Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 01, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | DAWSON GEOPHYSICAL CO | |
Entity Central Index Key | 799,165 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 21,718,018 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 30,503 | $ 14,624 |
Short-term investments | 12,000 | 40,250 |
Accounts receivable, net | 25,599 | 16,031 |
Current maturities of notes receivable | 560 | |
Prepaid expenses and other current assets | 6,205 | 4,822 |
Total current assets | 74,867 | 75,727 |
Property and equipment, net | 95,274 | 110,917 |
Notes receivable, net of current maturities | 975 | |
Intangibles | 525 | 487 |
Long-term deferred tax assets, net | 535 | |
Total assets | 171,641 | 187,666 |
Current liabilities: | ||
Accounts payable | 6,272 | 5,617 |
Accrued liabilities: | ||
Payroll costs and other taxes | 1,826 | 885 |
Other | 4,161 | 2,983 |
Deferred revenue | 3,644 | 3,155 |
Current maturities of notes payable and obligations under capital leases | 2,788 | 2,357 |
Total current liabilities | 18,691 | 14,997 |
Long-term liabilities: | ||
Notes payable and obligations under capital leases, net of current maturities | 5,829 | |
Deferred tax liabilities, net | 1,392 | 146 |
Other accrued liabilities | 169 | 1,639 |
Total long-term liabilities | 7,390 | 1,785 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock-par value $1.00 per share; 4,000,000 shares authorized, none outstanding | ||
Common stock-par value $0.01 per share; 35,000,000 shares authorized, 21,766,463 and 21,704,851 shares issued, and 21,718,018 and 21,656,406 shares outstanding at September 30, 2017 and December 31, 2016, respectively | 217 | 217 |
Additional paid-in capital | 143,666 | 142,998 |
Retained earnings | 2,523 | 29,265 |
Treasury stock, at cost; 48,445 shares at September 30, 2017 and December 31, 2016 | ||
Accumulated other comprehensive loss, net | (846) | (1,596) |
Total stockholders' equity | 145,560 | 170,884 |
Total liabilities and stockholders' equity | $ 171,641 | $ 187,666 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, shares authorized | 4,000,000 | 4,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 35,000,000 | 35,000,000 |
Common stock, shares issued | 21,766,463 | 21,704,851 |
Common stock, shares outstanding | 21,718,018 | 21,656,406 |
Treasury stock, shares | 48,445 | 48,445 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||
Operating revenues | $ 45,627 | $ 28,122 | $ 118,023 | $ 103,263 |
Operating costs: | ||||
Operating expenses | 36,594 | 28,132 | 107,639 | 94,203 |
General and administrative | 3,445 | 3,656 | 12,296 | 13,247 |
Depreciation and amortization | 9,724 | 10,591 | 29,750 | 33,967 |
Operating expenses, total | 49,763 | 42,379 | 149,685 | 141,417 |
Loss from operations | (4,136) | (14,257) | (31,662) | (38,154) |
Other income (expense): | ||||
Interest income | 87 | 92 | 230 | 226 |
Interest expense | (25) | (71) | (61) | (239) |
Other (expense) income | (103) | 263 | 136 | 1,829 |
Loss before income tax | (4,177) | (13,973) | (31,357) | (36,338) |
Income tax benefit | 1,418 | 1,557 | 4,635 | 3,733 |
Net loss | (2,759) | (12,416) | (26,722) | (32,605) |
Other comprehensive income (loss): | ||||
Net unrealized income (loss) on foreign exchange rate translation, net | 395 | (48) | 750 | 422 |
Comprehensive loss | $ (2,364) | $ (12,464) | $ (25,972) | $ (32,183) |
Basic loss per share attributable to common stock | $ (0.13) | $ (0.57) | $ (1.23) | $ (1.51) |
Diluted loss per share attributable to common stock | $ (0.13) | $ (0.57) | $ (1.23) | $ (1.51) |
Weighted average equivalent common shares outstanding | 21,701,662 | 21,622,349 | 21,681,474 | 21,603,065 |
Weighted average equivalent common shares outstanding - assuming dilution | 21,701,662 | 21,622,349 | 21,681,474 | 21,603,065 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (26,722) | $ (32,605) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 29,750 | 33,967 |
Noncash compensation | 706 | 671 |
Deferred income tax expense (benefit) | 1,257 | (3,676) |
Gain on proceeds from insurance settlements | (375) | (1,029) |
Change in other accrued long-term liabilities | (1,470) | 158 |
(Gain) loss on disposal of assets | (869) | 468 |
Other | 444 | 146 |
Change in current assets and liabilities: | ||
(Increase) decrease in accounts receivable | (9,568) | 22,928 |
(Increase) decrease in prepaid expenses and other current assets | (1,135) | 2,173 |
Increase (decrease) in accounts payable | 2,197 | (4,420) |
Increase in accrued liabilities | 1,987 | 31 |
Increase (decrease) in deferred revenue | 489 | (4,386) |
Net cash (used in) provided by operating activities | (3,309) | 14,426 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital expenditures, net of noncash capital expenditures summarized below | (8,301) | (6,198) |
Proceeds from maturity of short-term investments | 50,250 | 63,500 |
Acquisition of short-term investments | (22,000) | (86,750) |
Proceeds from disposal of assets | 696 | 1,848 |
Proceeds from flood insurance claims | 375 | 1,029 |
Proceeds from notes receivable | 97 | |
Net cash provided by (used in) investing activities | 21,117 | (26,571) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on notes payable | (2,131) | (6,090) |
Principal payments on capital lease obligations | (374) | (608) |
Tax withholdings related to stock-based compensation awards | (58) | (31) |
Net cash used in financing activities | (2,563) | (6,729) |
Effect of exchange rate changes on cash and cash equivalents | 634 | 128 |
Net increase (decrease) in cash and cash equivalents | 15,879 | (18,746) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 14,624 | 37,009 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 30,503 | 18,263 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for interest | 46 | 227 |
Cash received for income taxes | 2,538 | $ 231 |
NONCASH INVESTING AND FINANCING ACTIVITIES: | ||
Decrease in accrued purchases of property and equipment | (1,542) | |
Capital lease obligations incurred | 8,517 | |
Financed insurance premiums | 248 | |
Equipment sales financed for buyer | (1,500) | |
Sales tax on equipment sales financed for buyer | $ (132) |
ORGANIZATION AND NATURE OF OPER
ORGANIZATION AND NATURE OF OPERATIONS | 9 Months Ended |
Sep. 30, 2017 | |
ORGANIZATION AND NATURE OF OPERATIONS | |
ORGANIZATION AND NATURE OF OPERATIONS | 1. ORGANIZATION AND NATURE OF OPERATIONS Dawson Geophysical Company (the “Company”) is a leading provider of North American onshore seismic data acquisition services with operations throughout the continental United States (“U.S.”) and Canada. The Company acquires and processes 2-D, 3-D and multi-component seismic data solely for its clients, ranging from major oil and gas companies to independent oil and gas operators as well as providers of multi-client data libraries |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of the Company. Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Certain prior period amounts in the condensed consolidated financial statements have been reclassified to conform to the current period’s presentation. These condensed consolidated financial statements have been prepared using accounting principles generally accepted in the U.S. for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements presented in accordance with accounting principles generally accepted in the U.S. have been omitted. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Significant Accounting Policies Principles of Consolidation. The condensed consolidated financial statements for the three and nine months ended September 30, 2017 and 2016 include the accounts of the Company and its wholly-owned subsidiaries, Dawson Operating LLC, Eagle Canada, Inc., Dawson Seismic Services Holdings, Inc., Eagle Canada Seismic Services ULC, and Exploration Surveys, Inc. All significant intercompany balances and transactions have been eliminated in consolidation. Notes Receivable. The Company’s notes receivable consist of one note receivable from the purchaser of certain dynamite energy source drilling equipment sold by the Company in March 2017. This note receivable is stated at unpaid principal balance. No allowance for note losses was deemed necessary at September 30, 2017. Interest is recognized over the term of the note and is calculated using the simple-interest method. Amounts payable to the Company under the note receivable are fully collateralized by the specific dynamite energy source drilling equipment sold to the note payor. Allowance for Doubtful Accounts. Management prepares its allowance for doubtful accounts receivable based on its review of past-due accounts, its past experience of historical write-offs and its current client base. While the collectability of outstanding client invoices is continually assessed, the inherent volatility of the energy industry’s business cycle can cause swift and unpredictable changes in the financial stability of the Company’s clients. The Company’s allowance for doubtful accounts was $250,000 at September 30, 2017 and December 31, 2016. Property and Equipment. Property and equipment is capitalized at historical cost or the fair value of assets acquired in a business combination and is depreciated over the useful life of the asset. Management’s estimation of this useful life is based on circumstances that exist in the seismic industry and information available at the time of the purchase of the asset. As circumstances change and new information becomes available, these estimates could change. Depreciation is computed using the straight-line method. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the balance sheet, and any resulting gain or loss is reflected in the results of operations for the period. Impairment of Long-lived Assets . Long-lived assets are reviewed for impairment when triggering events occur suggesting deterioration in the assets’ recoverability or fair value. Recognition of an impairment charge is required if future expected undiscounted net cash flows are insufficient to recover the carrying value of the assets and the fair value of the assets is below the carrying value of the assets. Management’s forecast of future cash flows used to perform impairment analysis includes estimates of future revenues and expenses based on the Company’s anticipated future results while considering anticipated future oil and natural gas prices, which is fundamental in assessing demand for the Company’s services. If the carrying amounts of the assets exceed the estimated expected undiscounted future cash flows, the Company measures the amount of possible impairment by comparing the carrying amount of the assets to the fair value. Although the Company does not anticipate an impairment of its assets, if oil and natural gas prices remain at current levels for an extended period of time or significantly decline, the Company may be exposed to impairment charges in future periods, which could negatively affect the Company’s results of operations. Revenue Recognition . Services are provided under cancelable service contracts. These contracts are either “turnkey” or “term” agreements. Under both types of agreements, the Company recognizes revenues when revenue is realizable and services have been performed. Services are defined as the commencement of data acquisition or processing operations. Revenues are considered realizable when earned according to the terms of the service contracts. Under turnkey agreements, revenue is recognized on a per-unit-of-data-acquired rate as services are performed. Under term agreements, revenue is recognized on a per-unit-of-time-worked rate as services are performed. In the case of a cancelled service contract, revenue is recognized and the client is billed for services performed up to the date of cancellation. The Company receives reimbursements for certain out-of-pocket expenses under the terms of the service contracts. Amounts billed to clients are recorded in revenue at the gross amount, including out-of-pocket expenses that are reimbursed by the client. In some instances, clients are billed in advance of services performed. In those cases, the Company recognizes the liability as deferred revenue. As services are performed, those deferred revenue amounts are recognized as revenue. In some instances, the contract contains certain permitting, surveying and drilling costs that are incorporated into the per-unit-of-data-acquired rate. In these circumstances, these set-up costs that occur prior to initiating revenue recognition are capitalized and amortized as data is acquired. Stock-Based Compensation . The Company measures all stock-based compensation awards, which include stock options, restricted stock, restricted stock units and common stock awards, using the fair value method and recognizes compensation expense as operating or general and administrative expense, as appropriate, in the Condensed Consolidated Statements of Operations and Comprehensive Loss on a straight-line basis over the vesting period of the related awards. Use of Estimates in the Preparation of Financial Statements. Preparation of the accompanying financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Because of the use of assumptions and estimates inherent in the reporting process, actual results could differ from those estimates. Recently Issued Accounting Pronouncements In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting . This ASU is effective for the annual period beginning after December 15, 2017, and for annual and interim periods thereafter. The Company does not believe this ASU will have a material impact on its condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which is intended to simplify accounting for share-based payments awarded to employees, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU was effective for the annual period beginning after December 15, 2016, and for annual and interim periods thereafter. The Company adopted ASU 2016-09 in the first quarter of 2017 and elected to account for forfeitures as they occur, rather than estimate expected forfeitures. A s a result of adopting this standard, the Company applied the modified retrospective approach and recorded a cumulative-effect adjustment that had no material impact on the Company’s condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. In January 2017, the FASB issued ASU No. 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments – Equity Method and Joint Ventures (Topic 323), which stated additional qualitative disclosures should be considered to assess the significance of the impact upon adoption. This ASU is effective for the annual period beginning after December 15, 2018, and for annual and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its condensed consolidated financial statements and believes that the most significant change will be to its Condensed Consolidated Balance Sheets as its asset and liability balances will increase for operating leases that are currently off-balance sheet. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. Entities have the option of using either a full retrospective or modified approach to adopt ASU No. 2014-09. Subsequent amendments to the initial guidance have been issued in March 2016, April 2016, May 2016, December 2016, January 2017, and September 2017 within ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-12, ASU No. 2016-20, ASU No. 2017-03, and ASU No. 2017-13 regarding principal-versus-agent, performance obligations and licensing, assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. These updates do not change the core principle of the guidance under ASU No. 2014-09, but rather provide implementation guidance. In August 2015, ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, was issued and it amended the effective date of ASU No. 2014-09 for public companies to annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but only beginning after December 15, 2016. The Company has completed an initial assessment of the new standard and currently anticipates adopting the standard using the full retrospective method. Under the new standard, the Company expects the recognition of certain miscellaneous revenue to be delayed, but not materially different. These revenues will be estimated and allocated over the life of the contract rather than recognized as services are provided. The Company is continuing to evaluate the effect that the adoption will have on its financial statements, disclosures, and internal controls. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2017 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 3. FAIR VALUE OF FINANCIAL INSTRUMENTS At September 30, 2017 and December 31, 2016, the Company’s financial instruments included cash and cash equivalents, short-term investments in certificates of deposit, accounts receivable, other current assets, accounts payable, other current liabilities and notes payable. At September 30, 2017, the Company’s financial instruments also included notes receivable. Due to the short-term maturities of cash and cash equivalents, accounts receivable, other current assets, accounts payable and other current liabilities, the carrying amounts approximate fair value at the respective balance sheet dates. The carrying value of the notes receivable and notes payable approximate their fair value based on a comparison with the prevailing market interest rate. Due to the short-term maturities of the Company’s investments in certificates of deposit, the carrying amounts approximate fair value at the respective balance sheet dates. The fair values of the Company’s notes receivable, notes payable and investments in certificates of deposit are level 2 measurements in the fair value hierarchy . |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2017 | |
DEBT | |
DEBT | 4. DEBT Credit Agreement The Company’s existing amended and restated credit agreement (the “Credit Agreement”) with Veritex Bank (formerly Sovereign Bank, who merged with and into Veritex Bank effective September 11, 2017) includes term loan and revolving loan features, and also allows for the issuance of letters of credit and other promissory notes. The Company can borrow up to a maximum of $20.0 million pursuant to the Credit Agreement, subject to the terms and limitations discussed below. The Credit Agreement provides for a revolving loan feature (the “Line of Credit”) that permits the Company to borrow, repay and re-borrow, from time to time until June 30, 2018, up to the lesser of (i) $20.0 million or (ii) a sum equal to (a) 80% of the Company’s eligible accounts receivable (less the outstanding principal balance of term loans and letters of credit under the Credit Agreement) and (b) the lesser of (i) 50% of the value of certain of the Company’s core equipment or (ii) $12,500,000. The Company has not utilized the Line of Credit since its inception. Because the Company’s ability to borrow funds under the Line of Credit is tied to the amount of the Company’s eligible accounts receivable and value of certain of its core equipment, if the Company’s accounts receivable decrease materially for any reason, including delays, reductions or cancellations by clients, or decreased demand for the Company’s services, or the value of the Company’s pledged core equipment decreases materially, the Company’s borrowing ability to fund operations or other obligations may be reduced. The Credit Agreement also provides for a term loan feature. The Company has no outstanding notes payable under the term loan feature of the Credit Agreement, and any notes outstanding under this feature would count toward the maximum amounts the Company may borrow under the Credit Agreement. The Company paid off the final remaining equipment note payable during the third quarter of 2017. The Company does not currently have any notes payable under the Credit Agreement. The Company’s obligations under the Line of Credit are secured by a security interest in the Company’s accounts receivable and certain of the Company’s core equipment, and the term loans are also secured by certain of the Company’s core equipment. Interest on amounts outstanding under the Credit Agreement accrues at the lesser of 4.5% or the prime rate (as quoted in the Wall Street Journal ), subject to an interest rate floor of 2.5%. The Credit Agreement contains customary covenants for credit facilities of this type, including limitations on disposition of assets, mergers and other fundamental changes. The Company is also obligated to meet certain financial covenants, including (i) a ratio of (x) total liabilities minus subordinated debt to (y) tangible net worth plus subordinated debt not to exceed 1.00:1.00, (ii) a ratio of current assets to current liabilities of at least 1.50:1.00 and (iii) required tangible net worth of not less than $125,000,000. The Company was in compliance with all covenants under the Credit Agreement, including specified ratios, as of September 30, 2017. Veritex Bank has also issued two letters of credit as of September 30, 2017. The first letter of credit is in the amount of $1,767,000 in favor of AIG Assurance Company to support payment of certain insurance obligations of the Company. The principal amount of this letter of credit is collateralized by certain of the Company’s core equipment. The second letter of credit is unsecured and in the amount of $75,000 in favor of the City of Midland, Texas, to support certain performance obligations of the Company. Neither letter of credit counts as funds borrowed under the Company’s Line of Credit. Other Indebtedness The Company has one outstanding note, in the remaining principal amount of $56,000 at September 30, 2017 payable to a finance company for insurance. In addition, the Company enters into capital lease obligations for certain vehicles and recording equipment. The Company’s Condensed Consolidated Balance Sheets as of September 30, 2017 include capital lease obligations of $8,561,000, which includes $8,001,000 for the acquisition of recording equipment during the quarter ended September 30, 2017. Maturities and Interest Rates of Debt The following tables set forth the aggregate principal amount (in thousands) under the Company’s outstanding notes payable and the interest rates as of September 30, 2017 and December 31, 2016. September 30, 2017 December 31, 2016 Notes payable to commercial banks Aggregate principal amount outstanding $ — $ Interest rates — 3.50% - 4.50% September 30, 2017 December 31, 2016 Notes payable to finance company for insurance Aggregate principal amount outstanding $ $ — Interest rates — The aggregate maturities of the notes payable at September 30, 2017 are as follows (in thousands): October 2017 - September 2018 $ The aggregate maturities of obligations under capital leases at September 30, 2017 are as follows (in thousands): October 2017 - September 2018 $ October 2018 - September 2019 October 2019 - September 2020 October 2020 - September 2021 $ Interest rates on these leases range from 3.16% to 6.88%. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 5. COMMITMENTS AND CONTINGENCIES From time to time, the Company is a party to various legal proceedings arising in the ordinary course of business. Although the Company cannot predict the outcomes of any such legal proceedings, management believes that the resolution of pending legal actions will not have a material adverse effect on the Company’s financial condition, results of operations or liquidity, as the Company believes it is adequately indemnified and insured. The Company experiences contractual disputes with its clients from time to time regarding the payment of invoices or other matters. While the Company seeks to minimize these disputes and maintain good relations with its clients, the Company has experienced in the past, and may experience in the future, disputes that could affect its revenues and results of operations in any period. The Company has non-cancelable operating leases for office and shop space in Midland, Plano, Denison, Houston, Denver, Oklahoma City and Calgary, Alberta. |
NET LOSS PER SHARE ATTRIBUTABLE
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK | 9 Months Ended |
Sep. 30, 2017 | |
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK | |
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK | 6. NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK Net loss per share attributable to common stock is calculated using the two-class method. The two-class method is an allocation method of calculating loss per share when a company’s capital structure includes participating securities that have rights to undistributed earnings. Historically, the Company’s employees and officers that held unvested restricted stock were entitled to dividends when the Company paid dividends (“participating”). The Company’s employees and officers that hold unvested restricted stock awarded during 2016 or thereafter are not entitled to dividends when the Company pays dividends (“non-participating”). The Company’s basic net loss per share attributable to common stock is computed by reducing the Company’s net loss by the income allocable to unvested restricted stockholders that have a right to participate in earnings. The Company’s employees and officers that hold unvested restricted stock do not participate in losses because they are not contractually obligated to do so. The undistributed earnings are allocated based on the relative percentage of the weighted average unvested participating restricted stock awards. The basic net loss per share attributable to common stock is computed by dividing the net loss attributable to common stock by the weighted average shares outstanding. The Company’s diluted loss per share attributable to common stock is computed by adjusting basic loss per share attributable to common stock by income allocable to unvested participating restricted stock, if any, divided by weighted average diluted shares outstanding. A reconciliation of the net loss per share attributable to common stock is as follows (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Net loss $ (2,759) $ (12,416) $ (26,722) $ (32,605) Income allocable to unvested participating restricted stock — — — — Basic loss attributable to common stock $ (2,759) $ (12,416) $ (26,722) $ (32,605) Reallocation of participating earnings — — — — Diluted loss attributable to common stock $ (2,759) $ (12,416) $ (26,722) $ (32,605) Weighted average common shares outstanding: Basic 21,701,662 21,622,349 21,681,474 21,603,065 Dilutive common stock options, restricted stock unit awards and non-participating restricted stock awards — — — — Diluted 21,701,662 21,622,349 21,681,474 21,603,065 Basic loss attributable to a share of common stock $ (0.13) $ (0.57) $ (1.23) $ (1.51) Diluted loss attributable to a share of common stock $ (0.13) $ (0.57) $ (1.23) $ (1.51) The Company had a net loss in each of the three and nine months ended September 30, 2017 and 2016. As a result, all stock options, restricted stock unit awards, and non-participating restricted stock awards were anti-dilutive and excluded from weighted average shares used in determining the diluted loss attributable to a share of common stock for the respective periods. The following weighted average numbers of stock options, restricted stock unit awards, and non-participating restricted stock awards have been excluded from the calculation of diluted loss per share attributable to common stock, as their effect would be anti-dilutive for each of the three and nine months ended September 30, 2017 and 2016 : Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Stock options 326,868 414,533 347,599 418,121 Restricted stock unit awards 378,887 278,412 293,613 268,824 Non-participating restricted stock awards 71,167 87,000 74,014 72,711 Total 776,922 779,945 715,226 759,656 There were no shares of participating restricted stock awards at September 30, 2017 and 2016 included in common stock outstanding. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2017 | |
INCOME TAXES | |
INCOME TAXES | 7. INCOME TAXES For the three and nine months ended September 30, 2017, the Company's effective tax rate was 33.9% and 14.8%, respectively. For the three and nine months ended September 30, 2016, the Company’s effective tax rate was 11.1% and 10.3%, respectively. The Company’s quarter to date and year to date effective tax rates increased compared to the corresponding periods from the prior year primarily due to the processing of outstanding amended returns that were accepted in the first and third quarters of 2017 and the associated refunds received. The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three year period ended December 31, 2016. Such objective evidence limits the ability to consider other subjective evidence, such as projections for taxable earnings. The income tax benefit for the three and nine months ended September 30, 2017 does not include income tax benefits for all of the losses incurred because the Company recorded valuation allowances against significantly all of its federal, state and foreign deferred tax assets. The Company has recorded valuation allowances against the associated deferred tax assets for the amounts it deems are not more likely than not realizable. Based on management’s belief that not all the net operating losses are realizable, federal valuation allowances of $1,209,000 and $10,258,000 and additional state valuation allowances of $94,000 and $681,000 were recorded during the three and nine months ended September 30, 2017, respectively. In addition, due to the Company’s recent operating losses and valuation allowances, the Company may recognize reduced or no tax benefits on future losses on the condensed consolidated financial statements. The amount of the valuation allowances considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as projections for future growth. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2017 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 8. SUBSEQUENT EVENTS None. |
SUMMARY OF SIGNIFICANT ACCOUN14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation. The condensed consolidated financial statements for the three and nine months ended September 30, 2017 and 2016 include the accounts of the Company and its wholly-owned subsidiaries, Dawson Operating LLC, Eagle Canada, Inc., Dawson Seismic Services Holdings, Inc., Eagle Canada Seismic Services ULC, and Exploration Surveys, Inc. All significant intercompany balances and transactions have been eliminated in consolidation. |
Notes Receivable | Notes Receivable. The Company’s notes receivable consist of one note receivable from the purchaser of certain dynamite energy source drilling equipment sold by the Company in March 2017. This note receivable is stated at unpaid principal balance. No allowance for note losses was deemed necessary at September 30, 2017. Interest is recognized over the term of the note and is calculated using the simple-interest method. Amounts payable to the Company under the note receivable are fully collateralized by the specific dynamite energy source drilling equipment sold to the note payor. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts. Management prepares its allowance for doubtful accounts receivable based on its review of past-due accounts, its past experience of historical write-offs and its current client base. While the collectability of outstanding client invoices is continually assessed, the inherent volatility of the energy industry’s business cycle can cause swift and unpredictable changes in the financial stability of the Company’s clients. The Company’s allowance for doubtful accounts was $250,000 at September 30, 2017 and December 31, 2016. |
Property and Equipment | Property and Equipment. Property and equipment is capitalized at historical cost or the fair value of assets acquired in a business combination and is depreciated over the useful life of the asset. Management’s estimation of this useful life is based on circumstances that exist in the seismic industry and information available at the time of the purchase of the asset. As circumstances change and new information becomes available, these estimates could change. Depreciation is computed using the straight-line method. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the balance sheet, and any resulting gain or loss is reflected in the results of operations for the period. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets . Long-lived assets are reviewed for impairment when triggering events occur suggesting deterioration in the assets’ recoverability or fair value. Recognition of an impairment charge is required if future expected undiscounted net cash flows are insufficient to recover the carrying value of the assets and the fair value of the assets is below the carrying value of the assets. Management’s forecast of future cash flows used to perform impairment analysis includes estimates of future revenues and expenses based on the Company’s anticipated future results while considering anticipated future oil and natural gas prices, which is fundamental in assessing demand for the Company’s services. If the carrying amounts of the assets exceed the estimated expected undiscounted future cash flows, the Company measures the amount of possible impairment by comparing the carrying amount of the assets to the fair value. Although the Company does not anticipate an impairment of its assets, if oil and natural gas prices remain at current levels for an extended period of time or significantly decline, the Company may be exposed to impairment charges in future periods, which could negatively affect the Company’s results of operations. |
Revenue Recognition | Revenue Recognition . Services are provided under cancelable service contracts. These contracts are either “turnkey” or “term” agreements. Under both types of agreements, the Company recognizes revenues when revenue is realizable and services have been performed. Services are defined as the commencement of data acquisition or processing operations. Revenues are considered realizable when earned according to the terms of the service contracts. Under turnkey agreements, revenue is recognized on a per-unit-of-data-acquired rate as services are performed. Under term agreements, revenue is recognized on a per-unit-of-time-worked rate as services are performed. In the case of a cancelled service contract, revenue is recognized and the client is billed for services performed up to the date of cancellation. The Company receives reimbursements for certain out-of-pocket expenses under the terms of the service contracts. Amounts billed to clients are recorded in revenue at the gross amount, including out-of-pocket expenses that are reimbursed by the client. In some instances, clients are billed in advance of services performed. In those cases, the Company recognizes the liability as deferred revenue. As services are performed, those deferred revenue amounts are recognized as revenue. In some instances, the contract contains certain permitting, surveying and drilling costs that are incorporated into the per-unit-of-data-acquired rate. In these circumstances, these set-up costs that occur prior to initiating revenue recognition are capitalized and amortized as data is acquired. |
Stock-Based Compensation | Stock-Based Compensation . The Company measures all stock-based compensation awards, which include stock options, restricted stock, restricted stock units and common stock awards, using the fair value method and recognizes compensation expense as operating or general and administrative expense, as appropriate, in the Condensed Consolidated Statements of Operations and Comprehensive Loss on a straight-line basis over the vesting period of the related awards. |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements. Preparation of the accompanying financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Because of the use of assumptions and estimates inherent in the reporting process, actual results could differ from those estimates. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting . This ASU is effective for the annual period beginning after December 15, 2017, and for annual and interim periods thereafter. The Company does not believe this ASU will have a material impact on its condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which is intended to simplify accounting for share-based payments awarded to employees, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU was effective for the annual period beginning after December 15, 2016, and for annual and interim periods thereafter. The Company adopted ASU 2016-09 in the first quarter of 2017 and elected to account for forfeitures as they occur, rather than estimate expected forfeitures. A s a result of adopting this standard, the Company applied the modified retrospective approach and recorded a cumulative-effect adjustment that had no material impact on the Company’s condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. In January 2017, the FASB issued ASU No. 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments – Equity Method and Joint Ventures (Topic 323), which stated additional qualitative disclosures should be considered to assess the significance of the impact upon adoption. This ASU is effective for the annual period beginning after December 15, 2018, and for annual and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its condensed consolidated financial statements and believes that the most significant change will be to its Condensed Consolidated Balance Sheets as its asset and liability balances will increase for operating leases that are currently off-balance sheet. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. Entities have the option of using either a full retrospective or modified approach to adopt ASU No. 2014-09. Subsequent amendments to the initial guidance have been issued in March 2016, April 2016, May 2016, December 2016, January 2017, and September 2017 within ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-12, ASU No. 2016-20, ASU No. 2017-03, and ASU No. 2017-13 regarding principal-versus-agent, performance obligations and licensing, assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. These updates do not change the core principle of the guidance under ASU No. 2014-09, but rather provide implementation guidance. In August 2015, ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, was issued and it amended the effective date of ASU No. 2014-09 for public companies to annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but only beginning after December 15, 2016. The Company has completed an initial assessment of the new standard and currently anticipates adopting the standard using the full retrospective method. Under the new standard, the Company expects the recognition of certain miscellaneous revenue to be delayed, but not materially different. These revenues will be estimated and allocated over the life of the contract rather than recognized as services are provided. The Company is continuing to evaluate the effect that the adoption will have on its financial statements, disclosures, and internal controls. |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
DEBT | |
Schedule of aggregate principal amount outstanding, interest rates under outstanding notes payable | September 30, 2017 December 31, 2016 Notes payable to commercial banks Aggregate principal amount outstanding $ — $ Interest rates — 3.50% - 4.50% September 30, 2017 December 31, 2016 Notes payable to finance company for insurance Aggregate principal amount outstanding $ $ — Interest rates — |
Schedule of aggregate maturities of notes payable | The aggregate maturities of the notes payable at September 30, 2017 are as follows (in thousands): October 2017 - September 2018 $ |
Schedule of aggregate maturities of obligations under capital leases | The aggregate maturities of obligations under capital leases at September 30, 2017 are as follows (in thousands): October 2017 - September 2018 $ October 2018 - September 2019 October 2019 - September 2020 October 2020 - September 2021 $ |
NET LOSS PER SHARE ATTRIBUTAB16
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK | |
Schedule of reconciliation of the net loss per share attributable to common stock | Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Net loss $ (2,759) $ (12,416) $ (26,722) $ (32,605) Income allocable to unvested participating restricted stock — — — — Basic loss attributable to common stock $ (2,759) $ (12,416) $ (26,722) $ (32,605) Reallocation of participating earnings — — — — Diluted loss attributable to common stock $ (2,759) $ (12,416) $ (26,722) $ (32,605) Weighted average common shares outstanding: Basic 21,701,662 21,622,349 21,681,474 21,603,065 Dilutive common stock options, restricted stock unit awards and non-participating restricted stock awards — — — — Diluted 21,701,662 21,622,349 21,681,474 21,603,065 Basic loss attributable to a share of common stock $ (0.13) $ (0.57) $ (1.23) $ (1.51) Diluted loss attributable to a share of common stock $ (0.13) $ (0.57) $ (1.23) $ (1.51) |
Schedule of weighted average numbers of stock options, restricted stock units, and non-participating restricted stock awards that have been excluded from the calculation of diluted loss per share attributable to common stock | Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Stock options 326,868 414,533 347,599 418,121 Restricted stock unit awards 378,887 278,412 293,613 268,824 Non-participating restricted stock awards 71,167 87,000 74,014 72,711 Total 776,922 779,945 715,226 759,656 |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | Sep. 30, 2017USD ($)item | Dec. 31, 2016USD ($) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Number of notes receivable | item | 1 | |
Allowance for note losses | $ 0 | |
Allowance for doubtful accounts | $ 250,000 | $ 250,000 |
DEBT (Details)
DEBT (Details) | 9 Months Ended | |
Sep. 30, 2017USD ($)item | Dec. 31, 2016USD ($) | |
Recording equipment | ||
Debt Instruments | ||
Capital lease obligations | $ 8,001,000 | |
Letter Of Credit | ||
Debt Instruments | ||
Number of letters of credit | item | 2 | |
Letter Of Credit | AIG Assurance Company | ||
Debt Instruments | ||
Letters of credit issued | $ 1,767,000 | |
Letter Of Credit | City of Midland, Texas | ||
Debt Instruments | ||
Letters of credit issued | $ 75,000 | |
Notes payable to finance companies for insurance | ||
Debt Instruments | ||
Number of outstanding notes payable | item | 1 | |
Aggregate principal amount outstanding | $ 56,000 | |
Interest rate | 2.80% | |
Credit Agreement | ||
Debt Instruments | ||
Borrowing, repaying and re-borrowing capacity | $ 20,000,000 | |
Percentage of maximum borrowing capacity on eligible accounts receivable | 80.00% | |
Percentage of maximum borrowing capacity on eligible core equipment | 50.00% | |
Maximum borrowing capacity on core equipment | $ 12,500,000 | |
Interest rate | 4.50% | |
Minimum tangible net worth | $ 125,000,000 | |
Credit Agreement | Term Note | ||
Debt Instruments | ||
Number of outstanding notes payable | item | 0 | |
Credit Agreement | Prime rate | ||
Debt Instruments | ||
Variable interest rate basis | prime rate | |
Credit Agreement | Minimum | ||
Debt Instruments | ||
Ratio of current assets to current liabilities | 1.50 | |
Credit Agreement | Minimum | Prime rate | ||
Debt Instruments | ||
Interest rate | 2.50% | |
Credit Agreement | Maximum | ||
Debt Instruments | ||
Debt to tangible net worth ratio | 1 | |
Notes payable to commercial banks and finance companies | ||
Aggregate maturities of notes payable and obligations under capital leases | ||
October 2017 - September 2018 | $ 56,000 | |
Notes payable to commercial banks | ||
Debt Instruments | ||
Aggregate principal amount outstanding | $ 1,938,000 | |
Notes payable to commercial banks | Minimum | ||
Debt Instruments | ||
Interest rate | 3.50% | |
Notes payable to commercial banks | Maximum | ||
Debt Instruments | ||
Interest rate | 4.50% | |
Obligations under capital leases | ||
Aggregate maturities of notes payable and obligations under capital leases | ||
October 2017 - September 2018 | 2,732,000 | |
October 2018 - September 2019 | 2,802,000 | |
October 2019 - September 2020 | 3,002,000 | |
October 2020 - September 2021 | 25,000 | |
Total | $ 8,561,000 | |
Obligations under capital leases | Minimum | ||
Debt Instruments | ||
Interest rate | 3.16% | |
Obligations under capital leases | Maximum | ||
Debt Instruments | ||
Interest rate | 6.88% |
NET LOSS PER SHARE ATTRIBUTAB19
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK | ||||
Net loss | $ (2,759) | $ (12,416) | $ (26,722) | $ (32,605) |
Basic loss attributable to common stock | (2,759) | (12,416) | (26,722) | (32,605) |
Diluted loss attributable to common stock | $ (2,759) | $ (12,416) | $ (26,722) | $ (32,605) |
Weighted average common shares outstanding: | ||||
Basic | 21,701,662 | 21,622,349 | 21,681,474 | 21,603,065 |
Diluted | 21,701,662 | 21,622,349 | 21,681,474 | 21,603,065 |
Basic loss per share attributable to common stock | $ (0.13) | $ (0.57) | $ (1.23) | $ (1.51) |
Diluted loss attributable to a share of common stock | $ (0.13) | $ (0.57) | $ (1.23) | $ (1.51) |
NET LOSS PER SHARE ATTRIBUTAB20
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCK - Stock Options and Restricted Stock (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Weighted Average | ||||
Anti-dilutive Securities Excluded from Calculation of Earnings Per Share | ||||
Weighted average number of securities excluded from calculation | 776,922 | 779,945 | 715,226 | 759,656 |
Participating restricted stock | ||||
Anti-dilutive Securities Excluded from Calculation of Earnings Per Share | ||||
Weighted average participating restricted stock included in common stock outstanding | 0 | 0 | 0 | 0 |
Unvested stock options | ||||
Anti-dilutive Securities Excluded from Calculation of Earnings Per Share | ||||
Weighted average number of securities excluded from calculation | 326,868 | 414,533 | 347,599 | 418,121 |
Restricted stock | ||||
Anti-dilutive Securities Excluded from Calculation of Earnings Per Share | ||||
Weighted average number of securities excluded from calculation | 378,887 | 278,412 | 293,613 | 268,824 |
Non-participating restricted stock awards | ||||
Anti-dilutive Securities Excluded from Calculation of Earnings Per Share | ||||
Weighted average number of securities excluded from calculation | 71,167 | 87,000 | 74,014 | 72,711 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 36 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Effective tax rate (as percent) | 33.90% | 11.10% | 14.80% | 10.30% | |
Period of losses evaluated for assessment of future use of deferred tax assets | 3 years | ||||
Federal | |||||
Valuation allowance recorded | $ 1,209,000 | $ 10,258,000 | |||
State | |||||
Valuation allowance recorded | $ 94,000 | $ 681,000 |