful accounts of approximately $19.0 million against our accounts receivable related to ASV. The receivable was eliminated upon consolidation of ASV and the allowance for doubtful accounts was reversed.

~~We also corrected a prior error related to Delaware Franchise Taxes as part of the restatement. In the first quarter of 2018, we settled a multiyear audit with the State of Delaware.~~no longer probable. As ~~part of the restatement, we have properly recorded the franchise expense in the proper periods resulting in a decrease to selling, general and administrative expense by $547 thousand.~~

We failed to record royalty income related to our acquisition of certain assets of Geokinetics, Inc. We acquired a royalty agreement relating to a multiclient seismic data library, which was sold by Geokinetics. to a third party prior to our acquisition of the Geokinetics assets. The royalty agreement provided for a royalty of 20% of future sales of the multiclient seismic data library for a three-year period, not to exceed $5.0 million in royalty income. To correct this error, we have recorded royalty income related to this agreement of approximately $1.4 million in the nine months ended September 30, 2018. The royalty income is included in accounts receivable and other income in the accompanying financial statements, which resulted in an increase to our current assets and a decrease to our net loss.

~~SAExploration Holdings, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

Along with restating our unaudited condensed consolidated financial statements to correct the errors discussed above, we corrected our weighted average shares outstanding (basic and diluted) to include penny warrants in the computation of loss per common share and we recorded adjustments for certain immaterial accounting errors and reclassifications related to the periods covered in this Form 10–Q.

In connection with the restatement of our condensed consolidated financial statements in this Form 10–Q, management determined that material weaknesses exist in our internal control over financial reporting and that our disclosure controls and procedures were ineffective during the Non–Reliance Periods and as of September 30, ~~2019. For a description~~2020 and December 31, 2019, the tax credits receivable are net of ~~the material weaknesses identified by management~~an allowance of $30.4 million and ~~management’s implemented and planned remediations for those material weaknesses, please see “Item 4. Controls and Procedures” of this Form 10-Q.~~$53.0 million, respectively.

The tables below summarize the effects of the restatement on our (i) unaudited condensed consolidated balance sheet at December 31, 2018; (ii) unaudited condensed consolidated statements of operations for the three months and nine months ended September 30, 2018; and (iii) unaudited condensed consolidated statement of cash flows for the nine months ended September 30, 2018. A summary of the effect of the restatement on the unaudited condensed consolidated statements of changes to stockholders’ deficit for the nine months ended September 30, 2018 and the unaudited condensed consolidated statement of comprehensive income (loss) for the three months and nine months ended September 30, 2018 are not presented because the impact to accumulated deficit and comprehensive income (loss) are reflected below in the unaudited condensed consolidated balance sheet summaries and unaudited condensed consolidated statements of operations summaries.

~~SAExploration Holdings, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

~~Summary of Restatement – Unaudited Condensed Consolidated Balance Sheet~~

~~The effects of the restatement on our unaudited condensed consolidated balance sheet are as follows:~~

December 31, 2018

Previously
Reported

Adjustments

Restated

ASSETS

Current assets:

Cash and cash equivalents

$
7,192

$
387

$
7,579

Restricted cash

271

—

271

Accounts receivable, net

24,859

1,604

26,463

Deferred costs on contracts

3,717

29

3,746

Prepaid expenses and other current assets

2,813

30

2,843

Total current assets

38,852

2,050

40,902

Property and equipment, net

35,334

—

35,334

Multiclient seismic data library, net

—

4,733

4,733

Goodwill

1,687

—

1,687

Intangible assets, net

4,066

—

4,066

Long-term accounts receivable, net

52,804

(52,804
)

—

Tax credits receivable, net

—

13,198

13,198

Deferred income taxes

2,015

145

2,160

Other assets

2,715

(2,448
)

267

Total assets

$
137,473

$
(35,126
)

$
102,347

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:

Accounts payable

$
10,103

$
—

$
10,103

Accrued liabilities

10,498

—

10,498

Income and other taxes payable

3,331

—

3,331

Current portion of long-term debt and finance leases

7,837

—

7,837

Deferred revenue

4,298

59

4,357

Total current liabilities

36,067

59

36,126

Long-term debt and finance leases

85,653

(2,448
)

83,205

Other long-term liabilities

380

—

380

Commitments and contingencies

Stockholders' equity (deficit):

Common stock

—

—

—

Additional paid-in capital

232,661

—

232,661

Accumulated deficit

(216,612
)

(32,737
)

(249,349
)
Accumulated other comprehensive loss

(3,035
)

—

(3,035
)
Treasury stock, at cost

(1,866
)

—

(1,866
)
SAExploration stockholders’ equity (deficit)

11,148

(32,737
)

(21,589
)
Noncontrolling interest

4,225

—

4,225

Total stockholders’ equity (deficit)

15,373

(32,737
)

(17,364
)
Total liabilities and stockholders’ equity (deficit)

$
137,473

$
(35,126
)

$
102,347

~~SAExploration Holdings, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

~~Summary of Restatement – Unaudited Condensed Consolidated Statements of Operations~~

~~The effects of the restatement on our unaudited condensed consolidated statements of operations are as follows:~~

Three Months Ended September 30, 2018

Previously
Reported

Adjustments

Restated

Revenue from services

$
15,003

$
—

$
15,003

Cost of services

16,085

108

16,193

Depreciation and amortization

2,951

—

2,951

Gross loss

(4,033
)

(108
)

(4,141
)

Operating expenses:

Selling, general and administrative expenses

14,858

(282
)

14,576

Misappropriation of funds

—

265

265

Total operating expenses

14,858

(17
)

14,841

Operating loss

(18,891
)

(91
)

(18,982
)

Other (expense) income, net:

Interest expense, net

(4,738
)

—

(4,738
)
Foreign exchange loss, net

(331
)

—

(331
)
Other income, net

27

1,345

1,372

Total other expense, net

(5,042
)

1,345

(3,697
)

Loss before income taxes

(23,933
)

1,254

(22,679
)

Income taxes

1,364

(1,412
)

(48
)

Net loss

(25,297
)

2,666

(22,631
)

Less: net income attributable to noncontrolling interest

10

—

10

Net loss attributable to SAExploration

$
(25,307
)

$
2,666

$
(22,641
)

Loss per common share (basic and diluted)

$
(27.80
)

$
19.39

$
(8.41
)

Weighted average common shares outstanding (basic and diluted)

1,120

2,264

3,384

~~SAExploration Holdings, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

Nine Months Ended September 30, 2018

Previously
Reported

Adjustments

Restated

Revenue from services

$
69,009

$
—

$
69,009

Cost of services

61,800

108

61,908

Depreciation and amortization

7,667

—

7,667

Gross loss

(458
)

(108
)

(566
)

Operating expenses:

Selling, general and administrative expenses

46,998

(18,370
)

28,628

Misappropriation of funds

—

626

626

Total operating expenses

46,998

(17,744
)

29,254

Operating loss

(47,456
)

17,636

(29,820
)

Other (expense) income, net:

Interest expense, net

(10,225
)

—

(10,225
)
Foreign exchange loss, net

(2,510
)

—

(2,510
)
Other income, net

181

1,428

1,609

Total other expense, net

(12,554
)

1,428

(11,126
)

Loss before income taxes

(60,010
)

19,064

(40,946
)

Income taxes

107

(190
)

(83
)

Net loss

(60,117
)

19,254

(40,863
)

Less: net income attributable to noncontrolling interest

904

—

904

Net loss attributable to SAExploration

$
(61,021
)

$
19,254

$
(41,767
)

Loss per common share (basic and diluted)

$
(141.82
)

$
96.48

$
(45.34
)

Weighted average common shares outstanding (basic and diluted)

804

1,286

2,090

~~SAExploration Holdings, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

~~Summary of Restatement – Unaudited Condensed Consolidated Statement of Cash Flows~~

~~The effects of the restatement on our unaudited condensed consolidated statement of cash flows are as follows:~~

Nine Months Ended September 30, 2018

Previously
Reported

Adjustments

Restated

Cash flows from operating activities:

Net loss

$
(60,117
)

$
19,254

$
(40,863
)
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

7,960

—

7,960

Reserve for potential tax credits monetization

—

1,700

1,700

Reserve for doubtful accounts

19,120

(18,985
)

135

Equity-based compensation cost

9,114

—

9,114

Gain on disposal of property and equipment

(315
)

(20
)

(335
)
Amortization of loan issuance costs and debt discounts

4,115

—

4,115

Gain on debt extinguishment

(53
)

—

(53
)
Unrealized (gain) loss on foreign currency transactions

2,420

—

2,420

Deferred taxes

—

148

148

Changes in operating assets and liabilities

(4,308
)

(2,612
)

(6,920
)
Net cash used in operating activities

(22,064
)

(515
)

(22,579
)

Cash flows from investing activities:

Asset purchase

(21,749
)

—

(21,749
)
Purchase of property and equipment

(1,044
)

—

(1,044
)
Proceeds from sale of property and equipment

657

20

677

Net cash used in investing activities

(22,136
)

20

(22,116
)

Cash flows from financing activities:

Long-term debt and finance lease repayments

(56,271
)

—

(56,271
)
Long-term debt borrowings

123,411

—

123,411

Debt issuance costs

(1,602
)

—

(1,602
)
Stock issuance costs

(2,179
)

467

(1,712
)
Purchase of treasury stock

(1,753
)

—

(1,753
)
Distribution to noncontrolling interest

(500
)

—

(500
)
Net cash provided by financing activities

61,106

467

61,573

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(219
)

—

(219
)
Net change in cash, cash equivalents and restricted cash

16,687

(28
)

16,659

Cash, cash equivalents and restricted cash at the beginning of year

3,654

80

3,734

Cash, cash equivalents and restricted cash at the end of period

$
20,341

$
52

$
20,393

~~SAExploration Holdings, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

NOTE 3. LONG–TERM DEBT AND FINANCE LEASES

Long–term debt and finance leases consisted of the following:

	September 30, 2019			December 31, 2018
				(Restated)			September 30, 2020			December 31, 2019
Credit facility:
Principal outstanding	$	30,000		$	12,334		$	20,500		$	35,000
Unamortized debt issuance costs		(89	)		(125	)		(108	)		(205	)
Carrying amount		29,911			12,209			20,392			34,795

Senior loan facility:
Principal outstanding		29,000			29,000			29,000			29,000
Unamortized debt issuance costs		(1,538	)		(2,448	)		—			(1,232	)
Carrying amount		27,462			26,552			29,000			27,768

6% senior secured convertible notes due 2023:
Principal outstanding		60,000			60,000			60,000			60,000
Unamortized debt discount and debt issuance costs		(14,015	)		(15,906	)		—			(13,341	)
Carrying amount		45,985			44,094			60,000			46,659

10% senior notes due 2019:
Principal outstanding		—			6,957
Unamortized debt issuance costs		—			(4	)
Carrying amount		—			6,953
Secured note payable								7,934			9,974

Unsecured note payable								6,829			—

Finance leases		582			1,234			—			350

Total debt		103,940			91,042			124,155			119,546
Debt subject to compromise								(95,829	)		—
Total debt not subject to compromise								28,326			119,546
Current portion of long-term debt and finance leases		(582	)		(7,837	)		(28,326	)		(112,401	)
Total long-term debt and finance leases	$	103,358		$	83,205		$	—		$	7,145

~~In March 2019,~~12

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

The commencement of the ~~maturity date~~Chapter 11 Cases described in Note 1 above constitutes an event of ~~our~~default under the credit facility, the senior loan facility, ~~was extended to January 4, 2021.~~

In the ~~three months~~indenture governing the 2023 Notes, our secured note payable and ~~nine months ended September 30, 2019, we~~ recorded interest expense of $1.6 million and $4.6 million, respectively, related to the 6% senior secured convertible notes due 2023 (the “2023 Notes”), of which $0.9 million and $2.7 million, respectively, related to contractual interest expense.

~~In September 2019, we repaid in full~~ our ~~10% Senior Notes due 2019 (the “Senior Notes”) and borrowed the remaining $8.0 million of available borrowing capacity under our credit facility.~~

unsecured note payable. The credit agreements and indentures for our credit facility, senior loan facility, 2023 Notes and Senior Notes contain certain representations, warranties, covenants and other terms and conditions which are customary for agreements of these types. As previously disclosed, as a result of certain circumstances giving rise to, or occurring as a result of, the restatement, as of September 30, 2019, certain events of default had occurred under these agreements. We repaid in full the Senior Notes at maturity in September 2019. In September 2019, we entered into forbearance agreements with respect to our credit facility, senior loan facility and ~~2023 Notes, whereby~~ the holders of the indebtedness thereunder agreed to refrain from exercising their rights and remedies with respect to events of default that have occurred and other potential defaults or events of default that may occur as further specified in the forbearance agreements until 5:00 p.m. (New York City time) on the earlier of (i) November 30, 2019 and (ii) the date the forbearance agreements otherwise terminated in accordance with their terms. The November 30, 2019 deadline was ultimately extended to February 7, 2020. On February 7, 2020, we entered into amendments and waivers to our credit facility, senior loan facility, and the indenture governing the 2023 Notes provide that as a result of the Petition, the obligations thereunder are accelerated and the principal and interest due thereunder became immediately due and payable. However, any efforts to ~~among other things, waive existing events~~enforce such payment obligations under such debt instruments are automatically stayed as a result of the filing of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect of such debt instruments will be subject to the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

15Credit Facility

We repaid $14.5 million of the amounts outstanding under our credit facility with the net proceeds received from the sale of certain seismic data and related assets in January 2020 (see Note 2).

We are continuing to accrue interest on our credit facility with any accrued but unpaid interest to be paid upon our emergence from bankruptcy.

Senior Loan Facility

As of September 30, 2020, our senior loan facility is reflected as “Liabilities subject to compromise” in our unaudited condensed consolidated financial statements with the carrying value equal to the face value of the debt. The unamortized debt issuance costs of $0.4 million as of the Petition Date were expensed and recognized in “Reorganization expenses” in our unaudited condensed consolidated statements of operations. In addition, $0.3 million of accrued but unpaid interest is reflected as “Liabilities subject to compromise” in our unaudited condensed consolidated balance sheets. We have not recognized any interest expense on our senior loan facility subsequent to the Petition Date. Unrecognized contractual interest expense on our senior loan facility as of September 30, 2020 was $0.3 million.

2023 Notes

As of September 30, 2020, our 2023 Notes are reflected as “Liabilities subject to compromise” in our unaudited condensed consolidated financial statements with the carrying value equal to the face value of the debt. The unamortized discount and debt issuance costs of $0.6 million and $10.9 million, respectively, as of the Petition Date were expensed and recognized in “Reorganization expenses” in our unaudited condensed consolidated statements of operations. In addition, $0.7 million of accrued but unpaid interest is reflected as “Liabilities subject to compromise” in our unaudited condensed consolidated balance sheets. We have not recognized any interest expense on our 2023 Notes subsequent to the Petition Date. Unrecognized contractual interest expense on our 2023 Notes as of September 30, 2020 was $0.3 million.

Unsecured Note Payable

In May 2020, we received the proceeds from an unsecured loan in the amount of $6.8 million pursuant to the Paycheck Protection Program (the “PPP”) under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP loan matures in May 2022 and bears interest at a rate of 1.0% per annum. Principal and interest are payable monthly beginning seven months from the date of the PPP loan and may be prepaid at any time prior to maturity with no prepayment penalties.

Under the term of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of the loan. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any covered payments of mortgage interest, rent, and utilities. In the event the loan, or any portion thereof, is forgiven pursuant to the PPP, the amount forgiven is applied to outstanding principal, and we would record a gain on extinguishment for the amount forgiven when we are legally released from being the primary obligor. We intend to use the proceeds of the PPP loan to maintain payroll and make lease, rent and utility payments; however, there is no assurance that the PPP loan will be forgiven, in whole or in part.

As of September 30, 2020, the PPP loan is reflected as “Liabilities subject to compromise” in our unaudited condensed consolidated financial statements with the carrying value equal to the face value of the debt.

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

~~of default thereunder and amend certain covenants requiring us to deliver financial statements, reports, projections and other items thereunder.~~

NOTE 4. COMMITMENTS AND CONTINGENCIES

On August 18, 2019, a purported stockholder ~~John Bodin (the “Class Action Plaintiff”),~~ filed a putative class action lawsuit against us and certain former executive officers named therein ~~(the “Class Action Defendants”)~~ in the U.S. District Court for the Southern District of Texas captioned John Bodin v. SAExploration Holdings, Inc., et al. Case No. 4:19–cv–03089. Three other purported stockholders moved for appointment as lead plaintiff and approval of their counsel as lead counsel on October 2, 2019. An order was entered on February 7, 2020, appointing Amrit Kumar and Tony Tep as co–lead plaintiffs (the “Class Action Plaintiffs”) and approving their counsel as co–lead counsel. Pursuant to an agreed scheduling stipulation and order, the Class Action Plaintiffs filed their Amended Complaint on July 15, 2020 against us and certain of our former and current executive officers and directors named therein (the “Class Action Defendants”). The Class Action ~~Plaintiff seeks~~Plaintiffs seek to represent a class of stockholders who purchased or otherwise acquired our publicly traded securities from March 15, 2016 through ~~August 15, 2019~~February 7, 2020 (the “Covered Period”). The amended complaint generally alleges that the Class Action Defendants violated Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b–5 by making false and misleading statements in our periodic reports filed with the SEC during the Covered Period. The complaint requests damages, including interest, and an award of reasonable costs and expenses, including counsel and expert fees.

Pursuant to an agreed scheduling stipulation and order, the Class Action Defendants were scheduled to answer, move to dismiss, or otherwise respond to the amended complaint by October 9, 2020, with responsive briefing to be completed by February 5, 2021. As a result of the filing of the Chapter 11 Cases, the Court subsequently entered an order staying the entire case on September 2, 2020.

On September 6, 2019, a purported stockholder, M. Shane Hamilton (the ~~“Derivate~~“Derivative Plaintiff”), filed a stockholder derivative lawsuit against certain of our former and current executive officers and directors named therein (the “Derivative Defendants”) in the U.S. District Court for the District of Delaware captioned M. Shane Hamilton, derivatively on behalf of SAExploration Holdings, Inc., v. Jeff Hastings, et al. The derivative complaint generally alleges (i) breaches by the Derivative Defendants of their fiduciary duties as our directors and/or officers, (ii) unjust enrichment, (iii) waste of corporate assets, and (iv) violations of Section 14(a) of the Exchange Act. The derivative complaint seeks, among other things, relief (i) directing us and the Derivative Defendants to take actions to reform and improve our corporate governance and internal procedures, (ii) awarding us restitution from the Derivative Defendants, and (iii) awarding the Derivative Plaintiff’s costs and attorneys’ and experts’ fees. This matter is stayed pending the resolution of any motions to dismiss filed in John Bodin v. SAExploration Holdings, Inc., et al. Case No. 4:19–cv–03089 pending in the U.S. District Court for the Southern District of Texas.

~~As previously disclosed,~~On October 8, 2020, the SEC ~~has been conducting an~~filed a complaint against us and our former executive officers Jeffrey Hastings, Brent Whiteley, Brian Beatty, and Michael Scott (the “Former Executives”) in the U.S. District Court for the Southern District of New York (the “Court”) captioned U.S. Securities and Exchange Commission, v. SAExploration Holdings, Inc. et al. Civil Action No. 1:20–CV–8423 (the “SEC Lawsuit”) arising out of the actions of the Former Executives. The SEC Lawsuit charged us and charges the Former Executives with violating Section 17(a)(1) and (3) of the Securities Act and Section 10(b) of the Exchange Act of 1934, and Rule 10b–5(a) and (c) thereunder. It further charged us with violating Securities Act Section 17(a)(2) and Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B), and Rules 10b–5(b), 12b–20, 13a–1, 13a–11, 13a–13 thereunder, and that the Former Executives aided and abetted those violations. Additionally, the SEC Lawsuit charges the Former Executives with violating Exchange Act Section 13(b)(5) and Rule 13b2–1 thereunder, and Messrs. Hastings, Whiteley, and Beatty with also violating Exchange Act Rules 10b–5(b), 13a–14, and 13b2–2. The SEC sought a permanent injunction against us from violating the aforementioned provisions, but did not seek any monetary relief against us. From the Former Executives, the SEC seeks permanent injunctions as well as civil penalties, disgorgement of allegedly ill–gotten gains with prejudgment interest, and officer–and–director bars against each of them. Additionally, the SEC seeks to have Messrs. Hastings, Whiteley, and Beatty reimburse us for incentive–based compensation pursuant to Section 304(a) of the Sarbanes–Oxley Act of 2002. The Department of Justice, U.S. Attorney’s Office for the Southern District of New York (the “DOJ”) also announced criminal charges against Mr. Hastings in a parallel action on the same day.

On November 5, 2020, we and the SEC filed with the Court a joint motion for entry of a consent judgment and our consent (the “Consent”) to resolve all allegations pertaining to us with respect to the SEC Lawsuit described above. Pursuant the Consent, without admitting or denying the allegations of the SEC Lawsuit, we consented to the entry of a final judgment (the “Proposed Judgment”) that permanently enjoins us from violating the sections of the federal securities laws listed in the SEC Lawsuit, but that does not impose any monetary penalty on us. The Proposed Judgment, when entered, will resolve all allegations pertaining to us with respect to the SEC Lawsuit.

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

The actions taken by the SEC and the DOJ described above are based upon their investigation of certain matters, including with respect to revenue recognition, accounts receivable, and tax credits. ~~The DOJ is conducting a parallel investigation with the SEC.~~ We have been cooperating and ~~will~~intend to continue to cooperate with the SEC and the DOJ in their litigations and/or investigations. ~~The SEC and DOJ investigations are continuing, and we~~We are currently unable to predict the eventual scope, duration or outcome with the SEC and the DOJ or whether it could have a material impact on our financial position, results of ~~any potential SEC~~operations, or ~~DOJ legal action~~cash flows.

The DOR is conducting an investigation with respect to our determination that ASV is a VIE and related Alaska tax credit certificates. On October 27, 2020, the DOR filed a notice with the Bankruptcy Court notifying the Debtors and others that the tax credits held by the Debtors in the Chapter 11 Cases may be valueless based on allegations of criminal fraud in obtaining the credits and that it is highly likely that the DOR will determine that the tax credits are valueless. We have been cooperating, and intend to continue to cooperate, with the DOR in its investigation. We are unable to predict the eventual scope and duration of the DOR’s investigation, or ~~other action~~the outcome with the DOR or whether it could have a material impact on our financial condition, results of operations, or cash flow.

The DOR is conducting an investigation with respect to our determination that ASV is a variable interest entity and related Alaska tax credit certificates. We have been cooperating, and will continue to cooperate, with the DOR in its investigation. The DOR investigation is continuing, and we are unable to predict the eventual scope, duration or outcome of any potential DOR legal action or other action or whether it could have a material impact on our financial condition, results of operations, or cash flow.

In the ordinary course of business, we may be subject to legal proceedings involving contractual and employment relationships, liability claims and a variety of other matters. Although the results of these other legal proceedings cannot be predicted with certainty, we do not believe that the final outcome of these proceedings should have a material adverse effect on our business, results of operations, cash flows or financial condition. However, we cannot predict the occurrence or outcome of these proceedings with certainty, and if we are unsuccessful in these proceedings and any loss exceeds our available insurance, if any, this could have a material adverse effect on our results of operations.

~~NOTE 5. LEASES~~

We have entered into various non–cancellable operating and finance lease agreements for certain of our offices, shop and warehouse facilities, equipment and vehicles. We determine if an arrangement is a lease, or contains a lease, at inception and record the leases in our unaudited condensed consolidated financial statements upon lease commencement, which is the date when the underlying asset is made available for use by the lessor.

Our leases have remaining lease terms ranging from one year to eight years and often include options to extend the lease term for up to three years. Some of our leases also include options to terminate the lease prior to the end of the agreed upon lease term. For the majority of leases entered into during the current period, we have concluded it is not reasonably certain that we would exercise the options to extend the lease. Therefore, as of the lease commencement date, our lease terms generally do

~~SAExploration Holdings, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

~~not include these options. We include options to extend the lease when it is reasonably certain that we will exercise that option.~~

Lease expense for operating lease payments is recognized on a straight–line basis over the lease term. Certain operating leases provide for annual increases to lease payments based on an index or rate. We estimate the annual increase in lease payments based on the index or rate at the lease commencement date, for both our historical leases and for new leases commencing after January 1, 2019. Differences between the estimated lease payment and actual payment are expensed as incurred. Lease expense for finance lease payments is recognized as amortization expense of the finance lease ROU asset and interest expense on the finance lease liability over the lease term.

~~The balances for the operating and finance leases where we are the lessee are presented on our unaudited condensed consolidated balance sheet as follows:~~

Classification on Unaudited Condensed Consolidated
Balance Sheet

September 30,
2019

Assets:

Operating lease right-of-use assets

Operating lease right-of-use assets

$
6,976

Finance lease assets

Property and equipment, net

545

Total lease assets

$
7,521

Liabilities:

Current:

Operating lease liabilities

Operating lease liabilities

$
3,056

Finance lease liabilities

Current portion of long-term debt and finance leases

582

Long-term - Operating lease liabilities

Other long-term liabilities

4,018

Total lease liabilities

$
7,656

~~The components of lease expense on our unaudited condensed consolidated statement of operations are as follows:~~

Three Months Ended

Nine Months Ended

September 30,
2019

September 30,
2019

Operating lease expense:

Operating lease expense ⁽¹⁾

$
1,294

$
3,958

Finance lease expense:

Amortization of leased assets

$
221

$
664

Interest on lease liabilities

24

93

Total finance lease expense

$
245

$
757

Total lease expense

$
1,539

$
4,715

⁽¹⁾	~~Includes short–term leases and variable lease costs, both of which are immaterial.~~

As of September 30, 2019, our operating leases and finance leases have weighted average remaining lease terms of 3.8 years and 0.6 years, respectively, and both our operating leases and finance leases have a weighted average discount rate of 13.0%.

~~SAExploration Holdings, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

~~Supplemental cash flows information related to leases where we are the lessee is as follows:~~

Three Months Ended

Nine Months Ended

September 30,
2019

September 30,
2019

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

$
1,010

$
2,583

Operating cash flows from finance leases

24

93

Financing cash flows from finance leases

224

652

Operating right-of-use assets obtained in exchange for new operating lease liabilities

$
—

$
162

~~As of September 30, 2019, the maturities of the liabilities related to our operating leases and finance leases are as follows:~~

Operating
Leases

Finance
Leases

Six months ended December 31, 2019

$
1,168

$
248

2020

3,480

361

2021

1,209

—

2022

871

—

2023

701

—

Thereafter

479

—

Total minimum lease payments

7,908

609

Less: interest

834

27

Present value of lease liabilities

7,074

582

Less: current lease liabilities

3,056

582

Long-term lease liabilities

$
4,018

$
—

NOTE 6.5. STOCKHOLDERS' EQUITY

As of September 30, ~~2019,~~2020, we are authorized to issue 40.0 million shares of common stock with a par value of $0.0001 per share.

The following table presents the changes in the number of shares outstanding:

	~~2019~~
~~Shares issued:~~
~~Balance as of January 1~~		~~3,211~~
~~Issue of shares on exercises of Series C warrants~~		51
~~Issue of shares on exercises of Series D warrants~~		33
~~Issue of shares on exercises of Series E warrants~~		~~662~~
~~Issue of shares on vesting of restricted stock units~~		~~278~~
~~Issue of shares as consideration for services~~		~~243~~
~~Issue of shares in private placement~~		30
~~Balance as of September 30~~		~~4,508~~

~~Shares held as treasury stock:~~
~~Balance as of January 1~~		~~111~~
~~Purchase of treasury stock~~		97
~~Balance as of September 30~~		~~208~~

~~Shares outstanding as of September 30~~		~~4,300~~

	2020		2019
Shares issued:
Balance as of January 1		4,508		3,211
Issue of shares on exercises of warrants		2,312		746
Issue of shares on vesting of restricted stock units		—		278
Issue of shares as consideration for services		—		243
Issue of shares in private placement		—		30
Balance as of September 30		6,820		4,508

Shares held as treasury stock:
Balance as of January 1		208		111
Purchase of treasury stock		—		97
Balance as of September 30		208		208

Shares outstanding as of September 30		6,612		4,300

In January 2020, we issued 0.4 million of our Series F warrants upon receipt of NASDAQ approval of the issuance.

In the nine months ended September 30, 2020, 39.8 million Series C warrants, Series D warrants, Series E warrants and Series F warrants were exercised. As of September 30, 2020, we have 34.0 million warrants outstanding, which are potentially exercisable into 2.2 million shares of our common stock.

In accordance with the RSA and the Plan, our existing common stock and warrants to purchase our common stock will be extinguished upon emergence from bankruptcy, and our existing equity holders will not receive any type of consideration in respect of their equity interests.

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

In the nine months ended September 30, 2019, 1.0 million, 0.7 million and 13.2 million of our Series C warrants, Series D warrants and Series E warrants, respectively, were exercised. As of September 30, 2019, 6.9 million, 11.1 million and 54.6 million of our Series C warrants, Series D warrants and Series E warrants, respectively, are outstanding.

In February 2019, we issued 0.2 million shares of common stock as partial consideration for services provided to us related to our acquisition of certain assets from Geokinetics, Inc. (“GEOK”). The shares were valued at $0.5 million. These shares were sold and issued without registration under the ~~Securities Act in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act.~~

In March 2019, we issued 0.03 million shares of common stock in a private placement. The shares were valued at $0.1 million based on the closing price of our common stock on the date of issuance. These shares were sold and issued without registration under the ~~Securities Act in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act.~~

NOTE 7.6. REVENUE FROM SERVICES

Deferred Costs on Contracts

In some instances, we incur third party costs that directly relate to the contract to fulfill the contract obligations. These fulfillment costs are capitalized and amortized consistent with how the related revenue is recognized. Changes in our deferred costs on contracts are as follows for the nine months ended September 30:

	2019			2018
				(Restated)			2020			2019
Balance at beginning of year	$	3,746		$	1,780		$	14,966		$	3,746
Fulfillment costs incurred		10,561			5,487			9,256			10,561
Amortization of fulfillment costs		(8,947	)		(6,819	)		(23,879	)		(8,947	)
Balance at end of period	$	5,360		$	448		$	343		$	5,360

Deferred Revenue

Typically, our mobilization services are paid by the customer at the beginning of the contract while the revenue is recognized as control transfers to the customer, which can result in deferred revenue. Normally all other revenue is billed as work progresses, which generally will not result in significant deferred revenue except in those cases where a large mobilization is required for the contract.

Changes in our deferred revenue are as follows for the nine months ended September 30:

	2019			2018
				(Restated)			2020			2019
Balance at beginning of year	$	4,357		$	1,477		$	8,724		$	4,357
Cash received, excluding amounts recognized as revenue from services		13,674			3,566			12,959			13,674
Amounts recognized as revenue from services		(12,599	)		(3,000	)		(21,050	)		(12,599	)
Balance at end of period	$	5,432		$	2,043		$	633		$	5,432

~~SAExploration Holdings, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

Disaggregated Revenue

The following table disaggregates our revenue by major source:

	Three Months Ended September 30,				Nine Months Ended September 30,				2020						2019
	2019		2018		2019		2018		Land		Marine		Total		Land		Marine		Total
			(Restated)				(Restated)
Three Months Ended September 30:
North America	$	20,481	$	12,857	$	109,910	$	45,296	$	2,163	$	—	$	2,163	$	20,481	$	—	$	20,481
South America		2,160		1,224		2,911		22,791		—		—		—		2,160		—		2,160
Asia Pacific ⁽¹⁾		633		922		93,045		922		—		8		8		301		332		633
Total	$	23,274	$	15,003	$	205,866	$	69,009	$	2,163	$	8	$	2,171	$	22,942	$	332	$	23,274

Nine Months Ended September 30:
North America									$	122,637	$	—	$	122,637	$	109,910	$	—	$	109,910
South America										1,415		7,807		9,222		2,911		—		2,911
Asia Pacific										182		24,973		25,155		2,262		90,783		93,045
West Africa										—		6,356		6,356		—		—		—
Total									$	124,234	$	39,136	$	163,370	$	115,083	$	90,783	$	205,866

⁽¹⁾	~~Includes $0.3 million and $90.8 million related to our marine operations in the three months and nine months ended September 30, 2019, respectively.~~

Remaining Performance Obligations

As of September 30, ~~2019,~~2020, we had ~~$123.8~~$68.5 million of remaining performance obligations. We expect to recognize revenue of approximately ~~59%~~1% of these performance obligations in ~~2019~~2020, approximately 44% in 2021 and the remaining approximately ~~41%~~55% in ~~2020.~~2022.

NOTE 8.7. EQUITY–BASED COMPENSATION

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

We grant various forms of equity–based compensation to our senior management and directors. These equity–based awards currently consist of restricted stock units (“RSUs”).

In March ~~2019,~~2020, we issued ~~0.5~~0.1 million RSUs to our senior management, which ~~vested 50% on April 12, 2019 and the remaining 50%~~ will vest ~~on January 29, 2021, and an additional 0.2 million RSUs, all of which vest on~~in September ~~29, 2020.~~2021. The fair value of the RSUs on the date of grant was ~~$2.5~~$0.2 million.

We recognized equity–based compensation costs of ~~$(0.1)~~$(0.7) million and ~~$6.5~~$(0.1) million in the three months ended September 30, 2020 and 2019, respectively, and ~~2018~~$(0.4) million and $2.3 ~~million and $9.1~~ million in the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively. Included in these costs for each of the three months and nine months ended September 30, 2020 and 2019 is $(0.8) million related to the forfeiture of equity–based compensation. These costs are included in “Selling, general and administrative expenses” on our unaudited condensed consolidated statements of operations.

As of September 30, ~~2019,~~2020, we had ~~$3.4~~$0.1 million of unrecognized equity–based compensation cost, which is expected to be recognized over a weighted average period of ~~1.3~~0.6 years.

NOTE 8. LEASES

We have entered into various non–cancellable operating lease agreements for certain of our offices, shop and warehouse facilities, equipment and vehicles. We determine if an arrangement is a lease, or contains a lease, at inception and record the lease in our unaudited condensed consolidated financial statements upon lease commencement, which is the date when the underlying asset is made available for use by the lessor.

Our leases have remaining lease terms ranging from one year to seven years and often include options to extend the lease term for up to three years. Some of our leases also include options to terminate the lease prior to the end of the agreed upon lease term. For the majority of leases entered into during the current period, we have concluded it is not reasonably certain that we would exercise the options to extend the lease. Therefore, as of the lease commencement date, our lease terms generally do not include these options. We include options to extend the lease when it is reasonably certain that we will exercise that option.

Lease expense for operating lease payments is recognized on a straight–line basis over the lease term. Certain operating leases provide for annual increases to lease payments based on an index or rate. We estimate the annual increase in lease payments based on the index or rate at the lease commencement date. Differences between the estimated lease payment and actual payment are expensed as incurred. Lease expense for finance lease payments is recognized as amortization expense of the finance lease ROU asset and interest expense on the finance lease liability over the lease term.

The balances for the operating and finance leases where we are the lessee are presented on our unaudited condensed consolidated balance sheet as follows:

	Classification on Unaudited Condensed Consolidated Balance Sheet	September 30, 2020		December 31, 2019
Assets:
Operating lease right-of-use assets	Operating lease right-of-use assets	$	5,505	$	6,421
Finance lease assets	Property and equipment, net		—		324
Total lease assets		$	5,505	$	6,745

Liabilities:
Current:
Operating lease liabilities	Operating lease liabilities	$	1,517	$	2,576
Finance lease liabilities	Current portion of long-term debt and finance leases		—		350
Long-term - operating lease liabilities	Other long-term liabilities		4,107		3,980
Total lease liabilities		$	5,624	$	6,906

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

The components of lease expense on our unaudited condensed consolidated statement of operations are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Operating lease expense:
Operating lease expense ⁽¹⁾	$	696	$	1,294	$	3,103	$	3,958

Finance lease expense:
Amortization of leased assets	$	—	$	221	$	324	$	664
Interest on lease liabilities		—		24		10		93
Total finance lease expense	$	—	$	245	$	334	$	757

Total lease expense	$	696	$	1,539	$	3,437	$	4,715

⁽¹⁾	Includes short–term leases and variable lease costs, both of which are immaterial.

As of September 30, 2020, our operating leases have a weighted average remaining lease term of 3.9 years and a weighted average discount rate of 13.0%.

Supplemental cash flows information related to leases where we are the lessee is as follows for the nine months ended September 30:

	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,337	$	2,583
Operating cash flows from finance leases		10		93
Financing cash flows from finance leases		350		652

Operating lease right-of-use assets obtained in exchange for new operating lease liabilities		744		162

As of September 30, 2020, the maturities of the liabilities related to our operating leases are as follows:

Three months ended December 31, 2020	$	549
2021		1,958
2022		1,615
2023		1,461
2024		1,002
Thereafter		613
Total minimum lease payments		7,198
Less interest		1,574
Present value of lease liabilities		5,624
Less current lease liabilities		1,517
Long-term lease liabilities	$	4,107

NOTE 9. INCOME TAXES

We record income taxes for interim periods based on an estimated annual effective tax rate. The estimated annual effective tax rate is recomputed on a quarterly basis and may fluctuate due to changes in forecasted annual operating income, positive or negative changes to the valuation allowance for net deferred tax assets, and changes to actual or forecasted permanent book to tax differences.

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Our effective tax rates were ~~4.9%~~(0.3)% and ~~0.2%~~5.0% for the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~(65.3)~~(3.6)% and ~~0.2%~~(67.0)% for the nine months ended September 30, 2020 and 2019, ~~and 2018,~~ respectively. The changes in our effective tax rates and the primary ~~reason why~~reasons that these effective tax rates differ from the applicable federal statutory rates are the fluctuations in earnings among the various jurisdictions in which we operate, increases in valuation allowances and foreign tax rate differentials.

~~SAExploration Holdings, Inc.~~

~~Notes~~The CARES Act, among other things, permits net operating loss (“NOL”) carryovers and carrybacks to ~~Unaudited Condensed Consolidated Financial Statements (continued)~~offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019 and 2020 to be carried back to each of the five preceding years to generate a refund for previously paid income taxes. The CARES Act also contains modifications on the limitation of business interest for tax years beginning in 2019 and 2020. These modifications increase the allowable business interest deduction from 30% of adjusted taxable income to 50% of adjusted taxable income. Based upon current facts and circumstances, we do not expect that these provisions would result in a material cash benefit or impact to the effective tax rate.

NOTE 10. LOSS PER COMMON SHARE

The computation of basic and diluted loss per common share is as follows:

Three Months
Ended September 30,

Nine Months
Ended September 30,

2019

2018

2019

2018

(Restated)

(Restated)

Loss per common share (basic and diluted):

Net loss attributable to SAExploration

$
(12,985
)

$
(22,641
)

$
(17,104
)

$
(41,767
)
Amortization of discounts on Series A and Series B preferred stock

—

(5,336
)

—

(72,762
)
Accretion of Series A preferred stock to redemption value

—

—

—

21,376

Dividends on Series A preferred stock

—

(495
)

—

(1,614
)
Net loss available to common stockholders

$
(12,985
)

$
(28,472
)

$
(17,104
)

$
(94,767
)

Weighted average common shares outstanding (basic and diluted)

7,930

3,384

7,818

2,090

Loss per common share (basic and diluted)

$
(1.64
)

$
(8.41
)

$
(2.19
)

$
(45.34
)

Anti-dilutive securities excluded from diluted loss per common
share ⁽¹⁾

11,026

10,709

11,026

10,709

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Net loss attributable to SAExploration	$	(30,015	)	$	(12,985	)	$	(26,960	)	$	(17,104	)

Weighted average common shares outstanding (basic and diluted)		9,969			7,930			10,582			7,818

Loss per share available to common stockholders (basic and diluted)	$	(3.01	)	$	(1.64	)	$	(2.55	)	$	(2.19	)

Potentially antidilutive shares excluded from diluted loss available to common stockholders ⁽¹⁾		10,672			11,026			10,689			11,026

⁽¹⁾	Includes our Series A and Series B warrants, ~~and~~certain unvested equity–based ~~compensation.~~compensation and the shares underlying our 2023 Notes as their effect, if included, would have been anti–dilutive.

NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets or liabilities. Level 2 refers to fair values determined based on quoted prices for similar assets or liabilities in active markets or inputs that are observable to the asset or liability, either directly or indirectly through market corroboration. Level 3 refers to fair values determined based on unobservable inputs used in the measurement of assets and liabilities at fair value.

The estimated fair values of our financial instruments have been determined at discrete points in time based on relevant market information. Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and long–term debt. The carrying amounts of our financial instruments, other than our 2023 Notes, ~~and Senior Notes,~~ approximate fair value because of the short–term nature of the items.

As of September 30, 2020, the estimated fair value and carrying value of our 2023 Notes was $6.5 million and $60.0 million, respectively. As of December 31, 2019, the estimated fair value and carrying value of our 2023 Notes was ~~$47.2~~$42.0 million and ~~$46.0~~$46.7 million, respectively. ~~As of December 31, 2018, the estimated aggregate fair values and aggregate carrying values of our 2023 Notes and Senior Notes was $50.7 million $51.0 million, respectively.~~

As our 2023 Notes are not actively traded, the fair value determination of the 2023 Notes is categorized as Level 3 as the valuation was based on valuation techniques when observable market data is not available. ~~The fair value determination of our Senior Notes was categorized as Level 2 as this valuation used dealer quoted prices in active markets obtained from independent third–party sources.~~

2119

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

NOTE 12. OTHER SUPPLEMENTAL INFORMATION

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash are recorded in our unaudited condensed consolidated balance sheet as follows:

	September 30, 2019		December 31, 2018
			(Restated)		September 30, 2020		December 31, 2019
Cash and cash equivalents	$	13,378	$	7,579	$	21,987	$	5,441
Restricted cash		257		271		75		74
Total cash, cash equivalents and restricted cash	$	13,635	$	7,850	$	22,062	$	5,515

Our restricted cash served as collateral for labor claims, office rental and cash in another country restricted by exchange control regulations.

Accounts Receivable, net

Total accounts receivable, net is comprised of the following:

	September 30, 2019			December 31, 2018
				(Restated)			September 30, 2020			December 31, 2019
Trade receivables	$	25,116		$	23,330		$	8,121		$	50,447
Other receivables		3,958			3,681			2,547			3,199
Total accounts receivable		29,074			27,011			10,668			53,646
Less: allowance for doubtful accounts		(1,934	)		(548	)		(3,777	)		(2,064	)
Total accounts receivable, net	$	27,140		$	26,463		$	6,891		$	51,582

Allowance for Doubtful Accounts

Changes in the allowance for doubtful accounts are as follows for the nine months ended September 30:

	2020		2019
Balance at beginning of year	$	2,064	$	548
Provisions for doubtful accounts		1,645		1,619
Cumulative translation adjustment		68		(232	)
Balance at end of period	$	3,777	$	1,935

Accrued Liabilities

Accrued liabilities are comprised of the following:

	September 30, 2019		December 31, 2018
			(Restated)		September 30, 2020		December 31, 2019
Accrued payroll liabilities	$	2,751	$	3,622	$	2,637	$	2,877
Accrued interest		163		306		218		181
Other accrued liabilities		4,810		6,570		651		3,468
Total accrued liabilities	$	7,724	$	10,498	$	3,506	$	6,526

Other accrued liabilities primarily consist of accruals for project related expenses.

~~Supplemental Cash Flows Information~~

~~Supplemental cash flows information is as follows:~~

Nine Months Ended September 30,

2019

2018

Cash paid for interest

$
8,115

$
6,961

Cash paid for income taxes

266

2,124

2220

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Supplemental Cash Flows Information

Supplemental cash flows information is as follows for the nine months ended September 30:

	2020		2019
Cash paid for interest	$	5,446	$	8,115
Cash paid for income taxes		2,792		266

Noncash Transactions

Supplemental noncash transactions are as ~~follows:~~follows as of September 30:

As of September 30,

2019

2018

Common stock and preferred stock issued to retire long-term debt

$
—

$
73,234

Costs for additions to property and equipment in accounts payable

—

26

Accrual for stock issued for services

478

—

		2020				2019
Accrual for stock issued for services		$	—			$	478

NOTE 13. RELATED PARTY TRANSACTIONS

~~Mr.~~As of September 30, 2020, Jeff Hastings, our former Chief Executive Officer, Mr. Whiteley, our former Chief Financial Officer and General Counsel, and our former Vice President Finance were owners in Speculative Seismic Investments, LLC (“SSI”), which was a lender under our senior loan facility in the principal amount of $0.6 million. In February 2019, SSI assigned its entire principal amount to another unaffiliated lender in a private transaction. As of September 30, 2019, SSI is no longer a lender under our senior loan facility.

~~As of September 30, 2019, Mr. Hastings~~ is a lender under our credit facility in the principal amount of $0.5 million and a holder of our 2023 Notes in the principal amount of $1.0 million.

Mr. Hastings has an ownership interest in Fairweather Science, LLC (“Fairweather Science”), a company that provides specialized environmental support services to clients in Alaska’s natural resource industry. In the three months ended September 30, 2018, we recorded $17 thousand of expenses related to services providedBrent Whiteley, our former Chief Financial Officer and General Counsel, owns and/or controls RVI Consulting, Inc. No amounts were billed by ~~Fairweather Science. We did not record any expenses related to services provided by Fairweather Science~~RVI in the three months ~~ended September 30, 2019. In the~~or nine months ended September 30, ~~2019 and 2018, we recorded expenses of $31 thousand and $17 thousand, respectively, related to services provided by Fairweather Science.~~

Mr. Hastings also has an ownership interest in Fairweather, LLC (“Fairweather”), a company that provides aviation weather observation services to remote regions in Alaska. In each of the three months and nine months ended September 30, 2019 and 2018, we did not record any expenses related to services provided by Fairweather.

Mr. Whiteley owns RVI. In the three months ended September 30, 2019 and 2018, RVI billed us $55 thousand and $0.3 million for legal and professional services. In the nine months ended September 30, 2019 and 2018, RVI billed us $0.3 million and $0.6 million, respectively, for legal and professional services. These payments were determined to be a misappropriation of funds, and are included in misappropriation of funds on our unaudited condensed consolidated statements of operations.

A member of our operations management team owns Inupiate Resources LLC which provides us with certain specialty personnel. In the three months ended September 30, 2019 and 2018, we incurred $3 thousand and $10 thousand, respectively, in expenses associated with contract labor. In the nine months ended September 30, 2019 and 2018, we incurred $0.3 million and $0.1 million, respectively, in expenses associated with contract labor.

~~Three members of our operations management team own Inupiate Resources Leasing LLC which provides us with certain equipment.~~2020. In the three months and nine months ended September 30, 2019, ~~we incurred $18 thousand~~RVI billed us $0.1 million and ~~$0.2~~$0.3 million, respectively, for legal and professional services that were determined to be a misappropriation of funds from us. These amounts are included in ~~expenses associated with leased equipment. We did not incur any expenses in the three months and nine months ended September 30, 2018.~~“Misappropriation of funds” on our unaudited condensed consolidated statements of operations.

Other related party transactions are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Fairweather Science, LLC ⁽¹⁾	$	95	$	—	$	100	$	31

Inupiate Resources Leasing LLC ⁽²⁾	$	—	$	18	$	150	$	248

Inupiate Resources LLC ⁽³⁾	$	1	$	3	$	419	$	337

Summit Air Resources ⁽⁴⁾	$	—	$	—	$	37	$	32

1856125 Alberta Ltd. ⁽⁵⁾	$	—	$	4	$	84	$	91

Woodstone Builders LLC. ⁽⁶⁾	$	—	$	91	$	—	$	91

⁽¹⁾	Mr. Hastings has an ownership interest in Fairweather Science, LLC, a company that provides specialized environmental support services to clients in Alaska’s natural resource industry.

⁽²⁾	Three members of our operations management team own Inupiate Resources Leasing LLC, which provides us with certain equipment. In January 2020, we purchased $0.2 million of previously leased equipment, terminating the equipment leasing relationship.

⁽³⁾	A member of our operations management team owns Inupiate Resources LLC, which provides us with certain specialty personnel.

⁽⁴⁾	A member of our operations management team owns Summit Air Resources, which provides us with certain equipment and mechanical services.

~~A member of our operations management team owns Summit Air Resources which provided us with certain salvage services. We did not incur any expenses related~~21

SAExploration Holdings, Inc.

(Debtors–in–Possession)

Notes to these services in each of the three months ended September 30, 2019 and 2018. In the nine months ended September 30, 2019 and 2018, we incurred $32 thousand and $34 thousand, respectively, related to these services.Unaudited Condensed Consolidated Financial Statements (continued)

⁽⁵⁾	A family member of one of our former officers owns 1856125 Alberta Ltd., which provides us with certain equipment and mechanical services.

⁽⁶⁾	Mr. Whiteley, or a former immediate family member of Mr. Whiteley, is an owner of Woodstone Builders LLC which provided us construction services.

ASV is a VIE indirectly owned and/or controlled by Mr. Hastings and Mr. ~~Whiteley (see Note 2).~~Whiteley.

~~SAExploration Holdings, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

As of ~~January 27,~~September 30, 2020, three of the holders of the indebtedness outstanding under our credit facility, senior loan facility and 2023 Notes represent (together with their affiliates) approximately 90%, 72% and 90%, respectively, of the total principal amounts outstanding under such debt financing arrangements. These holders also collectively own ~~18%~~39% of the shares of our outstanding common stock, ~~62%~~55% of the shares of our outstanding common stock, including shares of common stock issuable upon the exercise of our outstanding Series C, D, E and F common stock warrants (including the Series F warrants to be issued upon receipt of shareholder approval), and ~~76%~~73% of the shares of our outstanding common stock, including shares of common stock issuable upon the exercise of our outstanding Series C, D, E and F common stock warrants (including the Series F warrants to be issued upon receipt of shareholder approval) and upon conversion of our 2023 Notes, respectively.

Moreover, the three lenders are parties to certain registration rights agreements, by and among us and certain of our stockholders.

NOTE 14. SUBSEQUENT EVENTS

In November 2019, we financed the purchase of property and equipment pursuant to a secured promissory note in the amount of $10.0 million. The note bears interest at a fixed rate equal to 7.0% per annum and matures on January 1, 2023. We also amended our credit facility, senior loan facility and indenture governing our 2023 Notes to permit the purchase pursuant to the note.

In November 2019, we consummated the sale of substantially all of our assets in Australia for up to $9.0 million (Australian), payable as follows: (i) $6.0 million (Australian) paid in cash at closing, (ii) $0.6 million (Australian) payable no later than 30 business days after closing and (iii) earnout payments based on the utilization of certain of these assets following the closing in an amount up to $3.0 million (Australian). The earnout payments will be paid over a two–year period and capped at $1.5 million (Australian) in each such year. Subject to certain conditions, we will receive a minimum earnout payment equal to $750 thousand (Australian) in each such year. We also amended our credit facility and senior loan facility to permit the sale and to allow us to retain up to $6.0 million (Australian) of the net proceeds received from the sale, instead of using such net proceeds to repay amounts owed under our credit facility and senior loan facility.

In December 2019, we amended our credit facility to, among other things, (i) request and receive advances in the aggregate principal amount of $5.0 million (the “First Advance”); (ii) provide for the ability to request and receive additional advances in the aggregate principal amount of $5.0 million (the “Additional Advances”); and (iii) provide for the issuance of Series F warrants pursuant to a warrant agreement (the “Warrant Agreement”) exercisable for shares of our common stock. We then borrowed the entire amount of the First Advance to be used for additional working capital. Under the Warrant Agreement, subject to certain conditions, we will issue up to approximately 2.0 million Series F warrants (the “First Advance Warrants”) and may issue additional Series F warrants representing up to 10% of the issued and outstanding shares of our common stock, on a fully diluted basis as of the date of the Additional Advances (or approximately 2.3 million shares of our common stock as of the closing date), upon the issuance of the Additional Advances. Each Series F warrant entitles the holder thereof to purchase one share of our common stock at an initial exercise price of $0.0001 per share. We have issued approximately 0.9 million First Advance Warrants and, upon approval by our shareholders, will issue the remaining First Advance Warrants. Our credit facility requires us to use our best efforts to obtain shareholder approval for the issuance of the Series F warrants.

In January 2020, we and ASV sold certain seismic data and related assets for a purchase price payable as follows: (i) $14.5 million paid to us, on behalf of ASV and us, in cash on the closing date, (ii) $0.5 million paid to us in cash on the closing date, and (iii) earnout payments in an amount of up to $5.0 million to be paid to us, on behalf of ASV and us, based on the licensing fees related to the licensing of certain seismic data following the closing date in an amount in excess of $15.0 million of licensing fees. In connection with the sale, we and ASV also entered into an agreement (the “Sellers’ Agreement”) with respect to certain post–closing indemnification obligations. The Sellers’ Agreement also provides that we will receive all the proceeds paid or payable pursuant to the sale pursuant to clauses (i) and (iii) above, which proceeds will be credited by us towards outstanding amounts owed to us by ASV. We also amended our credit facility, senior loan facility and the indenture governing the 2023 Notes to permit the sale and transactions contemplated by the Sellers’ Agreement and to provide for the application of $14.5 million of the net proceeds received from the sale to reduce indebtedness under our credit facility. Following the sale, the balance of our tax credits receivable, net has been reduced to $2.7 million.

~~SAExploration Holdings, Inc.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements (continued)~~

As previously disclosed, as a result of certain circumstances giving rise to, or occurring as a result of, the restatement, certain events of default had occurred under our credit facility, senior loan facility, 2023 Notes and Senior Notes. We repaid in full the Senior Notes at maturity in September 2019. In September 2019, we entered into forbearance agreements with respect to our credit facility, senior loan facility and 2023 Notes, whereby the holders of the indebtedness thereunder agreed to refrain from exercising their rights and remedies with respect to events of default that have occurred and other potential defaults or events of default that may occur as further specified in the forbearance agreements until 5:00 p.m. (New York City time) on the earlier of (i) November 30, 2019 and (ii) the date the forbearance agreements otherwise terminated in accordance with their terms. The November 30, 2019 deadline was ultimately extended to February 7, 2020. On February 7, 2020, we entered into amendments and waivers to our credit facility, senior loan facility and the indenture governing the 2023 Notes to, among other things, waive existing events of default thereunder and amend certain covenants requiring us to deliver financial statements, reports, projections and other items thereunder.

We evaluated subsequent events for appropriate accounting and disclosure through the date these unaudited condensed consolidated financial statements were issued and determined that there were no material items that required recognition or disclosure in our unaudited condensed consolidated financial ~~statements, except as described above.~~statements.

ITEM 2. MANAGEMENT'S ~~DISCUSSION~~DISCUSSION AND ANALYSIS OFOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto, as well as our Annual Report on Form 10–~~K/A~~K for the year ended December 31, ~~2018.~~

~~RESTATEMENT OF PREVIOUSLY UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

This “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” gives effect to the restatement of our unaudited condensed consolidated financial statements as more fully described in Note 2 in “Item 1. Financial Statements” and “Item 4. Controls and Procedures”, both contained herein.

2019.

OVERVIEW

We are ~~an international oilfield services company offering~~ a ~~full range~~full–service global provider of ~~vertically–integrated~~ seismic data acquisition, ~~data processing and interpretation, and~~ logistical support and processing services ~~throughout~~to customers in the oil and natural gas industry. Our business activities are primarily conducted in North America, South America, Asia Pacific ~~Africa~~ and ~~the Middle East to the oil and natural gas industry.~~West Africa. Our services include the acquisition of 2D, 3D, time–lapse 4D and multi–component seismic data on land, in transition zones between land and water, and offshore in depths reaching 3,000 meters. In addition, we offer a full suite of ~~data processing and interpretation services utilizing our proprietary, patent–protected software, and also provide in–house~~ logistical support ~~services, such as program design, planning~~ and ~~permitting, camp services and infrastructure, surveying, drilling, environmental assessment and reclamation and community relations.~~processing services. We currently provide our services on a proprietary basis only to our customers and the seismic data acquired is owned by our customers, other than the multiclient seismic data library currently maintained by ASV of approximately 440 square kilometers in certain basins in Alaska, which is available for future sales or license.

Our customers include major integrated oil companies, national oil companies and independent oil and natural gas exploration and production companies. Demand for our services depends on the level of spending by these customers for exploration, production, development and field management activities, which is influenced, in a large part, by oil and natural gas prices. Demand for our services is also impacted by long–term supply concerns based on national oil policies and other country–specific economic and geopolitical conditions. Significant fluctuations in oil and natural gas exploration activities and oil and natural gas prices have affected, and will continue to affect, demand for our services and our results of operations.

Project visibility, while remaining constrained due to the uncertain sustainability of the recent rise in oil prices and seismic data acquisition budgets, has improved. Despite the improved environment, market conditions remain challenging and we continue to maintain a conservative approach. We have continued to explore ways to reduce costs and gain operating efficiencies through internal restructuring.

While our revenues are mainly affected by the level of customer demand for our services, our revenues are also affected by the bargaining power of our customers relating to our services, as well as the productivity and utilization levels of our data acquisition crews. Factors impacting productivity and utilization levels include client demand, oil and natural gas prices, whether we enter into turnkey or ~~dayrate~~term 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.

Most of our client contracts are turnkey contracts. While turnkey contracts allow us to capitalize on improved crew productivity, we also bear more risks related to weather and crew downtime. We expect the percentage of turnkey contracts to remain high as we continue our operations in the regions of the U.S. and internationally in which turnkey contracts are more common.

COVID–19 Pandemic and Market Conditions

~~While~~Demand for our services has declined, and will continue to decline, as long as our customers continue to revise their capital budgets downward and adjust their operations in response to lower oil prices and demand due to the ~~markets~~COVID–19 pandemic. As of September 30, 2020, we had approximately $68.5 million of backlog under contract, in addition to approximately $334.7 million of bids outstanding. Of the $68.5 million of backlog under contract, we expect $0.6 million to be completed in 2020. However, our project visibility has continued to deteriorate. Due to the significant uncertainty in the outlook for oil and natural gas development as a result of the significant decline in oil prices since the beginning of 2020 due to the COVID–19 pandemic and its impact on the worldwide economy and global demand for oil, certain of our scheduled and anticipated projects have been ~~very volatile~~cancelled or delayed and are likely to continue to be so in the future, we believe opportunities exist for us to enhance our market position by responding to our clients continuing desire for higher resolution subsurface images. If economic conditions weaken such that our clients reduce their capital expenditures or if there is ~~a significant drop~~no assurance as to when they may be reinitiated or awarded, if at all. We are unable to predict when market conditions may improve and worsening overall market conditions could result in additional reductions of backlog and bids outstanding.

Throughout 2020 we have taken actions to mitigate the near and long–term financial impacts of the COVID–19 pandemic on our operating results to ensure adequate liquidity and capital resources are available to maintain our operations until conditions in the oil and natural gas ~~prices, it could result~~industry and global economy improve. These actions include, but are not limited to the following:

reducing our payroll costs through reductions in ~~diminished~~force;

exiting unnecessary facilities and consolidating our operational footprint to align the size of our operations with current demand;

reducing discretionary expenses and deferring any non–essential capital spending;

deferring of U.S. employer taxes, as permitted under the Coronavirus Aid, Relief, and Economic Security Act;

applying for and receiving a $6.8 million loan pursuant to the Paycheck Protection Program; and

applying for and receiving benefits under the Canada Emergency Wage Subsidy program.

We continue to evaluate market conditions and will continue to take necessary actions to further reduce our cost base and enhance liquidity should there be a further reduction in the demand for our ~~seismic services,~~services.

Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code

Going Concern Uncertainty

could be material.

RESULTS OF OPERATIONS

Three Months Ended September 30, ~~2019~~2020 Compared with the Three Months Ended September 30, ~~2018~~

2019

Net loss for the three months ended September 30, 2020 and 2019 was $30.0 million and $13.0 million, ~~compared with a net loss of $22.6 million for the three months ended September 30, 2018.~~respectively. The significant factors in this change were an increase of ~~$7.4~~$12.0 million in ~~gross profit (loss)~~other expense, net and a decrease of ~~$0.8~~$12.1 million in gross (loss) profit partially offset by a $7.8 million decrease in selling, general and administrative (“SG&A”) expenses.

Revenue from services in the three months ended September 30, ~~2019 increased $8.3~~2020 decreased $21.1 million compared with the three months ended September 30, ~~2018. In North America, revenue from services increased $7.6 million due to an increase in market share in~~2019 driven primarily by the ~~contiguous United States (the “Lower 48”)~~cancellation and postponement of contracts due to the ~~purchase of certain assets from Geokinetics, Inc. in 2018.~~

~~Revenue from services in South America increased $0.9 million due to a project in Bolivia offset by a decrease~~significant uncertainty in the ~~amount of work performed in Colombia~~outlook for oil and natural gas development as a result of ~~a fewer number~~the significant decline in oil prices since the beginning of ~~active customers. Revenue from services in Asia Pacific decreased $0.2 million primarily~~2020 due to ~~finishing a marine job in India offset by a land project in Australia.~~

the COVID–19 pandemic and its impact on the worldwide economy and global demand for oil.

Gross (loss) profit ~~(loss)~~ for the three months ended September 30, ~~2019 increased $7.4~~2020 decreased $12.1 million compared with the three months ended September 30, ~~2018.~~2019. Included in the three months ended September 30, 2020 was an additional reserve of $2.7 million related to the potential monetization of our tax credits receivable. Gross profit ~~(loss)~~ as a percentage of revenues was (405.3)% for the three months ended September 30, 2020 compared with 14.0% for the three months ended September 30, ~~2019 compared with (27.6)% for the three months ended September 30, 2018.~~2019. The ~~positive~~negative impact on gross profit ~~(loss)~~as a percentage of revenues can be attributed to ~~more favorable pricing when taking into account~~the decrease in revenues and the fixed costs involved in our projects.

SG&A expenses for the three months ended September 30, ~~2019~~2020 decreased ~~$0.8~~$7.8 million compared with the three months ended September 30, ~~2018~~2019. The decrease was primarily ~~due~~attributable to ~~a decrease~~the impact of ~~$6.6 million of equity–based compensation costs offset by an increase of $5.2 million of costs~~our cost cutting measures and decreased legal and professional fees related to ~~the~~our SEC ~~investigation~~ and ~~an increase of $0.7 million in reserve for doubtful accounts.~~

~~As disclosed elsewhere in this Form 10–Q, our former Chief Financial Officer and General Counsel misappropriated funds. For more information, see Note 2 contained herein.~~

internal investigations.

Other expense, net for the three months ended September 30, ~~2019 decreased $0.5~~2020 increased $12.0 million compared with the three months ended September 30, ~~2018~~2019 primarily due to a ~~$1.0~~$12.9 million increase in reorganization expenses and a $1.6 million decrease in other income, partially offset by decreases of $1.1 million in interest expense, net and $1.5 million in foreign currency gain (loss). The $1.1 million decrease in interest expense ~~and an increase of $0.5 million in other income offset by a $1.0 million increase in foreign currency loss. Of the $1.0 million decrease in~~is due to us no longer accruing interest ~~expense, $1.5 million related to decreased interest expense from the extension of~~on our senior loan facility ~~in February 2019 partially offset by $0.4 million~~and 2023 Notes as of ~~increased interest expense from~~ the ~~2023 Notes. The $1.0 million increase in foreign currency loss relates to increases in foreign currency losses in Brazil, Canada and Colombia.~~Petition Date.

Income taxes for the three months ended September 30, ~~2019 decreased $0.6~~2020 increased $0.8 million compared with the three months ended September 30, ~~2018~~2019 primarily due to fluctuations in earnings among the various jurisdictions in which we operate, offset by increases in valuation allowances and increases in foreign tax rate differentials.

Nine Months Ended September 30, ~~2019~~2020 Compared with the Nine Months Ended September ~~2018~~

30, 2019

Net loss for the nine months ended September 30, ~~2019~~2020 was ~~$14.5~~$24.4 million compared with ~~a net loss of $40.9~~$14.5 million for the nine months ended September 30, ~~2018.~~2019. The significant factors in this change were an increase of ~~$34.9 million in gross profit (loss) and a decrease of $2.2~~$17.3 million in other expense, net and a decrease of $4.3 million in gross (loss) profit partially offset by ~~increases of $5.2~~a $6.5 million decrease in SG&A ~~expenses and $5.9 million in income taxes.~~expenses.

Revenue from services in the nine months ended September 30, ~~2019 increased $136.9~~2020 decreased $42.4 million compared with the nine months ended September 30, ~~2018.~~2019. In North America, revenue from services increased ~~$64.6~~$12.7 million due to the sale by ASV and us of certain seismic data coupled with an increase in the number and scope of projects performed in Alaska asand Canada partially offset by a ~~result of a return to~~decrease in activity ~~on the North Slope, and the increase in market share~~ in the ~~Lower 48 due to the purchase~~contiguous United States of ~~certain assets from Geokinetics, Inc. in 2018.~~ America.

Revenue from services in South America ~~decreased $19.9~~increased $6.3 million due to the completion of a ~~decrease~~marine job in ~~the amount of work performed~~Brazil and a small project in ~~Colombia offset by an increase in the number of active projects in Mexico and Bolivia. Activity in Colombia continued to decrease due to a fewer number of active customers.~~Colombia. Revenue from services in Asia Pacific ~~increased $92.1~~decreased $67.9 million primarily due to the completions of a land job in Australia and two marine projects in India ~~Australia~~ and ~~Dubai.~~

Dubai in the nine months ended September 30, 2019. Revenue from services in West Africa consisted of the recognition of $6.4 million of revenue from services related to the termination of two marine projects in West Africa that were terminated by the operator in April 2020 due to the COVID–19 pandemic.

Gross (loss) profit ~~(loss)~~ for the nine months ended September 30, ~~2019 increased $34.9~~2020 decreased $4.3 million compared with the nine months ended September 30, ~~2018.~~2019. Gross profit ~~(loss)~~ as a percentage of revenues was 18.4% for the nine months ended September 30, 2020 compared with 16.7% for the nine months ended September 30, ~~2019 compared with (0.8)% for the nine months ended September 30, 2018.~~2019. The positive impact on gross profit as a percentage of revenues can be attributed to more favorable pricing when taking into account the fixed costs involved in our projects.

SG&A expenses for the nine months ended September 30, ~~2019 increased $5.2~~2020 decreased $6.5 million compared with the nine months ended September 30, ~~2018~~2019. The decrease was primarily ~~due~~attributable to ~~(i) $6.9~~the impact of our cost cutting measures, a $2.7 million ofdecrease in equity compensation costs and decreased legal and professional fees related to the SEC ~~investigation, (ii) $1.6 million of reserve for doubtful accounts~~ and ~~(iii) an overall increase in SG&A expenses from increases in revenue from services and activity partially offset by a decrease of $5.9 million in equity–based compensation costs.~~

internal investigations.

As previously disclosed, ~~elsewhere in this Form 10–Q,~~ our former Chief Financial Officer and General Counsel misappropriated ~~funds.~~$0.3 million of funds in the nine months ended September 30, 2019. For more information, see Note 213 contained herein.

Other expense, net for the nine months ended September 30, ~~2019 decreased $2.2~~2020 increased $17.3 million compared with the nine months ended September 30, ~~2018~~2019 primarily due to ~~a decrease~~increases of ~~$1.7~~$12.9 million in reorganization expenses and $3.8 million in foreign currency ~~loss~~gain (loss) and a ~~$1.2 million increase in other income partially offset by a $0.6 million increase in interest expense. The $1.7~~$1.4 million decrease in foreign currency loss relates to decreases in foreign currency losses in Brazil and Canada. Of the $0.6 million increase in interest expense, $2.1 million related to increased interest expense from the 2023 Notes partially offset by $1.5 million of decreased interest expense from the extension of our senior loan facility in February 2019 and the decrease in long–term debt outstanding from the debt exchange in January 2018.

other income.

Income taxes for the nine months ended September 30, ~~2019 increased $5.9~~2020 decreased $5.0 million compared with the nine months ended September 30, ~~2018~~2019 primarily due to fluctuations in earnings among the various jurisdictions in which we operate, partially offset by increases in valuation allowances and increases in foreign tax rate differentials.

LIQUIDITY AND CAPITAL RESOURCES

Our principal source of cash is from the seismic data acquisition services we provide to customers, supplemented as necessary by drawing against our credit facility. Our cash is primarily used to provide additional seismic data acquisition services, including the payment of expenses related to operations and the acquisition of new seismic data equipment, and to pay the interest on outstanding debt obligations. Our cash position and revenues depend on the level of demand for our services. Historically, cash generated from operations, along with cash reserves and borrowings from commercial, private, and related parties, have been sufficient to fund our working capital and to acquire or lease seismic data equipment.

As of September 30, ~~2019,~~2020, we had ~~working capital of $20.2~~approximately $22.0 million ~~compared with $4.8 million as of December 31, 2018. The increase in working capital was related to a $5.8 million increase~~ in cash and cash equivalents and ~~decreases in accrued liabilities and current portion of long–term debt and finance leases.~~

Our working capital needs are difficult to predict and can be subject to significant and rapid increases in our needs. Our available cash varies as a result of the timing of our projects, our customers’ budgetary cycles and our receipt of payment. Our working capital requirements may continue to increase due to the expansion of infrastructure that may be required to keep pace with technological advances. In addition, some of our larger projects require significant upfront expenditures.

Over time, we must continue to invest additional capital to maintain, upgrade and expand our seismic data acquisition capabilities. We currently estimate that our capital expenditures for 2019 will not exceed $3.0 million, of which we have spent $1.2 million through September 30, 2019. This amount will permit us to maintain the operational capability of our current fleet of equipment so that we can execute ongoing projects without delay or increased costs but will not allow us to purchase any new technology or upgrade existing capital assets.

We continue to diligently pursue improving our capitalization and reducing our long–term debt, but liquidity issues may continue to challenge us. Until we are able to finally resolve the issues described above, we could continue to experience liquidity and cash flow issues.

~~Long–term Debt~~

~~As of September 30, 2019, we have $119.0~~$124.3 million in aggregate principal amount of long–term debt outstanding.

We currently expect our ongoing capital and operating expenditures to exceed the revenue we expect to receive from our seismic data acquisition services for the foreseeable future due to, among other things, the significant uncertainty in the outlook for oil and natural gas development as a result of the significant decline in oil prices since the beginning of 2020 due to the COVID–19 pandemic and its impact on the worldwide economy and global demand for oil.

As a result of the foregoing, management, along with its legal and financial advisors, explored various strategic alternatives to address our capital structure, which included engaging in discussions with certain of our debt holders with respect to potential deleveraging or restructuring transactions. We have also attempted to manage operating costs by actively pursuing cost–cutting measures to maximize liquidity consistent with current industry market expectations. However, we were unable to negotiate an extension of the January 2021 maturity date of our senior loan facility or waivers of the events of default under our credit facility and our senior loan facility, and a cross default under the indenture governing our 2023 Notes. As a result of such events of default, we were unable to borrow additional amounts under our credit facility without the requisite approval of the lenders under such credit facility.

Accordingly, on August 27, 2020, the Debtors filed for relief under Chapter 11 of the Bankruptcy Code. For more information on the Chapter 11 Cases and related matters, see “– Overview – Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code” above and “Note 1 – General – Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code” in the notes to the unaudited condensed consolidated financial statements.

In connection with the Chapter 11 filing, the Debtors entered into the RSA with certain creditors to support a restructuring in accordance with the terms set forth in the Plan. As more fully disclosed in “– Overview – Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code” above and “Note 1 – General – Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code” in the notes to the unaudited condensed consolidated financial statements, the Plan and the RSA contemplate a restructuring which would provide for the treatment of holders of certain claims and existing equity interests. Accordingly, our liquidity during the bankruptcy proceedings will come from cash on hand and net operating cash flows during the bankruptcy period.

As part of the RSA and the Plan, we have secured commitments for new first lien exit facility in an aggregate principal amount of $15.0 million with certain lenders under our existing credit facility and senior loan facility and the conversion of the existing credit facility into a new second lien exit facility in an aggregate principal amount of $20.5 million with the existing lenders. In addition, we will eliminate $89.0 million of principal plus accrued interest with respect to our existing senior loan facility and 2023 Notes.

There can be no assurance that we will have sufficient liquidity to continue to fund our operations or allow us to continue as a going concern until the Plan is confirmed by the Bankruptcy Court and becomes effective, and thereafter. Our long–term liquidity requirements, the adequacy of our capital resources and our ability to continue as a going concern are difficult to predict at this time and ultimately cannot be determined until the Plan has been confirmed, if at all, by the Bankruptcy Court. Although we anticipate that the Chapter 11 Cases will help address our liquidity concerns, the approval of a plan of reorganization is not within our control and uncertainty remains over the Bankruptcy Court's approval of a plan of reorganization.

Long–term Debt

As of September 30, 2020, we have $124.3 million in aggregate principal amount of long–term debt outstanding, of which $95.8 million is classified as “Liabilities subject to compromise” in our unaudited condensed consolidated balance sheets. For additional information about our long–term debt, please see “Part I. Financial Information – Item 1. Financial Statements” contained herein.

Cash Flows

Cash flows provided by (used in) type of activity were as follows (in thousands):

	Nine Months Ended September 30,
	2019			2018			Nine Months Ended September 30,
				(Restated)			2020			2019
Operating activities	$	(1,375	)	$	(22,579	)	$	33,928		$	(1,375	)
Investing activities		(462	)		(22,116	)		(636	)		(462	)
Financing activities		7,546			61,573			(16,074	)		7,546

Operating Activities

Cash flows from operating activities ~~used $1.4 million and $22.6~~provided $33.9 million in the nine months ended September 30, ~~2019~~2020 and ~~2018, respectively.~~used $1.4 million in the nine months ended September 30, 2019. The significant factor in the change was a ~~favorable change~~positive impact from changes in our working capital asbalances in addition to a ~~result of increased revenue from services.~~

decrease in SG&A expenses.

Investing Activities

~~During~~In the nine months ended September 30, 2020 and 2019, cash flows used in investing activities consisted of $1.1 million and $1.2 million, ~~for the purchase of property~~respectively, to maintain, expand and ~~equipment~~upgrade our seismic data acquisition capabilities, partially offset by $0.5 million and $0.7 million, respectively, from the sale of ~~excess~~ property and equipment. ~~During~~

Financing Activities

In the nine months ended September 30, ~~2018,~~2020, cash flows used in ~~investing~~financing activities ~~consisted~~included $16.9 million of ~~$21.7~~long–term debt repayments and $6.0 million ~~for the purchase of assets and $1.0 million for the purchase of property and equipment~~in distributions to our noncontrolling interest partially offset by ~~proceeds~~$6.8 million of ~~$0.7 million from the sale of excess property and equipment.~~

~~Financing Activities~~

~~During~~long–term debt borrowings. In the nine months ended September 30, 2019, cash flows provided by financing activities consisted of $17.7 million of long–term debt borrowings partially offset by $7.6 million of long–term debt repayments and ~~finance lease repayments,~~ $2.3 million of distributions to our noncontrolling interest and $0.4 million for the purchase of treasury stock. During the nine months ended September 30, 2018, cash flows provided by financing activities consisted of $123.4 million of long–term debt borrowings offset by $56.3 million of long–term debt repayments, $1.6 million of debt issuance costs, $1.7 million of stock issuance costs and $1.8 million of treasury stock purchases.

interest.

FORWARD–LOOKING STATEMENTS

This Quarterly Report on Form 10–Q contains forward–looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based our forward–looking statements on our current expectations and estimates of future events and trends, which affect or may affect our business and operations. Although we believe that these forward–looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to us. Many important factors, in addition to the risk factors identified in the “Risk Factors” section included in Item 1A of our Annual Report on Form 10–~~K/A~~K for the year ended December 31, ~~2018~~2019 and Item 1A of this Quarterly Report on Form 10–Q, may have a material adverse effect on our results as indicated in the following forward–looking statements. You should read this Quarterly Report on Form 10–Q and the documents that we have filed as exhibits hereto completely and with the understanding that our actual results may be materially different from what we expect.

Our forward–looking statements may be influenced by the following factors, among others:

our ability to obtain Bankruptcy Court approval with respect to motions or other requests made to the Bankruptcy Court in the Chapter 11 Cases, including maintaining strategic control as debtor–-in–possession;

our ability to negotiate, develop, confirm and consummate the Plan or another plan of reorganization with respect to the Chapter 11 Cases or other alternative restructuring transaction;

the effects of our bankruptcy filing on us and on the interests of various constituents;

Bankruptcy Court rulings in the Chapter 11 Cases in general;

the length of time that we will operate under Chapter 11 protection and the continued availability of operating capital during the pendency of the proceedings;

risks associated with third party motions in the Chapter 11 Cases, which may interfere with our ability to confirm and consummate a plan of reorganization;

the potential adverse effects of the Chapter 11 proceedings on our liquidity or results of operations;

the high costs of bankruptcy proceedings, including increased advisory costs to execute our reorganization;

the impact of our bankruptcy filing on our ability to access the public capital markets;

the effects of our bankruptcy filing on our ability to attract, motivate and retain key employees;

substantial doubt about our ability to continue as a going concern as of September 30, 2020;

the impact of the COVID–19 pandemic on our business, financial condition and results of operations;

fluctuations in the levels of exploration and development activity in the oil and natural gas industry;

delays, reductions or cancellations of project awards and our ability to realize revenue projected in our backlog;

the impact of the restatement of our previously issued consolidated financial statements;

~~the identified material weaknesses in our internal control over financial reporting and our ability to remediate those material weaknesses;~~

•

the identified material weaknesses in our internal control over financial reporting and our ability to remediate those material weaknesses;

the outcome of the investigations by the SEC, the DOJ and the ~~Alaska Department~~DOR with respect to the circumstances giving rise to the restatement of ~~Revenue (the “DOR”), which is investigating~~ our ~~treatment of ASV as a VIE and related Alaska tax credit certificates,~~previously issued consolidated financial statements, which could include sanctions or other actions against us and our officers and directors, civil lawsuits, and penalties;

~~the outcome of our internal investigation into the matters summarized in the Annual Report on Form 10-K/A for the year ended December 31, 2018;~~

developments with respect to the Alaskan oil and natural gas exploration tax credit system that continue to affect our ability to timely monetize tax credits, including litigation over the constitutionality of the legislation allowing Alaska to sell bonds to retire its liabilities relating to tax credit certificates;

~~fluctuations in the levels of exploration and development activity in the oil and natural gas industry;~~

intense industry competition involving a competitive bidding process that involves significant costs and risks;

delays in permitting and land access rights;

limited number of customers;

credit and delayed payment risks related to our customers;

the availability of liquidity and capital resources, including our need to obtain additional working capital for upfront expenditures for upcoming projects, and the potential impact this has on our business and competitiveness;

increases in the level of activism against oil and natural gas exploration and development activities;

need to manage rapid growth and contraction of our business;

~~delays, reductions or cancellations of project awards~~operational disruptions due to seasonality, weather and ~~our ability to realize revenue projected in our backlog;~~other external factors;

•

~~operational disruptions due to seasonality, weather and other external factors;~~

crew availability and productivity;

whether we enter into turnkey or term contracts;

high fixed costs of operations;

substantial international business exposing us to currency fluctuations and global factors, including economic, political and military uncertainties;

risks relating to cyber incidents;

~~ability to retain key executives;~~

need to comply with diverse and complex laws and regulations;

~~the possible impact on payments received from the State of Alaska regarding tax credits that have been issued;~~

~~risks related to a possible delisting from the NASDAQ Capital Market;~~

costs and outcomes of pending and future litigation; and

the time and expense required for us to respond to the SEC, DOJ and DOR litigations and investigations and for us to complete ~~the restatement and~~ our internal investigation, which expenses have been and are likely to continue to be material and are likely to have a material adverse impact on our cash balance, cash flow and liquidity.

These words “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan to,” “ought,” “could,” “will,” “should,” “likely,” “appear,” “project,” “forecast,” “outlook” or other similar words or phrases are intended to identify forward–looking statements. These statements discuss future expectations, contain projections of results of operations or of financial condition or state other “forward–looking” information. The forward–looking statements speak only as of the date they were made and, except as required by law, we undertake no obligation to update, amend or clarify any forward–looking statements because of new information, future events or other factors. All of our forward–looking information involves risks and uncertainties that could cause actual results to differ materially from the results expected. Although it is not possible to identify all factors, these risks and uncertainties include the risk factors and the timing of any of the risk factors identified in the “Risk Factors” section included in Item 1A of our Annual Report on Form 10–~~K/A~~K for the year ended December 31, ~~2018.~~2019 and Item 1A of this Quarterly Report on Form 10–Q.

ITEM 4. ~~CONTROLS~~CONTROLS AND PROCEDURES

Overview

Notwithstanding the existence of the material weaknesses described below, we believe that the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10–Q fairly present, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with generally accepted accounting principles.

Evaluation of Disclosure Controls and Procedures

In accordance with Exchange Act Rules 13a–15 and 15d–15, we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this ~~report.~~

Quarterly Report on Form 10–Q. As described below, management has identified material weaknesses in our internal control over financial reporting, which is an integral component of our disclosure controls and procedures. As a result of those material weaknesses, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) were not effective as of September 30, ~~2019.~~ 2020.

Disclosure controls and procedures means our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Material Weaknesses in Internal Control over Financial Reporting

The control environment, which is the responsibility of senior management, helps set the tone of the organization, influences the control consciousness of its officers and employees, and is an important component affecting how the organization performs financial analysis, accounting and financial reporting. A proper organizational tone can be promoted through a variety of means, such as well–documented and communicated policies, a commitment to hiring competent employees, the manner and content of oral and written communications, strong internal controls and effective governance. WeOur former senior management, including our former principal executive officer and our former principal financial officer, did not design or maintain a proper control environment or proper tone at the senior management level.

Beginning with the replacement of our former principal executive officer and our former principal financial officer in August 2019, we have taken the steps noted below in “Remediation Plan for Material Weaknesses in Internal Control Over Financial Reporting and Status” to address the tone at the senior management level and the material weaknesses described below that were previously identified in our Amendment No. 1 to Annual Report on Form 10–K/A for the year ended December 31, 2018 and that continue to exist as of September 30, 2020.

We did not design or maintain effective monitoring activities and activities surrounding our control environment, which was primarily attributable to not performing ongoing evaluations to ascertain whether the components of internal control are present and functioning and not having a sufficient complement of accounting, information technology and financial reporting personnel with an appropriate level of knowledge to address our financial reporting requirements. The failures within these two components of Internal Control – Integrated Framework (2013) contributed to the following material weaknesses at the control activity level:

Revenues

~~Revenues –~~ We did not design or maintain effective controls over the review of revenue contracts for proper revenue recognition and accounts receivable reconciliations and the review of journal entries used to record revenue transactions.

Complex accounting and management estimates –

We did not appropriately design or maintain effective controls over complex accounting relating to variable interest entities or over the review and approval of entering into transactions with newly formed entities, which resulted in certain instances of incorrect accounting and improper consolidation decisions. We also did not appropriately design or maintain effective controls over complex accounting relating to earning per share calculations and the accounting for income taxes. Although the issue relating to income taxes, which was an incorrect valuation allowance on deferred tax assets, arose and was subsequently corrected in fiscal year 2018, sufficient controls were not in place that would necessarily identify a recurrence of such an error.

Financial statement close and reporting –

We did not design or maintain effective controls to support accurate reporting and disclosures within our quarterly and annual reporting.

Customer and vendor set–up, approval and maintenance –

We did not design or maintain effective controls to ensure that necessary procedures regarding the establishment and maintenance of both customers and vendors were followed.

Related Parties –

We did not properly disclose related parties in our consolidated financial statements and some of our officers and employees charged with making the proper notifications for such disclosures were inadequately trained on what constitutes a related party. Furthermore, there were instances where related parties were known to be related parties and were still not properly reported and disclosed.

Segregation of Duties –

We did not properly design or maintain effective controls to prevent unauthorized access to approve certain transactions, including appropriate analysis of segregation of duties conflicts. As a result of this failure, high level employees had the ability to approve transactions, and vendor set up and payments without necessary approvals at the transaction level and oversight at the Board level.

Information Technology –

We did not design or maintain effective controls to prevent unauthorized access to certain systems, programs and data, and provide for periodic review and monitoring of access including review of security logs and analysis of segregation of duties conflicts.

These material weaknesses resulted in the restatement of our audited consolidated financial statements as of and for the years ended December 31, 2018 and 2017 and the restatement of our unaudited condensed consolidated financial statements for the quarterly period ended March 31, 2019 and each of the quarterly periods in the years ended December 31, 2018 and 2017.

Remediation Plan for Material Weaknesses in Internal Control over Financial Reporting and Status

We have identified and implemented and continue to identify and implement actions to improve our internal control over financial reporting and disclosure controls and procedures, including actions to enhance our resources and training with respect to financial reporting, including technical accounting, and disclosure responsibilities. We have established a disclosure committee to assist our principal executive officer and principal financial officer in fulfilling their responsibility to oversee the

accuracy, completeness and timeliness of our public disclosures. Additional actions that have been implemented include updating our audit committee charter, updating our code of business conduct and ethics and ~~anti-corruption~~anti–corruption policy, updating our expense policy, updating our delegation of authority, adopting a new related party transaction policy and creating a more robust conflict of interest questionnaire for employees. An updated mandatory training course has been implemented for all employees in English and in Spanish which covers the code of business conduct and ethics as well as the ~~anti-corruption~~anti–corruption policy in accordance with the updated policies. Also, we will seek to hire more accounting personnel as deemed necessary to both strengthen reporting lines and segregation of duties as well as improve technical accounting functionality.

We have taken, and continue to take, the actions described below to remediate the identified material weaknesses and believe that the actions described below will remediate the material weaknesses we have identified and strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control processes and will continue to evaluate and improve our internal control over financial reporting. As we continue to evaluate and work to improve our internal control over financial reporting, our senior management may determine to take additional measures to address control deficiencies or determine to modify the remediation efforts described in this section. While the Audit Committee and senior management are closely monitoring the implementation, until the remediation efforts discussed in this section, including any additional remediation efforts that our senior management identifies as necessary, are completed, tested and determined effective, the material weaknesses described above will continue to exist.

As of the time of this filing, this testing has commenced and we expect, based on our preliminary indications of design effectiveness, that these material weaknesses will all be remediated.

Our Board has directed senior management to ensure that a proper, consistent tone is communicated throughout the organization, which emphasizes the expectation that previously existing deficiencies will be rectified through implementation of processes and controls to ensure strict compliance with generally accepted accounting principles and regulatory requirements. We also have taken steps to affect a proper tone through our policies and personnel, which includes the reorganization of our senior level management. Our former Chief Financial Officer and former Chief Operating Officer have been terminated, and agreements were reached with our former Chief Executive Officer and former Vice President, Finance allowing them to resign and provide limited consulting services to assist with the transition of their job duties. In addition, our Chairman, Chief Executive Officer and President has emphasized to all employees the importance of acting ethically and adhering to our code of business conduct and ethics as well as our anti-corruption policy.

We have retained a third–party consulting firm that specializes in internal audit work, and more specifically internal controls work. This firm has assisted, and will continue to assist, management with its risk assessment of internal control over financial reporting as well as documentation and testing of our internal control structure and evaluation of material weaknesses. The controls that exist at the entity level have been and will continue to be particularly scrutinized in this effort.

On May 1, 2020, we hired a permanent Chief Financial Officer who has significant experience in internal controls and he, with the assistance of our third–party consulting firm, will oversee the remediation of the material weaknesses described above.

With oversight from the Audit Committee, our management has begun to design and implement certain remediation measures to address the material weaknesses described above and enhance our internal control over financial reporting. We have taken or will take the following actions to improve the design and operating effectiveness of our internal control in order to remediate these material weaknesses:

assign process owners to ensure that controls are adequately evaluated and that the design of controls appropriately address risk related to critical functionality;

strengthen controls around revenue recognition, including stricter reconciliation procedures and the engagement of a ~~third~~ third–party consultant to assist in the review and analysis of complex contracts;

improve complex and technical accounting capabilities within our accounting structure by (i) changing senior leadership including the engagement of ~~an interim~~a permanent Chief Financial Officer in May 2020 with significant accounting knowledge and experience, ~~and the initiation of a search to fill this role on a more permanent basis. In addition,~~(ii) hiring new accounting personnel ~~will be hired~~ as needed and ~~supported~~(iii) supporting our accounting personnel with third party resources as needed;

require that the Board review and approve all significant transactions;

strengthen controls around financial close and reporting, including increased review of account reconciliations and imposing stricter monthly and quarterly close procedures and monitoring through a close checklist and additional layers of review;

formalize the approval and maintenance process for both customers and vendors, including higher level approvals of such where necessary;

•

~~formalize the approval and maintenance process for both customers and vendors, including higher level approvals of such where necessary;~~

improve controls around related party reporting and transactions, including training on proper related party disclosures on currently used annual forms and the implementation of a new quarterly review process which will require updates from officers and the Board;

improve segregation of duties issues through the strengthening of internal controls and a separate review and analysis of segregation of duties conflicts, which would include both systems and manual processes; and

•

institute new controls and strengthen existing controls in the information technology area, including performing a full review of the information technology general controls.

Earlier this year, we performed a review of our segregation of duties conflicts. This review identified and helped to remediate several high–level segregation of duties conflicts that have now been incorporated into our ongoing testing and remediation efforts. We also performed a review of our controls ~~which will include~~in the information technology area. There has already been work performed in this area, including review, testing and updating necessary controls that ~~will address~~has addressed the existing ~~weaknesses and the addition of controls~~weaknesses. Controls have been strengthened to help prevent unauthorized access to systems, programs and data and ~~controls~~ to provide for periodic review and monitoring of access, including a review of security logs and analysis of segregation of duties conflicts.

Our former Interim Chief Financial Officer has continued to assist us as a consultant to enhance our accounting knowledge and experience.

Changes in Internal Control over Financial Reporting

~~There~~Except as described above in “Remediation Plan for Material Weaknesses in Internal Control Over Financial Reporting and Status,” there have not been any changes in our internal control over financial reporting during the three months ended September 30, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~There~~Except as described in Note 4 in “Part 1. Financial Information – Item 1. Financial Statements” contained herein, there have been no material changes in the legal proceedings as described in the section entitled “Legal Proceedings” in our Annual Report on Form 10–~~K/A~~K for the year ended December 31, ~~2018.~~2019.

ITEM 1A. RISK FACTORS

~~There~~Except as set forth below, there have been no material changes in the significant risk factors that may affect our business, financial position, results of operations or liquidity as described in the section entitled “Risk Factors” in our Annual Report on Form 10–~~K/A~~K for the year ended December 31, ~~2018.~~2019.

We are subject to risks and uncertainties associated with our Chapter 11 proceedings.

Our operations and ability to develop and execute our business plan, our financial condition, our liquidity and our continuation as a going concern, are subject to the risks and uncertainties associated with our Chapter 11 proceedings. These risks include the following:

our ability to execute, confirm and consummate the Plan or another plan of reorganization with respect to the Chapter 11 proceedings or other alternative restructuring transaction;

our ability to comply with the terms of the RSA, including the milestones therein, and the BCA;

the high costs of bankruptcy proceedings and related fees;

our ability to obtain sufficient financing to allow us to emerge from bankruptcy and execute our business plan post-emergence;

our ability to maintain our relationships with our suppliers, service providers, customers, employees, and other third parties;

our ability to maintain contracts that are critical to our operations;

our ability to execute our business plan in the current depressed commodity price environment;

our ability to attract, motivate and retain key employees;

the ability of third parties to seek and obtain court approval to terminate contracts and other agreements with us;

the ability of third parties to seek and obtain court approval to convert the Chapter 11 proceeds to a Chapter 7 proceeding; and

the actions and decisions of our creditors and other third parties who have interests in our Chapter 11 proceedings that may be inconsistent with our plans.

Delays in our Chapter 11 proceedings increase the risks of us being unable to reorganize our business and emerge from bankruptcy and increase our costs associated with the bankruptcy process and may result in the termination of the RSA and BCA, which may, in turn, result in the termination of the right to use cash collateral.

These risks and uncertainties could affect our business and operations in various ways. For example, negative events or publicity associated with our Chapter 11 proceedings could adversely affect our relationships with our suppliers, service providers, customers, employees, and other third parties, which in turn could adversely affect our operations and financial condition. Also, pursuant to the Bankruptcy Code, we need the prior approval of the Bankruptcy Court for transactions outside the ordinary course of business, which may limit our ability to respond timely to certain events or take advantage of certain opportunities. We also need Bankruptcy Court confirmation of the Plan. Because of the risks and uncertainties associated with our Chapter 11 proceedings, we cannot accurately predict or quantify the ultimate impact that events that occur during our Chapter 11 proceedings will have on our business, financial condition and results of operations, and there is no certainty as to our ability to continue as a going concern.

We may not be able to obtain confirmation of a Chapter 11 plan of reorganization.

To emerge successfully from Bankruptcy Court protection as a viable entity, we must meet certain statutory requirements with respect to adequacy of disclosure with respect to a Chapter 11 plan of reorganization, solicit and obtain the requisite acceptances of such a reorganization plan and fulfill other statutory conditions for confirmation of such a plan. However, even if our Plan meets other requirements under the Bankruptcy Code, creditors may not vote in favor of our Plan, and certain parties in interest may file objections to the Plan in an effort to persuade the Bankruptcy Court that we have not satisfied the confirmation requirements under section 1129 of the Bankruptcy Code. Even if no objections are filed and the requisite acceptances of our Plan are received from creditors entitled to vote on the Plan, the Bankruptcy Court, which can exercise substantial discretion, may not confirm the Plan. The precise requirements and evidentiary showing for confirming a plan, notwithstanding its rejection by one or more impaired classes of claims or equity interests, depends upon a number of factors including, without limitation, the status and seniority of the claims or equity interests in the rejecting class (i.e., secured claims or unsecured claims, subordinated or senior claims, or common stock).

If the Plan is not confirmed by the Bankruptcy Court, it is unclear whether we would be able to reorganize our business and what, if anything, holders of claims against us would ultimately receive with respect to their claims.

Even if a Chapter 11 plan of reorganization is consummated, we may not be able to achieve our stated goals and continue as a going concern.

Even if the Plan or another Chapter 11 plan of reorganization is consummated, we will continue to face a number of risks, including further negative changes in economic conditions, changes in our industry, changes in global demand for oil and its impact on the demand for our services and increasing expenses. Accordingly, we cannot guarantee that the Plan or any other Chapter 11 plan of reorganization will achieve our stated goals.

Furthermore, even if our debts are reduced or discharged through the Plan, we may need to raise additional funds through debt or equity financing or other various means to fund our business after the completion of our Chapter 11 proceedings. Our access to additional financing is, and for the foreseeable future will likely continue to be, extremely limited, if it is available at all. Therefore, adequate funds may not be available when needed or may not be available on favorable terms, if they are available at all.

Our ability to continue as a going concern is dependent upon our ability to raise additional capital. As a result, we cannot give any assurance of our ability to continue as a going concern, even if the Plan is confirmed.

Any plan of reorganization that we may implement will be based in large part upon assumptions and analyses developed by us. If these assumptions and analyses prove to be incorrect, our plan may be unsuccessful in its execution.

Any plan of reorganization that we may implement could affect both our capital structure and the ownership, structure and operation of our businesses and will reflect assumptions and analyses based on our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we consider appropriate under the circumstances. Whether actual future results and developments will be consistent with our expectations and assumptions depends on a number of factors, including but not limited to (i) our ability to change substantially our capital structure; (ii) our ability to obtain adequate liquidity and financing sources; (iii) our ability to maintain customers’ confidence in our viability as a continuing entity and to attract and retain sufficient business from them; (iv) our ability to retain key employees, and (v) the overall strength and stability of general economic conditions. The failure of any of these factors could materially adversely affect the successful reorganization of our businesses.

In addition, any plan of reorganization will rely upon financial projections, including with respect to revenues, EBITDA, capital expenditures, debt service and cash flow. Financial forecasts are necessarily speculative, and it is likely that one or more of the assumptions and estimates that are the basis of these financial forecasts will not be accurate. In our case, the forecasts will be even more speculative than normal, because they may involve fundamental changes in the nature of our capital structure. Accordingly, we expect that our actual financial condition and results of operations will differ, perhaps materially, from what we have anticipated. Consequently, there can be no assurance that the results or developments contemplated by any plan of reorganization we may implement will occur or, even if they do occur, that they will have the anticipated effects on us and our subsidiaries or our businesses or operations. The failure of any such results or developments to materialize as anticipated could materially adversely affect the successful execution of any plan of reorganization.

We have substantial liquidity needs and may not be able to obtain sufficient liquidity to confirm a plan of reorganization and exit bankruptcy.

We face uncertainty regarding the adequacy of our liquidity and capital resources and have extremely limited, if any, access to additional financing. In addition to the cash necessary to fund our ongoing operations, we have incurred significant professional fees and other costs in connection with preparation for our Chapter 11 proceedings and expect that we will continue to incur significant professional fees and costs throughout our Chapter 11 proceedings. We cannot assure you that our cash on hand and cash flow from operations will be sufficient to continue to fund our operations and allow us to satisfy our obligations related to our Chapter 11 Cases until we are able to emerge from our Chapter 11 proceedings.

Our liquidity, including our ability to meet our ongoing operational obligations, is dependent upon, among other things; (i) our ability to comply with the terms and condition of any cash collateral order entered by the Bankruptcy Court in connection with our Chapter 11 proceedings; (ii) our ability to maintain adequate cash on hand; (iii) our ability to generate cash flow from operations, (iv) our ability to execute, confirm and consummate the Plan or another plan of reorganization with respect to the Chapter 11 proceedings or other alternative restructuring transaction; and (v) the cost, duration and outcome of our Chapter 11 proceedings. Our ability to maintain adequate liquidity depends in part upon industry conditions and general economic, financial, competitive, regulatory and other factors beyond our control. In the event that our cash on hand and cash flow from operations is not sufficient to meet our liquidity needs, we may be required to seek additional financing. We can provide no assurance that additional financing would be available or, if available, offered to us on acceptable terms. Our access to additional financing is, and for the foreseeable future will likely continue to be, extremely limited if it is available at all. Our long-term liquidity requirements and the adequacy of our capital resources are difficult to predict at this time.

In certain instances, a Chapter 11 case may be converted to a case under Chapter 7 of the Bankruptcy Code.

Upon a showing of cause, the Bankruptcy Court may convert our Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code. In such event, a Chapter 7 trustee would be appointed or elected to liquidate our assets for distribution in accordance with the priorities established by the Bankruptcy Code. We believe that liquidation under Chapter 7 would result in significantly smaller distributions being made to our creditors than those provided for in our Plan because of (i) the likelihood that the assets would have to be sold or otherwise disposed of in a distressed fashion over a short period of time rather than in a controlled manner and as a going concern, (ii) additional administrative expenses involved in the appointment of a Chapter 7 trustee, and (iii) additional expenses and claims, some of which would be entitled to priority, that would be generated during the liquidation and from the rejection of leases and other executory contracts in connection with a cessation of operations.

Trading in our securities is highly speculative and poses substantial risks. We expect that the shares of our existing common stock and warrants to purchase shares of our common stock will be extinguished and existing equity holders will not receive consideration in respect of their equity.

We have a significant amount of indebtedness that is senior to our existing common stock and warrants to purchase shares of our common stock in our capital structure. In addition, the RSA and the Plan contemplate that amounts outstanding under our senior loan facility will be converted into equity of the reorganized company and that all equity interests of our existing equity holders will be extinguished upon our emergence from bankruptcy. As a result, we expect that the shares of our existing common stock and warrants to purchase shares of our common stock will be extinguished in our Chapter 11 proceedings and our common stockholders and warrantholders will be entitled to no recovery. Accordingly, any trading in shares of our common stock or warrants to purchase shares of our common stock during the pendency of our Chapter 11 proceedings is highly speculative and poses substantial risks to purchasers of shares of our common stock and warrants to purchase shares of our common stock.

We may be subject to claims that will not be discharged in our Chapter 11 proceedings, which could have a material adverse effect on our financial condition and results of operations.

The Bankruptcy Code provides that the confirmation of a Chapter 11 plan of reorganization discharges a debtor from substantially all debts arising prior to confirmation. With few exceptions, all claims that arose prior to confirmation of the plan of reorganization (i) would be subject to compromise and/or treatment under the plan of reorganization and (ii) would be discharged in accordance with the Bankruptcy Code and the terms of the plan of reorganization. Any claims not ultimately discharged through a Chapter 11 plan of reorganization could be asserted against the reorganized entities and may have an adverse effect on our financial condition and results of operations on a post-reorganization basis.

Our financial results may be volatile and may not reflect historical trends.

During the Chapter 11 proceedings, we expect our financial results to continue to be volatile as asset impairments, asset dispositions, restructuring activities and expenses, contract terminations and rejections, and claims assessments may significantly impact our consolidated financial performance. As a result, our historical financial performance is likely not indicative of our financial performance after the petition date.

In addition, if we emerge from Chapter 11, the amounts reported in subsequent consolidated financial statements may materially change relative to historical consolidated financial statements, including as a result of revisions to our operating plans pursuant to the Plan. We also may be required to adopt fresh start accounting, in which case our assets and liabilities will be recorded at fair value as of the fresh start reporting date, which may differ materially from the recorded values of assets and liabilities on our consolidated balance sheets. Our financial results after the application of fresh start accounting also may be different from historical trends.

Transfers of our equity, or issuances of equity before or in connection with our Chapter 11 proceedings, may impair our ability to utilize our federal income tax net operating loss carryforwards in future years.

Under federal income tax law, a corporation is generally permitted to deduct from taxable income net operating losses carried forward from prior years. We have net operating loss carryforwards of approximately $100.1 million as of December 31, 2019. Our ability to utilize our net operating loss carryforwards to offset future taxable income and to reduce federal income tax liability is subject to certain requirements and restrictions. If we experience an “ownership change”, as defined in section 382 of the Internal Revenue Code, then our ability to use our net operating loss carryforwards may be substantially limited, which could have a negative impact on our financial position and results of operations. Generally, there is an “ownership change” if one or more stockholders owning 5% or more of a corporation’s common stock have aggregate increases in their ownership of such stock of more than 50 percentage points over the prior three–year period. Under section 382 of the Internal Revenue Code, absent an applicable exception, if a corporation undergoes an “ownership change”, the amount of its net operating losses that may be utilized to offset future table income generally is subject to an annual limitation. Even if the net operating loss carryforwards is subject to limitation under Section 382, the net operating losses would still be available to be reduced from the amount of discharge of indebtedness arising in a Chapter 11 case under Section 108 of the Internal Revenue Code under the tax attribute reduction rules, if applicable.

We have requested that the Bankruptcy Court approve restrictions on certain transfers of our stock to limit the risk of an “ownership change” prior to our restructuring in our Chapter 11 proceedings. Following the implementation of a plan of reorganization, it is likely that an “ownership change” will be deemed to occur and our net operating losses will nonetheless be subject to annual limitation. However, if an “ownership change” has not occurred prior to our reorganization, a provision in Section 382 of the Internal Revenue Code related to Chapter 11 proceedings may increase the amount of net operating losses available to utilize annually under the limitation.

The pursuit of the Chapter 11 proceedings has consumed and will continue to consume a substantial portion of the time and attention of our management and will impact how our business is conducted, which may have an adverse effect on our business and results of operations.

A long period of operating under Chapter 11 could adversely affect our business and results of operations. While the Chapter 11 proceedings continue, our senior management will be required to spend a significant amount of time and effort focusing on the proceedings. This diversion of attention may materially affect the conduct of our business adversely, and, as a result, on our financial condition and results of operations, particularly if the Chapter 11 Cases are protracted.

We may not meet certain conditions of the RSA, which could result in the automatic termination of such agreement and the BCA.

We entered into the RSA in connection with the filing of the Chapter 11 Cases on August 27, 2020. We may not be able to meet certain conditions of the RSA, which could cause a Consenting Credit Agreement Lender Termination Event, Consenting Term Loan Lender Termination Event or Consenting Convertible Noteholder Termination Event, each as defined in the RSA, which could cause the termination of the RSA and BCA.

The COVID–19 pandemic has adversely affected our business, financial condition and results of operations.

The outbreak of COVID–19, which has been declared by the World Health Organization to be a pandemic, has spread across the globe and is impacting worldwide economic activity, including the global demand for oil and natural gas. A pandemic, including COVID–19 or other public health epidemic, poses the risk that we or our employees, contractors, suppliers, customers and other partners may be prevented from conducting business activities for an indefinite period of time, including due to spread of the disease within these groups or due to restrictions that may be requested or mandated by governmental authorities, including quarantines of certain geographic areas, restrictions on travel and other restrictions that prohibit employees from going to work, both around the world as well as in certain jurisdictions in the United States. The continued spread of COVID–19 and the related mitigation measures has resulted in a significant decrease in business from our customers and/or may cause our customers to be unable to meet existing payment or other obligations to us. Through September 30, 2020, we have had certain of our contracts cancelled by the operators due to the COVID–19 pandemic and other scheduled and anticipated projects have been delayed and there is no assurance as to when they may resume, if at all. If COVID–19 continues to spread or the response to contain the COVID–19 pandemic is unsuccessful, we could experience a material adverse effect on our business, financial condition, and results of operations.

Our backlog can vary significantly from time to time. Our backlog estimates are based on certain assumptions and are subject to unexpected adjustments and cancellations and thus may not be timely converted to revenues in any particular fiscal period, if at all, or be indicative of our actual operating results for any future period.

As of September 30, 2020, we had approximately $68.5 million of backlog under contract, in addition to approximately $334.7 million of bids outstanding. Of the $68.5 million of backlog under contract, we expect $0.6 million to be completed in 2020. Our backlog estimates represent those projects for which a customer has executed a contract or signed a binding letter of award. Our backlog can vary significantly from time to time, particularly if the backlog is made up of multi–year contracts with some of our more significant customers. Backlog estimates are based on a number of assumptions and estimates including assumptions related to foreign exchange rates and proportionate performance of contracts. The realization of our backlog estimates is further affected by our performance under term rate contracts, as the early or late completion of a project under term rate contracts will generally result in decreased or increased, as the case may be, revenues derived from those projects. Contracts for services are also occasionally modified by mutual consent and often can be terminated for convenience by the customer. Because of potential changes in the scope or schedule of our customers’ projects, and the possibility of early termination of customer contracts, we cannot predict with certainty when or if our backlog will be realized. Material modifications, delays, payment defaults or cancellations on the underlying contracts (including those modifications, delays, defaults and cancellations relating to the COVID–19 pandemic) could reduce the amount of backlog currently reported and, consequently, could inhibit the conversion of that backlog into revenues. Due the significant uncertainty in the outlook for oil and gas development as a result of the significant decline in oil prices since the beginning of 2020 due to the COVID–19 pandemic and its impact on the worldwide economy and global demand for oil, certain of our scheduled and anticipated projects have recently been cancelled or delayed and there is no assurance as to when they may be reinitiated or awarded, if at all. We are unable to predict when market conditions may improve and worsening overall market conditions could result in additional reductions of backlog and bids outstanding.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

As previously disclosed, ~~as a result of certain circumstances giving rise to, or occurring as a result of, the restatement,~~ certain events of default had occurred under our credit facility, senior loan facility and 2023 ~~Notes and Senior~~ Notes. ~~We repaid in full the Senior Notes at maturity in September 2019.~~ In ~~September 2019,~~April 2020, we entered into a series of forbearance agreements ~~with respect to our credit facility, senior loan facility and 2023 Notes, whereby the holders~~with:

certain lenders (the “ABL Forbearing Parties”) of approximately 98% of the ~~indebtedness thereunder~~outstanding principal amount of the loans under the Third Amended and Restated Credit and Security Agreement (as amended, the “ABL Agreement”), dated as of September 26, 2018, by and among SAExploration Inc., a subsidiary of us, as the borrower, us, the other Guarantors from time to time party thereto, the Lenders from time to time party thereto, and Cantor Fitzgerald Securities, as the agent (the “ABL Forbearance Agreement”);

certain lenders (the “Term Loan Forbearing Parties”) of at least 82% of the outstanding principal amount of the term loans under the Term Loan and Security Agreement (as amended, the “Term Loan Agreement”), dated as of June 29, 2016, by and among us, as the borrower, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, and Delaware Trust Company, as the Collateral Agent and as the Administrative Agent (the “Term Loan Forbearance Agreement”); and

•

certain holders (the “Notes Forbearing Parties” and together with the Term Loan Forbearing Parties and the ABL Forbearing Parties, the “Forbearing Parties”) of approximately 98% of the outstanding principal amount of the 2023 Notes issued pursuant to the indenture (as amended, the “2023 Notes Indenture” and, together with the Term Loan Agreement and the ABL Agreement, the “Debt Instruments”), dated as of September 26, 2018, by and among us, the guarantors party thereto and Wilmington Savings Fund Society, FSB, as trustee and collateral trustee (the “2023 Notes Forbearance Agreement” and together with the Term Loan Forbearance Agreement and the ABL Forbearance Agreement, the “Forbearance Agreements”).

Pursuant to the Forbearance Agreements, the Forbearing Parties agreed to refrain from exercising their rights and remedies under the Debt Instruments and applicable law with respect to the existing defaults and other events of default that have occurred and ~~other potential defaults or events of default that may occur~~are continuing as further specified in the ~~forbearance agreements~~Forbearance Agreements until 5:00 p.m. (New York City time) on the earlier of ~~(i) November 30, 2019~~(a) May 31, 2020 and ~~(ii)~~(b) the date the ~~forbearance agreements~~Forbearance Agreements otherwise ~~terminated~~terminate in accordance with their terms. The ~~November 30, 2019~~May 31, 2020 deadline was ultimately extended to ~~February 7,~~August 31, 2020. ~~On February 7, 2020, we entered into amendments~~The forbearance agreements terminated on the commencement of the Chapter 11 Cases described in “Management's Discussion and ~~waivers to our~~Analysis of Financial Condition and Results of Operations” above. The commencement of the Chapter 11 Cases constitutes an event of default that accelerated the obligations under the credit facility, the senior loan facility, and the indenture governing the 2023 Notes. The credit facility and the senior loan facility, and the indenture governing the 2023 Notes provide that as a result of the Petition, the principal and interest due thereunder became immediately due and payable. However, any efforts to ~~among other things, waive existing events~~enforce such payment obligations under such debt instruments are automatically stayed as a result of ~~default thereunder and amend certain covenants requiring us to deliver financial statements, reports, projections and other items thereunder.~~

~~ITEM 5. OTHER EVENTS~~

~~On February 7, 2020, we entered into amendments and waivers to our credit facility, senior loan facility~~the filing of the Chapter 11 Cases, and the ~~indenture governing~~creditors’ rights of enforcement in respect of such debt instruments will be subject to the 2023 Notes to, among other things, waive existing events of default thereunder and amend certain covenants requiring us to deliver financial statements, reports, projections and other items thereunder. The foregoing descriptionapplicable provisions of the ~~amendments~~Bankruptcy Code and ~~waivers to our credit facility, senior loan facility and~~orders of the indenture governing the 2023 Notes are summaries only and is qualified in its entirety by reference to the complete text of (i) the amendment to our credit facility, attached as Exhibit 10.28 hereto, (ii) the amendment to our senior loan facility, attached as Exhibit 10.29 hereto, and (iii) the third supplemental indenture, attached as Exhibit 10.30 hereto, each incorporated by reference into this Form 10–Q.Bankruptcy Court.

ITEM 6. EXHIBITS

The exhibits listed below are filed or furnished as part of this report:

2.1		Debtors’ Chapter 11 Plan of Reorganization, dated as of August 27, 2020 (incorporated by reference from Exhibit A to Exhibit 10.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on August 28, 2020)

2.2		Debtors’ First Amended Chapter 11 Plan of Reorganization, dated as of September 15, 2020 (incorporated by reference from Exhibit 99.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on September 16, 2020)

2.3		Debtors’ Second Amended Chapter 11 Plan of Reorganization, dated as of November 1, 2020 (incorporated by reference from Exhibit 10.3 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on November 4, 2020)

3.1		Third Amended and Restated Certificate of Incorporation (incorporated by reference from Exhibit 3.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K/A filed with the SEC on September 9, 2016)

3.2		Certificate of Amendment to Third Amended and Restated Certificate of Incorporation (incorporated by reference from Exhibit 3.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on March 8, 2018)

3.3		Second Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of SAExploration Holdings, Inc. (incorporated by reference from Exhibit 3.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on September 19, 2018)

3.4		Third Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of SAExploration Holdings, Inc. (incorporated by reference from Exhibit 3.2 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on September 19, 2018)

3.5		Fourth Certificate of Amendment to ~~the~~ Third Amended and Restated Certificate of Incorporation of SAExploration Holdings, Inc. (incorporated by reference from Exhibit 3.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on November 29, 2018)

3.6		Second Amended and Restated ~~Bylaws~~By–Laws (incorporated by reference from Exhibit 3.2 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on August 1, 2016)

3.7		Amendment No. 1 to Second Amended and Restated ~~By-Laws~~By–Laws (incorporated by reference from Exhibit 3.2 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on March 8, 2018)

~~4.1~~		Warrant Agreement, dated as of December 11, 2019, by and between SAExploration Holdings, Inc., a Delaware corporation, and Continental Stock Transfer & Trust Company, a New York corporation (incorporated by reference from Exhibit 4.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on December 12, 2019)

~~4.2~~		Warrant Agreement Amendment, dated as of January 13, 2020 between SAExploration Holdings, Inc. and Continental Stock Transfer & Trust Company (incorporated by reference from Exhibit 10.7 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on January 13, 2020).


10.1		~~Engagement Letter,~~Restructuring Support Agreement, dated as of August ~~15, 2019, between SAExploration Holdings, Inc. and Ham, Langston & Brezina, LLP~~27, 2020 (incorporated by reference from Exhibit 10.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on August ~~16, 2019)~~28, 2020)

10.2		~~Second Amendment to the Amended and Restated Executive Employment~~Backstop Commitment Agreement, dated as of August ~~15, 2019, between SAExploration Holdings, Inc. and Jeffrey Hastings~~27, 2020 (incorporated by reference from Exhibit 10.2 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on August ~~16, 2019)~~28, 2020)

10.3		~~Executive Employment~~Amendment to Restructuring Support Agreement dated as of August 19, 2019, between Michael Faust and SAExploration Holdings, Inc. (incorporated by reference from Exhibit 10.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on August 22, 2019)

~~10.4~~		Forbearance Agreement, dated as of September 23, 2019, among SAExploration, Inc., SAExploration Holdings, Inc., the other loan parties thereto and the lenders party thereto (incorporated by reference from Exhibit 10.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on September 23, 2019)

~~10.5~~		Forbearance Agreement, dated as of September 23, 2019, among SAExploration Holdings, Inc., the other loan parties thereto and the lenders party thereto (incorporated by reference from Exhibit 10.2 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on September 23, 2019)

~~10.6~~		Forbearance Agreement, dated as of September 23, 2019, among SAExploration Holdings, Inc. and the holders party thereto (incorporated by reference from Exhibit 10.3 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on September 23, 2019)


~~10.7~~		Subsequent Advance Commitment Request and Amendment No. 2 to Third Amended and Restated Credit and Security Agreement, dated as of September 23, 2019, among SAExploration, Inc., as Borrower, the Guarantors party thereto, the Lenders party thereto and Cantor Fitzgerald Securities (incorporated by reference from Exhibit 10.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on September 25, 2019)

~~10.8~~		~~Secured Promissory Note made by SAExploration, Inc. to GTC, Inc., dated as of~~ November ~~18, 2019~~1, 2020 (incorporated by reference from Exhibit 10.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on November ~~19, 2019)~~4, 2020)

~~10.9~~10.4		~~Purchase Money Security~~Amendment to Backstop Commitment Agreement dated as of November ~~18, 2019, between SAExploration, Inc. and GTC, Inc.~~1, 2020 (incorporated by reference from Exhibit 10.2 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on November ~~19, 2019)~~

~~10.10~~		Amendment No. 3 to Third Amended and Restated Credit Agreement and Security Agreement, dated as of November 18, 2019, among SAExploration, Inc. SAExploration Holdings, Inc., the other loan parties thereto and the lenders party thereto (incorporated by reference from Exhibit 10.3 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on November 19, 2019)

~~10.11~~		Amendment No. 8 to the Term Loan and Security Agreement, dated as of November 18, 2019 among SAExploration Holdings, Inc., the other loan parties thereto and the lenders party thereto (incorporated by reference from Exhibit 10.4 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on November 19, 2019)

~~10.12~~		First Supplemental Indenture, dated as of November 18, 2019, among SAExploration Holdings, Inc., the guarantors party thereto, Wilmington Savings Fund, FSB, as trustee and collateral trustee, and the holders party thereto (incorporated by reference from Exhibit 10.5 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on November 19, 2019)

~~10.13+~~		Asset sale agreement, dates as of November 22, 2019 among SAExploration (Australia) Pty Ltd., SAExploration Holdings, Inc. and Terrex Pty Ltd. (incorporated by reference from Exhibit 10.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on November 29, 2019)

~~10.14~~		~~Amendment No.~~ 4, to Third Amended and Restated Credit Agreement and Security Agreement, dated as of November 22, 2019, among SAExploration, Inc. SAExploration Holdings, Inc., the other loan parties thereto and the lenders party thereto (incorporated by reference from Exhibit 10.2 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on November 29, 2019)2020)

~~10.15~~		Amendment No. 9 to the Term Loan and Security Agreement, dated as of November 22, 2019 among SAExploration Holdings, Inc., the other loan parties thereto and the lenders party thereto (incorporated by reference from Exhibit 10.3 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on November 29, 2019)

~~10.16~~		Amendment No. 5 to Third Amended and Restated Credit Agreement and Security Agreement, dated as of December 11, 2019, by and among SAExploration, Inc., a Delaware corporation, as borrower, SAExploration Holdings, Inc., a Delaware corporation, the other guarantors parties thereto, the lenders party thereto, and Cantor Fitzgerald Securities, as administrative agent and collateral agent for the Lenders (incorporated by reference from Exhibit 10.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on December 12, 2019)

~~10.17~~		Amendment No. 1 to Intercreditor Amendment, dated as of December 11, 2019, by and among Cantor Fitzgerald Securities, as agent, Delaware Trust Company, as administrative agent and collateral agent, Wilmington Savings Fund Society, FSB, as trustee and collateral trustee, and the ABL Lenders, Term Lenders and holders of Convertible Notes party thereto (incorporated by reference from Exhibit 10.2 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on December 12, 2019)

~~10.18~~		Amendment No. 1 to Amended and Restated Intercreditor Agreement, dated as of December 11, 2019, by and among Cantor Fitzgerald Securities, as agent, Delaware Trust Company, as administrative agent and collateral agent, and the ABL Lenders and Term Lenders party thereto (incorporated by reference from Exhibit 10.3 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on December 12, 2019)

~~10.19~~		Amendment No. 1 to Forbearance Agreement, dated as of December 31, 2019, among SAExploration, Inc., SAExploration Holdings, Inc., the other loan parties party thereto and the lenders party thereto (incorporated by reference from Exhibit 10.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on January 2, 2020).

~~10.20~~		Amendment No. 1 to Forbearance Agreement, dated as of December 31, 2019, among SAExploration Holdings, Inc., the other loan parties party thereto and the lenders party thereto (incorporated by reference from Exhibit 10.2 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on January 2, 2020).

~~10.21~~		Amendment No. 1 to Forbearance Agreement, dated as of December 31, 2019, among SAExploration Holdings, Inc. and the holders party thereto (incorporated by reference from Exhibit 10.3 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on January 2, 2020).

~~10.22+~~		Asset Purchase Agreement for the Aklaq and Kuukpik Surveys, dated as of January 10, 2020 among SAExploration, Inc., ALASKAN Seismic Ventures, LLC. and TGS-NOPEC Geophysical Company ASA (incorporated by reference from Exhibit 10.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on January 13, 2020).

~~10.23+~~		Asset Purchase Agreement for the CRD Surveys, dated as of January 10, 2020 among SAExploration, Inc. and TGS-NOPEC Geophysical Company ASA (incorporated by reference from Exhibit 10.2 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on January 13, 2020).

~~10.24~~		Sellers Side Letter Agreement, dated as of January 10, 2020, between SAE Exploration, Inc. and ALASKAN Seismic Ventures, LLC (incorporated by reference from Exhibit 10.3 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on January 13, 2020).

~~10.25+~~		Amendment No. 6 to Third Amended and Restated Credit and Security Agreement, dated as of January 10, 2020 among SAExploration, Inc., SAExploration Holdings, Inc., the other loan parties party thereto and the lenders party thereto (incorporated by reference from Exhibit 10.4 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on January 13, 2020).

~~10.26+~~		Amendment No. 10 to the Term Loan and Security Agreement, dated as of January 10, 2020 among SAExploration Holdings, Inc., the other loan parties party thereto and the lenders party thereto (incorporated by reference from Exhibit 10.5 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on January 13, 2020).

~~10.27+~~		Second Supplemental Indenture, dated as of January 10, 2020 among SAExploration Holdings, Inc., the guarantors party thereto, Wilmington Savings Fund Society, FSB, as trustee and collateral trustee, and the holders party thereto (incorporated by reference from Exhibit 10.6 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on January 13, 2020).

~~10.28*+~~		~~Amendment No. 7 to Third Amended and Restated Credit and Security Agreement~~ ~~and Waiver, dated as of February 7, 2020 among SAExploration, Inc., SAExploration Holdings, Inc., the other loan parties party thereto and the lenders party thereto~~.

~~10.29*+~~		~~Amendment No. 11 to the Term Loan and Security Agreement~~ ~~and Waiver, dated as of February 7, 2020 among SAExploration Holdings, Inc., the other loan parties party thereto and the lenders party thereto.~~

10.30*		Third Supplemental Indenture, dated as of February 7, 2020 among SAExploration Holdings, Inc., the guarantors party thereto, Wilmington Savings Fund Society, FSB, as trustee and collateral trustee, and the holders party thereto.

31.1*		Rule 13a–14(a) Certification of Chief Executive Officer

31.2*		Rule 13a–14(a) Certification of Chief Financial Officer

32.1**		Section 1350 Certification of Chief Executive Officer

32.2**		Section 1350 Certification of Chief Financial Officer

99.1		Disclosure Statement dated August 27, 2020 (incorporated by reference from Exhibit F to Exhibit 10.1 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on August 28, 2020)

99.2		Second Amended Disclosure Statement dated September 15, 2020 (incorporated by reference from Exhibit 99.2 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on September 16, 2020)

99.3		Third Amended Disclosure Statement dated November 1, 2020 (incorporated by reference from Exhibit 10.4 to SAExploration Holdings, Inc.’s Current Report on Form 8–K filed with the SEC on November 4, 2020)

99.4		Joint Motion for Entry of Consent Judgment Submitted by Plaintiff Securities and Exchange Commission and Defendant SAExploration Holdings, Inc. filed November 5, 2020 (incorporated by reference from Exhibit 99.1 to SAExploration Holdings Inc.’s Current Report on Form 8–K filed with the SEC on November 12, 2020)

99.5		Consent of Defendant SAExploration Holdings, Inc. filed November 5, 2020 (incorporated by reference from Exhibit 99.2 to SAExploration Holdings Inc.’s Current Report on Form 8–K filed with the SEC on November 12, 2020)

99.6		Proposed Judgment Submitted as to Defendant SAExploration Holdings, Inc. filed November 5, 2020 (incorporated by reference from Exhibit 99.3 to SAExploration Holdings Inc.’s Current Report on Form 8–K filed with the SEC on November 12, 2020)

101*		Interactive Data Files

*	Filed herewith

**	Furnished herewith

+ 40	Certain schedules (or similar attachments) have been omitted pursuant to Item 601 (a)(5) of Regulation S–K. A copy of any omitted schedule (or similar attachment) will be furnished to the SEC upon request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	SAExploration Holdings, Inc.

	By:		/s/ Michael Faust
			Michael Faust
			Chief Executive Officer and President
			(Duly Authorized Officer and Principal Executive Officer)

	By:		/s/ ~~Kevin Hubbard~~John A. Simmons
			~~Kevin Hubbard~~John A. Simmons
			~~Interim~~Vice President and Chief Financial Officer
			(Duly Authorized Officer and Principal Financial Officer)

Date: ~~February 7,~~November 16, 2020

3841

	December 31, 2018
	Previously Reported			Adjustments			Restated
ASSETS
Current assets:
Cash and cash equivalents	$	7,192		$	387		$	7,579
Restricted cash		271			—			271
Accounts receivable, net		24,859			1,604			26,463
Deferred costs on contracts		3,717			29			3,746
Prepaid expenses and other current assets		2,813			30			2,843
Total current assets		38,852			2,050			40,902

Property and equipment, net		35,334			—			35,334
Multiclient seismic data library, net		—			4,733			4,733
Goodwill		1,687			—			1,687
Intangible assets, net		4,066			—			4,066
Long-term accounts receivable, net		52,804			(52,804	)		—
Tax credits receivable, net		—			13,198			13,198
Deferred income taxes		2,015			145			2,160
Other assets		2,715			(2,448	)		267
Total assets	$	137,473		$	(35,126	)	$	102,347

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	10,103		$	—		$	10,103
Accrued liabilities		10,498			—			10,498
Income and other taxes payable		3,331			—			3,331
Current portion of long-term debt and finance leases		7,837			—			7,837
Deferred revenue		4,298			59			4,357
Total current liabilities		36,067			59			36,126

Long-term debt and finance leases		85,653			(2,448	)		83,205
Other long-term liabilities		380			—			380

Commitments and contingencies

Stockholders' equity (deficit):
Common stock		—			—			—
Additional paid-in capital		232,661			—			232,661
Accumulated deficit		(216,612	)		(32,737	)		(249,349	)
Accumulated other comprehensive loss		(3,035	)		—			(3,035	)
Treasury stock, at cost		(1,866	)		—			(1,866	)
SAExploration stockholders’ equity (deficit)		11,148			(32,737	)		(21,589	)
Noncontrolling interest		4,225			—			4,225
Total stockholders’ equity (deficit)		15,373			(32,737	)		(17,364	)
Total liabilities and stockholders’ equity (deficit)	$	137,473		$	(35,126	)	$	102,347

	Three Months Ended September 30, 2018
	Previously Reported			Adjustments			Restated
Revenue from services	$	15,003		$	—		$	15,003
Cost of services		16,085			108			16,193
Depreciation and amortization		2,951			—			2,951
Gross loss		(4,033	)		(108	)		(4,141	)

Operating expenses:
Selling, general and administrative expenses		14,858			(282	)		14,576
Misappropriation of funds		—			265			265
Total operating expenses		14,858			(17	)		14,841

Operating loss		(18,891	)		(91	)		(18,982	)

Other (expense) income, net:
Interest expense, net		(4,738	)		—			(4,738	)
Foreign exchange loss, net		(331	)		—			(331	)
Other income, net		27			1,345			1,372
Total other expense, net		(5,042	)		1,345			(3,697	)

Loss before income taxes		(23,933	)		1,254			(22,679	)

Income taxes		1,364			(1,412	)		(48	)

Net loss		(25,297	)		2,666			(22,631	)

Less: net income attributable to noncontrolling interest		10			—			10

Net loss attributable to SAExploration	$	(25,307	)	$	2,666		$	(22,641	)

Loss per common share (basic and diluted)	$	(27.80	)	$	19.39		$	(8.41	)

Weighted average common shares outstanding (basic and diluted)		1,120			2,264			3,384

	Nine Months Ended September 30, 2018
	Previously Reported			Adjustments			Restated
Revenue from services	$	69,009		$	—		$	69,009
Cost of services		61,800			108			61,908
Depreciation and amortization		7,667			—			7,667
Gross loss		(458	)		(108	)		(566	)

Operating expenses:
Selling, general and administrative expenses		46,998			(18,370	)		28,628
Misappropriation of funds		—			626			626
Total operating expenses		46,998			(17,744	)		29,254

Operating loss		(47,456	)		17,636			(29,820	)

Other (expense) income, net:
Interest expense, net		(10,225	)		—			(10,225	)
Foreign exchange loss, net		(2,510	)		—			(2,510	)
Other income, net		181			1,428			1,609
Total other expense, net		(12,554	)		1,428			(11,126	)

Loss before income taxes		(60,010	)		19,064			(40,946	)

Income taxes		107			(190	)		(83	)

Net loss		(60,117	)		19,254			(40,863	)

Less: net income attributable to noncontrolling interest		904			—			904

Net loss attributable to SAExploration	$	(61,021	)	$	19,254		$	(41,767	)

Loss per common share (basic and diluted)	$	(141.82	)	$	96.48		$	(45.34	)

Weighted average common shares outstanding (basic and diluted)		804			1,286			2,090

	Three Months Ended		Nine Months Ended
	September 30, 2019		September 30, 2019
Operating lease expense:
Operating lease expense ⁽¹⁾	$	1,294	$	3,958

Finance lease expense:
Amortization of leased assets	$	221	$	664
Interest on lease liabilities		24		93
Total finance lease expense	$	245	$	757

Total lease expense	$	1,539	$	4,715

	Operating Leases		Finance Leases
Six months ended December 31, 2019	$	1,168	$	248
2020		3,480		361
2021		1,209		—
2022		871		—
2023		701		—
Thereafter		479		—
Total minimum lease payments		7,908		609
Less: interest		834		27
Present value of lease liabilities		7,074		582
Less: current lease liabilities		3,056		582
Long-term lease liabilities	$	4,018	$	—

	As of September 30,
	2019		2018
Common stock and preferred stock issued to retire long-term debt	$	—	$	73,234
Costs for additions to property and equipment in accounts payable		—		26
Accrual for stock issued for services		478		—