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2018 ReportUNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 10-K þþ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2013or ¨¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Commission file number 001-35471SAExploration Holdings, Inc.(Exact name of registrant as specified in its charter) Delaware27-4867100(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.) 1160 Dairy Ashford, Suite 160, Houston, Texas77079; and3333 8th Street SE, 3rd Floor, Calgary, AlbertaT2G 3A4(Address of principal executive offices)(Zip Code) Registrant’s telephone number, including area code (281) 258-4400 Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.0001 Par ValueThe NASDAQ Global Market(Title of each class)(Name of each exchange on which registered) Securities registered pursuant to Section 12(g) of the Act: Warrants, Each to Purchase One Share of Common Stock (Title of class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ Noþþ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ Noþþ 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 1934during 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 filingsrequirements for the past 90 days. Yes þþ No ¨ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes þþ No ¨ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation in S-K (§229.405 of this chapter) is not contained herein, andwill not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form 10-K. ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Seedefinition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.Large accelerated filer ¨Accelerated filer ¨Non-accelerated filer ¨ (Do not check if a smaller reporting company)Smaller reporting companyþþ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ Noþþ The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 28, 2013, the last business day ofthe registrant’s most recently completed second fiscal quarter was $64,404,673, calculated by reference to the closing price of $10.15 for the registrant’scommon stock on The Nasdaq Global Market on that date. Number of shares of Common Stock, $0.0001 par value, outstanding as of March 31, 2014: 14,870,549 DOCUMENTS INCORPORATED BY REFERENCEThe information called for by Part III, Items 10, 11, 12, 13 and 14, will be included in adefinitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end ofthe fiscal year covered by this Form 10-K, and is incorporated herein by reference.Exhibit Index Located on Page 41 TABLE OF CONTENTS PART I2ITEM 1. Business.2ITEM 1A. Risk Factors.8ITEM 1B. Unresolved Staff Comments.20ITEM 2. Properties.20ITEM 3. Legal Proceedings.21ITEM 4. Mine Safety Disclosures.21 PART II21ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.21ITEM 6. Selected Consolidated Financial Data23ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations23ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk.34ITEM 8. Financial Statements and Supplementary Data.35ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.35ITEM 9A. Controls and Procedures.35ITEM 9B. Other Information.37 PART III37ITEM 10. Directors, Executive Officers and Corporate Governance.37ITEM 11. Executive Compensation.37ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.37ITEM 13. Certain Relationships and Related Transactions, and Director Independence.38ITEM 14. Principal Accountant Fees and Services.38 PART IV39ITEM 15. Exhibits and Financial Statement Schedules.39Index to Financial Statements.FS-1Exhibit Index41 i CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report contains “forward-looking statements” within the meaning of the federal securities laws, with respect to our financial condition, results ofoperations, cash flows and business, and our expectations or beliefs concerning future events. These forward-looking statements can generally be identifiedby phrases such as “expects,” “anticipates,” “believes,” “estimates,” “intends,” “plans to,” “ought,” “could,” “will,” “should,” “likely,” “appears,” “projects,”“forecasts,” “outlook” or other similar words or phrases. There are inherent risks and uncertainties in any forward-looking statements. Although we believethat our expectations are reasonable, we can give no assurance that these expectations will prove to have been correct, and actual results may vary materially.Except as required by law, we undertake no obligation to update, amend or clarify any forward-looking statements to reflect events, new information orotherwise. Some of the important factors that could cause actual results to differ materially from our expectations are discussed below. All written and oralforward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements. Factors that could cause actual results to vary materially from our expectations include the following: •fluctuations in the levels of exploration and development activity in the oil and gas industry; •intense industry competition; •limited number of customers; •credit risk related to our customers; •the availability of capital resources; •need to manage rapid growth; •delays, reductions or cancellations of service contracts; •operational disruptions due to seasonality and other external factors; •crew 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 militaryuncertainties; •ability to retain key executives; and •need to comply with diverse and complex laws and regulations. You should refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections ofthis report for specific risks which would cause actual results to be significantly different from those expressed or implied by any of our forward-lookingstatements. It is not possible to identify all of the risks, uncertainties and other factors that may affect future results. In light of these risks and uncertainties,the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially from those anticipated orimplied in the forward-looking statements. Accordingly, readers of this report are cautioned not to place undue reliance on the forward-looking statements. 1 PART I ITEM 1. Business. Overview We were incorporated in Delaware on February 2, 2011, under the name Trio Merger Corp. as a blank check company in order to serve as a vehiclefor the acquisition of a target business. On June 24, 2013, we completed a business combination in which the entity formerly known as SAExplorationHoldings, Inc. (“Former SAE”) merged with and into our wholly-owned subsidiary Trio Merger Sub, Inc. (“Merger Sub”), with Merger Sub surviving (the“Merger”), and we operate the business of Former SAE which is a geophysical services company offering a full range of seismic data acquisition services inNorth America, South America and Southeast Asia to our customers in the oil and natural gas industry. Our services include the acquisition of 2D, 3D, time-lapse 4D and multi-component seismic data on land, in transition zones and in shallow water, as well as seismic data field processing. Seismic data is used byour customers, which include national oil companies, major international oil companies and independent oil and gas exploration and production companies,to identify and analyze drilling prospects and maximize successful drilling. We specialize in the acquisition of seismic data in logistically complex and challenging environments and delicate ecosystems, including jungle,mountain and arctic terrain, and have extensive experience in deploying personnel and equipment in remote locations, while maintaining a strong quality,health, safety and environmental (“QHSE”) track record. We operate crews around the world that are equipped with over 29,500 land and marine channels ofseismic data acquisition equipment. Our principal headquarters are located in Houston, Texas at 1160 Dairy Ashford, Suite 160, Houston, Texas, 77079, Telephone: (281) 258-4400, andour web address is www.saexploration.com. We do not intend for information contained in our website to be a part of this report. Our operations in our various geographic locations are conducted through our subsidiary SAExploration, Inc. and its wholly-owned subsidiaries andbranch offices in the United States (primarily Alaska), Canada, Peru, Colombia, Papua New Guinea, Brazil, Bolivia, Malaysia, and New Zealand. Seismic Data Acquisition Services We provide a full range of seismic data acquisition and infield processing services. We currently provide our services on only a proprietary basis toour customers and the seismic data acquired is owned by our customers once acquired. Our seismic data acquisition services include the following: •Program Design •Planning and Permitting •Camp Services •Survey •Drilling •Recording •Reclamation •In-field Processing 2 Program Design, Planning and Permitting. The seismic survey is initiated at the time the customer requests a proposal to acquire seismic data on itsbehalf. We employ an experienced design team, including geophysicists with extensive experience in 2D, 3D and time-lapse 4D survey design, to assess andrecommend acquisition parameters and technologies to best meet the customer’s exploration objectives. Our design team analyzes the request and works withthe customer to put an operational, personnel and capital resource plan in place to execute and complete the project. Once a seismic program is designed, we work with the customer to obtain the necessary permits from governmental authorities and access rights ofway from surface and mineral estate owners or lessees where the survey is to be conducted. In most cases, the customer takes the lead in obtaining permits forseismic operations but we supplement these efforts by providing our expertise with the communities and local governments. Camp Services. We have developed efficient processes for setting up, operating and dismantling field camps in challenging and remote projectlocations. We operate our camps to ensure the safety, comfort and productivity for the team working on each project and to minimize the environmentalimpact through the use of wastewater treatments, trash management, water purification, generators with full noise isolation and recycling areas. In areas like South America and Papua New Guinea, logistical support needs to be in place to establish supply lines for remote jungle camps. Toinsure the quality of services delivered to these remote camps, we own 10 supply and personnel river boats to gain access to remote jungle areas. We alsohave five jungle camps and a series of 40 fly camps that act as advance camps from the main project camp. Each of these jungle base camps contains a fullservice medical facility complete with doctors and nurses in the remote chance it needs to stabilize any potential injuries for medical transport. The camps areequipped with full meal kitchens held to high standards of cleanliness, sleeping and recreational quarters, power supply, communications links, air support,water purification systems, black water purification systems, offices, repair garages, fuel storage and many more support services. Survey and Drilling. In a typical seismic recording program, the first two stages of the program are survey and drilling. Once all of the permitting iscompleted, the survey crews enter the project areas and begin establishing the source and receiver placements in accordance with the survey design agreed toby the customer. The survey crew lays out the line locations to be recorded and, if explosives are being used, identifies the sites for shot-hole placement. Thedrilling crew creates the holes for the explosive charges that produce the necessary acoustical impulse. The surveying and drilling crews may be employed by us or may be third party contractors depending on the nature of the project and its location. InNorth America, the surveying and drilling crews are typically provided by third party contractors and supervised by our personnel. In North America, ourvibroseis source units consist of the latest source technology, including eight AHV IV 364 Commander Vibrators and six environmentally friendly IVI minivibrators, complete with the latest Pelton DR electronics. In South America and Southeast Asia, we perform our own surveying and drilling, which issupported by up to 200 drilling units, including people portable, low impact self-propelled walk behind, track driven and heliportable deployed drilling rigs.Our senior drilling staff has a combined work experience of over 50 years in some of the most challenging environments in the world. On most programs thereare multiple survey and drilling crews that work at a coordinated pace to remain ahead of the data recording crews. Recording. We use equipment capable of collecting 2D, 3D, time-lapse 4D and multi-component seismic data. We utilize vibrator energy sources orexplosives depending on the nature of the program. In addition, we have over 29,500 land and marine seismic channels and other equipment availablethrough rental or long-term leasing sources. All of our systems record equivalent seismic information but vary in the manner by which seismic data istransferred to the central recording unit, as well as their operational flexibility and channel count expandability. We utilize 11,500 channels of Sercel428/408 equipment, 6,000 channels of Fairfield Land Nodal equipment and 2,000 units Fairfield Ocean Bottom Nodal equipment and 10,000 channels ofOyo GSR equipment. We have made significant capital investments to increase the recording capacity of our crews by increasing channel count and the number of energysource units we operate. This increase in channel count demand is driven by customer needs and is necessary in order to produce higher resolution images,increase crew efficiencies and undertake larger scale projects. In response to project-based channel requirements, we routinely deploy a variable number ofchannels with a variable number of crews in an effort to maximize asset utilization and meet customer needs. When recording equipment is at or near fullutilization, we utilize rental equipment from strategic suppliers to augment our existing inventories. We believe we will realize the benefit of increasedchannel counts and flexibility of deployment through increased crew efficiencies, higher revenues and increased margins. 3 During the past three years, we dedicated a significant portion of our capital investment to purchasing and leasing wireless recording systems ratherthan the traditional wired systems. We utilize this equipment as primarily stand-alone recording systems, but on occasion it is used in conjunction with cable-based systems. The wireless recording systems allow us to gain further efficiencies in data recording and provide greater flexibility in the complexenvironments in which we operate. In addition, we have realized increased crew efficiencies and lessened the environmental impact of our seismic programsdue to the wireless recording systems because they require presence of fewer personnel and less equipment in the field. We believe we will experiencecontinued demand for wireless recording systems in the future. We also utilize multi-component recording equipment on certain projects to further enhance the quality of data acquired and help our customersenhance their development of producing reservoirs. Multi-component recording involves the collection of different seismic waves, including shear waves,which aids in reservoir analysis such as fracture orientation and intensity in shales and allows for more descriptive rock properties. We maintain a surplus ofequipment, and augment our needs with leased equipment from time to time, to provide additional operational flexibility and to allow us to quickly deployadditional recording channels and energy source units as needed to respond to customer demand. Reclamation. We have experienced teams responsible for reclamation in the areas where work has been performed so as to minimize theenvironmental footprint from the seismic program. These programs can include reforestation or other activities to restore the natural landscape at ourworksites. In-field Processing. Our knowledgeable and experienced team provides our customers with superior quality field processing. Our quality controlapplications are appropriate for identifying and analyzing ambient noise, evaluating field parameters and supporting obstacle-recovery strategies. Using thelatest hardware and software, our technical and field teams electronically manage customer data from the field to the processing office, minimizing timebetween field production and processing. For full seismic processing, we use software from a variety of global suppliers. All the steps employed in our basicprocessing sequence are tailored to the particular customer project and objectives. We implement strict quality control processes to meet or surpass industry-established standards. Currently, we do not acquire data for our own account or for future sale, maintain multi-customer data libraries or participate in oil andgas ventures. The results of a seismic survey conducted for a customer belong to that customer. All of our customers’ information is maintained in strictconfidence. Markets and Trends North America The North American market is a stabilized and sustained market for 3D seismic data acquisition. Use of 3D technology is the norm in the Lower 48United States and Canada as international oil companies seek to maximize the efficiency of their reservoirs and reduce exploration risk. We expanded into North America in 2011 through our acquisitions of Datum Exploration Ltd. in Canada and Northern Exploration Services inAlaska. With each of those acquisitions, we brought on board personnel with extensive operations experience in each location. Our operations in the NorthAmerican market are consistent with our strategy to help increase our equipment utilization rates, while concurrently increasing margins, by balancinggrowth in North and South America, which have complementary operating seasons. South America South American countries continue to expand and develop, demanding significantly more energy to fuel their growth. As the political environmentsstabilize, oil companies are increasing operations in the market and are seeking experienced seismic service providers with complex environment know-how,strong QHSE records and excellent relations with local communities to satisfy their seismic needs. We have maintained operations in South America since 2006 while further growing our presence in Bolivia, Brazil, Colombia, and Peru. 4 Southeast Asia Exploration activities in Southeast Asia have continued to increase along with the demand for energy in that region. In 2010, we entered theSoutheast Asian market by commencing operations in Papua New Guinea for one of our major long-time customers. We have expanded our operations inSoutheast Asia into New Zealand and shallow-water marine work in Malaysia. During 2013, we also opened an office in Malaysia to pursue significantopportunities within the region. Africa During the last part of 2013 we began the process of opening an office in Ethiopia. We will proceed with establishing a legal entity in Ethiopia andpursuing opportunities in North Africa. The projects in North Africa are consistent with our strategy of operating in logistically complex regions. Strengths Extensive experience in challenging environments. We specialize in seismic data acquisition services in logistically challenging environments onland, in transition zones and in shallow water. We believe that our extensive experience operating in such complex locations, including our expertise inlogistics management and deploying personnel and equipment customized for the applicable environment, provides us with a significant competitiveadvantage. All of our remote area camps, drills and support equipment are easily containerized and made for efficient transport to locations anywhere in theworld. We employ a sophisticated tracking system in all of our vehicles, boats, aircraft support and in some cases personnel so we know where our equipmentis located at all times. All of our boats contain radar systems to avoid potential collisions with less sophisticated traffic on the waterways. We employrecording technology that is primarily adapted for the environments in which we typically operate, however, the systems can easily be utilized in mostenvironments. We have a logistical support department that works with management to focus on keeping our equipment strategically located in areas of highutilization. Global operations with expansion in high-growth markets. We operate in markets within key high growth regions around the world and continue toexpand our presence in those markets. Our experience includes projects in Alaska, Bolivia, Brazil, Colombia, Peru, Canada, Malaysia, Papua New Guinea andNew Zealand, where exploration activity is increasing due to governmental incentives and the stabilization of regulatory and financial environments, and wemaintain local offices in each of those areas. Strong QHSE performance record. Stringent QHSE processes are the foundation of all our projects. Our highly trained and qualified QHSE team hasextensive experience working in diverse ecosystems and complex cultural environments. This experience allows us to deliver high quality data and efficientoperations through systems and processes designed to minimize health and safety risk and overall environmental impact. Blue chip, loyal customer base. Members of our management team have long-standing relationships extending over 30 years with many of thelargest oil and gas companies in the world. Our global operating footprint allows us to leverage those relationships throughout the world, and our priorperformance for those customers enhances our ability to obtain new business from both existing and new customers. Highly experienced management team with significant ongoing ownership. Our senior executive management team has an average of over 30 yearsof experience in seismic services. The experience, knowledge base and relationships that our management team has built over the years enhance ouroperating and marketing capabilities and underlie our strong reputation in the industry. Our services are marketed by supervisory and executive personnelwho contact customers to determine geophysical needs and respond to customer inquiries regarding the availability of crews or processing schedules. Our management currently owns approximately one-third of our outstanding equity and has voting control over a majority of our outstandingequity, which qualifies us as a “controlled company.” This provides a strong alignment of the financial interests of our executives and stockholders. 5 Strategy We believe we have a strategic advantage over a substantial number of our competitors in the areas in which we operate because of our expertise inlogistics and our ability to provide a complete solution in remote and complex areas. Our strategy is to add value for our customers through a material reduction of the following risks: •Exploration risk — we deliver consistent high-quality seismic data utilizing the most advanced technology; •Data acquisition risk — we fulfill our promises regarding the timing, quality and scope of our services; •Reputation risk — we attract and retain highly skilled and experienced professionals who embody our strong focus on customer service, safetyand environmental safeguards; and •QHSE risk — we place the highest priority on the health and safety of our workforce, the protection of our assets, the environment and thecommunities where we conduct our work, and we strive for continual improvement in all QHSE aspects. We enable this strategy by continuing to pursue excellence in the following activities: •Building and maintaining mutually beneficial, long-term relationships with customers; •Aggressively marketing our capabilities and customer-value added proposition; •Continually monitoring technological developments in the industry, and implementing cutting-edge technologies that can give us acompetitive advantage; •Sharing best practices across regions to ensure the consistent delivery of high quality service; and •Continuing to seek innovative ideas to reduce the seasonal gaps in our equipment utilization rates. Seasonal Variation in Business Seismic data acquisition services are performed outdoors and, consequently, are subject to weather and seasonality. Particularly in Canada andAlaska, the primary season for seismic data acquisition is during the winter, from approximately December to April, since much of the terrain for seismic dataacquisition cannot be accessed until the ground has frozen. The weather conditions during this time of year can affect the timing and efficiency of operations.In addition, this prime season can be shortened by warmer weather conditions. In South America and Southeast Asia, our operations are affected by the periods of heavy rain in the areas where seismic operations are conducted.Specifically, the jungle areas of Peru and Colombia are affected by heavy rain during certain parts of the year so we must either avoid taking projects duringthese time periods or limit the weather risk in a particular customer contract. Many of the heavy rain periods in South America, though, are during the highseason for Canada and Alaska so there are opportunities to maximize the utilization of equipment and personnel by moving them between these regions totake advantage of the different high seasons. In all areas of operation, the weather is an uncontrollable factor that affects our operations at various times of the year. We try to minimize these risksduring the bidding process by utilizing the expertise of our personnel as to the weather in a particular area and through the negotiation of downtime clausesin our contracts with our customers. Due to the unpredictability of weather conditions, there may be times when adverse conditions substantially affect ouroperations and the financial results of a particular project may be impacted. Marketing Our services are marketed from our various offices around the world. We have a corporate business development and marketing staff and also havelocal managers who interact with customers in each country of operations. Through these customer interactions, we are able to remain updated on acustomer’s upcoming projects in the area and to work with the customer on projects in other countries. 6 Contracts are obtained either by direct negotiation with a prospective customer or through competitive bidding in response to invitations to bid.Most of our revenue historically has been generated through repeat customer sales and new sales to customers referred by existing and past customers. Inaddition, a significant portion of our engagements results from competitive bidding. Contracts are awarded primarily on the basis of price, experience,availability, technological expertise and reputation for dependability and safety. With the involvement and review of senior management, bids are preparedby knowledgeable regional operations managers who understand their respective markets, customers and operating conditions and who communicatedirectly with existing and target customers during the bid preparation process. We also work closely with customers on a direct award basis to plan particular seismic data acquisition projects. Due to the complexity of the areaswhere we do business, these projects can take a number of months in planning and consulting with the customer on exploration goals and parameters of theprojects to fit within a particular budget. By working closely with the customer, we are able to acquire seismic data for a project efficiently and within thecustomer’s required timeframe. Contracts We conduct data acquisition services under master service agreements with our customers that set forth certain obligations of our customers and us.A supplemental agreement setting forth the terms of a specific project, which may be cancelled by either party on short notice, is entered into for every dataacquisition project. The supplemental agreements are either “turnkey” agreements that provide for a fixed fee to be paid to us for each unit of data acquired,or “term” agreements that provide for a fixed hourly, daily or monthly fee during the term of the project. Turnkey agreements generally mean more profit potential, but involve more risks due to potential crew downtimes or operational delays. We attemptto negotiate on a project-by-project basis some level of weather downtime protection within the turnkey agreements. Under term agreements, we are ensured amore consistent revenue stream with improved protection from crew downtime or operational delays, but with a decreased profit potential. Customers Our customers include national and international oil companies and independent oil and gas exploration and production companies. Our revenuesare derived from a concentrated customer base. During the year ended December 31, 2013, we had two customers that represented 52% of our consolidatedrevenue for the period. During the year ended December 31, 2012, we had three customers that individually exceeded 10% of our consolidated revenue andin the aggregate represented 56% of consolidated revenue for the period. Based on the nature of our contracts and customer projects, our significantcustomers can change from year to year and the significant customers in any year may not be indicative of the largest customers in any subsequent year.However, we had a significant customer in 2012 and in 2013. In 2012, our significant customer represented 33% of our consolidated revenue for the yearended December 31, 2012. In 2013, our significant customer represented 32% of our consolidated revenue for the year ended December 31, 2013. Competition The acquisition of seismic data for the oil and gas industry is a highly competitive business. Factors such as price, experience, availability,technological expertise and reputation for dependability and safety of a crew significantly affect a potential customer’s decision to award a contract to us orone of our competitors. Our competitors include much larger companies with greater financial resources, more available equipment and more crews, as well as companies ofcomparable and smaller sizes. Our primary competitors are Compagnie Générale de Géophysique (CGG), Geokinetics, Inc., Global Geophysical Services, Inc.and ION Geophysical Corporation. In addition to those companies, we also compete for projects from time to time with smaller seismic companies thatoperate in local markets. 7 Intellectual Property We rely on certain proprietary information, proprietary software, trade secrets and confidentiality and licensing agreements to conduct ouroperations. We continually strive to improve our operating techniques and technologies, through internal development activities and working with vendorsto develop new processes and technologies to maintain pace with industry innovation. Through this process, we have developed certain proprietary processesand methods of doing business, particularly with respect to logistics. Although those processes and methods may not be patentable, we seek to protect ourproprietary information by entering into confidentiality agreements with our key managers and customers. Equipment Acquisitions and Capital Expenditures We funded most of our capital expenditures and working capital needs within the past year with cash from operations and borrowings under our $80million senior Credit Agreement (as amended, the “2012 Credit Agreement”). We commit capital funds to purchase or lease the equipment we deem mosteffective to conduct our operations and implement our business strategy. Purchasing new assets and upgrading existing capital assets requires a commitmentto capital spending. During 2012, we made capital expenditures of approximately $41.7 million, which was used to invest in additional seismic acquisitionsystems and vibroseis equipment and make technical improvements to existing equipment. During 2013, we made capital expenditures of approximately$11.1 million, which included mostly seismic acquisition equipment. Any major capital expenditures during 2014 will be presented to our board of directorsfor approval up to a maximum of $18 million, which is the limitation under our 2012 Credit Agreement. Government and Environmental Regulations Our operations are subject to various international, federal, provincial, state and local laws and regulations. Those laws and regulations governvarious aspects of operations, including the discharge of explosive materials into the environment, requiring the removal and clean-up of materials that mayharm the environment or otherwise relating to the protection of the environment and access to private and governmental land to conduct seismic surveys. Webelieve we have conducted our operations in material compliance with applicable laws and regulations governing our activities. The costs of acquiring permits and remaining in compliance with environmental laws and regulations, title research, environmental studies andsurveys are generally borne by our customers. Although our direct costs of complying with applicable laws and regulations have historically not beenmaterial, the changing nature of such laws and regulations makes it impossible to predict the cost or impact of such laws and regulations on future operations.Additional United States or foreign government laws or regulations would likely increase the compliance and insurance costs associated with our customers’operations. Significant increases in compliance expenses for customers could have a material adverse effect on customers’ operating results and cash flows,which could also negatively impact the demand for our services. Employees and Subcontractors As of February 28, 2014, we had 3,800 employees, 176 of whom were located in the United States. From time to time and on an as-needed basis, wesupplement our regular workforce with individuals that we hire temporarily or as independent contractors in order to meet certain business needs. Our U.S.employees are not represented by any collective bargaining agreement, and we believe that our employee relations are good. Generally the choice of whether to subcontract out services depends on the expertise available in a certain region and whether that expertise is moreefficiently hired through subcontractors or by using our own labor force. For the most part, services are subcontracted within North America and ourpersonnel are used in other regions where we operate. When subcontractors are used, we manage them and require that they comply with our work policiesand QHSE systems. ITEM 1A. Risk Factors. Our business, financial position, results of operations or liquidity could be adversely affected by any of these risks. The risks and uncertainties wedescribe are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impairour business or operations. Any adverse effect on our business, financial position, results of operations or liquidity could result in a decline in the value ofour common stock and other securities. 8 Risks Relating to Our Business Our business largely depends on the levels of exploration and development activity in the oil and natural gas industry, a historically cyclical industry. Adecrease in this activity caused by low oil and gas prices, reduced demand or other factors will have an adverse effect on our business, liquidity and resultsof operations. Demand for our services depends upon the level of spending by oil and natural gas companies for exploration, production, development and fieldmanagement activities, which depend, in part, on oil and natural gas prices. The markets for oil and natural gas have historically been volatile and are likelyto continue to be so in the future. In addition to the market prices of oil and natural gas, our customers’ willingness to explore, develop and produce dependslargely upon prevailing industry conditions that are influenced by numerous factors over which our management has no control. A decline in oil and naturalgas exploration activities and commodity prices may adversely affect the demand for our services and our results of operations. Factors affecting the prices of oil and natural gas and our customers’ desire to explore, develop and produce include: •the level of supply and demand for oil and natural gas; •expectations about future prices for oil and natural gas; •the worldwide political, military and economic conditions; •the ability of the Organization of Petroleum Exporting Countries to set and maintain production levels and prices for oil; •the rate of discovery of new oil and gas reserves and the decline of existing oil and gas reserves; •the cost of exploring for, developing and producing oil and natural gas; •the ability of exploration and production companies to generate funds or otherwise obtain capital for exploration, development andproduction operations; •technological advances affecting energy exploration, production and consumption; •government policies, including environmental regulations and tax policies, regarding the exploration for, production and developmentof oil and natural gas reserves, the use of fossil fuels and alternative energy sources and climate change; and •weather conditions, including large-scale weather events such as hurricanes that affect oil and gas operations over a wide area or affectprices. We cannot assure you that the exploration and development activities by our customers will be maintained at current levels. Any significant declinein exploration or production-related spending by our customers, whether due to a decrease in the market prices for oil and natural gas or otherwise, wouldhave a material adverse effect on our results of operations. Additionally, increases in oil and gas prices may not increase demand for our products and servicesor otherwise have a positive effect on our results of operations or financial condition. Our revenues are subject to fluctuations that are beyond our control, which could adversely affect our results of operations in any financial period. Our operating results may vary in material respects from quarter to quarter. Factors that cause variations include the timing of the receipt andcommencement of contracts for seismic data acquisition, processing or interpretation and customers’ budgetary cycles, all of which are beyond our control. Inaddition, in any given period, we could have idle crews which result in a significant portion of our revenues, cash flows and earnings coming from arelatively small number of crews. Lower crew utilization rates can be caused by land access permit and weather delays, seasonal factors such as holidayschedules, shorter winter days or agricultural or hunting seasons, and crew repositioning and crew utilization and productivity. Additionally, due to location,service line or particular project, some of our individual crews may achieve results that are a significant percentage of our consolidated operating results.Should any of our crews experience changes in timing or delays due to one or more of these factors, our financial results could be subject to significantvariations from period to period. Combined with our fixed costs, these revenue fluctuations could also produce unexpected adverse results of operations inany fiscal period. 9 In addition to the above potential fluctuations in our revenue, we may also have significant third-party pass-through costs that are reflected in ourrevenues but correspond to a very small administrative margin charged to the customer. Therefore, our revenues for certain periods may include a largeamount of these third-party charges and can cause our gross profit margin to be lower. Revenues derived from our projects may not be sufficient to cover our costs of completing those projects or may not result in the profit we anticipated whenwe entered into the contract. Our revenue is determined, in part, by the prices we receive for our services, the productivity of our crews and the accuracy of our cost estimates. Theproductivity of our crews is partly a function of external factors, such as weather and third party delays, over which we have no control. In addition, costestimates for our projects may be inadequate due to unknown factors associated with the work to be performed and market conditions, resulting in cost over-runs. If our crews encounter operational difficulties or delays, or if we have not correctly priced our services, our results of operation may vary and, in somecases, may be adversely affected. Our projects are performed on both a turnkey basis where a defined amount and scope of work is provided by us for a fixed price and additionalwork, which is subject to customer approval, is billed separately, and on a term basis where work is provided by us for a fixed hourly, daily or monthly fee.Our current projects are operated under a close to even mix of turnkey agreement and term agreements but the relative percentages can vary widely from timeto time. The revenue, cost and gross profit realized on a turnkey contract can vary from our estimated amount because of changes in job conditions, variationsin labor and equipment productivity from the original estimates, and the performance of subcontractors. In addition, if conditions exist on a particular projectthat were not anticipated in the customer contract such as excessive weather delays, community issues, governmental issues or equipment failure, then therevenue timing and amount from a project can be affected substantially. Turnkey contracts may also cause us to bear substantially all of the risks of businessinterruption caused by weather delays and other hazards. Those variations, delays and risks inherent in billing customers at a fixed price may result in usexperiencing reduced profitability or losses on projects. The high fixed costs of our operations could result in operating losses. We are subject to high fixed costs, which primarily consist of depreciation and maintenance expenses associated with our equipment, certain crewcosts and interest expense under our 2012 Credit Agreement. During 2013, we increased our shallow-water operations, which inherently carry higher fixedcosts. Extended periods of significant downtime or low productivity caused by reduced demand, weather interruptions, equipment failures, permit delays orother causes could negatively affect our results and have a material adverse effect on our financial condition and results of operations because we will not beable to reduce our fixed costs as fast as revenues decline. Our results of operations could be adversely affected by asset impairments. We periodically review our portfolio of equipment for impairment. A prolonged downturn could affect the carrying value of our goodwill andrequire us to recognize a loss. We may be required to write down the value of our equipment if the present value of future cash flows anticipated to begenerated from the related equipment falls below net book value. A decline in oil and natural gas prices, if sustained, can result in future impairments.Because the impairment of long-lived assets or goodwill would be recorded as an operating expense, such a write-down would negatively affect our netincome and may result in a breach of certain of our financial covenants under our 2012 Credit Agreement. Our working capital needs are difficult to forecast and may vary significantly, which could require us to seek additional financing that we may not be ableto obtain on satisfactory terms, or at all. Our working capital needs are difficult to predict with certainty. Our available cash varies in material respects as a result of, among other things, thetiming of our projects, our customers’ budgetary cycles and our receipt of payment. Our working capital requirements continue to increase, primarily due tothe expansion of our infrastructure in response to our continued growth and expansion of operations and the need to keep pace with technological advances.In order to remain competitive, we must continue to invest additional capital to maintain, upgrade and expand our seismic data acquisition capabilities. Inaddition, some of our larger projects require significant upfront costs. We therefore may be subject to significant and rapid increases in our working capitalneeds that could require us to seek additional financing sources. Restrictions in our debt agreements may impair our ability to obtain other sources offinancing, and access to additional sources of financing may not be available on terms acceptable to us, or at all. 10 Our operations are subject to weather and seasonality, which may affect our ability to timely complete projects. Our seismic data acquisition services are performed outdoors and are therefore subject to weather and seasonality. In Canada and Alaska, the primaryseason for seismic data acquisition is during the winter, from December to April, as many areas are only accessible when the ground is frozen. The weatherconditions during this time of year can affect the timing and efficiency of operations. In addition, this prime season can be shortened by warmer weatherconditions. In South America and Southeast Asia, our operations are affected by the periods of heavy rain in the areas where seismic operations are conducted.Many of the heavy rain periods in South America, though, are during the high season for Canada and Alaska so there are opportunities to maximize theutilization of equipment and personnel by moving them between these regions to take advantage of the different high seasons. In all areas in which we operate, the weather is an uncontrollable factor that affects our operations at various times of the year. We try to minimizethese risks during the bidding process by utilizing the expertise of our personnel as to the weather in a particular area and through the negotiation ofdowntime clauses in our contracts with our customers. Due to the unpredictability of weather conditions, there may be times when adverse conditions maycause our operations to be delayed and result in additional costs and may negatively affect our results of operations. Our operations are subject to delays related to obtaining government permits and land access rights from third parties which could result in delaysaffecting our results of operations. Our seismic data acquisition operations could be adversely affected by our inability to obtain timely right of way usage from both public and privateland and/or mineral owners. We cannot begin surveys on property without obtaining any required permits from governmental entities as well as thepermission of the private landowners who own the land being surveyed. In recent years, it has become more difficult, costly and time-consuming to obtainaccess rights of way as drilling activities have expanded into more populated areas. Additionally, while landowners generally are cooperative in grantingaccess rights, some have become more resistant to seismic and drilling activities occurring on their property. In addition, governmental entities do not alwaysgrant permits within the time periods expected. Delays associated with obtaining such permits and rights of way may negatively affect our results ofoperations. Our backlog can vary significantly from time to time and our backlog estimates are based on certain assumptions and are subject to unexpectedadjustments and cancellations and thus may not be timely converted to revenues in any particular fiscal period, if at all, or be indicative of our actualoperating results for any future period. Our backlog estimates represent those seismic data acquisition projects for which a customer has executed a contract and has a scheduled start datefor the project. Our backlog can vary significantly from time to time, particularly if the backlog is made up of multi-year contracts with some of our moresignificant customers. Backlog estimates are based on a number of assumptions and estimates including assumptions related to foreign exchange rates andproportionate performance of contracts. The realization of our backlog estimates is further affected by our performance under term rate contracts, as the earlyor late completion of a project under term rate contracts will generally result in decreased or increased, as the case may be, revenues derived from thoseprojects. Contracts for services are also occasionally modified by mutual consent and often can be terminated for convenience by the customer. Because ofpotential changes in the scope or schedule of our customers’ projects, and the possibility of early termination of customer contracts, we cannot predict withcertainty when or if our backlog will be realized. Material delays, payment defaults or cancellations on the underlying contracts could reduce the amount ofbacklog currently reported and, consequently, could inhibit the conversion of that backlog into revenues. 11 We face intense competition in our business that could result in downward pricing pressure and the loss of market share. Competition among seismic contractors historically has been, and likely will continue to be, intense. Competitive factors have in recent yearsincluded price, crew experience, equipment availability, technological expertise and reputation for quality and dependability. We also face increasingcompetition from nationally owned companies in various international jurisdictions that operate under less significant financial constraints than those weexperience. Many of our competitors have greater financial and other resources, more customers, greater market recognition and more establishedrelationships and alliances in the industry than we do. They and other competitors may be better positioned to withstand and adjust more quickly to volatilemarket conditions, such as fluctuations in oil and natural gas prices and production levels, as well as changes in government regulations. Additionally, theseismic data acquisition business is extremely price competitive and has a history of protracted periods of months or years where seismic contractors underfinancial duress bid jobs at unattractive pricing levels and therefore adversely affect industry pricing. Competition from those and other competitors couldresult in downward pricing pressure, which could adversely affect our margins, and could result in the loss of market share. Capital requirements for the technology we use are significant. If we are unable to finance these requirements, we may not be able to maintain ourcompetitive advantage. Seismic data acquisition technologies historically have steadily improved and progressed, and we expect this trend to continue. Manufacturers ofseismic equipment may develop new systems that have competitive advantages relative to systems now in use that either render the equipment we currentlyuse obsolete or require us to make substantial capital expenditures to maintain our competitive position. In order to remain competitive, we must continue toinvest additional capital to maintain, upgrade and expand our seismic data acquisition capabilities. Our capital requirements, which are primarily the cost of equipment, are significant. We attempt to minimize our capital expenditures by restrictingour purchase of equipment to equipment that we believe will remain highly utilized, and we strategically rent equipment utilizing the most currenttechnology to cover peak periods in equipment demands. We may not be able to finance all of our capital requirements, however, when and if needed, toacquire new equipment. If we are unable to do so, it may have a material negative impact on our operations and financial condition. We are dependent upon a small number of significant customers. We derive a significant amount of our revenues from a small number of oil and gas exploration and development companies. Our revenues arederived from a concentrated customer base. During the year ended December 31, 2013, two customers aggregated 52% of our consolidated revenue for theperiod. During the year ended December 31, 2012, three customers aggregated 56% of our consolidated revenue for the period. Our contracts with thesecustomers, as with certain of our other contracts, may be terminated by the customers at any time for convenience. If any of our significant customers were toterminate their contracts with us or fail to contract for our services in the future because they are acquired, alter their exploration or development strategy,experience financial difficulties or for any other reason, our business, financial condition and results of operations could be materially and adversely affected.However, we had a significant customer in 2012 and in 2013. In 2012, our significant customer represented 33% of our consolidated revenue for the yearended December 31, 2012. In 2013, our significant customer represented 32% of our consolidated revenue for the year ended December 31, 2013. We operate under hazardous conditions that subject us and our employees to risk of damage to property or personal injury and limitations on ourinsurance coverage may expose us to potentially significant liability costs. Our activities are often conducted in dangerous environments and include hazardous conditions, including operation of heavy equipment, thedetonation of explosives, and operations in remote areas of developing countries. Operating in such environments, and under such conditions, carries with itinherent risks, such as loss of human life or equipment, as well as the risk of downtime or reduced productivity resulting from equipment failures caused by anadverse operating environment. Those risks could cause us to experience injuries to our personnel, equipment losses, and interruptions in our business. 12 Although we maintain what we believe is prudent insurance protection that is consistent with industry practice, our insurance contains certaincoverage exclusions and policy limits. There can be no assurance that our insurance will be sufficient or adequate to cover all losses or liabilities or thatinsurance will continue to be available to us on acceptable terms, or at all. Further, we may experience difficulties in collecting from insurers as such insurersmay deny all or a portion of our claims for insurance coverage. A successful claim for which we are not fully insured, or which is excluded from coverage orexceeds the policy limits of our applicable insurance, could have a material adverse effect on our financial condition. We may be held liable for the actions of our subcontractors. We often work as the general contractor on seismic data acquisition surveys and consequently engage a number of subcontractors to performservices and provide products. While we generally obtain contractual indemnification and insurance covering the acts of those subcontractors, and requirethe subcontractors to obtain insurance for our benefit, there can be no assurance we will not be held liable for the actions of those subcontractors. In addition,subcontractors may cause damage or injury to our personnel and property that is not fully covered by insurance or by claims against the subcontractors. Our agreements with our customers may not adequately protect us from unforeseen events or address all issues that could arise with our customers. Theoccurrence of unforeseen events or disputes with customers not adequately addressed in the contracts could result in increased liability, costs and expensesfor our projects. We enter into master service agreements with many of our customers that allocate certain operational risks. Despite the inclusion of risk allocationprovisions in our agreements, our operations may be affected by a number of events that are unforeseen or not within our control and our agreements may notadequately protect us from each possible event. If an event occurs which we have not contemplated or otherwise addressed in our agreement we, and not ourcustomer, will likely bear the increased cost or liability. To the extent our agreements do not adequately address those and other issues, or we are not able tosuccessfully resolve resulting disputes, we may incur increased liability, costs and expenses. This may have a material adverse effect on our results ofoperations. We, along with our customers, are subject to compliance with governmental laws and regulations that may expose us to significant costs and liabilitiesand may adversely affect the demand for our services. Our operations, and those of our customers, are subject to a variety of federal, provincial, state and local laws and regulations in the United Statesand foreign jurisdictions, including stringent laws and regulations relating to protection of the environment. Those laws and regulations may imposenumerous obligations that are applicable to our operations including: •the acquisition of permits before commencing regulated activities; and •the limitation or prohibition of seismic activities in environmentally sensitive or protected areas such as wetlands or wilderness areas. Numerous governmental authorities, such as the U.S. Environmental Protection Agency (the “EPA”) and analogous state agencies in the UnitedStates and governmental bodies with control over environmental matters in foreign jurisdictions, have the power to enforce compliance with those laws andregulations and any permits issued under them, oftentimes requiring difficult and costly actions. Failure to comply with those laws, regulations and permitsmay result in the assessment of administrative, civil and criminal penalties, the imposition of remedial obligations and the issuance of injunctions limiting orpreventing some or all of our operations. We expend financial and managerial resources to comply with all the laws and regulations applicable to our operations. The fact that such laws orregulations change frequently makes it impossible for us to predict the cost or impact of such laws and regulations on our future operations. The adoption oflaws and regulations that have the effect of reducing or curtailing exploration and production activities by energy companies could also adversely affect ourresults of operations by reducing the demand for our services. Our operations outside of the United States are subject to additional political, economic, and other uncertainties that could adversely affect our business,financial condition, results of operations, or cash flows, and our exposure to such risks will increase as we expand our international operations. Our operations outside of North America accounted for approximately 58% of our consolidated revenue in 2013 and 53% of our consolidatedrevenue in 2012. Our international operations are subject to a number of risks inherent in any business operating in foreign countries, and especially thosewith emerging markets. As we continue to increase our presence in those countries, our operations will encounter the following risks, among others: 13 •government instability, which can cause our potential customers to withdraw or delay investment in capital projects, thereby reducing oreliminating the viability of some markets for our services; •potential expropriation, seizure, nationalization or detention of assets; •risks relating to foreign currency, as described below; •import/export quotas; •civil uprisings, riots and war, which can make it unsafe to continue operations, adversely affect both budgets and schedules and expose usto losses; •availability of suitable personnel and equipment, which can be affected by government policy, or changes in policy, which limit theimportation of qualified crew members or specialized equipment in areas where local resources are insufficient; •laws, regulations, decrees and court decisions under legal systems that are not always fully developed and that may be retroactively appliedand cause us to incur unanticipated and/or unrecoverable costs, as well as delays which may result in real or opportunity costs; and •terrorist attacks, including kidnappings of our personnel. If any of those or other similar events should occur, it could have a material adverse effect on our financial condition and results of operations. We are subject to taxation in many foreign jurisdictions and the final determination of our tax liabilities involves the interpretation of the statutesand requirements of taxing authorities worldwide. Our tax returns are subject to routine examination by taxing authorities, and those examinations may resultin assessments of additional taxes, penalties and/or interest. Our overall success as a global business depends, in part, upon our ability to succeed in differing economic, social and political conditions. We maynot succeed in developing and implementing policies and strategies that are effective in each location where we do business, and we may experience projectdisruptions and losses, which could negatively affect our profitability. Our results of operations can be significantly affected by foreign currency fluctuations and regulations. A portion of our revenues is derived in the local currencies of the foreign jurisdictions in which we operate. Accordingly, we are subject to risksrelating to fluctuations in currency exchange rates. In the future, and especially as we further expand our sales in international markets, our customers mayincreasingly make payments in non-U.S. currencies. Fluctuations in foreign currency exchange rates could affect our sales, cost of sales and operatingmargins. In addition, currency devaluation can result in a loss to us if we hold deposits of that currency. Hedging foreign currencies can be difficult,especially if the currency is not actively traded. We cannot predict the effect of future exchange rate fluctuations on our operating results. In addition, we are subject to risks relating to governmental regulation of foreign currency, which may limit our ability to: •transfer funds from or convert currencies in certain countries; •repatriate foreign currency received in excess of local currency requirements; and •repatriate funds held by our foreign subsidiaries to the United States at favorable tax rates. As we continue to increase our operations in foreign countries, there is an increased risk that foreign currency controls may create difficulty inrepatriating profits from foreign countries in the form of taxes or other restrictions, which could restrict our cash flow. 14 Principally in the United States and to a lesser degree in other countries, current and future legislation or regulation relating to climate change orhydraulic fracturing could negatively affect the exploration and production of oil and gas and adversely affect demand for our services. In response to concerns suggesting that emissions of certain gases, commonly referred to as “greenhouse gases” (“GHG”) (including carbon dioxideand methane), may be contributing to global climate change, legislative and regulatory measures to address the concerns are in various phases of discussionor implementation at the national and state levels. Many states, either individually or through multi-state regional initiatives, have already taken legalmeasures intended to reduce GHG emissions, primarily through the planned development of GHG emission inventories and/or GHG cap and trade programs. Although various climate change legislative measures have been under consideration by the U.S. Congress, it is not possible at this time to predictwhether or when Congress may act on climate change legislation. The EPA has promulgated a series of rulemakings and taken other actions that the EPAstates will result in the regulation of GHG as “air pollutants” under the existing federal Clean Air Act. Furthermore, in 2010, EPA regulations becameeffective that require monitoring and reporting of GHG emissions on an annual basis, including extensive GHG monitoring and reporting requirements.While this rule does not control GHG emission levels from any facilities, it will cause covered facilities to incur monitoring and reporting costs. Moreover,lawsuits have been filed seeking to require individual companies to reduce GHG emissions from their operations. This increasing focus on global warming may result in new environmental laws or regulations that may negatively affect us, our suppliers and ourcustomers. This could cause us to incur additional direct costs in complying with any new environmental regulations, as well as increased indirect costsresulting from our customers, suppliers or both incurring additional compliance costs that get passed on to us. Moreover, passage of climate changelegislation or other legislative or regulatory initiatives that regulate or restrict emissions of GHG may curtail production and demand for fossil fuels such asoil and gas in areas where our customers operate and thus adversely affect future demand for our services. Reductions in our revenues or increases in ourexpenses as a result of climate control initiatives could have adverse effects on our business, financial position, results of operations and prospects. Hydraulic fracturing is an important and commonly used process in the completion of oil and gas wells. Hydraulic fracturing involves the injectionof water, sand and chemical additives under pressure into rock formations to stimulate gas production. Due to public concerns raised regarding potentialimpacts of hydraulic fracturing on groundwater quality, legislative and regulatory efforts at the federal level and in some states have been initiated to requireor make more stringent the permitting, reporting and compliance requirements for hydraulic fracturing operations. These legislative and regulatory initiativesimposing additional reporting obligations on, or otherwise limiting, the hydraulic fracturing process could make it more difficult or costly to completenatural gas wells. Shale gas cannot be economically produced without extensive fracturing. In the event such initiatives are successful, demand for ourseismic acquisition services may be adversely affected. As a company subject to compliance with the Foreign Corrupt Practices Act (the “FCPA”), our business may suffer because our efforts to comply with U.S.laws could restrict our ability to do business in foreign markets relative to our competitors who are not subject to U.S. law. Any determination that we orour foreign agents have violated the FCPA may adversely affect our business and operations. We operate in certain parts of the world that have experienced governmental corruption to some degree and, in certain circumstances, strictcompliance with anti-bribery laws may conflict with local customs and practices. We may be subject to competitive disadvantages to the extent that ourcompetitors are able to secure business, licenses or other preferential treatment by making payments to government officials and others in positions ofinfluence or using other methods that U.S. law and regulations prohibit us from using. As a U.S. corporation, we are subject to the regulations imposed by the FCPA, which generally prohibits U.S. companies and their intermediariesfrom making improper payments to foreign officials for the purpose of obtaining or keeping business. In particular, we may be held liable for actions taken byour strategic or local partners even though our partners are not subject to the FCPA. Any such violations could result in substantial civil and/or criminalpenalties and might adversely affect our results of operations and our ability to continue to work in those countries. 15 We may be unable to attract and retain executive officers and skilled and technically knowledgeable employees, which could adversely affect our business. Our continued success depends upon retaining and attracting executive officers and highly skilled employees. A number of our executive officersand employees possess many years of industry experience and are highly skilled, and members of our management team also have relationships with oil andgas companies and others in the industry that are integral to our ability to market and sell our services. Our inability to retain such individuals couldadversely affect our ability to compete in the seismic service industry. We may face significant competition for such skilled personnel, particularly duringperiods of increased demand for seismic services. Although we utilize employment agreements, stock-based compensation and other incentives to retaincertain of our key employees, there is no guarantee that we will be able to retain those personnel. If we do not manage our recent growth and future expansion effectively, our results of operations could be adversely affected. We have experienced significant growth to date. Our growth has placed, and is expected to continue to place, significant demands on our personnel,management, infrastructure and support mechanisms and other resources. We must continue to improve our operational, financial, management, legalcompliance and information systems to keep pace with the growth of our business. We may also expand through the strategic acquisition of companies andassets. We must plan and manage any acquisitions effectively to achieve revenue growth and maintain profitability in our evolving market. If we fail tomanage our growth effectively, our results of operations could be adversely affected. The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualifiedboard members. As a public company, we are subject to the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Sarbanes-Oxley Act, the Dodd-Frank Act and other applicable securities rules and regulations. Compliance with these rules and regulations will make some activitiesmore difficult, time-consuming or costly, increase demand on our systems and resources and cause us to incur significant legal, accounting and otherexpenses that we did not incur as a private company. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results.The Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC and the national securities exchanges, establish certain requirements for thecorporate governance practices of public companies. For example, as a result of becoming a public company, we have additional board committees and arerequired to maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improveour disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight arerequired. As a result, management’s attention may be diverted from other business concerns, which could harm our business and operating results. We have had material weaknesses in our internal control over financial reporting, as described below. Any inability on our part to assert that ourinternal control over financial reporting is effective could result in a loss of investor confidence in the accuracy and completeness of our financial reports,which would cause the price of our common stock to decline. Because we are a smaller reporting company, our independent auditor will not be required toissue an attestation report regarding our internal control over financial reporting in the annual reports that we file with the SEC on Form 10-K. We will remaina smaller reporting company as long as the market value of our securities held by non-affiliates is below $75 million, as of the end of our second fiscal quartereach year. In addition to increased legal and financial compliance costs and required management attention, we also expect these rules and regulations to makeit more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits andcoverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualifiedpersons to serve on our board of directors or as executive officers. Though we cannot accurately predict the amount of additional costs we may incur, or thetiming of such costs, we currently estimate that we will incur approximately $1 million of annual recurring general and administrative costs for as a result ofbeing a public company. 16 Our debt burden could adversely affect our liquidity and results of operations. As of December 31, 2013, we had approximately $93.6 million of total indebtedness net of unamortized discount (comprised primarily of our $80million 2012 Credit Agreement, which bears interest at a fixed rate of 13.5% per annum and the $17.5 million notes payable to Former SAE stockholders,which bears interest at a fixed rate of 10.0% per annum). We may not be able to generate sufficient cash to service our debt or sufficient earnings to coverfixed charges and fees in future years. If we increase our borrowings under the 2012 Credit Agreement or other new debt is added to our current debt levels,the related risks for us could intensify. Our debt burden could have important consequences. In particular, it could: •require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing theavailability of our cash flow to fund capital expenditures and other general corporate purposes; •limit, along with the financial and other restrictive covenants of our indebtedness, among other things, our ability to borrow additionalfunds; •limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate; •limit our ability to make capital expenditures; •increase our vulnerability to general adverse economic and industry conditions; and •place us at a competitive disadvantage compared to our competitors that have less debt. Our debt agreements contain restrictive covenants that may limit our ability to respond to changes in market conditions or pursue business opportunities. Our 2012 Credit Agreement contains restrictive covenants that limit our ability to, among other things: •incur or guarantee additional debt; •pay dividends; •repay subordinated debt prior to its maturity; •grant additional liens on our assets; •enter into transactions with our affiliates; •repurchase stock; •make certain investments or acquisitions of substantially all or a portion of another entity’s business assets; •undergo a change of control; and •merge with another entity or dispose of our assets. Complying with these covenants may limit our ability to respond to changes in market conditions or pursue business opportunities that would otherwise beavailable to us. 17 If we are unable to comply with the restrictions and covenants in our debt agreements, there could be a default under the terms of such agreements, whichcould result in an acceleration of repayment and the sale of our assets to satisfy our obligations with our lenders. Failure to maintain existing financing orto secure new financing could have a material adverse effect on our liquidity and financial position. If we are unable to comply with the restrictions and covenants in our 2012 Credit Agreement and other debt agreements, there could be a defaultunder the terms of those agreements. In the event of a default under those agreements, lenders could terminate their commitments to lend or accelerate theloans and declare all amounts borrowed due and payable. Borrowings under other debt instruments that contain cross-acceleration or cross-default provisions,such as our 2012 Credit Agreement, may also be accelerated and become due and payable. In addition, our obligations under our 2012 Credit Agreement aresecured by a lien on substantially all of our U.S. assets and certain of our foreign assets, including the equity interests in our material subsidiaries. In the eventof foreclosure, liquidation, bankruptcy or other insolvency proceeding relating to us or to our subsidiaries that have guaranteed our debt, holders of oursecured indebtedness and our other lenders will have prior claims on our assets. If any of those events occur, our assets might not be sufficient to repay in fullall of our outstanding indebtedness and we may be unable to find alternative financing. Even if we could obtain alternative financing, it might not be onterms that are favorable or acceptable to us. Additionally, we may not be able to amend our debt agreements or obtain needed waivers on satisfactory terms orwithout incurring substantial costs. Failure to maintain existing or secure new financing could have a material adverse effect on our liquidity and financialposition. We have had material weaknesses in our internal control over financial reporting. On June 24, 2013, we completed the Merger with Former SAE. Former SAE was not a public reporting company and had limited accountingpersonnel and systems to adequately execute accounting process and limited other supervisory resources with which to address internal control over financialreporting, especially in its early years. As such, during an audit in 2013 of Former SAE’s 2010 financials for purposes of preparing Former SAE’s financialstatements for the Merger and becoming a public company, we identified past accounting errors, which resulted in the restatement of Former SAE’spreviously issued financial statements for 2011 and 2010, as result of material internal control weaknesses. We and our independent registered publicaccounting firm identified a material weakness in internal control over financial reporting related to these items which required adjustment, specifically: (i)the accounting for revenue recognition, (ii) elimination of inter-company activity and accounting for transactions denominated in foreign currencies, and (iii)accounting for the presentation of income taxes. Similar material weaknesses were identified in 2011 and 2012 audits. During the preparation of our financial statements as of and for the three and six months ended June 30, 2013, we identified misstatements relatingto the overstatement of certain accruals for expenses as a result of errors in the accounting for liabilities relating to Former SAE’s Papua New Guineaoperations for the quarter ended March 31, 2013, which resulted in the restatement of our financial statements for that quarter. Because of the time involvedin restating our first quarter financial statements, we were not able to timely file our Quarterly Report Form 10-Q for the quarter ended June 30, 2013. Ourmanagement determined that a deficiency associated with the accounting for liabilities relating to our Papua New Guinea operations constituted a materialweakness. During the preparation of our financial statements as of and for the year ended December 31, 2013, we identified errors in accounting relating to thesecond and third quarters of 2013. The Former SAE restricted stock was vested on an accelerated basis prior to the Merger; however, we failed to record theassociated expense in the second quarter of 2013 when the vesting occurred. We also identified an accounting error relating to our improper capitalization ofcertain work-in-progress expenses in Colombia and Peru, which led to an overstatement of the current asset "Deferred costs on contracts" relating to certainexpenses that were incorrectly deferred but should have been expensed in Colombia in the second quarter of 2013 and in Peru in the third quarter of 2013. Asa result, we have restated our second quarter and third quarter financial statements. These circumstances indicate that we continue to have materialweaknesses in accounting for complex transactions, particularly those relating to the accounting for the Merger and for intercompany transactions, inpreparing and reviewing tax provisions relating to our multi-jurisdictional business, and in reviewing and characterizing our end of period revenue cut-off.Further, we have identified that certain employees have been granted inappropriate system administrator access to our information systems. During 2012, 2013 and 2014, Former SAE (until the Merger) and we (following the Merger) have taken and will continue to take substantial steps inimproving and fortifying our internal controls and filling out Former SAE and our accounting and financial staffing, and we have retained a large publicaccounting firm to assist us in the evaluation and implementation of our internal control policies and procedures, all as described below in Item 9A. Whilethese measures have been and continue to be taken to correct the material weaknesses identified by us or our independent public accounting firm; we cannotassure that there will not be other material weaknesses that we or our independent registered public accounting firm will identify. If additional materialweaknesses in our internal controls are discovered in the future, they may adversely affect our ability to record, process, summarize, and report financialinformation timely and accurately. 18 Risks Relating to Our Securities Future resales of our common stock issued to the Former SAE common stockholders may cause the market price of our securities to drop significantly,even if our business is doing well. In connection with the Merger, the Former SAE common stockholders, on a fully-diluted basis, received among other things, an aggregate of6,448,443 shares (after rounding up for fractional shares) of our common stock and the right to receive up to 992,108 additional shares (after rounding up forfractional shares) of our common stock after the closing based on our achieving of specified earnings targets for the 2013 and/or 2014 fiscal years. Pursuant tolock-up agreements entered into as required by the merger agreement governing the Merger, the Former SAE common stockholders may not sell any of theshares of our common stock that they received as a result of the Merger during the twelve month period after the closing date of the Merger, subject to certainexceptions. We entered into a registration rights agreement at the closing of the Merger with CLCH, LLC (“CLCH”), which became an “affiliate” of ours as aresult of the issuance of shares of our common stock in the Merger. Under the registration rights agreement, CLCH is entitled to demand that we register theshares issued to it in the Merger under the Securities Act of 1933, as amended (the “Securities Act”). In addition, CLCH has certain “piggy-back” registrationrights with respect to certain registration statements filed subsequent to consummation of the Merger. Furthermore, the Former SAE common stockholders,including CLCH and any other Former SAE common stockholder who may be deemed an “affiliate” of ours, may sell shares of our common stock pursuant toRule 144 under the Securities Act, if available, rather than under a registration statement. In these cases, the resales must meet the criteria and conform to therequirements of that rule, including, because we were a shell company, waiting until one year after our filing with the SEC of the Current Report on Form 8-Kcontaining Form 10 type information reflecting the Merger with SAE, which was filed on June 28, 2013. Notwithstanding such registration rights and thepotential availability of Rule 144, CLCH is subject to the restrictions of a lock-up agreement, as described above, and may not sell its shares of commonstock in a public market during the twelve month period after the closing date of the Merger. Upon expiration of the applicable lock-up periods, and upon effectiveness of the registration statement we file pursuant to the registration rightsagreement or upon satisfaction of the requirements of Rule 144 under the Securities Act, the Former SAE common stockholders may sell large amounts of ourcommon stock in the open market or in privately negotiated transactions, which could have the effect of increasing the volatility in our stock price or puttingsignificant downward pressure on the price of our stock. If our Initial Stockholders or the Former SAE warrant holders exercise their registration rights with respect to their securities, or if our former warrantholders resell the shares of our common stock they received upon the exchange of their warrants for common stock, it may have an adverse effect on themarket price of our shares of common stock. The holders (“Initial Stockholders”) of the shares of our common stock issued prior to our initial public offering (the “Initial Shares”), are entitled tomake a demand that we register the resale of their Initial Shares at any time commencing three months prior to June 24, 2014, the date on which their sharesmay be released from escrow. On January 7, 2014, we commenced an offer to exchange our outstanding warrants to purchase up to 15.0 million shares of our common stock (the“Warrant Exchange”). Each warrant holder had the opportunity to receive one share of common stock in exchange for every ten outstanding warrantstendered by the holder and exchanged pursuant to the Warrant Exchange. The Warrant Exchange offer period expired on February 7, 2014, and a total of14,418,193 warrants were tendered and accepted for exchange. On February 14, 2014, we issued 1,441,813 shares and paid $52 in cash in lieu of fractionalshares in exchange for the tendered warrants. The holders of shares of our common stock issued in the Warrant Exchange, who are not affiliates of ours (andwho have not been affiliates of ours within three months preceding a proposed sale) may resell those shares without restriction under the Federal securitieslaws. In addition, the holders of shares issued in the Warrant Exchange who are affiliates of ours (or who have been affiliates of ours within three monthspreceding a proposed sale), are entitled to make a demand that we register the resale of the shares they received at any time. Furthermore, the InitialStockholders have certain “piggy-back” registration rights with respect to certain registration statements filed subsequent to the Merger. Holders of warrantsissued by Former SAE also have “piggy-back” registration rights with respect to certain registration statements we file as to the shares of our common stockissuable in respect of such warrants. The presence of these additional shares of common stock trading in the public market may have an adverse effect on themarket price of our securities. 19 Three of our executive officers and directors own approximately one-third of our common stock and have voting control over a majority of our commonstock, which makes it possible for them to determine the outcome of all matters submitted to our stockholders for approval and exempts us from certainNasdaq corporate governance requirements. This control may be alleged to conflict with our company’s interests and the interests of our otherstockholders. Three of our executive officers and directors, Jeff Hastings, Brian Beatty and Brent Whiteley, own approximately one-third of the outstanding sharesof our common stock. On their own, with voting proxies that have been granted to them, Messrs. Hastings, Beatty and Whiteley currently have the power tovote a majority of the outstanding shares of our common stock. These stockholders have the power to determine the outcome of all matters submitted to ourstockholders for approval, including the election of our directors and other corporate actions. It is possible that the interests of Messrs. Hastings, Beatty andWhiteley may in some circumstances conflict with our interests and the interests of our other stockholders. In addition, such control could have the effect ofdiscouraging others from attempting to purchase or obtain control of our company, and/or reducing the market price offered for our common stock in such anevent. In addition, because Messrs. Hastings, Beatty and Whiteley control more than 50% of the voting power of our common stock, we are a “controlledcompany” for purposes of the Nasdaq listing requirements. As such, we are permitted to and have opted out of the Nasdaq listing requirements that wouldotherwise require our board to be comprised of a majority of independent directors; our board nominations to be selected, or recommended for the board’sselection, either by a nominating committee comprised entirely of independent directors or by a majority of independent directors; and us to maintain acompensation committee comprised entirely of independent directors. Accordingly, our other stockholders may not have the same protections afforded tostockholders of companies that are subject to all of the Nasdaq corporate governance requirements. We are not eligible to register securities on Form S-3 which may adversely affect our ability to raise capital. In connection with the preparation of our financial statements as of and for the three and six months ended June 30, 2013, we identifiedmisstatements relating to the overstatement of certain accruals for expenses as a result of errors in the accounting for liabilities relating to Former SAE’sPapua New Guinea operations for the quarter ended March 31, 2013, which resulted in the restatement of our financial statements for that quarter. Because ofthe time involved in restating our first quarter financial statements, we were not able to timely file our Quarterly Report Form 10-Q for the quarter ended June30, 2013. Accordingly, we are not eligible to register securities on Form S-3 and will be unable to use short-form registration until we have timely filed allrequired reports under the Exchange Act for the 12 months before filing a registration statement. While we will still be able to use a long-form registrationstatement, this could increase our transaction costs, the length of time that it might take to have a future registration statement declared effective, andadversely impact our ability to raise capital in a timely manner. ITEM 1B. Unresolved Staff Comments. Not applicable. ITEM 2. Properties. Properties We lease all of the facilities used in our operations. Our principal facilities are summarized in the table below. 20 Location Square Footage PurposeHouston, Texas, U.S.A. 4,788 Executive officesCalgary, Alberta, Canada 11,344 Executive officesCalgary, Alberta, Canada 12,335 WarehouseAnchorage, Alaska, U.S.A. 4,600 Field OfficeAnchorage, Alaska, U.S.A. 9,312 WarehouseLima, Peru 2,476 Field OfficeLima, Peru 5,156 WarehouseBogotá, Colombia 4,639 Field OfficeBogotá, Colombia 13,261 WarehouseSanta Cruz, Bolivia 2,153 Field OfficeSanta Cruz, Bolivia 12,810 WarehouseRio de Janeiro, Brazil 2,153 Field OfficeKuala Lumpur, Malaysia 2,600 Field OfficeKuala Lumpur, Malaysia 28,720 Warehouse In the first quarter of 2014, we added additional executive offices in Houston. We also maintain other regional offices and warehouses in Australia,Bolivia, Brazil, Papua New Guinea, Malaysia, and New Zealand. The leases expire at various times over the next six years and most contain renewal options for additional one year periods. The leases generallyrequire us to pay all operating costs, such as maintenance and insurance. The aggregate lease payments made by us for our facilities in 2013 and 2012 were$1.2 million and $1.8 million, respectively. We believe that our facilities are generally well maintained and adequate to meet our current and foreseeablerequirements for the next several years. ITEM 3. Legal Proceedings. In the ordinary course of business, we may be subject to legal proceedings involving contractual and employment relationships, liability claims anda variety of other matters. Although the results of these other legal proceeding cannot be predicted with certainty, we do not believe that the final outcome ofthese matters should have a material adverse effect on our business, results of operations, cash flows or financial condition. ITEM 4. Mine Safety Disclosures. Not applicable. PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Price of Common Stock and Warrants Our common stock is traded on the Nasdaq Global Market under the symbol “SAEX,” and our warrants are quoted on the Over-the-Counter BulletinBoard under the symbol “SAEXW.” The following table sets forth the high and low sales prices for the common stock and bid prices for the warrants for theperiods indicated: Common Stock Warrants High Low High Low Fiscal 2013: Fourth Quarter $9.95 $6.60 $0.93 $0.66 Third Quarter $10.39 $8.34 $1.00 $0.87 Second Quarter $10.55 $9.15 $1.25 $0.37 First Quarter $10.07 $9.91 $0.49 $0.35 Fiscal 2012: Fourth Quarter $10.01 $9.73 $0.70 $0.36 Third Quarter $11.55 $9.67 $0.75 $0.60 Second Quarter $9.75 $7.70 $0.85 $0.65 First Quarter $15.00 $9.00 $0.80 $0.70 21 Holders As of March 27, 2014, there were 53 holders of record of our common stock and 2 holders of record of our warrants. We believe there are more than500 beneficial owners of our common stock and approximately 20 beneficial owners of our warrants. Dividends We have not paid any cash dividends on our common stock to date. Immediately prior to the Merger, Former SAE declared and paid cash dividendsof $5.1 million in the aggregate in respect of its preferred stock and $10.0 million in the aggregate in respect of its common stock. It is the present intentionof our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board does not anticipate declaring anydividends in the foreseeable future. The payment of dividends will be within the discretion of our board of directors and will be contingent upon ourrevenues and earnings, if any, capital requirements and general financial condition, the restrictions on dividends contained in our 2012 Credit Agreement,and other matters. Securities Authorized for Issuance under Equity Compensation Plans Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plan (Excluding Securities Reflected in the first Column) Equity compensation plans approved by security holders — $— 1,166,441 Equity compensation plans not approved by security holders — — — Total — $— 1,166,441 For a description of the material features of our equity compensation plans, see Note 14 of “Notes to Consolidated Financial Statements.” Issuances of Unregistered Securities On December 6, 2013, we issued 6,518 shares of our common stock to each of Gary Dalton, Gregory R. Monahan, Eric S. Rosenfeld and David D.Sgro, as the non-employee directors serving on a committee of our board, for an aggregate of 26,072 shares. The issuances were made pursuant to awardsauthorized by our board of directors on June 24, 2013, subject to the effectiveness of our 2013 Non-Employee Director Plan, for a number of shares equal to$50,000 divided by the average of the last sale prices of our common stock for five consecutive trading days ending two days before issuance. Each issuancewas made effective as of November 1, 2013, the effective date of our 2013 Non-Employee Director Plan, and evidenced by a Notice of Stock Award andAgreement with each such director. The issuance of common stock to our non-employee directors was made in reliance on Section 4(a)(2) of the Securities Act as transactions by anissuer not involving any public offering. Each of the recipients is a member of our board of directors and received the subject securities in privatetransactions. 22 Initial Public Offering On March 14, 2011, we filed a registration statement on Form S-1 (File No. 333-172836) for our initial public offering, which was declared effectiveon June 20, 2011. On June 21, 2011, we filed a new registration statement on Form S-1 (File No. 333-175040) to increase the size of the offering by 20%pursuant to Rule 462(b) under the Securities Act, which became effective immediately upon filing. Under the registration statements, we registered 6,900,000units, with each unit consisting of one share of our common stock and one warrant, each to purchase one share of our common stock at an exercise price of$7.50 per share (as well as all of the shares and warrants comprising such units and all of the shares underlying such warrants). On June 24, 2011, we closedour initial public offering of 6,000,000 units. On June 27, 2011, we closed on the sale of an additional 900,000 units, which were subject to an over-allotmentoption granted to the underwriters. The units from the initial public offering (including the over-allotment option) were sold at an offering price of $10.00 perunit, generating total gross proceeds of $69,000,000. EarlyBirdCapital, Inc. acted as the representative of the underwriters for the initial public offering. We paid a total of $2,415,000 in underwriting discounts and commissions (not including a fee of $2,415,000 payable to EarlyBirdCapital, Inc. uponconsummation of an initial business combination for acting as our non-exclusive investment banker) and $465,000 for other costs and expenses related to theoffering and the over-allotment option. After deducting the underwriting discounts and commissions and the offering expenses, the total net proceeds to usfrom the offering (including the over-allotment option) were $66,120,000 of which $65,660,000 (plus the $3,550,000 from the a private sale of 6,500,000warrants to the holders of our common stock issued prior to our initial public offering and 600,000 warrants to EarlyBirdCapital, Inc., the representative ofthe underwriters for our initial public offering, and its designees, for an aggregate of $69,210,000) was deposited into the trust account. The remainingproceeds of $460,000 were available to be used as working capital to provide for business, legal and accounting due diligence on prospective businesscombinations and continuing general and administrative expenses. Additionally, prior to the Merger, we paid $10,000 per month in administrative fees toCrescendo Advisors II, LLC (which is owned by Eric S. Rosenfeld, a member of our board of directors). Prior to the termination of the 10b5-1 plan on March 14, 2012, we were required to release from the trust account such amounts necessary torepurchase up to 25% of the shares sold in our initial public offering (including the shares sold pursuant to the over-allotment option). On June 21, 2011, weentered into a 10b5-1 plan pursuant to which we maintained a limit order for the repurchase of up to 1,725,000 shares in the open market at $9.60 per shareduring the period specified above. When this plan was terminated, $7,540,000 had been released to us from the trust account in order to fund the repurchaseof 783,145 shares. Through June 24, 2013, we withdrew approximately $42,000 of interest income from the trust account for working capital purposes prior to theMerger with the Former SAE. The remaining proceeds held in the trust account were released to us upon completion of the Merger, on June 24, 2013, andhave been used as working capital for our operations. ITEM 6. Selected Consolidated Financial Data Not applicable. ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financialstatements and notes to those statements included in this report. This discussion contains forward-looking statements that involve risks and uncertainties.Please see the sections entitled “Cautionary Note regarding Forward-Looking Statements” and “Risk Factors” in this report. Introduction We are a geophysical services company offering a full range of seismic data acquisition services in North America, South America and SoutheastAsia. We were initially formed on February 2, 2011 as a blank check company in order to effect a merger, capital stock exchange, asset acquisition or othersimilar business combination with one or more business entities. On December 10, 2012, we entered into the Merger Agreement with Merger Sub, FormerSAE and CLCH, which contemplated Former SAE merging with and into Merger Sub with Merger Sub surviving as our wholly-owned subsidiary (the“Merger”). The Merger was consummated on June 24, 2013, at which time, our business became the business of Former SAE. 23 The Merger was accounted for as a reverse acquisition in accordance with U.S. GAAP. Under this method of accounting, we were treated as the“acquired” company for financial reporting purposes. This determination was primarily based on Former SAE comprising the ongoing operations of thecombined entity, Former SAE senior management comprising the senior management of the combined company, and the Former SAE common stockholdershaving a majority of the voting power of the combined entity. In accordance with guidance applicable to these circumstances, the Merger was considered tobe a capital transaction in substance. Accordingly, for accounting purposes, the Merger was treated as the equivalent of Former SAE issuing stock for our netassets, accompanied by a recapitalization. Our net assets were stated at fair value, with no goodwill or other intangible assets recorded. Operations prior to theMerger are those of Former SAE. The equity structure after the Merger reflects our equity structure. Overview Our services include the acquisition of 2D, 3D, time-lapse 4D and multi-component seismic data on land, in transition zones between land and waterand in shallow water, as well as seismic data field processing. Our customers include national oil companies, major international oil companies andindependent oil and gas exploration and production companies. Our services are primarily used by our customers to identify and analyze drilling prospectsand to maximize successful drilling, making demand for such services dependent upon the level of customer spending on exploration, production,development and field management activities, which is influenced by the fluctuation in oil and natural gas commodity prices. Demand for our services is alsoimpacted by long-term supply concerns based on national oil policies and other country-specific economic and geo-political conditions. We have expertisein logistics and focus upon providing a complete service package, particularly in our international operations, which allows efficient movement into remoteareas, giving us what we believe to be a strategic advantage over our competitors and providing us with opportunities for growth. Many of the areas of theworld where we work have limited seasons for seismic data acquisition, requiring high utilization of key personnel and redeployment of equipment from onepart of the world to another. All of our remote area camps, drills and support equipment are easily containerized and made for easy transport to locationsanywhere in the world. As a result, if conditions deteriorate in a current location or demand rises in another location, we are able to quickly redeploy ourcrews and equipment to other parts of the world. By contrast, we tend to subcontract out more of our services in North America than in other regions, and ourNorth American revenues tend to be more dependent upon data acquisition services rather than our full line of services. While our revenues from services are mainly affected by the level of customer demand for our services, operating revenue is also affected by thebargaining power of our customers relating to our services, as well as the productivity and utilization levels of our data acquisition crews. Our logisticalexpertise can be a mitigating factor in service price negotiation with our customers, allowing us to maintain larger margins in certain regions of the world,particularly in the most remote or most challenging climates of the world. Factors impacting the productivity and utilization levels of our crews includepermitting delays, downtime related to inclement weather, decrease in daylight working hours during winter months, time and expense of repositioningcrews, the number and size of each crew, and the number of recording channels available to each crew. We have the ability to optimize the utilization ofpersonnel and equipment, which is a key factor to stabilizing margins in the various regions in which we operate. Specifically, we are investing in equipmentthat is lighter weight and more easily shipped between the different regions. The ability to reduce both the costs of shipment and the amount of shipping timeincreases our operating margins and utilization of equipment. Similar logic applies to the utilization of personnel. We focus on employing field managerswho are mobile and have the expertise and knowledge of many different markets within our operations. This allows for better timing of operations and theability of management staff to run those operations while at the same time minimizing personnel costs. An added benefit of a highly mobile fieldmanagement team is better internal transfer of skill and operational knowledge and the ability to spread operational efficiencies rapidly between the variousregions. Generally the choice of whether to subcontract out services depends on the expertise available in a certain region and whether that expertise is moreefficiently obtained through subcontractors or by using our own labor force. For the most part, services are subcontracted within North America and ourpersonnel are used in other regions where we operate. When subcontractors are used, we manage them and require that they comply with our work policiesand Quality, Health, Safety and Environmental objectives. 24 Our customers continue to request increased recording channel capacity on a per crew or project basis in order to produce higher resolution images,to increase crew efficiencies and to allow us to undertake larger scale projects. In order to meet these demands, we continue to invest in additional land andmarine channels, and routinely deploy a variable number of channels with multiple crews in an effort to maximize asset utilization and meet customer needs.We believe that increased channel counts and more flexibility of deployment will result in increased crew efficiencies, which we believe should translate intohigher revenues and margins. Key Accomplishments Since inception, we have grown at a rapid pace, with operating revenue growing from $23.4 million in 2007, the first full year of operations, to$245.3 million in 2013. Although our growth has slowed in the last year, we continue to expand our geographical footprint, operational capabilities andlogistical expertise to provide seismic data acquisition in logistically challenging areas. With our geographic expansion from providing services exclusively in South America to now including North America, and Southeast Asia we areable to achieve better utilization of our personnel through redeployment of key personnel and seismic equipment from off-season areas to in-season areas,helping reduce some of the peaks and valleys in our financial performance. We anticipate even further growth and improvement in financial performance inthe future as a result of reducing the impact of our otherwise highly seasonal business through such redeployments. Capital Investments and Impact on Operations Our focus on providing leading edge technology will be at the forefront of our capital expenditure plans in the coming years, which investments willcontinue to strengthen our position and growth in the global oil and gas exploration services market. During the last three years, in line with our focus on wireless land data acquisition, we purchased a cableless seismic data acquisition system whichallows up to three crews to operate under the system at the same time. Following customer needs for higher density land programs using a single pointreceiver application and to answer the demand for conventional and unconventional oil and gas exploration, we purchased high sensitivity geophones andtwo types of vibrators, further strengthening our position as a full solution provider for land data acquisition methods and technologies. Additionalequipment investments were made for ongoing operations in Alaska in order to increase efficiency. We also invested in cable equipment in order to providecustomers in Latin America with cable systems as wireless technology is slower to take hold in that market. Capital expenditures for 2012 and 2013 totaled $41.7 million and $11.1 million, respectively. In accordance with the 2012 Credit Agreement,capital expenditures for 2012 and 2013 were limited to $42.5 million and $18.0 million, respectively. Our planned capital expenditures for 2014 areexpected to be at or under $15.0 million. Focusing on current worldwide oil and gas markets, we will continue to employ and expand our wireless equipment on a worldwide basis whilemaintaining the ability to provide services to the still existing cable markets. Our capital purchases have and will allow us to take advantage of all aspects ofthe geophysical exploration services market, ranging from land, marine and transition zone data acquisition; 2D, 3D, 4D and multi-component dataacquisition; use of different methods to acquire data such as using vibroseis (vibrating) and impulsive sources; as well as vertical seismic profiling andreservoir monitoring. Investments in expanding further into our South America and Southeast Asia markets will also focus upon surveying, drilling and basecamp operations. Fiscal 2013 Summary Key points comparing the year ending December 31, 2013, to December 31, 2012 include: •Revenues from services were $245.3 million in 2013, a decrease of 4.7% from $257.4 million in 2012. •Cash flows provided by operations were $3.0 million in 2013, an increase of $4.5 million, or 299%, from $1.5 million used in 2012. 25 •Gross profit was $42.9 million in 2013, a decrease of $1.9 million, or 4.2%, from $44.8 million in 2012. •Income from operations was $8.3 million in 2013, a decrease of $10.0 million, or 54.7%, from $18.2 million in 2012. •(Loss) income before income taxes was $(10.5) million in 2013, a decrease of $21.9 million, or 192.0%, from $11.4 million in 2012. •Modified EBITDA was $25.1 million in 2013, a decrease of 18.8% from $30.9 million in 2012. Revenues in 2013 decreased by a total of $12.1 million, mostly due to issues encountered during the third quarter related to project delays inColombia and Bolivia and failure of a customer in Alaska to resume a project that was previously paused. In addition, 2012 had third-party sub-contractrevenues of $90.0 million, which were outside of our normal seasonality of projects and on which we billed our customers and earned an administrative fee.Third-party sub-contract revenue for 2013 was only $17.2 million. 2013 Results of Operations The following table describes changes between the fiscal years ended December 31, 2013 and December 31, 2012 for revenues for the regions inwhich we provided services: Revenues (In thousands) Years Ended December 31, 2013 2012 North America $103,198 $122,060 South America 112,022 118,577 Southeast Asia 30,048 16,722 Total $245,268 $257,359 North America: The decrease in revenues was a reflection of a crew that was operating in North America in 2012 that was paused by the customer in late2012. We expected to go back to work on this project in the third quarter of 2013, but the customer continued to keep the crew on pause. South America: The decrease in revenues was due mainly to lower revenues in Bolivia and the delay of certain projects in Bolivia and Colombia. Bolivia isnot an area of high activity and tends to generate project specific activity versus continuous work, resulting in higher variability in revenue year-over-year.This had the result of reducing the total revenue for South America in 2013. Southeast Asia: The increase in Southeast Asia was due primarily to renewed operations in Papua New Guinea in the first quarter 2013, after a period of littleactivity in 2012. In addition, we completed one relatively complex shallow-water project in Malaysia in 2013 contrasted with no projects there in 2012. Comparison of Fiscal Years Ended December 31, 2013 and December 31, 2012 Revenue from Services. Our revenue from services decreased by $12.1 million, from $257.4 million in 2012 to $245.3 million, or 4.7%. As explainedabove, much of this revenue variation was due to the delay of certain projects and a crew not resuming work in North America. This was partially offset byincreases in Southeast Asia. Direct Operating Expenses. Our 2013 direct operating expenses decreased by 4.8% or $10.2 million. This decrease largely followed the decrease inrevenues. Gross Profit. Gross profit decreased by $1.9 million, and gross margin percentage increased from 17.4% in 2012 to 17.5% in 2013. The primarycause of the decrease in gross profit was the costs incurred on a shallow-water fixed-fee project in Malaysia in 2013 when one of our lead vessels experiencedmore than a week’s downtime for repair. 26 Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses increased to $32.1 million in 2013 comparedto $25.7 million in 2012. Such expenses increased as a result of an increase in share-based compensation of $1.1 million, $1.0 million of which was as a resultof accelerated vesting of Former SAE’s restricted shares prior to the Merger, the need to hire personnel able to support our worldwide operations, costs relatedto the amendments to our 2012 Credit Agreement, and the additional administrative costs and staffing increases related to becoming a public company.Selling, general and administrative cost as a percentage of revenues increased by 3.1% compared to 2012. This increase was due mainly to decreasedrevenues and increased expenses as explained above. Merger Costs. We incurred $6.2 million in costs related to the Merger in 2013. Of this amount, $1.2 million was charged to expense and theremaining $5.0 million was charged to stockholders’ equity. There was no comparable charge in 2012. Depreciation and Amortization. Depreciation increased by $4.0 million in 2013 compared to 2012 because of the capital assets acquired during2012. The increase in fixed assets is principally attributable to the opening of operations in North America, specifically in Canada and Alaska in 2011. Total Operating Costs. Total operating costs (direct operating expenses, selling, general and administrative expenses, Merger costs, depreciationand amortization, and loss on sale of assets) decreased by $2.1 million or 0.9% principally as a result of the decrease in direct operating expenses, partiallyoffset by additional SG&A and depreciation expenses. Total Other Income (Expense). Total other (expense) increased to $(18.8) million for 2013 versus $(6.8) million for 2012. This increase was duemainly to: ·$1.0 million in debt-related fees;·$0.6 million in unrealized loss on the change in the fair value of the notes payable to Former SAE stockholders;·interest expense, net, increased to $15.3 million for 2013 versus $3.8 million for 2012 due to a higher outstanding principal balance underthe 2012 Credit Agreement and interest associated with the notes payable to Former SAE stockholders issued in connection with theMerger; and·a foreign currency loss of $1.8 million, compared to a foreign currency gain of $0.3 million in 2012 due primarily to the U.S. dollarstrengthening against the other currencies. Income Taxes. Our income tax provision increased $9.1 million in 2013 compared to 2012 primarily as a result of pre-tax losses in the U.S., therecording of a valuation allowance of approximately $7.0 million attributed to cumulative deferred tax assets, and the effects of differences between U.S. andforeign tax rates. The pre-tax losses in the U.S. increased primarily due to the decreased operating income and the increased interest incurred in 2013 relatedto the 2012 Credit Agreement and the notes payable to Former SAE stockholders. We also operate in Canada, Bolivia, Brazil, Colombia, Malaysia, Peru, Papua New Guinea and New Zealand through wholly-owned subsidiaries orbranches of a U.S. entity (whereby we have elected to treat the earnings of the branches as U.S. source income that is taxable in the U.S.). These subsidiaries orbranches are subject to foreign taxation based on the financial results of the operations under the laws of each tax jurisdictions. Corporate income taxes are calculated based on U.S. GAAP and U.S. and various international tax codes and regulations. The appropriate foreigntaxes paid in the country of operations are credited against U.S. corporate taxes subject to the U.S. foreign tax credit limitations. Deferred tax assets andliabilities are recognized using the liability method based on the differences between the financial statement carrying amounts of existing assets andliabilities and their respective tax bases, operating losses and tax credit carry forwards, as stipulated under ASC 740. Where appropriate, valuation allowancesare provided to reserve the amount of net operating loss and tax credit carry forwards where it is not more likely than not that they will be realized due tovarious provisions of both U.S. and foreign tax laws. A comprehensive model is used to account for uncertain tax positions, which includes consideration of how we recognize, measure, present anddisclose uncertain tax positions taken or to be taken on a tax return. The income tax laws and regulations are voluminous and are often ambiguous. As such,we are required to make many subjective assumptions and judgments regarding our tax positions that can materially affect amounts recognized in ourconsolidated balance sheets and statements of operations. 27 Our U.S. statutory tax rate was 35% for years ended December 31, 2013 and 2012. For the year ended December 31, 2013, our effective tax rate was -99.8% due principally to permanent differences, the effects of differences between U.S. and foreign tax rates, and the recording of the valuation allowancesagainst the U.S. deferred tax assets. For the year ended December 31, 2012, our effective tax rate was 12.6% due to a decrease in valuation allowance ofdeferred tax assets relating to net operating loss carryforwards utilized in Peru in 2012 and the effects of differences between U.S. and foreign tax rates, net offederal benefit. Liquidity and Capital Resources Historically, cash generated from operations, along with cash reserves and borrowings from commercial, private, and related parties, have beensufficient to fund our working capital and to acquire or lease seismic data equipment. Our principal source of cash is from the seismic data acquisitionservices we provide to customers. Our cash is primarily used to provide additional seismic data acquisition services, including payment of expenses related tooperations and the acquisition of new seismic data equipment. Accordingly, our cash position and revenues depend on the level of demand for our services. Cash Flows. Cash provided by operations in 2013 was $3.0 million, compared to cash used of $(1.5) million in 2012, an increase of $4.5million compared to 2012. Net income in 2012 was $10.0 million, while in 2013, net loss was $(21.1) million. Changes in operating assets andliabilities were cash uses of $(0.7) million in 2013 and cash uses of $(23.8) million in 2012. Net cash used in investing activities was $(11.1) million in 2013 and $(49.9) million in 2012. The decrease was primarily the result of ourmanagement’s decision to focus on fully utilizing equipment purchased in prior years before making further investments, which resulted in substantiallylower levels of capital expenditures in 2013. The Merger generated net cash proceeds of $35.3 million. Net of the $15.1 million in dividends paid to Former SAE stockholders as part of theMerger and other Merger related costs, this resulted in net cash provided of $10.8 million for financing activities in 2013. Financing activities in the prioryear provided $62.0 million of cash, principally as the result of net refinancing and borrowings. Working Capital. Working capital as of December 31, 2013 was $27.1 million compared to $27.7 million as of December 31, 2012. Thedecrease in working capital was principally the result of increases in accounts payable and deferred revenue-current of $4.2 million and $1.8 million,respectively, and decreases in prepaid expenses, restricted cash and deferred cost on contracts of $3.9 million, $3.1 million, and $2.7 million,respectively, offset by an increase in accounts receivable of $13.3 million. While our 2012 Credit Agreement does not contain a restrictive covenant that specifically addresses ongoing working capital requirements, it doescontain certain restrictive covenants that have the effect of limiting our expenditures, including a covenant governing debt service coverage ratios. While ourmanagement believes that our current level of working capital will be sufficient for us to operate and to continue to implement our business plan, there can beno assurance that this will be the case given that our net working capital varies significantly from time to time. There also can be no assurance that our currentlevel of working capital will be adequate to pursue our strategy for growth. Capital Expenditures. Capital expenditures in 2013 were approximately $11.1 million compared to $41.7 million in 2012. The decrease in capitalexpenditures during 2013 was a strategic move by our management to assure a high level of utilization for the equipment purchased in prior years beforemaking further significant investments. Once the level of utilization is maximized, we will plan further capital expenditures to satisfy our growth strategy andtake advantage of upcoming opportunities. Financing. In connection with the Merger, we executed a Joinder to the 2012 Credit Agreement, pursuant to which we joined, in the same capacityas Former SAE, the 2012 Credit Agreement dated as of November 28, 2012, among Former SAE, as parent, its subsidiaries, SAExploration, Inc.,SAExploration Seismic Services (US), LLC and NES, LLC, as borrowers, the lenders party thereto, and CP Admin Co LLC, as Administrative Agent, asamended by an Amendment No. 1 to the 2012 Credit Agreement dated as of December 5, 2012, by an Amendment No. 2 and Consent to the 2012 CreditAgreement dated as of June 24, 2013, and by an Amendment No. 3 to the 2012 Credit Agreement dated October 31, 2013. 28 The 2012 Credit Agreement interest rate is 13.5%, of which 2.5% may be paid-in-kind (“PIK”), at our election, by adding interest back to theprincipal amount under the 2012 Credit Agreement. Our management has exercised the PIK option in 2013 and currently intends to continue to do so.Repayment of the 2012 Credit Agreement began on December 31, 2012, with a payment of $100,000, and additional principal payments of $200,000 are dueat the end of every calendar quarter through September 30, 2016, with the remaining balance due on November 28, 2016. The 2012 Credit Agreementprovides for certain prepayment penalties if we prepay any portion of the outstanding principal balance prior to its due date that decline over the term of theagreement. We may borrow up to an additional $20 million under the 2012 Credit Agreement on the same terms as our current loan amount, including theeffective interest rate, provided that, at the time of our request, no default exists and certain conditions are satisfied. Those conditions include the consent ofthe lenders that agree to provide such additional loan amounts, our compliance on a pro forma basis with certain financial ratio tests and the execution of anamendment to the 2012 Credit Agreement, in a form agreed to by us and the administrative agent under the 2012 Credit Agreement, providing for theincrease in the loan amount. The payment of intercompany notes and stockholder notes is subordinated to the payment of the obligations under the 2012 Credit Agreement. The 2012 Credit Agreement is secured by security interests in most of our assets, and the lenders may require additional security interests to begranted with respect to assets not initially pledged to them. The 2012 Credit Agreement contains numerous negative covenants, including covenants restricting liens, consolidations, mergers (except for theMerger), acquisitions, purchases and sales of assets other than in the ordinary course of business, dividends, indebtedness, advances, investments, loans,transactions with affiliates, capital expenditures, modifications or prepayments of existing stockholder notes, amendments of the certificates of incorporationand by-laws of our company and our subsidiaries, changes to our joint venture or any of the stockholder notes, prepayment or amendment of anyintercompany secured note, issuances of additional equity interests, changes in the nature of the companies’ existing businesses, the creation of additionalsubsidiaries and holding amounts in deposit accounts not subject to perfected security interests. The 2012 Credit Agreement also contains affirmative covenants, including those requiring the furnishing of periodic financial information,compliance with ERISA and environmental laws and other standard covenants. The 2012 Credit Agreement also contains certain financial covenants,including capital expenditure limits, as well as required ratios we must maintain with respect to debt service coverage, net leverage and a total leverage. The 2012 Credit Agreement contains events of default related to nonpayment of obligations thereunder, representations or warranties beingdetermined to be untrue in any material respect when made, noncompliance with covenants, default under other agreements, the bankruptcy or insolvency ofus or any of our subsidiaries, special ERISA defaults related to plan underfunding and other reportable events, any security document ceasing to be in effector failing to constitute a first priority lien or security interest in favor of the lenders, any guaranty of the obligations ceasing to be in force or being denied ordisaffirmed, judgments or decrees being entered against us or any of the borrowers, or the occurrence of a change of control or a material adverse event. At December 31, 2013, and December 31, 2012, we were in compliance with all covenants and had $81.1 million and $79.9 million, respectively,outstanding under the 2012 Credit Agreement. We note that we have an obligation under our 2012 Credit Agreement to deliver annual consolidatedfinancial statements with 90 days following the end of our fiscal year. We were not able to deliver such financial statements until the completion of our 2013financial statement audit and the filing of this Form 10-K. The failure to timely deliver such financial statements resulted in a technical event of default underour 2012 Credit Agreement. The remedies provided to the lenders in the 2012 Credit Agreement for an event of default are only available if the event ofdefault is continuing. At the Closing of the Merger, we issued a promissory note in the principal amount of $17.5 million to CLCH, as a representative of the Former SAEstockholders, as Merger consideration to the Former SAE stockholders. The note is unsecured, is subordinate to the borrowings outstanding under the 2012Credit Agreement, carries an annual interest rate of 10% and is due and payable in full on June 24, 2023. Interest payments are due semi-annually under thenote, subject to certain restrictions under the 2012 Credit Agreement. In connection with the execution of Amendment No. 3 to the 2012 Credit Agreement,CLCH, LLC, Seismic Management Holdings Inc. and Brent Whiteley, agreed to allow us to withhold the interest payments payable to them in respect of theirindividual interests as stockholders of Former SAE under the note until such payments are permitted to be made under the 2012 Credit Agreement, which isexpected to be in the fourth quarter of 2014. Additional financing is not anticipated, nor is it permitted under the 2012 Credit Agreement other than with respect to our ability to borrowadditional amounts under the 2012 Credit Agreement as described above. As a result, financing activities in 2014 are restricted to the planned principalpayments of $0.2 million per quarter and the payment of current debt, capital leases, and other items. 29 Use of EBITDA (Non-GAAP measure) as a Performance Measure We use a modified form of EBITDA to measure period over period performance. Modified EBITDA is defined as net income (loss) plus interestexpense, less interest income, plus unrealized loss on change in fair value of notes payable to related parties, plus income taxes, plus depreciation andamortization, plus non-recurring major expenses outside of operations. Our management uses modified EBITDA as a supplemental financial measure toassess: •the financial performance of our assets without regard to financing methods, capital structures, taxes, historical cost basis or non-recurring expenses; •our liquidity and operating performance over time in relation to other companies that own similar assets and calculate EBITDA in asimilar manner; and •the ability of our assets to generate cash sufficient to pay potential interest cost. We also understand that such data is used by investors to assess performance. However, the term EBITDA is not defined under GAAP and weacknowledge that EBITDA is not a measure of operating income, operating performance or liquidity presented in accordance with GAAP. When assessing ouroperating performance or liquidity, investors and others should not consider this data in isolation or as a substitute for net income (loss), cash flow fromoperating activities or other cash flow data calculated in accordance with GAAP. In addition, modified EBITDA may not be comparable to EBITDA orsimilarly titled measures utilized by other companies since such other companies may not calculate EBITDA in the same manner. Further, the resultspresented by EBITDA cannot be achieved without incurring the costs that the measure excludes: interest, taxes, depreciation, amortization, and non-recurringexpenses. The computation of our modified EBITDA (a non-GAAP measure) from net income (loss), the most directly comparable GAAP financial measure, isprovided in the table below (in thousands): Year Ended December 31, 2013 2012 Net (loss) income $(21,051) $9,985 Net income attributable to non-controlling interest 45 — Depreciation and amortization 18,956 12,470 Interest expense (income), net 12,396(1) 3,573(1)Unrealized loss on change in fair value of notes payable to related parties 631 — Provision for income taxes 10,495 1,444 Non-recurring major expense 3,620(2) 3,437(3)Modified EBITDA $25,092 $30,909 (1) Excludes $2,860 and $213 of amortization of loan issuance costs which are included in depreciation and amortization in 2013 and 2012, respectively. (2) Principally the cost associated with financing costs, share-based compensation expense related to the accelerated vesting of Former SAE’s restricted sharesin connection with the Merger, and costs associated with the Merger. (3) Principally the cost associated with financing costs and fees for early payment of debt. 30 A reconciliation of modified EBITDA to net cash (used in) provided by operating activities and the three components of cash flows are provided inthe table below (in thousands): Year Ended December 31, 2013 2012 Modified EBITDA $25,092 $30,909 Adjustments to modified EBITDA which were not adjustments to net cash (used in) provided by operatingactivities: Interest (expense) income, net (12,396) (3,573)Unrealized loss on change in fair value of notes payable to related parties (631) — Income tax (expense) (10,495) (1,444)Non-recurring major (expense)(1) (3,620) (2,208)Adjustments to net cash (used in) provided by operating activities which were not adjustments to modifiedEBITDA: Deferred income taxes 1,352 (1,566)Changes in operating assets and liabilities (695) (23,775)Provision for doubtful accounts 254 — Unrealized loss on change in fair value of notes payable to related parties 631 — Payment in kind interest 2,040 — Share-based compensation 1,298 21 Loss (gain) on sale of property and equipment 133 148 Net cash (used in) provided by operating activities $2,963 $(1,488)Net cash (used in) provided by investing activities $(11,110) $(49,860)Net cash provided by financing activities $10,766 $62,021 (1) Excludes $1,200 of loan issuance costs written off in 2012 that were also an adjustment for cash used in operating activities. Critical Accounting Policies The preparation of our financial statements in conformity with GAAP requires certain assumptions and estimates to be made that affect the reportedamounts of assets and liabilities at the financial statement date and the reported amounts of revenues and expenses during the reporting periods covered bythe financial statements. Because of the use of assumptions and estimates inherent in the reporting process, actual results could differ from those estimates. Allowance for Doubtful Accounts We maintain an allowance for doubtful accounts for estimated losses in our accounts receivable portfolio. We utilize the specific identificationmethod for establishing and maintaining the allowance for doubtful accounts. Account balances are charged off against the allowance after all means ofcollection have been exhausted and the potential for recovery is considered remote. As of December 31, 2013 and 2012, we had $254,000 and $0, inallowance for doubtful accounts, respectively. For the years ended December 31, 2013 and 2012, we recorded $254,000 and $0, in bad debt expense,respectively. While the collectability of outstanding customer invoices is continually assessed, the cyclical nature of our industry may affect our customers’operating performance and cash flows, impacting our ability to collect on the invoices. Some of our customers are located in certain international areas thatare inherently subject to economic, political and civil risks, which may also impact our ability to collect receivables. 31 Property and Equipment Our property and equipment is capitalized at historical cost and depreciated over the estimated useful life of the asset. The estimation of useful life isbased on circumstances that exist in the seismic industry and information available at the time of the asset purchase. Changes in technology have asignificant impact on these estimates. As circumstances change and new information becomes available, these estimates could change. Seismic equipment istypically depreciated over three to ten years. Depreciation is computed using the straight-line method. When assets are retired or otherwise disposed of, the cost and related accumulateddepreciation are removed from the balance sheet, and any resulting gain or loss is reflected in the results of operations for such period. Impairment of Long-Lived Assets We review long-lived assets for impairment when triggering events occur which suggest 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 andthe fair value of the assets is below its carrying value. If the carrying amounts of the assets exceed the estimated expected undiscounted future cash flows, wemeasure the amount of possible impairment by comparing the carrying amount of the asset to its fair value. Revenue Recognition Our services are provided under master service agreements with our customers that set forth certain obligations of us and our customers. Asupplemental agreement setting forth the terms of a specific project, which may be cancelled by either party on short notice, is entered into for every dataacquisition project. Customer contracts for services vary in terms and conditions. Contracts are either “turnkey” (fixed price) agreements that provide for afixed fee, per unit of measure to be paid to us, or “term” (variable price) agreements that provide for a fixed hourly, daily or monthly fee during the term of theproject. Under turnkey agreements, we recognize revenue based upon output measures as work is performed. This method requires that we recognize revenuebased upon quantifiable measures of progress, such as square or linear kilometers surveyed or each unit of data recorded. Expenses associated with each unitof measure are recognized as revenue is earned. If it is determined that a contract will have a loss, the entire amount of the loss associated with the contract isimmediately recognized. Revenue under a “term” contract is billed as the applicable rate is earned under the terms of the agreement. With respect to thosecontracts where the customer pays separately for the mobilization of equipment, we recognize such mobilization fees as revenue during the performance ofthe seismic data acquisition, using the same performance method as for the seismic work. To the extent costs have been incurred in relation to our servicecontracts where the revenue is not yet earned, those costs are capitalized and deferred within deferred costs on contracts until the revenue is earned, at whichtime it is expensed. We invoice customers for certain out-of-pocket expenses under the terms of the contracts. Amounts billed to customers are recorded in revenue at thegross amount including out-of-pocket expenses. We also utilize subcontractors to perform certain services to facilitate the completion of customer contracts.We bill our customers for the cost of these subcontractors plus an administrative fee. We record amounts billed to our customers related to subcontractors atthe gross amount and record the related cost of subcontractors as cost of sales. Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and are excluded from revenues in theconsolidated statements of operations and comprehensive income. In some instances, we bill customers in advance of the services performed. In those cases, we recognize the liability as deferred revenue and, asservices are performed, the deferred revenue amounts are recognized as revenue in accordance with our revenue recognition policy and the terms of thecontract. Currency Translation The majority of our operations are conducted outside the United States in countries with stable currencies. Many contracts and local expenses arepaid in local currencies and not in U.S. Dollars (“USD”). Our results of operations and cash flows could be impacted by changes in foreign currency exchangerates. We do not hold or issue foreign currency forward contracts, option contracts or other derivative financial instruments for speculative purposes or tomitigate the currency exchange rate risk. 32 Our reporting currency is in USD. For foreign subsidiaries and branches using the local currency as their functional currency, assets and liabilities aretranslated at exchange rates in effect at the balance sheet dates. Revenues and expenses of these foreign subsidiaries are translated at average exchange rates for the period. Equity is translated at historical rates,and the resulting cumulative foreign currency translation adjustments resulting from this process are included as a component of accumulated othercomprehensive income (loss). Therefore, the USD value of these items in the financial statements fluctuates from period to period, depending on the value ofthe USD against these functional currencies. Exchange gains and losses arising from transactions denominated in a currency other than the functionalcurrency of the entity involved are included in the consolidated statements of income as foreign exchange gain (losses). For the foreign subsidiaries andbranches using USD as their functional currency, any local currency operations are re-measured to USD. The re-measurement of these operations is includedin the consolidated statements of income as foreign exchange gain (loss). The unrealized foreign currency exchange income (loss) included in accumulated other comprehensive (loss) income was $(2.1) million and $0.4million at December 31, 2013 and 2012, respectively. Since inception, we have not suffered any significant losses due to the fluctuation of foreign currency. Income Taxes We account for our income taxes with the recognition of amounts of taxes payable or refundable for the current year and by using an asset andliability approach in recognizing the amount of deferred tax liabilities and assets for the future tax consequences of events that have been recognized in ourfinancial statements or tax returns. Deferred taxes are determined by identifying the types and amounts of existing temporary differences, measuring the totaldeferred tax asset or liability using the applicable tax rate in effect for the year in which those temporary differences are expected to be recovered or settled.The effect of a change in tax rates of deferred tax assets and liabilities is recognized in income in the year of an enacted rate change. The deferred tax asset isreduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not berealized. Our methodology for recording income taxes requires judgment regarding assumptions and the use of estimates, including the valuation of deferredtax assets, which can create a variance between actual results and estimates and could have a material impact on our provision or benefit for income taxes. Incertain foreign jurisdictions, the local income tax rate may exceed the U.S. or Canadian statutory rates, and in many of those cases we receive a foreign taxcredit for U.S. or Canadian purposes. In other foreign jurisdictions, the local income tax rate may be less than the U.S. or Canadian statutory rates. In otherforeign jurisdictions we may be subject to a tax on revenues when the amount of tax liability would exceed that computed on our net income before tax inthe jurisdiction, and in such cases, the tax is treated as an income tax for accounting purposes. Goodwill and Intangible Assets We assess the recoverability of long-lived assets and intangible assets whenever events or changes in circumstances indicate that the carrying valueof the asset may not be recoverable. We assess the impairment of goodwill annually or more frequently if events or changes in circumstances indicate thecarrying value of goodwill may not be recoverable. We have one reporting unit. Several factors were considered that could trigger impairment, the mostimportant of which was significant underperformance relative to expected historical performance or projected future operating results. Goodwill represents the excess of costs over the fair value of assets acquired. Goodwill and other intangible assets acquired in a purchase businesscombination and determined to have indefinite life are not amortized but instead are tested for impairment at least annually. We assess our goodwill as ofJuly 31st of each year. The following two step process is performed to test goodwill: •The fair value of a reporting unit is compared to its carrying value, including goodwill. If the fair value of a reporting unit exceeds itscarrying amount, goodwill of the unit is not considered impaired, and thus the second step of the impairment test is not necessary. If thecarrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure theamount of impairment loss, if any. 33 •The second step compares the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. If the carryingamount of a reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss will be recognized in an amountequal to that excess. The loss recognized cannot exceed the carrying amount of goodwill. The estimate of our reporting unit's fair value requires the use of assumptions and estimates regarding the reporting unit's future cash flows, growthrates and weighted average cost of capital. Any significant adverse changes in key assumptions about this unit and its prospects or an adverse change inmarket conditions may cause a change in the estimation of fair value and could result in an impairment charge. Significant judgment is required in the forecasting of future operating results, which are used in the preparation of projected cash flows. Due touncertain market conditions and potential changes in our strategy, it is possible that forecasts used to support our goodwill may change in the future, whichcould result in significant non-cash charges that would adversely affect our results of operations. Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements as of December 31, 2013 or 2012. Effect of Inflation We do not believe that inflation has had a material effect on our business, results of operations, or financial condition during the past two fiscalyears. Recently Issued Accounting Pronouncements Foreign Currency MattersIn March 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-05, which amends ASC Topic830, “Foreign Currency Matters.” This ASU provides guidance on foreign currency translation adjustments when a parent entity ceases to have a controllinginterest on a previously consolidated subsidiary or group of assets. The guidance is effective for fiscal years beginning on or after December 15, 2013. We arestill evaluating what impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or financialdisclosures. Comprehensive IncomeIn February 2013, the FASB issued ASU No. 2013-02, “Comprehensive Income, Reporting of Amounts Reclassified Out of Accumulated OtherComprehensive Income.” ASU 2013-02 requires an entity to provide information about the amounts reclassified out of accumulated other comprehensiveincome by component. For public entities, this ASU is effective prospectively for reporting periods beginning after December 15, 2012. The adoption of thisASU has not had nor is it expected to have a material impact on our results of operations, financial position or disclosures. Income TaxesIn July 2013, the FASB issued ASU No. 2013-11, “Income Taxes (Topic 740): Presentation Of An Unrecognized Tax Benefit When A Net Operating LossCarryforward, A Similar Tax Loss, Or A Tax Credit Carryforward Exists” requiring the presentation of an unrecognized tax benefit in the financial statementsas a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryfoward. This net presentation is requiredunless a net operating loss carryforward, a similar tax loss, or a tax credit carryfoward is not available at the reporting date or the tax law of the jurisdictiondoes not require, and the entity does not intend to use, the deferred tax asset to settle any additional income tax that would result from the disallowance ofthe unrecognized tax benefit. The standards update is effective for fiscal years beginning after December 15, 2013, with early adoption permitted. Theadoption of this standards update will not have a material impact on our consolidated financial statements. ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk. Not applicable. 34 ITEM 8. Financial Statements and Supplementary Data. The information required by this item appears on pages F-1 through F-40 hereof and are incorporated herein by reference. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. ITEM 9A. Controls and Procedures. Management’s Evaluation of Disclosure Controls and Procedures As of the end of the fourth quarter of the period covered by this annual report on Form 10-K, we carried out an evaluation, under the supervision andwith the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls andprocedures as such term is defined in Rule 13a-15(e). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that ourdisclosure controls and procedures were not effective for the quarter ended December 31, 2013. In making this evaluation, our Chief Executive Officer and Chief Financial Officer considered that our internal controls and procedures are stillbeing developed, reviewed and tested by management, but noted that we are not yet required to make an assessment regarding internal control over financialreporting. As discussed below, we are now actively preparing for full compliance with the requirements of Item 308 of Regulation S-K relating to internalcontrol over financial reporting for our annual report for the 2014 fiscal year. In addition, in the process of preparing our audited financial statements for theyear ended December 31, 2013, we determined that certain material weaknesses, as discussed below in “Internal Control Over Financial Reporting”, remainedor had been identified. Notwithstanding the conclusion that our disclosure controls and procedures were not effective as of the end of the fourth quarter, that certainmaterial weaknesses and significant deficiencies remain or have been identified, and that we are still developing, reviewing and testing our internal controlsand procedures, our management believes that this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport. Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As noted above, we are nowactively preparing for full compliance with the requirements of Item 308 of Regulation S-K relating to internal control over financial reporting for our 2014annual report on Form 10-K, but due to the significant impact of the recently completed acquisition of Former SAE, this 2013 annual report does not includea report of management’s assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm.Before June 24, 2013, we were a blank check company with no business operations, no operating assets other than cash held in a trust account pending theconsummation of a business combination, and no purpose other than to seek to effect a merger, acquisition or other similar business combination with anoperating business. Substantially all of the internal control over financial reporting that existed prior to June 24, 2013 relating to us no longer exists and has beenreplaced by the internal control over financial reporting of the Former SAE, our operating subsidiary, which we acquired in our Merger on that date. Prior toJune 24, 2013, Former SAE was a private company that was not required to prepare an annual report on Form 10-K and therefore its management had noreason to make an assessment of, or consider the preparation of a management report on, internal control over financial reporting as required by Form 10-K. Inaddition, there was a relatively short period of time between the date of our Merger and the end of the fiscal year on December 31, 2013, during which ourmanagement did not have time to put into place Former SAE’s internal controls and make an assessment of its internal control over financial reporting. 35 Despite the fact that our management was not required to make an assessment regarding internal control over financial reporting, over the course ofthe year, and in preparing our financial statements as of and for the year ended December 31, 2013, we did identify some material internal control weaknessesand significant deficiencies. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonablepossibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A significantdeficiency is defined as a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough tomerit attention by those responsible for oversight of our financial reporting. During an audit of Former SAE’s 2010 financials conducted in 2013 for purposes of preparing financial statements for the Merger and becoming apublic company, Former SAE identified past accounting errors as a result of material internal control weaknesses, which resulted in the restatement of itspreviously issued financial statements for 2011 and 2010. We and our independent registered public accounting firm identified a material weakness ininternal control over financial reporting related to these items which required adjustment, specifically: (i) the accounting for revenue recognition, (ii)elimination of inter-company activity and accounting for transactions denominated in foreign currencies, and (iii) accounting for the presentation of incometaxes. Similar material weaknesses were identified in our 2011 and 2012 audits. We were unable to timely file our Form 10-Q for the second quarter of the year due to the overstatement of certain accruals for expenses as a result oferrors in the accounting for liabilities of Former SAE’s operations in Papua New Guinea for the quarter ended March 31, 2013, and the complications ofaccounting for the Merger with Former SAE in the second quarter of the year. During the preparation of our financial statements as of and for the year ended December 31, 2013, we identified errors in accounting relating to thesecond and third quarters of 2013. The Former SAE restricted stock was vested on an accelerated basis prior to the Merger; however, we failed to record theassociated expense in the second quarter of 2013 when the vesting occurred. We also identified an accounting error relating to our improper capitalization ofcertain work-in-progress expenses in Colombia and Peru, which led to an overstatement of the current asset "Deferred costs on contracts" relating to certainexpenses that were incorrectly deferred but should have been expensed in Colombia in the second and third quarters of 2013 and in Peru in the third quarterof 2013. As a result, we have restated our second quarter and third quarter financial statements. These circumstances indicate that we continue to havematerial weaknesses in accounting for complex transactions, particularly those relating to the accounting for the Merger and for intercompany transactions,in preparing and reviewing tax provisions relating to our multi-jurisdictional business, and in reviewing and characterizing our end of period revenue cut-off.Further, we have identified individuals within our organization that were granted inappropriate system administrator access to our information system, whichled to a material weakness. During 2012 and 2013, Former SAE and we have taken, and in 2014 we will continue to take, substantial steps to improve and fortify our internalcontrols, to fill out our accounting and financial staffing to ensure that we are able to timely file our periodic reports, and to address the remaining materialweaknesses. Since the Merger, the chairman of the audit committee of our board of directors has been working closely with our executive management teamto review the material weaknesses and to accelerate the necessary remedial actions. To address the material weaknesses, we believe we needed and continue to need to add to our accounting, finance and tax staff to address thecomplex transactions, and complicated tax accounting issues. During the third quarter of 2013, we created a number of new accounting, finance and tax positions, including a manager of internal audit, a managerfor financial reporting and a tax director. In that quarter, we also shifted supervision of the accounting for the Papua New Guinea and Southeast Asiandivision to our office in Calgary, Alberta where we have what we believe is a more highly qualified accounting staff. During the third and fourth quarters, wetook steps to improve and fortify the accounting staff in our foreign offices to include controllers that are more experienced and more familiar with thereporting requirements of a public company. As related to our internal procedures regarding management’s supervision of financial reporting, our executivemanagement implemented in the third quarter weekly, monthly, and quarterly calls with all regional operations management and financial controllers toreview the operations and financial results for the applicable period, and it remains in regular contact on any questions or issues that may arise regardingfinancial reporting. In the first quarter of 2014, we also determined to add a chief accounting officer with greater international oil and gas service industryskills to address the complexity of accounting for our business. We anticipate hiring this person no later than second quarter of 2014. Further, we are in theprocess of examining the individuals within the organization within our organization with system administrator access to our information systems to ensureonly the appropriate individuals have such access. 36 To address the timeliness of our filings, in the fourth quarter of 2013, we implemented a formal internal reporting calendar to assist in ensuring thatwe make timely filings of our periodic reports with the SEC. As noted above, our internal controls and procedures are still being developed, reviewed and tested by management. In the second quarter of 2013,we retained an international public accounting firm to assist us in the evaluation and implementation of our internal control policies and procedures. We areworking with this accounting firm to accelerate our full compliance with the requirements of Section 404(a) of the Sarbanes-Oxley Act. Nonetheless, becausewe have not been able to complete the development, review and testing of our internal control policies and procedures, and because we continue to identifymaterial weaknesses and significant deficiencies, we are unable to conclude that our internal controls over financial reporting are effective. Notwithstanding the material weaknesses, and accounting errors discussed above, and the fact we are still developing, reviewing and testing ourinternal controls and procedures, our management, based upon the substantive work performed during the financial reporting process, believes that ourconsolidated financial statements included in this report are fairly stated in all material respects in accordance with U.S. GAAP. Finally, our management notes that even when we have developed, implemented and tested our internal control policies and procedures, and areable to conclude that our internal controls over financial reporting are effective, we cannot assure that there will not be other material weaknesses that we orour independent registered public accounting firm will identify. If additional material weaknesses in our internal controls are discovered in the future, theymay adversely affect our ability to record, process, summarize, and report financial information timely and accurately. Changes in Internal Control over Financial Reporting Other than the changes noted above, there were no changes in our internal control over financial reporting that occurred during the fourth quarter ofthe period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. Other Information. None. PART III ITEM 10. Directors, Executive Officers and Corporate Governance. The information required by this item is incorporated by reference to our definitive Proxy Statement to be delivered to stockholders in connectionwith our 2014 Annual Meeting of Stockholders. ITEM 11. Executive Compensation. The information required by this item is incorporated by reference to our definitive Proxy Statement to be delivered to stockholders in connectionwith our 2014 Annual Meeting of Stockholders. ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this item is incorporated by reference to our definitive Proxy Statement to be delivered to stockholders in connectionwith our 2014 Annual Meeting of Stockholders. 37 ITEM 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this item is incorporated by reference to our definitive Proxy Statement to be delivered to stockholders in connectionwith our 2014 Annual Meeting of Stockholders. ITEM 14. Principal Accountant Fees and Services. The information required by this item is incorporated by reference to our definitive Proxy Statement to be delivered to stockholders in connectionwith our 2014 Annual Meeting of Stockholders. 38 PART IV ITEM 15. Exhibits and Financial Statement Schedules. (a) The following documents are filed as part of this report: (1) Financial Statements. The following consolidated financial statements of the Company appear on pages F-1 through F-40 and are incorporated by reference into Part II,Item 8:Report of Independent Registered Public Accounting FirmConsolidated Balance Sheets as of December 31, 2013 and 2012Consolidated Statements of Operations for the Years Ended December 31, 2013 and 2012Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2013 and 2012Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2013 and 2012Consolidated Statements of Cash Flows for the Years Ended December 31, 2013 and 2012Notes to Consolidated Financial Statements (2) Financial Statement Schedules. All schedules are omitted because they are either not applicable or the required information is shown in the financial statements or notes thereto. (3) Exhibits. The information required by this item 15(a)(3) is set forth in the Index to Exhibits accompanying this Annual Report on Form 10-K and is herebyincorporated by reference. 39 SIGNATURES Pursuant to the requirements of the Section 13 or 15 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to besigned on its behalf by the undersigned, thereunto duly authorized. SAEXPLORATION HOLDINGS, INC. Date: April 3, 2014By:/s/ Brent Whiteley Brent Whiteley Chief Financial Officer, General Counsel andSecretary POWER OF ATTORNEY The undersigned directors and officers of SAExploration Holdings, Inc. hereby constitute and appoint Jeff Hastings and Brent Whiteley, and each ofthem, with full power to act without the other and with full power of substitution and resubstitution, our true and lawful attorneys-in-fact with full power toexecute in our name and behalf in the capacities indicated below, this annual report on Form 10-K and any and all amendments thereto and to file the same,with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and hereby ratify and confirm all thatsuch attorneys-in-fact, or any of them, or their substitutes shall lawfully do or cause to be done by virtue hereof. In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant andin the capacities and on the dates indicated. SIGNATURE TITLE DATE /s/ Jeff Hastings Executive Chairman and Director April 3, 2014Jeff Hastings /s/ Brian A. Beatty Chief Executive Officer, President and Director April 3, 2014Brian A. Beatty (Principal Executive Officer) /s/ Brent Whiteley Chief Financial Officer, General Counsel, April 3, 2014Brent Whiteley Secretary, and Director (Principal Financial Officer and Principal AccountingOfficer) /s/ Eric S. Rosenfeld Director April 3, 2014Eric S. Rosenfeld /s/ David D. Sgro Director April 3, 2014David D. Sgro /s/ Gary Dalton Director April 3, 2014Gary Dalton /s/ Arnold Wong Director April 3, 2014Arnold Wong /s/ Gregory R. Monahan Director April 3, 2014Gregory R. Monahan INDEX TO CONSOLIDATED FINANCIAL STATEMENTS SAEXPLORATION HOLDINGS, INC. Page Report of Independent Registered Public Accounting Firm FS-2 Consolidated Financial Statements: Consolidated Balance Sheets as of December 31, 2013 and 2012 FS-3 Consolidated Statements of Operations for the years ended December 31, 2013 and 2012 FS-4 Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2013 and 2012 FS-5 Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2013 and 2012 FS-6 Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012 FS-7 Notes to Consolidated Financial Statements FS-8 FS-1 Report of Independent Registered Public Accounting Firm Board of Directors and StockholdersSAExploration Holdings, Inc. We have audited the accompanying consolidated balance sheets of SAExploration Holdings, Inc. (a Delaware corporation, formerly Trio Merger Corp.) andsubsidiaries (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive (loss) income,changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2013. These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engagedto perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reportingas a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SAExplorationHoldings, Inc. and subsidiaries as of December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the two years in theperiod ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. Miami, FloridaApril 3, 2014 FS-2 SAExploration Holdings, Inc. and SubsidiariesCONSOLIDATED BALANCE SHEETS(In thousands, except share amounts) As of December 31, 2013 2012 ASSETS Current assets: Cash and cash equivalents $17,351 $15,721 Restricted cash 638 3,701 Accounts receivable, net of allowance for doubtful accounts of $254 and $0, respectively 40,928 27,585 Deferred costs on contracts 3,190 5,911 Prepaid expenses 4,619 8,553 Deferred tax asset 1,371 902 Total current assets 68,097 62,373 Property and equipment, net 64,572 70,456 Intangible assets, net 1,260 1,478 Goodwill 2,150 2,306 Deferred loan issuance costs, net 9,115 9,066 Deferred tax asset, net 743 1,622 Other assets 13 674 Total assets $145,950 $147,975 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $16,511 $12,309 Accrued liabilities 3,124 5,435 Income and other taxes payable 7,073 5,896 Accrued payroll liabilities 4,497 3,247 Notes payable – current portion 800 800 Notes payable to related parties 500 53 Deferred revenue – current portion 7,927 6,145 Deferred tax liabilities – current portion 69 — Capital leases – current portion 485 818 Total current liabilities 40,986 34,703 Long-term portion of notes payable, net 79,888 78,493 Long-term portion of notes payable to related parties, at fair value 12,406 — Long-term portion of capital leases 618 1,054 Deferred revenue – non-current portion — 3,175 Deferred tax liabilities 1,114 241 Warrant liabilities — 1,244 Total liabilities 135.012 118,910 Commitments and contingencies Convertible preferred stock of Former SAE, $0.0001 par value, 5,000,000 shares authorized; Series A preferredstock, $1.00 stated value, 5,000,000 shares outstanding at December 31, 2012, and retired as a result of theMerger — 5,000 Stockholders’ equity: Preferred stock, $0.0001 par value, 1,000,000 shares authorized and no shares outstanding — — Common Stock, $0.0001 par value, 55,000,000 shares authorized, and 13,428,736 and 6,321,848 issued andoutstanding at December 31, 2013 and December 31, 2012, respectively. 2 1 Additional paid-in capital 27,485 1,907 Retained earnings (accumulated deficit) (14,511) 21,801 Accumulated other comprehensive (loss) income (2,083) 356 Total stockholders’ equity attributable to the Corporation 10,893 24,065 Non-controlling interest 45 — Total stockholders’ equity 10,938 24,065 Total liabilities and stockholders’ equity $ 145,950 $147,975 The accompanying notes are an integral part of these consolidated financial statements. FS-3 SAExploration Holdings, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share amounts) Years Ended December 31, 2013 2012 Revenue from services $245,268 $257,359 Direct operating expenses, including depreciation expense of $14,843 and $11,411, respectively 202,336 212,540 Gross profit 42,932 44,819 Selling, general and administrative expenses 32,103 25,714 Merger costs 1,188 — Depreciation and amortization 1,253 720 Loss on disposal/sale of assets 133 148 Income from operations 8,255 18,237 Other income (expense): Change in fair value of notes payable to related parties (631) — Interest expense, net (15,256) (3,786)Loan prepayment fee — (2,209)Foreign exchange (loss) gain, net (1,755) 320 Other, net (1,124) (1,133)Total other expense, net (18,766) (6,808)(Loss) income before income taxes (10,511) 11,429 Provision for income taxes 10,495 1,444 Net (loss) income $(21,006) $9,985 Less: income attributable to non-controlling interest (45) — Net (loss) income attributable to the Corporation $(21,051) $9,985 Basic and diluted (loss) income per common share Weighted average shares outstanding - basic 10,010,492 5,746,161 (Loss) income per share - basic $(2.10) $1.74 Weighted average shares outstanding - diluted 10,010,492 5,755,392 (Loss) income per share - diluted $(2.10) $1.73 The accompanying notes are an integral part of these consolidated financial statements. FS-4 SAExploration Holdings, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME(In thousands) Years Ended December 31, 2013 2012 Net (loss) income $(21,006) $9,985 Other items of comprehensive (loss) income, foreign currency translation (2,439) 966 Total comprehensive (loss) income (23,445) 10,951 Less: Comprehensive income attributable to non-controlling interest (45) — Comprehensive (loss) income attributable to the Corporation $(23,490) $10,951 The accompanying notes are an integral part of these consolidated financial statements. FS-5 SAExploration Holdings, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (In thousands, except share amounts) Corporation’s Number ofCommon Shares Issuedand Outstanding Common Stock at Par Value Additional Paid-In Capital Retained Earnings (Accumulated deficit) Accumulated Other Comprehensive Income (Loss) Total Corporation stockholders’ equity Non-controlling interest Total stockholders’ equity Balance at December 31, 2011 5,685,288 $1 $1,886 $12,341 $(610) $13,618 $— $13,618 Dividends — — — (525) — (525) — (525)Foreign currency translation — — — — 966 966 — 966 Share-based Compensation 636,560 — 21 — — 21 — 21 Net income — — — 9,985 — 9,985 — 9,985 Balance at December 31, 2012 6,321,848 $1 $1,907 $21,801 $356 $24,065 $— $24,065 Dividends — — — (15,261) — (15,261) — (15,261)Forfeitures of restricted stock (8,549) — — — — — — — Warrants converted to stock asa result of the Merger 135,144 — 1,293 — — 1,293 — 1,293 Merger transaction 6,954,221 1 28,014 — — 28,015 — 28,015 Merger costs — — (5,027) — — (5,027) — (5,027)Issuance of restricted shares to non-employee directors 26,072 — 200 — — 200 — 200 Share-based compensation — — 1,098 — — 1,098 — 1,098 Foreign currency translation — — — — (2,439) (2,439) — (2,439)Net (loss) income — — — (21,051) — (21,051) 45 (21,006)Balance at December 31, 2013 13,428,736 $2 $27,485 $(14,511) $(2,083) $10,893 $45 $10,938 The accompanying notes are an integral part of these consolidated financial statements. FS-6 SAExploration Holdings, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Years Ended December 31, 2013 2012 Operating activities: Net (loss) income attributable to Corporation $(21,051) $9,985 Net income attributable to non-controlling interest 45 — Net (loss) income (21,006) 9,985 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 16,096 12,257 Write off of loan issuance cost — 1,229 Amortization of loan costs and debt discounts 2,860 213 Payment in kind interest 2,040 — Deferred income taxes 1,352 (1,566)Loss on disposal/sale of property and equipment 133 148 Change in fair value of notes payable to related parties 631 — Share-based compensation 1,298 21 Provision for doubtful accounts 254 — Changes in operating assets and liabilities Accounts receivable (13,597) 6,287 Restricted cash 3,063 (3,593)Prepaid expenses 3,947 (5,964)Deferred costs on contracts 2,721 (2,911)Accounts payable 3,915 (22,505)Accrued liabilities (2,488) 2,355 Deferred revenues (1,393) (865)Income and other taxes payable 1,177 1,932 Other, net 1,960 1,489 Net cash provided by (used in) operating activities 2,963 (1,488)Investing activities: Purchase of property and equipment (11,110) (49,949)Business acquisition, net of cash acquired — (760)Proceeds from sale of property and equipment — 849 Net cash (used in) investing activities (11,110) (49,860)Financing activities: Principal borrowings on notes payable — 118,247 Net proceeds from Merger 35,277 — Repayments of notes payable (800) (44,362)Repayments of advances from related parties (53) (1,917)Payment of debt issuance costs (2,750) (8,657)Merger costs (5,027) — Repayments of capital lease obligations (797) (1,122)Dividend payments on common shares (10,000) — Dividend payments on preferred shares (5,084) (168)Net cash provided by financing activities 10,766 62,021 Effects of exchange rate changes on cash and cash equivalents (989) 70 Net change in cash and cash equivalents 1,630 10,743 Cash and cash equivalents at the beginning of period 15,721 4,978 Cash and cash equivalents at the end of period $17,351 $15,721 Supplemental disclosures of cash flow information: Interest paid $9,256 $5,813 Income taxes paid $4,163 $2,503 Non-cash investing and financing activities: Dividends accrued but unpaid on preferred shares $1,072 $525 Capital assets acquired under capital leases $98 $410 Cash flow impact of Merger See Note 3 N/A The accompanying notes are an integral part of these consolidated financial statements. FS-7 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 1 — GENERAL INFORMATION SAExploration Holdings, Inc. and its subsidiaries (collectively, the “Corporation”) is a geophysical seismic services company offering a full range of seismicdata acquisition services including program design, planning and permitting, camp services, survey, drilling, recording, reclamation and in-field processing.The Corporation’s services include the acquisition of 2D, 3D, time-lapse 4D and multi-component seismic data on land, in transition zones between land andwater and in shallow water, as well as seismic data field processing. The Corporation’s customers include national oil companies, major international oilcompanies and independent oil and gas exploration and production companies in North America, South America and Southeast Asia. Seismic data is used bythe Corporation’s customers to identify and analyze drilling prospects and maximize successful drilling. NOTE 2 — COMPLETED MERGER The Corporation was initially formed on February 2, 2011 as a blank check company in order to effect a merger, capital stock exchange, asset acquisition orother similar business combination with one or more business entities. On December 10, 2012, the Corporation entered into an Agreement and Plan ofReorganization (the “Merger Agreement”), as amended by a First Amendment to Agreement and Plan of Reorganization dated as of May 23, 2013, with TrioMerger Sub, Inc. (“ Merger Sub”), the entity formerly known as SAExploration Holdings, Inc. (“Former SAE”), and CLCH, LLC (“CLCH”), whichcontemplated Former SAE merging with and into Merger Sub with Merger Sub surviving as a wholly-owned subsidiary of the Corporation (the “Merger”).The Merger was consummated on June 24, 2013, at which time, the Corporation’s business became the business of Former SAE. The Merger was accounted for as a reverse acquisition in accordance with U.S. GAAP. Under this method of accounting, Merger Sub was treated as the“acquired” company for financial reporting purposes. This determination was primarily based on Former SAE comprising the ongoing operations of thecombined entity, Former SAE senior management comprising the senior management of the combined company, and the Former SAE common stockholdershaving a majority of the voting power of the combined entity. In accordance with guidance applicable to these circumstances, the Merger was considered tobe a capital transaction in substance. Accordingly, for accounting purposes, the Merger was treated as the equivalent of Former SAE issuing stock for theCorporation’s net assets, accompanied by a recapitalization. The Corporation’s assets were stated at fair value, with no goodwill or other intangible assetsrecorded. Operations prior to the Merger are those of Former SAE. The equity structure after the Merger reflects the Corporation’s equity structure. On June 21, 2013, the Corporation held its special meeting in lieu of an annual meeting of stockholders (the “Special Meeting”), at which the stockholdersconsidered and adopted, among other matters, the Merger Agreement. On June 24, 2013, the parties consummated the Merger (the “Closing”). Pursuant to theMerger Agreement, the Former SAE common stockholders, on a fully-diluted basis, as consideration for all shares of Former SAE common stock they held orhad the right to acquire prior to the Merger, received: (i) an aggregate of 6,448,443 shares (which includes 30 shares issued in lieu of fractional shares) of theCorporation’s common stock at the Closing; (ii) an aggregate of $7.5 million in cash at the Closing; (iii) an aggregate of $17.5 million represented by apromissory note issued by the Corporation at the Closing, discussed in Note 10; and (iv) the right to receive up to 992,108 additional shares (which includes44 shares that may be issued in lieu of fractional shares) of the Corporation’s common stock after the Closing based on the achievement of specified earningstargets by the Corporation for the 2013 and/or the 2014 fiscal years. Additionally, the Corporation paid to CLCH, the holder of all of the outstanding sharesof Former SAE preferred stock and a company controlled by Jeff Hastings, the Corporation’s Executive Chairman, an aggregate of $5.0 million in cash for allof such shares. Of the shares of the Corporation’s common stock issued to the Former SAE stockholders at Closing, an aggregate of 545,635 shares weredeposited in escrow to secure the indemnification obligations owed to the Corporation under the Merger Agreement. On the first anniversary of the closing ofthe Merger, 272,818 of the escrow shares, less amounts previously applied in satisfaction of or reserved with respect to indemnification claims (other than taxor environmental indemnification claims, except to the extent such claims exceed 272,817 shares) that are made prior to that date, will be released to theFormer SAE stockholders. The remaining 272,817 escrow shares will be released 30 days after the Corporation files its annual report on Form 10-K for its2015 fiscal year, less any shares reserved to satisfy tax or environmental indemnification claims made prior to such date. FS-8 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 2 — COMPLETED MERGER – (continued) The portion of the merger consideration payable at Closing that is allocable to holders of certain derivative securities of Former SAE that were not convertedor exchanged prior to the Merger is being held in a separate escrow pending the conversion or exercise of those derivative securities (the “MergerConsideration Escrow”). Those derivative securities include Former SAE’s warrants outstanding for 2% of its stock immediately prior to the Merger, whichwere convertible into 135,144 shares of Former SAE common stock immediately prior to the Merger, and the common shares issued by a wholly-ownedCanadian subsidiary of the Corporation, which were exchangeable for 48,793 shares of Former SAE common stock immediately prior to the Merger. Theescrow agreement for the Merger Consideration Escrow provides that CLCH as nominee of the Corporation will have voting control over all shares of theCorporation’s common stock held in that escrow.The following table summarizes the effects of the Merger on the Corporation’s assets, liabilities, and capital structure: Cash and cash held in trust, after conversions $47,777 Payment to Former SAE common stockholders (7,500)Net released from escrow to the Corporation after conversions 40,277 Other assets and liabilities remaining in the Corporation: Other assets 13 Note payable to Former SAE common stockholders (11,775)Related party notes (500)Contingent consideration — 28,015 Merger costs (5,027)Pre-acquisition value of Former SAE warrants deemed equity under their terms 1,293 Net increase in the Corporation's equity resulting from the Merger $24,281 Of the $40,277 of cash transferred from the Corporation’s trust account at Closing, $5,000 was transferred to a transfer agent to purchase Former SAE’spreferred stock, and the consolidated statement of cash flows for the year ended December 31, 2013 reflects $35,277 of merger proceeds received directly byFormer SAE in cash provided by financing activities. The Corporation incurred $6,215 of merger related costs, $5,027 of which were treated as equityissuance costs and reported as a reduction of equity, and the remaining $1,188 was reported as Merger costs on the consolidated statement of operations asthese costs did not qualify for equity presentation because they were not directly related to the issuance of equity. FS-9 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 2 — COMPLETED MERGER – (continued) In connection with the Merger, holders of 987,634 shares of the Corporation’s outstanding common stock issued in its initial public offering (“publicshares”) exercised their rights to convert those shares to cash at a conversion price of approximately $10.08 per share, or an aggregate of approximately $9.96million. After giving effect to the issuance of the shares of the Corporation’s common stock to Former SAE stockholders at the Closing (excluding theadditional shares that may be issued to the Former SAE stockholders based on the achievement of the earnings targets), the issuance of 100,000 shares of theCorporation’s Common Stock in exchange for the options to purchase up to a total of 600,000 shares of common stock and 600,000 warrants held byEarlyBirdCapital, Inc. and its designees for 100,000 shares of Corporation common stock and the conversion of 987,634 of the Corporation’s public shares,there were 13,402,664 shares of the Corporation’s common stock outstanding as of June 24, 2013. The conversion price for holders of public shares electingconversion was paid out of the Corporation’s trust account, which had a balance immediately prior to the Closing of $61.7 million. The remaining trustaccount funds were used to pay the Corporation’s transaction expenses of approximately $4.0 million and the cash portion of the Merger considerationpayable to the Former SAE preferred and common stockholders, totaling $12.5 million, and the balance of approximately $35.3 million was released to theCorporation. Additionally, immediately prior to the closing of the Merger, Former SAE paid cash dividends to its stockholders of $5 million on shares of its preferred stockand $10 million on shares of its common stock outstanding immediately prior to the Merger, for an aggregate dividend amount of $15 million. At the Special Meeting, the Corporation’s stockholders voted to approve an amendment to the Corporation’s amended and restated certificate ofincorporation to change the Corporation’s name to SAExploration Holdings, Inc. Accordingly, effective upon the Closing, the Corporation changed its nameto SAExploration Holdings, Inc. and Merger Sub, the surviving entity in the Merger, changed its name to SAExploration Sub, Inc. Thus, the Corporation isnow a holding company called SAExploration Holdings, Inc., operating through its wholly-owned subsidiary, Merger Sub, and its subsidiaries. At the Special Meeting, the Corporation’s stockholders also approved other amendments to the Corporation’s amended and restated certificate ofincorporation to adjust the classification of directors such that the three classes’ respective terms expire upon the annual meetings of stockholders in 2014,2015 and 2016, with each class serving three-year terms thereafter, and to delete certain provisions that are no longer applicable since the Merger wasconsummated. At the Closing, the Corporation also entered into an amendment to the warrant agreement (“Warrant Amendment”) with Continental Stock Transfer & TrustCompany for all outstanding warrants as of the Merger date, as warrant agent, and for warrants subject to conversion by the Corporation’s convertible notes,which amended the Corporation’s warrants to (i) increase the exercise price of the warrants from $7.50 to $12.00 per share of the Corporation’s common stockand (ii) increase the redemption price of the warrants from $12.50 to $15.00 per share of the Corporation’s common stock. On December 10, 2012, theCorporation obtained written consents from the holders of a majority of the then outstanding warrants approving the Warrant Amendment. The WarrantAmendment became effective upon the closing of the Merger. Since the amendments were a pre-Merger modification by the Corporation, the effects of thechange in fair value were reflected in the equity of the Corporation and were not reflected in the pre-Merger net assets recorded by the Corporation. At the Closing of the Merger, the pre-Merger stockholders of the Corporation owned approximately 51.5% of the Corporation, and the pre-Mergerstockholders of Former SAE owned approximately 48.5% of the Corporation. In connection with the Merger, certain of the initial stockholders of theCorporation granted voting proxies to CLCH, which was the majority stockholder of Former SAE, such that CLCH, along with certain other stockholders ofFormer SAE, control at least 50.5% of the voting power of the Corporation following the Merger. The Merger completes the Corporation’s objective toacquire, through a merger, share exchange, asset acquisition, or other similar business combination, one or more businesses or entities.FS-10 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 3 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of PresentationThe Merger has been accounted for as a reverse acquisition. The accompanying consolidated financial statements have been retrospectively restated topresent the financial position and results of operations of Former SAE as if the Merger had been effective as of the beginning of the earliest period presented. Principles of ConsolidationThe accompanying consolidated financial statements include the accounts of SAExploration Holdings, Inc. and its wholly-owned subsidiaries as well as avariable interest entity in which the Corporation is the primary beneficiary. During 2013 the Corporation accomplished the Merger, adding Former SAE’ssubsidiaries. During 2013, The Corporation also formed a new subsidiary in Malaysia as well as a variable interest entity in which the Corporation is theprimary beneficiary. All significant intercompany balances and transactions have been eliminated upon consolidation. The consolidated financial statementsof the Corporation have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States ofAmerica (“U.S. GAAP”).Use of EstimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amounts ofrevenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions include accounting for contracts in process, determining useful livesfor depreciation and amortization purposes, allowance for doubtful accounts, the valuation of fixed assets, fair value of certain financial instrumentsrecognized at fair value on a recurring basis, deferred tax assets, income tax uncertainties, share-based compensation, warrants and other contingencies, Whilemanagement believes current estimates are reasonable and appropriate actual results could differ materially from current estimates. Cash and Cash EquivalentsThe Corporation considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Corporation hascash in banks which, at times, may exceed insured limits, established in the United States and foreign countries. The Corporation has not experienced anylosses in such accounts and management believes it is not exposed to any significant credit risk on cash and cash equivalents. The Corporation conductsoperations outside the United States, which exposes the Corporation to market risks from changes in exchange rates. As of December 31, 2013 and December31, 2012, the balances of cash in subsidiaries outside of the United States totaled $13,962 and $7,473, respectively. Restricted CashRestricted cash consists primarily of cash collateral for performance guarantees, letters of credit and custom bonds. As of December 31, 2013 and December31, 2012 restricted cash was $638 and $3,701, respectively. Accounts Receivable and Allowance for Doubtful AccountsAccounts receivable are uncollateralized obligations recorded at the invoiced amount and do not bear interest. Amounts collected on accounts receivable areincluded in net cash provided by operating activities in the consolidated statements of cash flows. The cyclical nature of the Corporation’s industry mayaffect the Corporation’s customers’ operating performance and cash flows, which could impact the Corporation’s ability to collect on these obligations. Additionally, some of the Corporation’s customers are located in certain international areas that are inherently subject to economic, political and civil risks,which may impact the Corporation’s ability to collect receivables. FS-11 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 3 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES – (continued) The Corporation maintains an allowance for doubtful accounts for estimated losses in its accounts receivable portfolio. It utilizes the specific identificationmethod for establishing and maintaining the allowance for doubtful accounts. Account balances are charged off against the allowance after all means ofcollection have been exhausted and the potential for recovery is considered remote. As of December 31, 2013 and 2012, the Corporation had $254 and $0, inthe allowance for doubtful accounts, respectively. For the years ended December 31, 2013 and 2012, the Corporation recorded $254 and $0, in bad debtexpense, respectively.The following table summarizes the change in our allowance for doubtful accounts for the years ended December 31, 2013 and 2012: 2013 2012 (in thousands ) Beginning balance $— $— Charges to expense 254 — Ending Balance $254 — Revenue RecognitionThe Corporation’s services are provided under master service agreements with its customers that set forth certain obligations of the Corporation and itscustomers. A supplemental agreement setting forth the terms of a specific project, which may be cancelled by either party on short notice, is entered intofor every data acquisition project. Customer contracts for services vary in terms and conditions. Contracts are either “turnkey” (fixed price) agreementsthat provide for a fixed fee per unit of measure to be paid to the Corporation, or “term” (variable price) agreements that provide for a fixed hourly, dailyor monthly fee during the term of the project. Under turnkey agreements, the Corporation recognizes revenue based upon output measures as work isperformed. This method requires that the Corporation recognize revenue based upon quantifiable measures of progress, such as square or linearkilometers surveyed or each unit of data recorded. Expenses associated with each unit of measure are immediately recognized. If it is determined that acontract will have a loss, the entire amount of the loss associated with the contract is immediately recognized. Revenue under a “term” contract is billedas the applicable rate is earned under the terms of the agreement. With respect to those contracts where the customer pays separately for the mobilizationof equipment, the Corporation recognizes such mobilization fees as revenue during the performance of the seismic data acquisition, using the sameoutput measures as for the seismic work. To the extent costs have been incurred in relation to the Corporation’s service contracts where the revenue isnot yet earned, those costs are capitalized and deferred within deferred costs on contracts until the revenue is earned at which point the costs arerecognized to direct operating expenses over the life of the contract or the Corporation determines that they are not recoverable, at which time they areexpensed. The Corporation invoices customers for certain out-of-pocket expenses under the terms of the contracts. Amounts billed to customers are recorded in revenueat the gross amount including out-of-pocket expenses. The Corporation also utilizes subcontractors to perform certain services to facilitate the completion ofcustomer contracts. The Corporation bills its customers for the cost of these subcontractors plus an administrative fee. The Corporation records amountsbilled to its customers related to subcontractors at the gross amount and records the related cost of subcontractors as direct operating expenses. Sales taxes collected from customers and remitted to government authorities are accounted for on a net basis and are excluded from revenues in theconsolidated statements of operations. Deferred RevenueDeferred revenue primarily represents amounts billed or payments received for services in advance of the services to be rendered over a future period oradvanced payments from customers related to equipment leasing. Deferred revenue as of December 31, 2013 of $7,927 and 2012 of $9,320 consists primarilyof $3,175 and $7,409, respectively, of advanced equipment leasing payments and $4,172 and $1,911, respectively, of payments related to mobilization andseismic services. FS-12 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 3 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES – (continued) Multiple-Element ArrangementsThe Corporation evaluates each contract to determine if the contract is a multiple-element arrangement requiring different accounting treatments for varyingcomponents of the contract. If a contract is deemed to have separate units of accounting, the Corporation allocates arrangement consideration based on theirrelative selling price and the applicable revenue recognition criteria are considered separately for each of the separate units of accounting. The Corporationaccounts for each contract element when the applicable criteria for revenue recognition have been met. During 2013 and 2012, the Corporation deliveredboth professional services and equipment under a lease arrangement. The equipment leased under the contracts is highly customized and specialized toperform specific surveying operations. The Corporation uses its best estimate of selling price when allocating multiple-element arrangement consideration. In estimating its selling price for theleased equipment, the Corporation considers the cost to acquire the equipment, the profit margin for similar arrangements, customer demand, effect ofcompetitors on the Corporation’s equipment, and other market constraints. Lease IncomeAs a result of the terms of its contracts, the Corporation may bill for the use of its equipment as part of the billing for its services. One of the Corporation’scontracts with a customer had such unique equipment needs that the equipment was separately listed and a composite rate established for all the equipmentin the service contract. This contract reserves the use of this equipment solely for the customer for the first three years. The carrying value of leased equipmentincluded in property and equipment as of December 31, 2013 and 2012 was $21,692 and $28,763 respectively, net of accumulated depreciation of $9,215and $5,067, respectively. Equipment fee income, included in revenue, as a result of this contract was $8,184 and $6,494 for the years ended December 31,2013 and 2012, respectively. Future required fees payable by the customer (exclusive of deferred revenue) embedded in this contract relate to equipmentlease payments total $3,175 and are due in 2014. Leases as LesseeIn accordance with applicable guidance, the Corporation classifies leases as capital leases if they meet certain specified criteria. All other leases are accountedfor as operating leases where the cost of the rental of the property is expensed throughout the term of the lease. Property and EquipmentProperty and equipment is capitalized at historical cost and depreciated over the useful life of the asset. Assets held under capital leases are recorded at lowerof the net present value of minimum lease payments or fair value of leased assets at the inception of the lease. Depreciation on property and equipment iscalculated on the straight-line method over the estimated useful lives of the assets or the lesser of the lease term, as applicable. Management’s estimate of thisuseful life is based on circumstances that exist in the seismic industry and information available at the time of the purchase of the asset. Repairs andmaintenance, which are not considered betterments and do not extend the useful life of the property, are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the asset and accumulated depreciation or amortization are removed from the accountsand the resulting gain or loss is reflected in (gain) or loss on sale of assets. Income TaxesThe Corporation accounts for income taxes under Accounting Standards Codification (“ASC”), 740 Income Taxes (“ASC 740”). ASC 740 requires therecognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets andliabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuationallowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. FS-13 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 3 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES – (continued) ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognitionthreshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Forthose benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also providesguidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Corporation is required to fileincome tax returns in the United States (federal) and in various state and local jurisdictions, as well as in international jurisdictions. Based on theCorporation’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Corporation’s currentfinancial statements. The reserves made in 2011 and 2012 for a Colombian uncertain tax position were reversed in 2013 due to both expiration of the statuteof limitation and completion of the audit by the relevant tax authority without any additional assessment.The Corporation’s policy for recording interest and penalties associated with uncertain tax positions is to record such expense in accounts identified as non-deductible expense for income tax purposes. Management is currently unaware of any issues under review that could result in significant payments oraccruals of material amounts for the current year. Long-Lived AssetsLong-lived assets, such as property and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events orchanges in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group betested for possible impairment, the Corporation first compares undiscounted cash flows expected to be generated by that asset or asset group to its carryingvalue. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment loss is recognized tothe extent that the carrying value exceeds it fair value. Fair value is determined through various valuation techniques including discounted cash flow models,quoted market values and third-party independent appraisals, as considered necessary. No long-lived assets were impaired as of December 31, 2013 or 2012. Foreign Exchange Gains and LossesThe Corporation’s reporting currency is the U.S. dollar (“USD”). For foreign subsidiaries and branches using local currency as their functional currency, assetsand liabilities are translated at exchange rates in effect at the balance sheet dates. Revenues and expenses of these foreign subsidiaries are translated ataverage exchange rates for the period. Equity is translated at historical rates, and the resulting cumulative foreign currency translation adjustments resultingfrom this process are included, net of tax as a component of accumulated other comprehensive (loss) income. Therefore, the USD value of these items in thefinancial statements fluctuates from period to period, depending on the value of the USD against these functional currencies. Exchange gains and lossesarising from transactions denominated in a currency other than the functional currency of the entity involved are included in the consolidated statement ofoperations and comprehensive (loss) income as foreign exchange gains (losses). The foreign subsidiaries and branches using USD as their functional currencyare Bolivia, Peru, Malaysia and Singapore. The unrealized foreign currency translation gain (loss) included in accumulated other comprehensive (loss) income was $(2,083) and $356 at December 31,2013 and 2012, respectively. FS-14 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 3 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES – (continued) Commitments and ContingenciesThe Former SAE common stockholders, as a result of the Merger, have the right to receive up to 992,108 additional shares (which includes 44 shares that maybe issued in lieu of fractional shares) of the Corporation’s common stock after the Closing based on the achievement of specified earnings targets by theCorporation for the 2013 and the 2014 fiscal years. The target was not met for the fiscal year ended December 31, 2013, so no shares have been issued for2013, however, the Former SAE common stockholders still have the right to receive up to the full 992,108 additional shares depending on the Corporation’sperformance in 2014. Since the contingent consideration is considered to be equity, it did not impact the net assets recorded by the Corporation. Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources, are recorded when it is probable that aliability has been incurred and the amount of the assessment and remediation can be reasonably estimated. Legal costs incurred in connection with losscontingencies are expensed as incurred. In the ordinary course of business, the Corporation can be involved in legal proceedings involving contractual and employment relationships, liabilityclaims, and a variety of other matters. Although the ultimate outcome is uncertain, as of December 31, 2013 and December 31, 2012, the Corporation did nothave any legal proceedings for which the ultimate outcome is expected to have a material impact on its financial position or results of operations. Goodwill and Intangible AssetsGoodwill represents the excess of costs over the fair value of the net assets acquired in the Datum Exploration Ltd. acquisition in 2011. All of theCorporation’s goodwill resides in its Canadian operations reporting unit. The change in the carrying value of goodwill in the year ended December 31, 2013is the result of currency translation. In accordance with ASC Topic 350, “Goodwill and Other”, the Corporation reviews its goodwill for impairment annually, or more frequently, if facts andcircumstances warrant a review, at the reporting unit level. The provisions of ASC Topic 350 require that a two-step test be performed to assess goodwill forimpairment. First, the fair value of the reporting unit is compared to its carrying value. If the fair value exceeds the carrying value, goodwill is not impairedand no further testing is performed. The second step is performed if the carrying value exceeds the fair value. The implied fair value of the reporting unit’sgoodwill must be determined and compared to the carrying value of the goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fairvalue, an impairment loss equal to the difference will be recorded. In determining the fair value of the Corporation’s reporting unit, the Corporation relied onthe Income Approach and the Market Approach. Under the Income Approach, the fair value of a business unit is based on the discounted cash flows it can beexpected to generate over its remaining life. The estimated cash flows are converted to their present value equivalent using an appropriate rate of return.Under the Market Approach, the fair value of the business is based on the Guideline Public Company (“GPC”) methodology using guideline publiccompanies whose stocks are actively traded that were considered similar to the Corporation as of the valuation date. Valuation multiples for the GPCs weredetermined as of the valuation date and were applied to the Corporation’s operating results to arrive at an estimate of value. Intangible assets include customer relationships and are recorded at cost. Intangible assets are amortized over their estimated useful lives of 13 years. The Corporation completed its annual goodwill impairment test as of its annual assessment date of July 31, 2013 and determined that the carrying amount ofgoodwill was not impaired. Further, there were no events subsequent to the Corporation’s annual assessment date which would have resulted in animpairment of its goodwill. Comprehensive Income Comprehensive income includes net (loss) income as currently reported and also considers the effect of additional economic events that are not required to berecorded in determining net income but rather reported as a separate component of stockholders’ equity. The Corporation reports foreign currency translationgains and losses as a component of comprehensive (loss) income. FS-15 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 3 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES – (continued) Variable Interest Entities The Corporation evaluates its joint venture and other entities in which it has a variable interest (a “VIE”), to determine if it has a controlling financialinterest and is required to consolidate the entity as a result. The reporting entity with a controlling financial interest in the VIE will have both of thefollowing characteristics: (i) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (ii) theobligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive benefit from the VIE that couldpotentially be significant to the VIE. See discussion of the Corporation’s joint venture at Note 19. Fair Value MeasurementsThe Corporation follows ASC 820, “Fair Value Measurements and Disclosures”, as it relates to financial assets and liabilities, which defines fair value,establishes a framework for measuring fair value under U.S. GAAP and expands disclosures about fair value measurements. The provisions of this standardapply to other accounting pronouncements that require or permit fair value measurements. This guidance defines fair value as the price that would bereceived to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Hierarchical levels, asdefined in this guidance which are directly related to the amount of subjectivity associated with the inputs to the estimation of the fair values of these assetsand liabilities, are as follows: Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quotedprocess for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs otherthan quoted prices that are observable for the asset or liability (e.g. interest rates); and inputs that are derived principally from or corroborated by observablemarket data by correlation or other means. Level 3 — Inputs that are both significant to the fair value measurement and unobservable. Unobservable inputs reflect the Corporation’s judgment aboutassumptions market participants would use in pricing the asset or liability estimated impact to quoted market prices. The Corporation’s financial instruments include cash and cash equivalents, restricted cash, accounts receivable, other current assets, accounts payable andaccrued liabilities. Due to the short-term maturities of each or the contractual interest rate, the carrying amounts approximate fair value at the respectivebalance sheet dates. ASC 825-10, Financial Instruments (“ASC 825-10”), provides a fair value option election that allows companies an irrevocable election to use fair value asthe initial and subsequent accounting measurement attribute for certain financial assets and liabilities. ASC 825-10 permits entities to elect to measureeligible financial assets and liabilities at fair value on an ongoing basis. Changes in the fair value of items for which the fair value option has been elected arereported in earnings. The decision to elect the fair value option is determined on an instrument-by-instrument basis, which must be applied to an entireinstrument, and not only specified risks, specific cash flows, or portions of that instrument, and is irrevocable once elected. Assets and liabilities measured atfair value pursuant to ASC 825-10 are required to be reported separately from those instruments measured using another accounting method. The Corporation’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2013 are notes payable to Former SAEstockholders, and at December 31, 2012 are warrants. The fair values of these financial instruments at the applicable valuation dates are based on Level 3inputs using an income and market approach. As of December 31, 2013 and 2012, the Corporation’s notes payable, with the exception at December 31, 2013 of the notes payable to the Former SAEstockholders, are recorded at historical cost net of applicable discounts. FS-16 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 3 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES – (continued) Deferred Loan Issuance CostsDeferred loan issuance costs as of December 31, 2013 and 2012 include deferred costs of $12,029 and $9,279, respectively, less accumulated amortization of$2,914 and $213, respectively, associated with the 2012 Credit Agreement, as discussed further in Note 10. The increase in the deferred costs in 2013 isdeferred costs related to the 2012 Credit Agreement of $2,750. These costs are being amortized over the life of the debt. The amortization of debt issuancecosts is included in interest expense using the effective interest method. Credit Agreement DiscountThe discount associated with the 2012 Credit Agreement (see Note 10) is being amortized over the life of the debt. The amortization of debt discount isincluded in interest using the effective interest method. The consolidated balance sheet as of December 31, 2013 includes the original discount of $607, lessaccumulated amortization of $158. Share-Based CompensationThe Corporation records the grant date fair value of share-based compensation arrangements as compensation cost using a straight-line method over theservice period. Off-Balance Sheet ArrangementsThe Corporation’s policies regarding off-balance sheet arrangements as of and for the year ended December 31, 2013 are consistent with those in placeduring, as of and for the year ended December 31, 2012. The Corporation did not have any off-balance sheet arrangements as of December 31, 2013 or 2012. Net (Loss) Income Per ShareThe Corporation follows the accounting and disclosure requirements of ASC 260, “Earnings Per Share.” Net (loss) income per share is computed by dividingnet (loss) income by the weighted-average number of shares of common stock outstanding during the period. Prior to the Merger on June 24, 2013, theCorporation had not considered the effect of warrants to purchase 14,000,000 shares of common stock or 1,000,000 warrants issuable upon conversion ofnotes payable to two of its stockholders in the calculation of diluted loss per share, since the exercise of the warrants were then contingent upon theoccurrence of future events. Additionally, the contingent consideration associated with the Merger Agreement will not be included in the calculation ofearnings per share until or if the related targets are obtained. Due to the Corporation’s net loss for the year ended December 31, 2013, all potentially dilutiveinstruments were excluded because their inclusion would have been anti-dilutive. The warrants to purchase 14,000,000 shares of common stock or 1,000,000warrants issuable upon conversion of notes payable have been excluded from the calculation of dilutive net loss per share, as their effect would be anti-dilutive. For the year ended December 31, 2012, the effect of Former SAE warrants issued in November 2012 for 135,144 shares as well as the 636,560restricted shares issued in November 2012 were included in the computation of diluted net income per share. Potentially dilutive securities are not consideredin the calculation of diluted (loss) income per share during periods in which there is a net loss, as the effect would be anti-dilutive. Recently Issued Accounting PronouncementsForeign Currency MattersIn March 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-05, which amends ASC Topic830, “Foreign Currency Matters.” This ASU provides guidance on foreign currency translation adjustments when a parent entity ceases to have a controllinginterest on a previously consolidated subsidiary or group of assets. The guidance is effective for fiscal years beginning on or after December 15, 2013. TheCorporation is still evaluating what impact, if any, the adoption of this guidance will have on its financial condition, results of operations, cash flows orfinancial disclosures. FS-17 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 3 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES – (continued) Comprehensive IncomeIn February 2013, the FASB issued ASU No. 2013-02, “Comprehensive Income, Reporting of Amounts Reclassified Out of Accumulated OtherComprehensive Income.” ASU 2013-02 requires an entity to provide information about the amounts reclassified out of accumulated other comprehensiveincome by component. For public entities, this ASU is effective prospectively for reporting periods beginning after December 15, 2012. The adoption of thisASU has not had nor is it expected to have a material impact on the Corporation’s results of operations, financial position or disclosures. Income TaxesIn July 2013, the FASB issued ASU No. 2013-11- “Income Taxes (Topic 740): Presentation Of An Unrecognized Tax Benefit When A Net Operating LossCarryforward, A Similar Tax Loss, Or A Tax Credit Carryforward Exists” requiring the presentation of an unrecognized tax benefit in the financial statementsas a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryfoward. This net presentation is requiredunless a net operating loss carryforward, a similar tax loss, or a tax credit carryfoward is not available at the reporting date or the tax law of the jurisdictiondoes not require, and the entity does not intend to use, the deferred tax asset to settle any additional income tax that would result from the disallowance of theunrecognized tax benefit. The standards update is effective for fiscal years beginning after December 15, 2013, with early adoption permitted. The adoptionof this ASU will not have a material impact on the Corporation’s consolidated financial statements.NOTE 4 - SIGNIFICANT RISKS AND UNCERTAINTIES INCLUDING BUSINESS AND CREDIT CONCENTRATIONS The Corporation’s primary market risks include fluctuations in oil and gas commodity prices which affect demand for and pricing of services. All of theCorporation’s customers are involved in the oil and natural gas industry, which expose the Corporation to credit risk because the customers may be similarlyaffected by changes in economic and industry conditions. Further, the Corporation generally provides services and extends credit to a relatively small groupof key customers that account for a significant percentage of accounts receivable of the Corporation at any given time. Due to the nature of the Corporation’scontracts and customers’ projects, the largest customers can change from year to year and the largest customers in any year may not be indicative of thelargest customers in any subsequent year. If any key customers were to terminate their contracts or fail to contract for future services due to changes inownership or business strategy or for any other reason, the Corporation’s results of operations could be affected. The Corporation has cash in banks, including restricted cash, which, at times, may exceed insured limits established in the United States and foreigncountries. The Corporation has not experienced any losses in such accounts and management believes it is not exposed to any significant credit risk on cashand cash equivalents. The Corporation conducts operations outside the United States, which exposes the Corporation to market risks from changes in foreign exchange rates. FS-18 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 5 — PROPERTY AND EQUIPMENT Property and equipment is comprised of the following at December 31, 2013 and 2012: Estimated Useful Life 2013 2012 Field operating equipment 3 – 10 years $85,990 $82,798 Vehicles 3 – 5 years 3,550 2,408 Leasehold improvements 2 – 5 years 455 473 Software 3 – 5 years 1,122 1,063 Computer equipment 3 – 5 years 4,358 4,080 Office equipment 3 – 5 years 968 864 96,443 91,686 Less: Accumulated depreciation and amortization (31,871) (21,230)Total $64,572 $70,456 The Corporation reviews the useful life and residual values of property and equipment on an ongoing basis considering the effect of events or changes incircumstances. Total depreciation and amortization expense for the years ended December 31, 2013 and 2012 was $16,096 and $12,131, respectively, of which $14,843 and$11,411, respectively, was recorded in direct operating expenses and $1,253 and $720, respectively, was recorded in depreciation and amortization. FS-19 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 6 — INTANGIBLE ASSETS AND GOODWILL The carrying amounts of intangible assets at December 31, 2013 and 2012 are as follows: 2013 2012 Customer relationships $1,478 $1,684 Less: annual amortization (121) (126) 1,357 1,558 Foreign currency translation (97) (80)Balance at December 31, $1,260 $1,478 Amortization expense included in direct operating expenses in the accompanying statements of operations for each of the years ended December 31, 2013and 2012 were $121 and $126, respectively. Amortization expense for each of the next five years is as follows: 2014 $121 2015 121 2016 121 2017 121 2018 121 Thereafter 655 Total $1,260 The Corporation’s goodwill balance at December 31, 2013 and 2012 was as follows: 2013 2012 Datum acquisition $2,150 $2,306 The differences in the gross amounts of goodwill and customer relationships between the years relate to foreign currency translations. FS-20 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 7 — PREPAID EXPENSES Prepaid expenses at December 31, 2013 and 2012 include the following: 2013 2012 Prepaid other taxes $1,009 $3,610 Advances to suppliers 2,442 2,158 Prepaid VAT tax 121 2,104 Deposits 355 490 Other 692 191 Total $4,619 $8,553 NOTE 8 — ACCRUED LIABILITIES Accrued liabilities at December 31, 2013 and 2012 include the following: 2013 2012 Accrued supplier expenses $801 $3,910 Accrued Former SAE convertible preferred dividends (See Note 13) 1,072 894 Accrued interest payable (See Note 10) 686 — Other 565 631 Total $3,124 $5,435 FS-21 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 9 — LEASES Capital LeasesThe Corporation leases certain machinery and equipment under agreements that are classified as capital leases. As of December 31, 2013, the future minimumlease payments required under the capital leases and the present value of the net minimum lease payments, are as follows:Year Ending December 31, Amounts 2014 $583 2015 518 2016 148 2017 8 Total minimum lease payments 1,257 Less: Amount representing interest (154)Present value of net minimum lease payments 1,103 Less: Current maturities of capital lease obligations (485)Long-term capital lease obligations $618 Assets recorded under capital leases and included in property and equipment in the Corporation’s consolidated balance sheets consist of the following atDecember 31, 2013 and 2012: 2013 2012 Field operating equipment $2,062 $1,934 Vehicles 437 204 Computer equipment 292 274 Office equipment 152 142 2,943 2,554 Less: Accumulated depreciation (1,280) (580)Total $1,663 $1,974 Operating LeasesThe Corporation also has several non-cancelable operating leases, primarily for office, warehouse space, and corporate apartments that are set to expire overthe next five years. These leases generally contain renewal options for a one-year period and require the Corporation to pay all executory costs such asmaintenance and insurance. FS-22 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 9 — LEASES– (continued) Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease including any periods of free rent. Rentalexpense for operating leases for the years ended December 31, 2013 and 2012 was $1,880 and $1,801, respectively. As of December 31, 2013, future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year)were: 2014 $8,360(1)2015 8,954(1)2016 156 2017 134 2018 124 Total $17,728 (1) Includes a two-year equipment lease agreement in North America, for which terms regarding discounted rates for additional rental beyond the minimumhave not yet been finalized, with minimum guaranteed rental commitment of $6,720 and $8,400 for 2014 and 2015, respectively. FS-23 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 10 — NOTES PAYABLE Notes payable at December 31, 2013 and December 31, 2012 consist of the following: 2013 2012 Amount outstanding under 2012 Credit Agreement $81,137 $79,900 Unamortized loan discount (449) (607)Net note payable 80,688 79,293 Less current portion of note payable (800) (800)Long-term portion of note payable 79,888 78,493 Notes payable to Former SAE stockholders - related parties – long-term at fair value 12,406 — Notes payables to related parties - current 500 53 Total notes payable to related parties 12,906 53 Total notes payable, excluding current portion of note payable $92,794 $78,546 FS-24 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 10 — NOTES PAYABLE – (continued) All of the Corporation’s outstanding debt in 2012 as described below was paid off from proceeds of the 2012 Credit Agreement (defined below) prior toDecember 31, 2012 except for the loan payable to CLCH that was paid off in February 2013. The Corporation had ten bank loans with various financial institutions in Colombia that were used to fund short-term working capital requirements, includedin notes payable (the “Colombia Loans”). The Colombia Loans had maturity dates in 2012 and interest rates that ranged between 8.2% and 13.87%. TheColombia Loans were repaid in full in December 2012. During 2012, the Corporation entered into additional short-term working capital loans with five financial institutions in Colombia for an aggregate amountof $8,698. These loans had maturity dates between October 2012 and June 2013 with interest rates between 6.8% and 13.5% and were partially secured byColombian accounts receivable, with an average interest rate of 9.24% for the year ended December 31, 2012. All of these Colombian loans were repaid infull in December 2012. The Corporation entered into two loan agreements with entities owned by stockholders of the Corporation to fund working capital needs. The agreement withEncompass LLP (“Encompass”) was entered by the Corporation on January 1, 2009 for a maximum credit line of $3,000. The line carried an annual interestrate of 15% and was due on demand. There was no outstanding balance on this credit line on December 31, 2012, and the line has been cancelled as ofDecember 31, 2012. Another agreement with CLCH was entered by the Corporation on January 1, 2009 for a maximum credit line of $3,000 and carried anannual interest rate of 8.5% and was due on demand. The Corporation had $53 outstanding under this credit line as of December 31, 2012. The credit line hasbeen closed and the balance of this loan was paid off in February 2013. The Corporation also had a loan with a third-party dated September 30, 2011 related to the purchase of equipment with an original balance of $162 orC$(157). The loan was secured by the equipment, was due in monthly installments of $21 or C$(20) and carried an annual interest rate of 8.25%. The loanmatured May 15, 2012, and was paid in full in December 2012. On January 1, 2012, the Corporation entered into a Promissory Note for working capital purposes in the principal amount of $375 at an annual interest rate of9% with a stockholder of the Corporation. The note was paid in full in December 2012. On July 3, 2012, NES LLC, a wholly-owned subsidiary of the Corporation, as Issuer and the Corporation as a Guarantor, entered into a Note PurchaseAgreement with Prudential Capital Group for the issuance of secured promissory notes in the principal amount of $15,000 at an interest rate of 8.75% perannum (the “NES Note”). The NES Note was secured by field operating equipment and was to mature November 1, 2015. This loan was repaid in full inDecember 2012. On July 6, 2012, SAExploration (Canada) Ltd., a wholly-owned subsidiary of the Corporation, as Issuer and the Corporation as a Guarantor, entered into aNote Purchase Agreement with Prudential Capital Group for the issuance of secured promissory notes in the principal amount of $5,000 at an interest rate of8.75% per annum (the “Canadian Note”). The Canadian Note was secured by certain field operating equipment and was to mature July 1, 2016. The CanadianNote was paid in full in December 2012. The two above Prudential notes had a prepayment fee of $2,209, which was paid in December 2012 and charged toloan prepayment fee in the accompanying consolidated statement of operations for the year ended December 31, 2012. FS-25 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 10 — NOTES PAYABLE – (continued) The Corporation issued a promissory note to CLCH, as a representative of the Former SAE stockholders, at the Closing on June 24, 2013, as Mergerconsideration to the Former SAE stockholders with a stated amount of $17,500. At issuance, the Corporation elected the fair value option for recording thenote on a recurring basis at issuance. The fair value as of June 24, 2013 was $11,775. The Corporation determined that the net present value approach wouldbe the best method to estimate the fair value. In calculating the net present value, the Corporation used the average yield for similar instruments to determinethe discount rate. As of June 24, 2013 the discount rate was determined to be 17.6%. Any change in the fair value of the note is recorded on the statement ofoperations as a change in fair value of notes payable to related parties. The note is unsecured, is subordinate to the borrowings outstanding under the 2012Credit Agreement, carries an annual interest rate of 10%, with interest payments subject to certain restrictions under the 2012 Credit Agreement, and is dueand payable in full on June 24, 2023. As of December 31, 2013, the Corporation determined the discount rate to be consistent to the rate at inception. As ofDecember 31, 2013, the outstanding balance was $17,500 with a fair value of $12,406. The change in the fair value of the Former SAE stockholders note forthe period ended December 31, 2013 was $631. The Corporation owes convertible promissory notes of Eric S. Rosenfeld and David D. Sgro, who are directors and founding stockholders of the Corporation,with aggregate principal amounts of $300 and $200, respectively. These $500 related party notes are convertible into 1,000,000 warrants with an exerciseprice of $12 per warrant. On October 10, 2013 the Corporation mailed an information statement on Schedule 14C to Corporation’s stockholders (whichbecame effective on November 1, 2013) relating to amending the convertible promissory notes of Eric S. Rosenfeld and David D. Sgro to extend the maturitydate to December 31, 2013. Also, the principal balance of the Notes may be converted, at the holder’s option, to warrants at a price of $0.50 per warrant, or upto an aggregate of 1,000,000 warrants (the “Convertible Debt Warrants”), upon the effectiveness of stockholder approval of the conversion. Each ConvertibleDebt Warrant will be exercisable for one share of our common stock at a cash exercise price of $12.00, or on a “cashless basis” at the holder’s option. TheConvertible Debt Warrants will expire on June 24, 2016. The Corporation records these notes payable at a combined carrying amount of $500 and estimatedtheir combined fair value to be $886 as of December 31, 2013. 2012 Credit Agreement On November 28, 2012, Former SAE entered into a four year term Credit Agreement for $80 million (as amended, the “2012 Credit Agreement”). The 2012Credit Agreement is collateralized by all the assets of Former SAE. Of the proceeds from this transaction, approximately $40 million retired all theoutstanding debt in 2012, except for the loan payable to CLCH that was paid off in February 2013. As part of this transaction, warrants were issued for 1% ofthe “Common Stock Deemed Outstanding” of Former SAE, which takes into account any securities or contract of a dilutive nature which are exercisable. The cost associated with the issuance of the 2012 Credit Agreement, in the amount of $12,029 is being amortized in interest expense over the life of the 2012Credit Agreement using the effective interest method. The total amount of amortization of the debt cost and discount for the years ended December 31, 2013and 2012 was $2,860 and $213, respectively. FS-26 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 10 — NOTES PAYABLE – (continued) The Corporation joined the 2012 Credit Agreement, in the same capacity as Former SAE, in connection with the consummation of the Merger, and MergerSub, as the surviving entity in the Merger, succeeded to the obligations of Former SAE. The 2012 Credit Agreement has requirements for principal paymentsof $200, plus 0.25% of any additional amounts borrowed under the 2012 Credit Agreement, per quarter until the note is due, at which time the entireoutstanding principal balance must be repaid. The interest rate on borrowings under the 2012 Credit Agreement is 13.5%. The Corporation may elect to payup to 2.5% of the interest as a payment in kind (“PIK”); the PIK amount of interest is added to the balance of the note. For the year ended December 31, 2013the Corporation elected to exercise the PIK option and $2,040 was expensed to interest and added to the balance of the note. At the time Former SAE enteredinto the Amendment No. 2 and Consent to Credit Agreement on June 24, 2013, Former SAE and the Borrowers under the 2012 Credit Agreement received acommitment to fund, at Former SAE’s election and subject to the satisfaction of customary closing conditions, the full $20 million of the additional loansavailable to the borrowers under the 2012 Credit Agreement. The commitment expired unexercised on October 5, 2013.The 2012 Credit Agreement provides for certain prepayment penalties if the Corporation prepays any portion of the outstanding principal balance prior to itsdue date that decline over the term of the agreement. On October 31, 2013, the Corporation entered into Amendment No. 3, which revised certain financial covenant ratios, lowered capital expenditure limits for2013 and 2014, granted waivers for any failure to comply with the financial covenants for the quarter ended September 30, 2013, and limited the payment ofinterest under the Corporation’s $17.5 million subordinated note issued in connection with the Merger.On October 31, 2013, in connection with the execution of Amendment No. 3 to the 2012 Credit Agreement, CLCH, Seismic Management Holdings Inc. andBrent Whiteley, entered into a waiver agreement with the Corporation, pursuant to which they agreed to allow the withholding of the interest paymentspayable to them in respect of their individual interests as stockholders of Former SAE under the $17.5 million subordinated note issued in connection withthe Merger, until such payments are permitted to be made under the 2012 Credit Agreement. The Corporation accrued $686 of such interest payments for thefourth quarter of 2013 related to the $17.5 million subordinated note. The following table represents the future principal payments for the 2012 Credit Agreement per year, as of December 31, 2013: 2014 $800 2015 800 2016 79,537 Total $81,137 The Corporation records its 2012 Credit Agreement at a carrying amount, net of discount, of $80,688 and $79,293, respectively, and estimated its fair valueto be $90,536 and $79,737, respectively, as of December 31, 2013 and 2012, respectively. Fair values of the 2012 Credit Agreement are derived using the netpresent value of expected cash flow discounted based on using yield curves for similar USD debt instruments adjusted for the specific terms of the 2012Credit Agreement and other factors such as the Corporation’s own cost of capital in recent financing transactions.At December 31, 2013, and December 31, 2012, the Corporation was in compliance with all covenants of the 2012 Credit Agreement. The Corporation notesthat it has an obligation under the 2012 Credit Agreement to deliver annual consolidated financial statements with 90 days following the end of theCorporation’s fiscal year. The Corporation was not able to deliver such financial statements until the completion of its 2013 financial statement audit and thefiling of the Corporation’s Form 10-K. The failure to timely deliver such financial statements resulted in a technical event of default under the 2012 CreditAgreement. The remedies provided to the lenders in the 2012 Credit Agreement for an event of default are only available if the event of default is continuing. FS-27 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 11 — INCOME TAXES (Loss) income before income taxes attributable to U.S. (including its foreign branches) and foreign operations for the years ended December 31, 2013 and2012 are as follows: 2013 2012 U.S. $(6,159) $4,554 Foreign (4,352) 6,875 Total $(10,511) $11,429 No income taxes are attributable to the non-controlling interest. The provision for income taxes shown in the consolidated statements of operations and comprehensive (loss) income consists of current and deferred expense(benefit) for the years ended December 31, 2013 and 2012 as shown in the following table. 2013 2012 Current tax expense: U.S. – federal and state $1 $161 Foreign 9,139 2,849 Total current expense 9,140 3,010 Deferred tax expense (benefit): U.S. – federal and state 1,812 (1,711)Foreign (457) 145 Total deferred expense ( benefit) 1,355 (1,566)Total provision for income taxes $10,495 $1,444 FS-28 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 11 — INCOME TAXES – (continued) A reconciliation of the income tax (benefit) provision expected at the U.S. federal statutory income tax rate to the effective income tax rate is as follows: 2013 2012 Expected tax (benefit) provision at 35% for the years ended December 31, 2013 and 2012 $(3,678) $4,000 IRC Section 956 deemed dividend 5,645 — Effects of expenses not deductible for tax purposes 1,614 624 Tax effect of valuation allowance on deferred tax assets 1,144 (1,747)Taxes in lieu of income taxes 3,126 745 Reduction in reserve for uncertain tax position (329) — Effects of differences between U.S. and foreign tax rates, net of federal benefit, and other 2,973 (2,178)Provision for income taxes $10,495 $1,444 FS-29 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 11 — INCOME TAXES – (continued) The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2013 and2012 are presented below: 2013 2012 Deferred tax assets: Deferred charges $— $74 Deferred revenue 1,206 2,327 Related party accrued expenses 33 346 Deferred contract costs 398 — Other accruals 581 482 Restricted stock — 8 Capital lease obligation 240 424 Foreign tax credit and AMT credit carry forwards 7,764 2,386 Financing costs 334 — Unrealized gain/loss 379 — Fixed assets 636 — Net operating loss carry forwards 3,590 5,433 Total deferred tax assets 15,161 11,480 Less: Valuation allowance (6,998) (29)Total deferred tax assets, net 8,163 11,451 Deferred tax liabilities: Other receivables (69) — Fixed assets (6,787) (8,798)Foreign exchange (gain) loss (61) — Intangible assets (315) (370)Total deferred tax liabilities (7,232) (9,168)Net deferred tax assets $931 $2,283 The net deferred tax assets as of December 31, 2013 and 2012 consist of the following: 2013 2012 Current deferred tax asset, net $1,371 $902 Non-current deferred tax asset, net 743 1,622 Current deferred tax liability, net (69) — Non-current deferred tax liability, net (1,114) (241)Net deferred tax asset $931 $2,283 FS-30 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 11 — INCOME TAXES – (continued) In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assetswill not be realized. The Corporation has evaluated the available evidence and the likelihood of realizing the benefit of its net deferred tax assets.Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making thisassessment. From its evaluation, the Corporation has concluded that based on the weight of available evidence, it is not more likely than not to realize thebenefit of its deferred tax assets recorded in Malaysia, the United States, Brazil and Canada at December 31, 2013 and Brazil in 2012. Accordingly, theCorporation had a valuation allowance totaling $6,998 and $29, respectively, at December 31, 2013 and 2012 for the deferred tax assets in U.S., Canada,Malaysia and Brazil that more likely than not will not be realized. Should the factors underlying management’s analysis change, future valuationadjustments to the Corporation’s net deferred tax assets may be necessary. The valuation allowance was increased by $6,969 and $1,747, respectively, duringthe years ended December 31, 2013 and 2012. Of the total $6,998 valuation allowance, $1,144 relates to prior year deferred tax assets that were fully valuedduring 2013. The Corporation is subject to examination in all jurisdictions in which it operates. The Corporation is no longer subject to examination by the InternalRevenue Service or other foreign taxing authorities in which it files for years prior to 2010. The Corporation recognized benefit of $329 during 2013 related to uncertain tax positions existing as of December 31, 2012 which was included inincome tax expense. These unrecognized tax benefits relate to income tax contingencies in Colombia. Foreign earnings are considered to be permanently reinvested in operations outside the USA and therefore the Corporation has not provided for U.S.income taxes on these un-repatriated foreign earnings. Uncertain tax positions as of December 31, 2013 and 2012 are shown below: 2013 2012 Unrecognized tax benefits, beginning balance $329 $323 Additions for prior year tax positions — 6 Reductions for lapse in statute (329) — Unrecognized tax benefits, ending balance $— $329 The details of the Corporation’s tax attributes as of December 31, 2013 and 2012 are shown below: 2013 2012 Net Operating Losses Balance carried forward Balance carried forward U.S. $5,563 $9,129 Canada 440 4,898 Malaysia 5,743 — Others 526 249 Total $12,272 $14,276 FS-31 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 11 — INCOME TAXES – (continued) 2013 2012 Foreign Tax Credits Balance carried forward Balance carriedforward U.S. $6,938 $2,011 Canada 515 214 Total $7,453 $2,225 2013 2012 Net Deferred Tax Assets (Liabilities) Balance carried forward Balance carried forward U.S. $— $1,812 Canada (156) (241)Others 1,087 712 Total $931 $2,283 The total amount of accrued interest and penalties included in accrued expenses as of December 31, 2013 and 2012 was $0 and $15, respectively. To theextent interest and penalties are assessed with respect to the uncertain tax positions, amounts accrued will be reflected as income tax expense. Net Operating LossesAs of December 31, 2013, the Corporation had U.S. federal tax net operating loss (“NOLs”) carryforwards of approximately $5.6 million, which begin toexpire in fiscal year 2032. These net operating loss carryforwards, subject to certain requirements and restrictions, including limitations on their use as aresult of an ownership change, may be used to offset future taxable income and thereby reduce the Corporation’s U.S. federal income taxes otherwise payable.Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), imposes an annual limit on the ability of a corporation that undergoes anownership change to use its net operating loss carry forwards to reduce its tax liability. The amount of taxable income in each tax year after the ownershipchange that may be offset by pre-change NOLs and certain other pre-change tax attributes is generally equal to the product of (a) the fair market value of thecorporation’s outstanding stock immediately prior to the ownership change and (b) the long-term tax exempt rate (i.e., a rate of interest established by theInternal Revenue Service that fluctuates from month to month). An ownership change would occur if stockholders, deemed under Section 382 to own fivepercent or more of our capital stock by value, increase their collective ownership of the aggregate amount of the Corporation’s capital stock to more than fiftypercentage points over a defined period of time. As a result of the Merger, the Corporation has experienced an ownership change as defined in Section 382 ofthe Code. Accordingly, the Corporation’s use of the net operating loss carryforwards and foreign tax credit carryforwards are limited to the applicable annuallimitation amount. Management has estimated the annual Section 382 limitation to be approximately $3.7 million. FS-32 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 11 — INCOME TAXES – (continued) Repairs and Maintenance Regulations in the United StatesIn September 2013, the U.S. Internal Revenue Service (“IRS”) issued new regulations for capitalizing and deducting costs incurred to acquire, produce, orimprove tangible property. These new regulations are effective in the U.S. for taxable years beginning on or after January 1, 2014; however, they areconsidered enacted as of the date of issuance. As a result of the new regulations, the Corporation is required to review its existing income tax accountingmethods related to tangible property, and determine which, if any, income tax accounting method changes are required; whether the Corporation will file anyincome tax accounting method changes with its 2014 federal income tax return; and the potential financial statement impact. Because additionalimplementation guidance from the IRS is anticipated, the Corporation is in the process of reviewing its existing income tax accounting methods related totangible property; however, the Corporation believes that certain of its historical income tax accounting policies may differ from what is prescribed in thenew regulations. Based on the Corporation’s initial assessment, the new regulations will not have a material effect on the Corporation’s consolidatedfinancial statements. NOTE 12 — WARRANTS WarrantsIn February 2011, the Corporation sold 6,500,000 warrants to the holders of its common stock in a private sale of units, consisting of warrants and commonstock. It also sold 600,000 warrants to EarlyBirdCapital, Inc., the representative of the underwriters for the Corporation’s initial public offering. On June 24,2011, the Corporation closed its initial public offering of 6,000,000 units, with each unit consisting of one share of common stock and one warrant, each topurchase one share of common stock at an exercise price of $7.50 per share. On June 27, 2011, the Corporation closed on the sale of an additional 900,000units, which were subject to an over-allotment option granted to the underwriters. The units from the initial public offering (including the over-allotmentoption) were sold at an offering price of $10.00 per unit. As of December 31, 2013 and 2012, the 14,000,000 warrants were outstanding. At the Closing of the Merger, the Corporation also entered into an amendment to the warrant agreement (“Warrant Amendment”) with Continental StockTransfer & Trust Company for all outstanding warrants as of Merger date, as warrant agent, and for warrants subject to conversion by the Corporation’sconvertible notes, which amended the Corporation’s warrants to (i) increase the exercise price of the warrants from $7.50 to $12.00 per share of theCorporation’s common stock and (ii) increase the redemption price of the warrants from $12.50 to $15.00 per share of the Corporation’s common stock. OnDecember 10, 2012, the Corporation obtained written consents from the holders of a majority of the then outstanding warrants approving the WarrantAmendment. The Warrant Amendment became effective upon the closing of the Merger (Note 2). Former SAE WarrantsTwo classes of liability warrants were issued in 2012 convertible into an aggregate of 2% of Former SAE’s common stock deemed outstanding at the time ofthe exercise, including any securities or contracts of a dilutive nature, whether or not exercisable at the time of the determination. The fair value of thewarrants issued is based on a third party valuation which used an income and market approach weighted for a merger or sale. The warrants have an exerciseprice of $0.01 a share. The lenders pursuant to the senior credit facility hold warrants totaling 1% of Former SAE’s common stock deemed outstanding that have a cash settlementprovision or “put option” that allows the warrant holders to ask for the fair value in cash once the debt is repaid. These warrants are exercisable at any time bythe holders. FS-33 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 12 — WARRANTS – (continued) The remaining warrant is for 1% of SAE common stock deemed outstanding and does not have a cash settlement provision. This warrant is exercisable atany time at the option of the holder or at the option of Former SAE, and is not automatically exercised in connection with a reorganization, merger, saleor similar transaction. The Former SAE warrants remain outstanding as a contractual obligation to receive their allocable portion of the Merger consideration. This allocableportion of Merger consideration was determined upon consummation of the Merger and the allocable portion of shares included in the Merger consideration,into which the warrants are convertible are being held in escrow as of December 31, 2013. NOTE 13 — FORMER SAE CONVERTIBLE PREFERRED STOCK As of December 31, 2012, the outstanding shares of Series A Convertible Preferred Stock of Former SAE (the “Preferred Shares”) were presented outside ofstockholders’ equity due to the characteristics described below. The holder of Preferred Shares was entitled to receive cumulative dividends at the rate of10.5% per annum on the face value of the Preferred Shares, which were payable monthly commencing January 1, 2010. The distributions to holders ofPreferred Shares were required to be paid prior to any distributions to the other shares in Former SAE and the shares of Preferred Stock had limited votingrights. The total face value of the Preferred Shares in the Former SAE was one USD ($1.00) per share, or $5,000. The liquidation value of the Preferred Sharesat December 31, 2012 was equal to the face value plus any cumulative unpaid dividends. The Corporation has declared and accrued but not paid $1,072 and $894 respectively, of dividends on the Preferred Shares for the years ended December 31,2013 and 2012 (See Note 8). The following table represents the accrued, paid and unpaid dividends included in accrued liabilities for Former SAE preferred shares, which were retired as aresult of the Merger on June 24, 2013, as of the dates set forth below: 2013 2012 January 1 $894 $537 Accrual 5,262 525 Payment (5,084) (168)December 31 $1,072 $894 NOTE 14 — STOCKHOLDERS’ EQUITY Preferred StockThe Corporation is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferencesas may be determined from time to time by the Corporation’s board of directors. As of December 31, 2013, there are no shares of preferred stock issued oroutstanding. Common StockThe Corporation is authorized to issue 55,000,000 shares of common stock with a par value of $0.0001 per share. As of December 31, 2013, a total of13,428,736 shares were issued and outstanding. FS-34 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 14 — STOCKHOLDERS’ EQUITY– (continued) Share-Based CompensationWith the consent of the Former SAE’s stockholders and board of directors, effective November 20, 2012, the Former SAE 2012 Stock Compensation Plan wasestablished. The plan provided for the issuance of either restricted stock or incentive stock options up to a maximum of 125,020 shares. After adoption of thisplan, 111,691 restricted shares (1,500 of which were forfeited during 2013 prior to the Merger) were issued to certain employees of Former SAE, with five-year cliff vesting based on the anniversary date of the grant. No restricted shares under the plan were forfeited in 2012. In addition, no restricted shares wereissued in 2013. Prior to the Merger, Former SAE’s board of directors approved the full vesting of the 111,691 restricted shares. In addition, the 2012 StockCompensation Plan terminated upon consummation of the Merger. The Corporation recorded share-based compensation of $1,098 and $21 related to theserestricted shares during the years ended December 31, 2013 and 2012, respectively.On June 21, 2013 the stockholders approved the Corporation’s 2013 Long-Term Incentive Compensation Plan for the benefit of certain employeesperforming services for the Corporation. The plan reserves up to 792,513 shares of the Corporation’s common stock for issuance in accordance with the plan’sterms including a maximum of up to 396,256 shares that may be issued pursuant to awards of restricted stock. As of December 31, 2013, no shares have beenissued under the plan. On November 1, 2013, the Corporation’s non-employee director share incentive plan (the “2013 Non-Employee Director Plan”) became effective, whichprovides for discretionary grants of stock awards to the Corporation’s independent non-employee directors, as determined by the Corporation’s board ofdirectors from time to time. The awards may take the form of unrestricted or restricted shares of the Corporation’s common stock or options to purchase sharesof the Corporation’s common stock. The Corporation has reserved 400,000 shares of common stock for issuance under the 2013 Non-Employee Director Plan.As of December 31, 2013, 26,072 shares have been issued under the plan. These shares vested immediately at issuance and the Corporation recorded share-based compensation of $200. NOTE 15 — RELATED PARTY TRANSACTIONS From time to time, the Corporation enters into transactions in the normal course of business with related parties. Prior to the Merger, the Corporation reimbursed its officers and directors for reasonable out-of-pocket business expenses incurred by them in connection withcertain activities on the Corporation’s behalf such as identifying and investigating possible target businesses and business combinations. As of June 24, 2013and December 31, 2012, the Corporation had reimbursed its Initial Stockholders an aggregate of approximately $28 and $20, respectively, for out-of-pocketbusiness expenses incurred by them in connection with activities on the Corporation’s behalf. Prior to the Merger, Crescendo Advisors II, LLC, an affiliate of Eric S. Rosenfeld, the chairman of the board and chief executive officer of the Corporationprior to the Merger and now a member of the Corporation’s board of directors, made available to the Corporation certain general and administrative services,including office space, utilities and administrative support, as the Corporation required from time to time. The Corporation paid Crescendo Advisors II, LLC$10 per month for these services. Eric S. Rosenfeld is the majority owner of Crescendo Advisors II, LLC. Accordingly, Mr. Rosenfeld benefitted fromproviding these services to the extent of his interest in Crescendo Advisors II, LLC. However, this arrangement was solely for the Corporation’s benefit andwas not intended to provide Mr. Rosenfeld compensation in lieu of a salary. Payment of these fees ended upon consummation of the Merger. FS-35 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 15 — RELATED PARTY TRANSACTIONS – (continued) Prior to the Merger, Jeff Hastings, the Corporation’s Chairman, individually and through his controlled company CLCH, LLC, which was the majoritystockholder of Former SAE, periodically paid expenses on behalf of Former SAE, which Former SAE reimbursed on a dollar-for-dollar basis as cash becameavailable. During the year ended December 31, 2012, Former SAE reimbursed Mr. Hastings $1,100 in the aggregate. The largest aggregate amount ofunreimbursed expenses during 2012 was $302. As of December 31, 2012, there was $109 in unreimbursed expenses paid by Mr. Hastings on behalf of FormerSAE for operations; these expenses were recorded in “Direct operating expenses.” On February 27, 2013, the remaining $109 of unreimbursed expenses waspaid in full. For the period January 1, 2013 to June 24, 2013, Former SAE reimbursed Mr. Hastings $192 for expenses incurred on behalf of Former SAE.Former SAE also reimbursed Brian A. Beatty, the Corporation’s President and CEO, $69 for the expenses incurred on behalf of Former SAE For the period January 1, 2013 to June 24, 2013, Former SAE paid CLCH, LLC $84 in dividends on preferred shares. Immediately prior to the Merger, Former SAE, at the direction of the board of directors, distributed dividends to CLCH, LLC and Seismic Management, LLP,of $7,923 and $5,009, respectively. In connection with the Merger, CLCH, LLC, which was the majority stockholder of Former SAE and Seismic Management, LLP, owned by Brian A. Beatty,the Corporation’s President and CEO, and his wife, received $8,803 and $1,392, respectively, in Merger consideration at Closing. During the period June 25, 2013 to December 31, 2013, the Corporation reimbursed Mr. Hastings and Mr. Beatty, $11 and $18 in the aggregate expensesincurred on behalf of the Corporation. On January 1, 2009, Former SAE entered into a revolving credit agreement with CLCH, which provided for a credit line to Former SAE for working capitalpurposes of up to $3,000. Amounts outstanding under this credit agreement bore interest at a rate of 8.5% per annum and were payable on demand. Duringthe year ended December 31, 2012, Former SAE made no payments of principal and interest to CLCH. The largest aggregate amount of principal outstandingunder the credit agreement with CLCH during 2012 was $53. On February 7, 2013, the loan was repaid in full and the line has been closed. Former SAE leased seismic equipment from Encompass and Seismic Management, LLP, pursuant to lease agreements executed in 2010. Brian A. Beatty, theCorporation’s President and CEO, together with his wife, owns a controlling interest in Encompass and owns all of the outstanding partnership interests inSeismic Management. The leases may be terminated by any party at any time. Aggregate rent paid by the Corporation to Encompass and SeismicManagement was $0 and $1,326 for the years ended December 31, 2013 and 2012, respectively. Former SAE purchased leased equipment in the amount of$1,483, for the year ended December 31, 2013 from Encompass and Seismic Management. On January 1, 2009, Former SAE entered into a revolving credit agreement with Encompass, which provided for a credit line to Former SAE for workingcapital purposes of up to $3,000. Amounts outstanding under this credit agreement bore interest at a rate of 15% per annum and were payable on demand.During the year ended December 31, 2012, Former SAE made payments of principal and interest to Encompass of $2,000 and $445, respectively. The largestaggregate amount of principal outstanding under the credit agreement with Encompass during 2012 was $2,100. As of December 31, 2012, this line wasclosed. On January 1, 2012, Former SAE borrowed approximately $375 for working capital purposes from Peggy Siegfried. Mrs. Siegfried is the wife of DavidSiegfried, Former SAE’s and our current executive vice president of business development, and Mr. and Mrs. Siegfried collectively own 15,404 exchangeableshares issued by our subsidiary, 1623753 Alberta Ltd., which may be exchanged for their allocable portion of the Merger consideration. The loan wasevidenced by a promissory note made payable to Mrs. Siegfried, which provided for interest on the outstanding principal amount at a rate of nine percent perannum and was due in full by December 31, 2012. On December 17, 2012, Former SAE repaid the full principal amount of the promissory note, plus allaccrued interest, in the aggregate amount of $405. Also see Note 10 for discussion of the Corporation’s note with Former SAE stockholders and notes with related parties. FS-36 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 16 — EMPLOYEE BENEFITS The Corporation offers a Retirement Registered Saving Plan for all eligible employees of its Canadian operations. The Corporation matches each employee’scontributions up to a maximum of 10% of the employee’s base salary or until the Canada Revenue Agency annual limit is reached. For the years endedDecember 31, 2013 and 2012, respectively, the Corporation expensed matching contributions totaling of $338 and $325, respectively. The Corporation offers a 401(k) Plan for all eligible employees of its United States operations. The Corporation matches each employee’s contributions up toa maximum of 4% of the employee’s base salary. For the years ended December 31, 2013 and 2012, respectively, the Corporation expensed matchingcontributions totaling $72 and $0, respectively. NOTE 17 — GEOGRAPHIC AND RELATED INFORMATION The Corporation reports its contract services operations as a single reportable segment: Contract Seismic Services. The consolidation of its contract seismicoperations into one reportable segment is attributable to how the Corporation’s business is managed, and the fact that all of its seismic equipment isdependent upon the worldwide oil industry. The equipment operates in a single, global market for contract seismic services and is often redeployed globallydue to changing demands of the Corporation’s customers, which consist largely of major non-U.S. and government owned/controlled oil and gas companiesthroughout the world. The Corporation’s contract seismic services segment currently conducts operations in North America, South America, and SoutheastAsia. The accounting policies of the Corporation’s reportable segment are the same as those described in the summary of significant accounting policies. TheCorporation has one operating segment for which the financial information is regularly reviewed by the Chief Operating Decision Maker (“CODM”) toallocate resources and assess the performance. The Corporation evaluates the performance of its operating segment based on gross profit and income beforeincome taxes. The following table sets forth significant information concerning the Corporation’s reportable segment as of and for the years ended December 31, 2013 and2012. Contract Seismic Services (In Thousands) For the Year Ended December 31, 2013 2012 Revenue for services $245,268 $257,359 Gross profit $42,932 $44,819 (Loss) income before income taxes $(10,511) $11,429 Assets $145,950 $147,975 FS-37 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 17 — GEOGRAPHIC AND RELATED INFORMATION – (continued) Revenues and identifiable assets by region based on the location of the service provided, is shown in the following table. Revenue for Services Identifiable Assets (1) (In Thousands) (In Thousands) For the Year Ended December 31, As of December 31, 2013 2012 2013 2012 North America $103,198 $122,060 $51,397 $68,485 South America 112,022 118,577 16,412 6,316 Southeast Asia 30,048 16,722 2,287 1,963 Total $245,268 $257,359 $70,096 $76,764 (1)Identifiable assets include property and equipment, deferred tax assets, intangible assets and goodwill. For the year ended December 31, 2013, two customers individually exceeded 10% of the Corporation’s 2013 consolidated revenue which aggregated 52% ofthe Corporation’s 2013 consolidated revenue. Customer D revenue was $48.4 million and customer E revenue was $78.4 million. As of December 31, 2013,two customers individually exceeded 10% of the Corporation’s consolidated accounts receivable which aggregated 64% of the Corporation’s consolidatedaccounts receivable. Customer F accounts receivable balance was $5.3 million or 13% of total consolidated accounts receivable and Customer E receivablebalance was $21.1 million or 52% of total consolidated accounts receivable. For the year ended December 31, 2012, three customers individually exceeded 10% of the Corporation’s consolidated revenue, aggregating 56% of theCorporation’s 2012 consolidated revenue. Customer A revenue was $27.6 million, customer B revenue was $30.0 million and customer C revenue was $84.6million. As of December 31, 2012, two customers individually exceeded 10% of the Corporation’s consolidated accounts receivable which aggregated 54%of the Corporation’s consolidated accounts receivable. Customer E receivable balance was $10.7 million or 39% of total consolidated accounts receivable.Customer D receivable balance was $4.3 million or 16% of total consolidated accounts receivable. FS-38 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 18 — FINANCIAL INSTRUMENTS The following table presents the carrying amount and estimated fair value of the Corporation’s financial instruments recognized at fair value on a recurringbasis as of December 31, 2013. Fair Value Carrying Amount Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Note payable to Former SAE stockholders as ofDecember 31, 2013 $12,406 — — $12,406 Fair values of the note payable to Former SAE stockholders are derived using the net present value of expected cash flow discounted using a rate based onyield curves for similar U.S. Dollar debt instruments adjusted for the specific terms of the note payable to the Former SAE stockholders and other factors suchas the Corporation’s own cost of capital in recent financing transactions. As of December 31, 2013, the face amount of the note payable to Former SAEstockholders was $17,500 with a fair value of $12,406. An increase of 2% in the discount rate would result in a decrease in the fair value of $1,067 and adecrease of 2% would result in an increase in the fair value of $1,235. The following table summarizes the change in fair value of the note payable to Former SAE stockholders for the respective periods: Notes payable toFormer SAEStockholders Beginning balance $11,775 Unrealized (Gain)/Loss 631 Ending balance $12,406 The following table presents the carrying amount and estimated fair value of the Corporation’s financial instrument recognized at fair value on a recurringbasis as of December 31, 2012. Fair Value Carrying Amount Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Warrant liabilities as of December 31, 2012 $1,244 — — $1,244 FS-39 SAExploration Holdings, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except for share amounts and as otherwise noted) NOTE 19 — JOINT VENTURE Effective November 19, 2012, an agreement was entered into between the Corporation and a village corporation in the north slope of Alaska (“Village Corp”)to form a separate legal entity (“Joint Venture”) for the purpose of performing contracts for the acquisition and development of geophysical and seismic dataand for geophysical and seismic services and any and all related work anywhere on the north slope of Alaska (onshore or offshore), for a period of five years.The Joint Venture subcontracts exclusively with the Corporation to provide the resources necessary to perform the services called for in contracts obtained bythe Joint Venture. The Joint Venture earns 10% of the gross contract revenues, which are distributed based on the relative percentage ownership of theCorporation and Village Corp. The Corporation and Village Corp’s percentage ownership interest in the Joint Venture are 49.0% and 51.0%, respectively,based on consideration provided of $490 and $510, respectively. The Joint Venture was formed as a limited liability company, granting both the Corporationand Village Corp the ability to designate two of the four members of the Joint Venture’s management committee. The Corporation, however, based on itspower to influence the significant business activities of the Joint Venture is determined to be the primary beneficiary and as such consolidates the JointVenture in accordance with the variable interest entities subsection under ASC 810-10. The results of the Joint Venture are presented gross and allintercompany transactions are eliminated upon consolidation. For the years ended December 31, 2013 and 2012, the Corporation recorded income of lessthan $0.1 million and $0, respectively. As of December 31, 2013 and 2012, the Corporation had accounts payable of less than $0.1 million and $0,respectively to Village Corp. NOTE 20 — SUBSEQUENT EVENTS Warrant ExchangeOn January 7, 2014, the Corporation commenced an offer to exchange warrants to purchase 15.0 million shares of its common stock for up to 1.5 millionshares of its common stock (the “Warrant Exchange”). Each warrant holder had the opportunity to receive one share of the Corporation’s common stock inexchange for every ten outstanding warrants tendered by the holder and exchanged pursuant to the Warrant Exchange. In lieu of issuing fractional shares ofcommon stock, the Corporation paid cash to each holder of warrants who would otherwise have been entitled to receive fractional shares, after aggregating allsuch fractional shares of such holder, in an amount equal to such fractional part of a share multiplied by the last sale price of a share of the Corporation’scommon stock on the Nasdaq Global Market on February 7, 2014. The Warrant Exchange offer period expired on February 7, 2014 and a total of 14,418,193 warrants were tendered and accepted for exchange. On February14, 2014, the Corporation issued 1,441,813 shares and paid $52 cash in lieu of fractional shares in exchange for such tendered warrants. Conversion of Convertible NotesOn January 8, 2014, Eric S. Rosenfeld and David D. Sgro, two of the Corporation’s founding stockholders and current directors, elected to convert promissorynotes in the aggregate principal amounts of $300 and $200, respectively, into Convertible Debt Warrants to purchase an aggregate of 600,000 and 400,000shares, respectively, of the Corporation’s common stock. Messrs. Rosenfeld and Sgro each exchanged such warrants for common stock, at a ratio of tenwarrants for one share, in the Warrant Exchange. Conversion of Exchangeable SharesOn March 7, 2014, the holders of the common shares issued by 1623739 Alberta Ltd., a wholly-owned Canadian subsidiary of the Corporation, elected toexchange those shares for their allocable portion of the consideration issued to the Former SAE stockholders in the Merger, which included 254,558 shares ofthe Corporation’s common stock that were released from the Merger Consideration Escrow. The exchanged shares of 1623739 Alberta Ltd. are no longeroutstanding. FS-40 EXHIBIT INDEX ExhibitNo. Description Included Form Filing Date1.1 Form of Underwriting Agreement. By Reference S-1/A April 28, 2011 2.1 Agreement and Plan of Reorganization dated as of December 10,2012, by and among the Registrant., Trio Merger Sub, Inc.,SAExploration Holdings, Inc. and CLCH, LLC. By Reference 8-K December 11, 2012 2.2 First Amendment to Agreement and Plan of Reorganization datedas of May 23, 2013, by and among the Registrant, Trio MergerSub, Inc., SAExploration Holdings, Inc. and CLCH, LLC. By Reference 8-K May 28, 2013 3.1 Second Amended and Restated Certificate of Incorporation. By Reference 8-K June 28, 2013 3.2 Amended and Restated Bylaws. By Reference 8-K June 28, 2013 4.1 Specimen Common Stock Certificate. By Reference 8-K June 28, 2013 4.2 Specimen Warrant Certificate. By Reference 8-K June 28, 2013 4.3 Form of Warrant Agreement by and between Continental StockTransfer & Trust Company and the Registrant. By Reference S-1/A April 28, 2011 4.4 Amendment to Warrant Agreement dated June 24, 2013, by andbetween Continental Stock Transfer & Trust Company and theRegistrant. By Reference 8-K June 28, 2013 10.1 Credit Agreement dated as of November 28, 2012, by and amongSAExploration Holdings, Inc., as parent, SAExploration, Inc.,SAExploration Seismic Services (US), LLC and NES, LLC, asborrowers, the lenders party thereto, and CP Admin Co LLC, asAdministrative Agent. By Reference 8-K/A October 10, 2013 10.2 Amendment No. 1 to Credit Agreement dated as of December 5,2012, by and among SAExploration Holdings, Inc.,SAExploration, Inc., SAExploration Seismic Services (US), LLC,NES, LLC, the lenders party thereto, and CP Admin Co LLC, asAdministrative Agent. By Reference 8-K/A October 10, 2013 10.3 Amendment No. 2 and Consent to Credit Agreement dated as ofJune 24, 2013, by and among SAExploration Holdings, Inc.,SAExploration, Inc., SAExploration Seismic Services (US), LLC,NES, LLC, the lenders party thereto, and MC Admin Co LLC, asAdministrative Agent. By Reference 8-K/A October 10, 2013 41 10.4 Joinder to Credit Agreement dated as of June 24, 2013, betweenthe Registrant and MC Admin Co LLC. By Reference 8-K June 28, 2013 10.5 Amendment No. 3 to Credit Agreement dated as of October 31,2013, by and among the Registrant, SAExploration Sub, Inc.,SAExploration, Inc., SAExploration Seismic Services (US), LLC,NES, LLC, the lenders party thereto, and MC Admin Co LLC, asAdministrative Agent. By Reference 8-K November 1, 2013 10.6 Waiver Agreement dated as of October 31, 2013, among theRegistrant, CLCH, LLC, Seismic Management Holdings Inc. andBrent Whiteley. By Reference S-4 November 1, 2013 10.7 Indemnity Escrow Agreement dated as of June 24, 2013, by andamong SAExploration Holdings, Inc., CLCH, LLC, andContinental Stock Transfer & Trust Company. By Reference 8-K June 28, 2013 10.8 Merger Consideration Escrow Agreement dated as of June 24,2013, by and among SAExploration Holdings, Inc., CLCH, LLC,and Continental Stock Transfer & Trust Company. By Reference 8-K June 28, 2013 10.9 Registration Rights Agreement dated June 24, 2013 by andbetween SAExploration Holdings, Inc. and CLCH, LLC. By Reference 8-K June 28, 2013 10.10 Form of Indemnification Agreement. By Reference 8-K June 28, 2013 10.11 Unsecured Promissory Note in the amount of $17,500,000 bySAExploration Holdings, Inc. for the benefit of CLCH, LLC, asrepresentative. By Reference 8-K June 28, 2013 10.12 Employment Agreement dated June 24, 2013, by and betweenSAExploration Holdings, Inc. and Jeff Hastings. By Reference(*) 8-K June 28, 2013 10.13 Employment Agreement dated June 24, 2013, by and betweenSAExploration Holdings, Inc. and Brian Beatty. By Reference(*) 8-K June 28, 2013 10.14 Employment Agreement dated June 24, 2013, by and betweenSAExploration Holdings, Inc. and Brent Whiteley. By Reference(*) 8-K June 28, 2013 10.15 Form of Non-Disclosure Agreement between the Registrant andeach of Jeff Hastings, Brian Beatty and Brent Whiteley. By Reference 8-K June 28, 2013 10.16 Form of Lock-Up Agreement between the Registrant and each ofthe former stockholders of SAExploration Holdings, Inc. By Reference 8-K June 28, 2013 10.17 Employment Agreement dated July 1, 2011, by and betweenSAExploration, Inc. (f/k/a South American Exploration LLC) andMike Scott. By Reference(*) 8-K June 28, 2013 10.18 Employment Agreement dated July 15, 2011, by and betweenSAExploration, Inc. (f/k/a South American Exploration LLC)and Darin Silvernagle. By Reference(*) 8-K June 28, 2013 10.19 SAExploration Holdings, Inc. 2013 Long-Term IncentivePlan. By Reference(*) 8-K June 28, 2013 10.20 SAExploration Holdings, Inc. 2013 Non-Employee DirectorShare Incentive Plan. By Reference(*) 8-K August 19, 2013 10.21 Form of Notice of Stock Award and Agreement under theSAExploration Holdings, Inc. 2013 Non-Employee DirectorShare Incentive Plan between the Registrant and each of GaryDalton, Gregory R. Monahan, Eric S. Rosenfeld and David D.Sgro. By Reference(*) S-4/A December 10, 2013 10.22 Form of Letter Agreement among the Registrant,EarlyBirdCapital, Inc. and each of the Registrant’s Officers,Directors and Initial Stockholders. By Reference S-1/A April 28, 2011 10.23 Form of Investment Management Trust Agreement betweenContinental Stock Transfer & Trust Company and theRegistrant. By Reference S-1/A May 23, 2011 10.24 Form of Escrow Agreement between the Registrant,Continental Stock Transfer & Trust Company and the InitialStockholders. By Reference S-1/A April 28, 2011 10.25 Form of Registration Rights Agreement among the Registrantand the Initial Stockholders and EarlyBirdCapital, Inc. By Reference S-1/A April 28, 2011 10.26 Form of Subscription Agreements among the Registrant,Graubard Miller and the Purchasers of Insider Warrants andEBC Warrants. By Reference S-1/A April 28, 2011 10.27 Form of Warrant Consent and Support Agreement. By Reference 8-K December 11, 2012 14.1 Code of Ethics. By Reference S-1/A April 28, 2011 21.1 List of subsidiaries. Herewith 23.1 Consent of Grant Thornton LLP. Herewith 31.1 Certification of Chief Executive Officer pursuant to Section302 of the Sarbanes-Oxley Act of 2002. Herewith 31.2 Certification of Chief Financial Officer pursuant to Section302 of the Sarbanes-Oxley Act of 2002. Herewith 32.1 Certification of Chief Executive Officer pursuant to Section906 of the Sarbanes-Oxley Act of 2002. Herewith 32.2 Certification of Chief Financial Officer pursuant to Section906 of the Sarbanes-Oxley Act of 2002. Herewith 101.IN XBRL Instance Document Herewith(**) 101.SCH XBRL Taxonomy Extension Scheme Document Herewith(**) 101.CAL XBRL Taxonomy Calculation Linkbase Document Herewith(**) 101.DEF XBRL Taxonomy Extension Definition Document Herewith(**) 101.LAB XBRL Taxonomy Label Linkbase Document Herewith(**) 101.PRE XBRL Taxonomy Presentation Linkbase Document Herewith(**) (*)Denotes compensation arrangement.(**)Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files attached as Exhibit 101 hereto are deemed not filed or part of a registrationstatement or prospectus for purposes of Section 11 or Section 12 of the Securities Act of 1933, as amended, and are deemed not filed for purposes ofSection 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. Exhibit 21.1 SUBSIDIARIES OF SAEXPLORATION HOLDINGS, INC. Name State or County of OrganizationSAExploration Sub, Inc. DelawareSAExploration, Inc. DelawareSAExploration Seismic Services (US), LLC DelawareNES, LLC AlaskaSoutheast Asian Exploration Pte., Ltd. SingaporeSouth American Exploration (Australia) PTY Limited AustraliaSAExploration (Brasil) Servicos Sismicos Ltda. BrazilSAExploration (Colombia) S.A.S. Colombia1623739 Alberta Ltd. Alberta, CA1623753 Alberta Ltd. Alberta, CASAExploration (Canada) Ltd. Alberta, CASAExploration Ltd. Alberta, CASAExploration (Malaysia) Sdn. Bhd. (f/k/a Pacific Rhapsody Sdn. Bhd.) MalaysiaKuukpik/SAExploration, LLC1 Alaska 1 SAExploration, Inc. owns 49%; Kuukpik Corporation owns 51%. Exhibit 23.1 Consent of Independent Registered Public Accounting Firm We have issued our report dated April 3, 2014, with respect to the consolidated financial statements included in the Annual Report of SAExplorationHoldings, Inc. on Form 10-K for the year ended December 31, 2013. We hereby consent to the incorporation by reference of said report in theRegistration Statement of SAExploration Holdings, Inc. on Form S-4 (File No. 333-192034, effective January 6, 2014). /s/ Grant Thornton LLP Miami, FloridaApril 3, 2014 Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICERPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Brian A. Beatty, certify that: 1.I have reviewed this annual report on Form 10-K for the year ended December 31, 2013 of SAExploration Holdings, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. Date: April 3, 2014/s/ Brian A. Beatty Brian A. Beatty President and Chief Executive Officer (Principal Executive Officer) Exhibit 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICERPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Brent Whiteley, certify that: 1.I have reviewed this annual report on Form 10-K for the year ended December 31, 2013 of SAExploration Holdings, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. Date: April 3, 2014/s/ Brent Whiteley Brent Whiteley Chief Financial Officer, General Counsel and Secretary(Principal Financial Officer) Exhibit 32.1 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of SAExploration Holdings, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2013, as filed withthe Securities and Exchange Commission on the date hereof (the “Report”), I, Brian A. Beatty, President and Chief Executive Officer of the Company, certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: 1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: April 3, 2014/s/ Brian A. Beatty Brian A. Beatty President and Chief Executive Officer (Principal Executive Officer) Exhibit 32.2 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of SAExploration Holdings, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2013, as filed withthe Securities and Exchange Commission on the date hereof (the “Report”), I, Brent Whiteley, Chief Financial Officer, General Counsel and Secretary of theCompany, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of myknowledge: 1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: April 3, 2014/s/ Brent Whiteley Brent Whiteley Chief Financial Officer, General Counsel and Secretary(Principal Financial Officer)
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