SAExploration Holdings, Inc.
Annual Report 2015

Plain-text annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 10-Kþ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2015or ¨ ¨ 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 Rd., Suite 160, Houston, Texas77079(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 ¨NoþþIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨NoþþIndicate 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 þ þ 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 þ þ 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. Yes ¨ NoþþIndicate 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 company þþIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ NoþþThe aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2015, the last business day ofthe registrant’s most recently completed second fiscal quarter was $19,957,245, calculated by reference to the closing price of $3.40 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 9, 2016: 17,451,353 DOCUMENTS INCORPORATED BY REFERENCEProxy Statement for 2016 Annual Meeting of Stockholders -- Referenced in Part III of this ReportTABLE OF CONTENTS PART I2ITEM 1. Business.2ITEM 1A. Risk Factors.11ITEM 2. Properties.24ITEM 3. Legal Proceedings.24 PART II25ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.25ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations26ITEM 8. Financial Statements and Supplementary Data.41ITEM 9A. Controls and Procedures.41 PART III42ITEM 10. Directors, Executive Officers and Corporate Governance.42ITEM 11. Executive Compensation.42ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.42ITEM 13. Certain Relationships and Related Transactions, and Director Independence.42ITEM 14. Principal Accountant Fees and Services.42 PART IV43ITEM 15. Exhibits and Financial Statement Schedules.43Exhibit Index45Index to Financial Statements.FS-1i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 and delayed payment risks related to our customers;•the availability of capital resources;•changes in the Alaskan oil and natural gas exploration tax credit system that may significantly affect the level of Alaskan exploration spending;•need to manage rapid growth and contraction of our business;•delays, reductions or cancellations of service contracts;•operational disruptions due to seasonality, weather and other external factors;•crew availability and productivity;•whether we enter into turnkey or term contracts;•high fixed costs of operations;•substantial international business exposing us to currency fluctuations and global factors, including economic, political and militaryuncertainties;•ability to retain key executives; and•need to comply with diverse and complex laws and regulations.Refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this report for specificrisks which would cause actual results to be significantly different from those expressed or implied by any of our forward-looking statements. It is notpossible to identify all of the risks, uncertainties and other factors that may affect future results. In light of these risks and uncertainties, the forward-lookingevents and circumstances discussed in this report may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. Accordingly, readers of this report are cautioned not to place undue reliance on the forward-looking statements.1PART IITEM 1. Business.Overview SAExploration Holdings, Inc. and its Subsidiaries (collectively, the “Corporation”, "we", or "our") is an internationally-focused oilfield services companyoffering a full range of vertically-integrated seismic data acquisition and logistical support services in Alaska, Canada, South America, and Southeast Asia toour customers in the oil and natural gas industry. In addition to the acquisition of 2D, 3D, time-lapse 4D and multi-component seismic data on land, intransition zones between land and water, and offshore in depths reaching 3,000 meters, we offer a full-suite of logistical support and in-field data processingservices. We operate crews around the world that are supported by over 29,500 owned land and marine channels of seismic data acquisition equipment andother leased equipment as needed to complete particular projects. Seismic data is used by our customers, including major integrated oil companies, nationaloil companies and independent oil and gas exploration and production companies, to identify and analyze drilling prospects and maximize successfuldrilling. The results of the seismic surveys we conduct belong to our customers and are proprietary in nature; we do not acquire data for our own account orfor future sale or maintain multi-client data libraries.We specialize in the acquisition of seismic data in logistically complex and challenging environments and delicate ecosystems, including jungle, mountain,arctic and subaquatic terrains. We have extensive experience in deploying personnel and equipment in remote locations, while maintaining a strong quality,health, safety and environmental ("QHSE") track record and building positive community relations in the locations where we operate. We employ highlyspecialized crews made up of personnel with the training and skills required to prepare for and execute each project and, over time, train and employ largenumbers of people from the local communities where we conduct our surveys. Our personnel are equipped with the technology necessary to meet the specificneeds of the particular project and to manage the challenges presented by sensitive environments.We were initially 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 into our wholly-owned subsidiary (the “Merger”), and we operate the business of Former SAE.Our principal headquarters are located in Houston, Texas at 1160 Dairy Ashford Rd., Suite 160, Houston, Texas, 77079, Telephone: (281) 258-4400, and ourweb 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 and branchoffices in the United States (primarily Alaska), Canada, Peru, Colombia, Papua New Guinea, Brazil, Bolivia, Malaysia, and New Zealand. Pursuant to our2014 proposed Foreign Subsidiary Reorganization, we transferred the assets used in our foreign branch operations as of December 31, 2014, to existing ornew subsidiaries incorporated in the same jurisdictions in which the branches were located. These transfers were made either as tax-free transactions or withminimal gains or losses recognized. Seismic Data Acquisition Services We provide a full range of seismic data acquisition services, including in-field data processing, and related logistics services. We currently provide ourservices on only a proprietary basis to our customers and the seismic data acquired is owned by our customers once acquired.Our seismic data acquisition and logistics services include the following:•Program Design•Planning and Permitting•Camp Services•Survey•Drilling•Recording2•Reclamation; and•In-field Data ProcessingProgram Design, Planning and Permitting. A seismic survey is initiated at the time the customer requests a proposal to acquire seismic data on its behalf. Weemploy an experienced design team, including geophysicists with extensive experience in 2D, 3D and time-lapse 4D survey design, to recommendacquisition parameters and technologies to best meet the customer’s exploration objectives. Our design team analyzes the request and works with thecustomer to put an operational, personnel and capital resource plan in place to execute the project.Once a seismic program is designed, we assist the customer in obtaining the necessary permits from governmental authorities and access rights of way fromsurface and mineral estate owners or lessees where the survey is to be conducted. It is usually our permitting crew that is first to engage with the localresidents and authorities. We believe our knowledge of the local environment, cultural norms and excellent QHSE track record enable us to engender trustand goodwill with the local communities, which our customers are able to leverage over the longer exploration cycle in the area.Camp Services. We have developed efficient processes for assembling, operating and disassembling field camps in challenging and remote project locations.We operate our camps to ensure the safety, comfort and productivity of the team working on each project and to minimize our environmental impact throughthe use of wastewater treatment, trash management, water purification, generators with full noise isolation and recycling areas.In areas like South America and Southeast Asia, logistical support needs to be in place to establish supply lines for remote jungle camps. To insure thequality of services delivered to these remote camps, we own ten supply and personnel river vessels to gain access to remote jungle areas. We also have fivejungle 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 full servicemedical facility complete with doctors and nurses in the remote chance any potential injuries need to be stabilized 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 the permitting is completed, oursurvey crews enter the project areas and begin establishing the source and receiver placements in accordance with the survey design agreed to by thecustomer. 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 are usually employed by us but may be third party contractors depending on the nature of the project and its location.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 Alaska and Canada 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 objectives.In Alaska and Canada, the surveying and drilling crews are typically provided by third party contractors but are supervised by our personnel. In Alaska andCanada, our vibroseis source units consist of the latest source technology, including eight AHV IV 364 Commander Vibrators and six environmentallyfriendly IVI mini vibrators, complete with the latest Pelton DR electronics. In South America and Southeast Asia, we perform our own surveying and drilling,which is supported by up to 200 drilling units, including people-portable, low impact self-propelled walk behind, track-driven and heli-portable deployeddrilling 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 mostprograms there are 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 and measure the reflected signals with strategically placed sensors. Onshore, geophones are manuallyburied, or partially buried, to ensure good coupling with the surface and to reduce wind noise. Offshore, the reflected signals are recorded by eitherhydrophones towed behind a survey vessel or by geophones placed directly on the seabed. We increasingly employ ocean bottom nodes positioned byremote operated vehicles on the seafloor in our marine data acquisition operations. We have available over 29,500 owned land and marine seismic recordingchannels with the ability to access additional equipment, as needed, through rental or long-term leasing sources. All of our systems record equivalent seismicinformation but vary in the manner by which seismic data is transferred to the central recording unit, as well as their operational flexibility and channel countexpandability. We utilize 11,500 channels of Sercel 428/408 equipment, 6,000 channels3of Fairfield Land Nodal equipment, 2,000 units Fairfield Ocean Bottom Nodal equipment and 10,000 channels of Geospace GSX equipment.We have made significant capital investments to increase the recording capacity of our crews by increasing channel count and the number of energy sourceunits we operate. This increase in channel count demand is driven by customer needs and is necessary in order to produce higher resolution images, increasecrew efficiencies and undertake larger scale projects. In response to project-based channel requirements, we routinely deploy a variable number of channelswith a variable number of crews in an effort to maximize asset utilization and meet customer needs. When recording equipment is at or near full utilization,we utilize rental equipment from strategic suppliers to augment our existing inventories. We believe we will realize the benefit of increased channel countsand flexibility of deployment through increased crew efficiencies, higher revenues and increased margins.During the past three years, we dedicated a significant portion of our capital investment to purchasing and leasing wireless recording systems rather than thetraditional wired systems. We utilize this equipment as primarily stand-alone recording systems, but on occasion it is used in conjunction with cable-basedsystems. The wireless recording systems allow us to gain further efficiencies in data recording and provide greater flexibility in the complex environments inwhich we operate. In addition, we have realized increased crew efficiencies and lessened the environmental impact of our seismic programs due to thewireless recording systems because they require the presence of fewer personnel and less equipment in the field. We believe we will experience continueddemand 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 customers enhancetheir development of producing reservoirs. Multi-component recording involves the collection of different seismic waves, including shear waves, which aidsin reservoir analysis such as fracture orientation and intensity in shales and allows for more descriptive rock properties.Reclamation. We have experienced teams responsible for reclamation of the areas where work has been performed so as to minimize the environmentalfootprint from the seismic program. These programs can include reforestation or other activities to restore the natural landscape at our worksites.In-field Data Processing. Our knowledgeable and experienced team provides our customers with superior quality in-field data processing. We believe thatour strict quality control processes meet or surpass industry-established standards, including identifying and analyzing ambient noise, evaluating fieldparameters and employing obstacle-recovery strategies. Using the latest technology, our technical and field teams electronically manage customer data fromthe field to the processing office, minimizing time between field production and processing. All of the steps employed in our in-field data processingsequence are tailored to the particular customer project and objectives.Industry OverviewSeismic technology is the primary tool used to locate oil and gas reserves, and it facilitates the development of complex reservoirs. Seismic data is used topinpoint and determine the locations of subsurface features favorable for the accumulation of hydrocarbons, as well as define the make-up of the sedimentaryrock layers and their corresponding fluids. Seismic data is acquired by introducing acoustic energy into the earth and water through controlled energysources. Seismic energy sources can consist of truck-mounted vibration equipment in accessible terrain, explosives such as dynamite in more difficult terrain,or vessel-mounted air guns in shallow water and certain marsh environments. The sound waves created by explosives or vibration equipment are reflectedback to the surface and collected by seismic sensors referred to as “geophones” or “hydrophones,” which measure ground and water displacement. One ormore strategically positioned seismic sensors are connected to a recording channel which transmits the data to a central recording location. A typical projectinvolves the use of thousands, and sometimes tens of thousands, of channels recording simultaneously over the survey area. In general, the higher the numberof recording channels employed in a given survey, the richer the data set that is produced.A seismic survey is acquired with a surface geometry grid of seismic energy sources and receivers extending over very large areas. The size of this grid varieswith and depends on the size, depth and geophysical characteristics of the target to be imaged. The lines must be accurately positioned, so the location ofeach source and receiver point is obtained using either GPS, inertial, or conventional optical survey methods depending upon the vegetation andenvironment in the prospect area. Seismic receivers are deployed on the surface of the area being surveyed at regular intervals and patterns to measure,digitize and transmit reflected seismic energy to a set of specialized recording instruments. The transportation of cables, geophones and field recordingequipment can be by truck, vessel or helicopter depending upon the terrain and environment within the area to be imaged.Land seismic data acquisition. For land applications, geophones are buried, or partially buried, to ensure good coupling with the surface and to reduce windnoise. Burying geophones in the ground is a manual process and may involve anywhere from a few4to more than 100 people depending on the size of the seismic crew and the terrain involved. Cables that connect the geophones to cabled recording systemsmay also be deployed manually or, in some cases, automatically from a vehicle depending on the terrain. The acoustic source for land seismic dataacquisition is typically a fleet of large hydraulic vibrator trucks, but may also be explosives detonated in holes drilled for such purposes.On a typical land seismic survey, the seismic recording crew is supported by a permitting and surveying crew along with a vibroseis and/or drilling crew. Thepermitting crew secures permission from the landowner and mineral owner or lease to gain access to the surface and subsurface rights to conduct the seismicprogram. The surveying crew lays out the receiver locations to be recorded and, in a survey using an explosive source, identifies the sites where the drillingcrew creates the holes for the explosive charges that produce an acoustical impulse. In other surveys, a mechanical vibrating unit, such as a vibrator truck, isused as the seismic energy source. The seismic crew lays out the geophones and recording instruments, directs shooting operations and records the acousticalsignal reflected from subsurface strata. The number of individuals on each crew is dependent upon the size and nature of the seismic survey.Offshore seismic data acquisition. In marine surveys, air guns, which release high-pressure compressed air into the water column, are used as the acousticenergy source. For ocean bottom cable operations, an assembly of vertically oriented geophones and hydrophones connected by electrical wires typically isdeployed on the sea floor to record and relay data to a seismic recording vessel. Increasingly, ocean bottom nodes positioned by remote operated vehicles areused in areas of obstructions (such as production platforms) or shallow water inaccessible to ships towing seismic streamers (such as submerged cables).Transition zone seismic data acquisition. In the transition zone area where land and water come together, elements of both land data acquisition and offshoredata acquisition are employed. Transition zone seismic data acquisition is similar to ocean bottom cable applications in that both hydrophones andgeophones are lowered to the ocean floor. However, due to the shallow water depths, only small vessels and manual labor can be used to deploy and retrievethe cables. Additionally, the source vessels and acoustic source arrays must be configured to run in shallow water. In transition zone areas consisting ofswamps and marshes, explosives must be used as an acoustic source in addition to air guns.Two-dimensional, or 2D, seismic data is recorded using single lines of receivers crossing the earth’s surface, and, once processed, results in only a profileimage of the earth, and the data is generally used only to identify gross structural features. Prior to 1980, all seismic data acquired was 2D, and 2D surveys arestill widely employed in locations previously unexplored by E&P companies to provide preliminary data for broad-scale exploration evaluation. Three-dimensional, or 3D, seismic data surveys have proven more effective in providing detailed views of subsurface structures.The increased use of 3D seismic data by the oil and natural gas industry in the 1980s helped drive significant increases in drilling success rates as better dataquality allowed operators to optimize well locations and results. Today, the vast majority of seismic data acquired in North America is 3D, of which highdensity 3D is a growing component.More recently, the seismic industry has seen the development of four-dimensional, or 4D, imaging technology, also known as time-lapse seismic. 4D seismicdata incorporates numerous 3D seismic surveys over the same reservoir at specified intervals of time and can help determine changes in flow, pressure andsaturation. As hydrocarbons are depleted from a field, the pressure and composition of the fluids may change. By scanning a reservoir over a given period oftime, the flow of the hydrocarbons within can be traced and better understood. In addition, 4D seismic data can help geologists understand how a reservoirreacts to gas injection or water flooding and can help locate untapped pockets of oil or natural gas within the reservoir.In conventional 3D seismic surveys, only the primary wave, or P-wave, is acquired. P-wave reflection cannot always image fluid saturated zones properly.Multi-component seismic data acquisition captures the seismic wave field more completely than conventional P-wave techniques. In multi-componentacquisition, multiple sets of data are received at each receiver, P-wave and two measurements (X, Y) of the shear wave, or S-wave. Information obtained fromthe S-wave passing through a fluid-saturated medium provides a better interpretation of the reservoir structure. Evaluating P- and S-wave data togetherprovides additional information to reduce uncertainty in prospect evaluation.Once seismic data is acquired, complex mathematical algorithms are used to transform the data into 2D profiles, 3D volumes of the earth’s subsurface or 4Dtime-lapse seismic data. These images are then interpreted by geophysicists and geologists for use by oil and natural gas companies in evaluating prospectiveareas, designing drilling programs, selecting drilling sites and managing producing reservoirs.5Markets and TrendsNorth AmericaThe North American market has historically been a stable and sustainable market for 3D seismic data acquisition. Use of 3D technology is the norm in theUnited 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 in Alaska. Witheach of those acquisitions, we brought on board personnel with extensive operations experience in each location. Our operations in the North Americanmarket are consistent with our strategy to help increase our equipment utilization rates, while concurrently increasing margins, by balancing growth in Northand South America, which have complementary operating seasons. While this model continues to be a viable operating model, the recent market downturnhas created significant pressure on competitive cost structures and pricing. This trend is expected to continue as long as commodity prices remain low.South AmericaThe economies in South American countries continue to expand and develop, demanding significantly more energy to fuel their growth. As the politicalenvironments stabilize, oil companies are increasing operations in the market and are seeking experienced seismic service providers with complexenvironment know-how, strong QHSE records and excellent relations with local communities to satisfy their exploration needs.We have maintained operations in South America since 2006 while further growing our presence in Bolivia, Brazil, Colombia, and Peru.Southeast AsiaExploration activities in Southeast Asia have declined recently with lower commodity prices but there is a steady demand for energy in the region. In 2010,we entered the Southeast Asian market by commencing operations in Papua New Guinea for one of our major long-time customers. We have expanded ouroperations in Southeast Asia into New Zealand and shallow-water marine work in Malaysia. During 2013, we also opened an office in Malaysia to pursuesignificant opportunities within the region.StrengthsFull service logistics provider. A majority of our revenues is earned through high-margin logistics-related activities performed in-house. Unlike many otherseismic data acquisition companies, we focus on providing a complete service and logistical solutions package, especially in our international operations,which allows efficient movement into remote areas. This provides us with opportunities to capture a larger portion of the revenues associated with eachproject and gives us what we believe to be a strategic advantage over our competitors, who generally outsource logistics services to multiple third parties.Usually we are the first point of contact with the local communities, and we believe having contact with these communities from initiation of the projectthrough the seismic phase and demonstrating our commitment to QHSE forms relationships that benefit us and our customers over the longer term.Additionally, our logistical expertise can be a value proposition in price negotiations with our customers, allowing us to maintain higher margins in certainregions of the world, particularly in the more remote areas and challenging environments.International platform. We operate in numerous regions around the world and continue to maintain our market share in those markets. Our experienceincludes projects in Alaska, Canada, Bolivia, Brazil, Colombia, Peru, Malaysia, Papua New Guinea and New Zealand. We maintain a local presence in manyof these areas. As the majority of our operations are focused in locations previously unexplored by E&P companies, the first projects in those areas tend to befor the acquisition of 2D data for preliminary, broad-scale exploration evaluation. That initial acquisition often leads to further work, as the 2D data is used todetermine the location and design of additional 3D and 4D surveys, which are then used for more detailed analysis to maximize actual drilling potential andsuccess. Typically once we are hired for a project, we tend to get follow-on surveys due to our familiarity with the customer, the local communities and theproject. The international platform also enables us to expand and contract in various regions around the world to match the changes in demand in certainregions as driven by commodity prices, economic factors and energy consumption in the local markets.Extensive experience in challenging environments. We specialize in seismic data acquisition services in logistically challenging environments on land, intransition zones and in water. We believe that our extensive experience operating in such complex locations, including our expertise in logisticsmanagement and deploying personnel and equipment customized for the applicable environment, provides us with a significant competitive advantage.Many of the areas of the world where we work have limited seasons for seismic data acquisition, requiring high utilization of key personnel andredeployment of equipment from one part of6the world to another. Most of our remote area camps, drills and support equipment are easily containerized for transport to locations anywhere 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 our crews and equipment toother parts of the world. We have a logistical support department that works with management to keep our equipment strategically located in areas of highutilization.Strong local relationships and stringent QHSE processes. E&P companies seek experienced seismic service providers with complex environment know-how,strong QHSE records and excellent relations with local communities to satisfy their seismic needs. Our highly trained and qualified QHSE team has extensiveexperience working in diverse ecosystems and complex cultural environments. We believe this experience allows us to deliver high quality data and efficientoperations through systems and processes designed to minimize health and safety risk and overall community and environmental impact. We believe that ourstrong local relationships, QHSE track record and our history of successful reclamation programs facilitate negotiating permits and other seismic dataacquisition rights on behalf of our customers.Cash flow generation supported by backlog and competitive bids. As of December 31, 2015, we had approximately $200 million of backlog under contract,in addition to approximately $283 million of bids outstanding, with minimal additional growth capex required. We believe our backlog results in longervisibility to future cash flows relative to our peers. Such visibility is also evidenced by our strong number of bids outstanding. Our key operations outside ofNorth America are generally in countries with strict concession leasing requirements, resulting in clients planning seismic shoots well in advance of thecapital being spent. Additionally, the short duration of operating seasons, especially in Alaska, leads to more advanced planning which in turn results in amore accurate cash flow forecast. Non-North American seismic shoots are also less susceptible to cancellation due to the long-term nature of very expensivedevelopment programs compared to more volatile, commodity-price driven shorter-term projects typical of North America.Strong relationships with blue chip customer base. Members of our management team have long-standing relationships often extending over 30 years withmany of the largest oil and gas companies in the world. Our global operating footprint allows us to leverage those relationships throughout the world, and webelieve our prior performance for those customers enhances our ability to obtain new business from existing and past customers.Experienced management team with significant operational experience and ownership stake. We believe the experience, knowledge base and relationshipsthat our management team has built over the years enhance our operating and marketing capabilities and underlie our strong reputation in the industry. Infact, we believe the operating expertise of our management team frequently leads to winning bids for new business. Virtually every member of ourmanagement team has technological and first-hand experience of the seismic data acquisition industry stemming from years of field work. Our managementteam currently owns approximately one-third of our outstanding equity, which we believe provides a strong alignment of the interests of our executives withour company and our investors.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 in logisticsand our ability to provide a complete solution in remote and complex areas.We plan to build upon our competitive strengths to grow our business through the following strategies:•Maintain strict focus on contract work with key clients. We intend to continue to work on a fully contracted basis with major national andinternational oil and gas companies and capitalize on our long-term relationships with our customers. Unlike many of our competitors, we do notacquire data for our own use or maintain multi-client data libraries, which are either unfunded or partially funded speculative libraries, and involvesignificantly more risk and uncertainty. We seek 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;•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; and7•Financial risk-we employ a higher proportion of turnkey contracts in our operations, which shift most of the business interruption risks ontous.•Provide full in-house logistics services. We intend to continue to focus on our logistics expertise, which, in addition to our seismic data acquisitionabilities, allows us to provide a complete service package to our customers. We believe our vertical integration will continue to provide for efficientmovement into remote areas as we further expand internationally, giving us a strategic advantage over our competitors. 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 equipmentfrom one part of the world to another. We believe that few of our competitors have a global reach that is similar to ours.•Focus on global diversification and capitalize on market positioning in emerging basins. We seek to maintain our market share in the markets inwhich we currently operate and continue our positioning into other emerging markets, such as worldwide ocean bottom seismic services, which webelieve hold the highest degree of potential for opportunities during this downturn in the overall market. Emerging economies will likely continueto expand and develop, demanding significantly more energy to fuel their growth. As the political environments stabilize in many of thosecountries, oil and natural gas companies will likely increase operations in these markets. With our geographic expansion from providing servicesexclusively in South America to providing services in Alaska, Canada and Southeast Asia, we are able to achieve better utilization of our personneland equipment through redeployment from off-season areas to in-season areas, helping to reduce some of the volatility in our financial performance.•Maintain local relationships and stringent QHSE processes as the foundation of all our projects. We plan to maintain our focus on strongcommunity relations and QHSE standards. We believe our continued success in those areas can be leveraged to help us further maintain our marketshare in these emerging markets. •Continue higher utilization of turnkey contracts to capitalize on higher operating margins. Our contracts for proprietary seismic data acquisitionservices reflect a high proportion of turnkey contracts, which are fixed fee, compared to term contracts, which use a variable or day-rate fee basis.This provides us with the opportunity to maximize the advantage we have from being a full-service provider and the operational efficiencies createdby our vertical integration. Our customers prefer turnkey contracts because they shift much of the business interruption risk onto us. We alsoincreasingly use hybrid contracts where we may share with our customers a certain degree of the risks for certain business interruptions, such asweather, community relations and permitting delays, that are outside of our control.We enable these strategies 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 a competitiveadvantage;•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 BusinessSeismic data acquisition services are performed outdoors and, consequently, are subject to weather and seasonality. Particularly in Alaska and Canada, theprimary season for seismic data acquisition is during the winter, from approximately December to April, since much of the terrain for seismic data acquisitioncannot be accessed until the ground has frozen. The weather conditions during this time of year can affect the timing and efficiency of operations. Inaddition, 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 Colombia, Bolivia and Peru are affected by heavy rain during certain parts of the year so we must either avoid taking projectsduring these time periods or limit the weather risk in a particular customer contract. Many of the heavy rain periods in South America, though, are during thehigh season for Alaska and Canada, and there are8opportunities to maximize the utilization of equipment and personnel by moving them between these regions to take 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 risks duringthe bidding process by utilizing the expertise of our personnel as to the weather in a particular area and through the negotiation of downtime clauses in ourcontracts 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 have localmanagers who interact with customers in each country of operations. Through these customer interactions, we are able to remain updated on a customer’supcoming projects in the area and to work with the customer on projects in other countries.Contracts are obtained either by direct negotiation with a prospective customer or through competitive bidding in response to invitations to bid. Most of ourrevenue historically has been generated through repeat customer sales and new sales to customers referred by existing and past customers. In addition, asignificant 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 prepared byknowledgeable regional operations managers who understand their respective markets, customers and operating conditions and who communicate directlywith 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 areas where wedo business, these projects can take a number of months in planning and consulting with the customer on exploration goals and parameters of the projects tofit within a particular budget. By working closely with the customer, we are able to acquire seismic data for a project efficiently and within the customer’srequired timeframe.Contracts and BacklogWe conduct data acquisition services under master service agreements with our customers that set forth certain obligations of our customers and us. Asupplemental agreement setting forth the terms of a specific project, which may be canceled 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 profitpotential, but involve more risks due to potential crew downtimes or operational delays. Under term agreements, we are ensured a more consistent revenuestream with improved protection from crew downtime or operational delays, but with a decreased profit potential.Our contracts for proprietary seismic data acquisition services reflect a high proportion of turnkey contracts, which is preferred by our customers because itshifts much of the business interruption risk onto us; however, it provides us with the greatest opportunity to maximize the advantage we have from being afull-service provider and the operational efficiencies created by our vertical integration. We attempt to negotiate on a project-by-project basis some level ofweather downtime protection within the turnkey agreements and increasingly use hybrid contracts where we may share with our customers a certain degree ofthe risks for certain business interruptions, such as weather, community relations and permitting delays, that are outside of our control.Our backlog estimates represent those projects for which a customer has executed a contract or signed a binding letter of award. Our backlog can varysignificantly from time to time, particularly if the backlog is made up of multi-year contracts with some of our more significant customers. Backlog estimatesare based on a number of assumptions and estimates including assumptions related to foreign exchange rates and proportionate performance of contracts. Therealization of our backlog estimates is further affected by our performance under term rate contracts, as the early or late completion of a project under termrate contracts will generally result in decreased or increased, as the case may be, revenues derived from those projects. Contracts for services are alsooccasionally modified by mutual consent and often can be terminated for convenience by the customer. Because of potential changes in the scope orschedule of our customers’ projects, and the possibility of early termination of customer contracts, we cannot predict with certainty when or if our backlogwill be realized. Material delays, payment defaults or cancellations on the underlying contracts could reduce the amount of backlog currently reported and,consequently, could inhibit the conversion of that backlog into revenues. In addition, worsening overall market conditions are likely to result in furtherreductions of backlog, which will impact our financial performance.9Customers Our customers include national and international oil companies and independent oil and gas exploration and production companies. Our revenues arederived from a concentrated customer base; however, we are not substantially dependent on any one customer. Based on the nature of our contracts andcustomer projects, our significant customers can and typically do change from year to year and the largest customers in any one year may not be indicative ofthe largest customers in the future. During the year ended December 31, 2015, we had four customers, Alaskan Seismic Ventures, Repsol, Prosper EnergySystems Group Sdn Bhd (Malaysia), and BP Exploration, that individually exceeded 10% of our consolidated revenue and represented 77% of consolidatedrevenue for the period. During the year ended December 31, 2014, we had two customers, Repsol and Pluspetrol, that individually exceeded 10% of ourconsolidated revenue and represented 47% of our consolidated revenue for the period.Competition The acquisition of seismic data for the oil and gas industry is a highly competitive business. Factors such as price, experience, asset availability and capacity,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. In addition, the recent excess supply and downturn in commodity prices has decreased demand for seismic services, furtherintensifying the competitive landscape and causing further pressure on pricing and margins.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.,BGP, Inc. and Dawson Geophysical Company. In addition to those companies, we also compete for projects from time to time with smaller seismic companiesthat operate in local markets.Intellectual Property We rely on certain proprietary information, proprietary software, trade secrets and confidentiality and licensing agreements to conduct our operations. Wecontinually strive to improve our operating techniques and technologies, through internal development activities and working with vendors to develop newprocesses and technologies to maintain pace with industry innovation. Through this process, we have developed certain proprietary processes and methods ofdoing business, particularly with respect to logistics. Although those processes and methods may not be patentable, we seek to protect our proprietaryinformation by entering into confidentiality agreements with our key managers and customers.Equipment Purchases and Capital Expenditures 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 natural gas exploration services market. Focusing on current worldwide oil and naturalgas markets, we will continue to employ and expand our wireless equipment on a worldwide basis while maintaining the ability to provide services to thestill existing cable markets. Our capital purchases have and will allow us to take advantage of all aspects of the geophysical exploration services market,ranging from land, marine and transition zone data acquisition; 2D, 3D, 4D and multi-component data acquisition; use of different methods to acquire datasuch as using vibroseis (vibrating) and impulsive sources; as well as vertical seismic profiling and reservoir monitoring. Investments in expanding furtherinto our South America and Southeast Asia markets will also focus upon surveying, drilling and base camp operations. However, given the state of theindustry and the significant reduction in oil and gas activity, we believe any significant investment in capital expenditures, particularly in large equipmentpurchases, is highly unlikely on our part until we see a consistent and sustainable recovery throughout the broader market.We commit capital funds to purchase or lease the equipment we deem most effective to conduct our operations and implement our business strategy.Purchasing new assets and upgrading existing capital assets requires a commitment to capital spending. During the last three years, in line with our focus onwireless land data acquisition, we purchased a cableless seismic data acquisition system which allows up to three crews to operate under the system at thesame time. Following customer needs for higher density land programs using a single point receiver application and to answer the demand for conventionaland unconventional oil and gas exploration, we purchased high sensitivity geophones and two types of vibrators, further strengthening our position as a fullsolution provider for land data acquisition methods and technologies. Additional equipment investments were made for ongoing operations in Alaska inorder to increase efficiency. We also invested in cable equipment in order to provide customers in Latin America with cable systems as wireless technology isslower to take hold in that market.During 2015, we made capital expenditures of approximately $6.4 million, which included purchases of data processing software and equipment and theremaining cash payments for our purchase in 2014 of non-seismic recording equipment necessary to outfit10a second crew on the North Slope in Alaska. During 2014, we made capital expenditures of approximately $28.2 million, which included purchases of non-seismic recording equipment necessary to outfit a second crew on the North Slope in Alaska and to acquire other seismic acquisition and logistics equipment.Under our business model, capital expenditures will be kept at minimum levels other than very low maintenance expenditures until we see improvement inthe overall oil and natural gas market.Government and Environmental Regulations Our operations are subject to various international, federal, provincial, state and local laws and regulations. Those laws and regulations govern variousaspects of operations, including the discharge of explosive materials into the environment, requiring the removal and clean-up of materials that may harm theenvironment or otherwise relating to the protection of the environment and access to private and governmental land to conduct seismic surveys. We believewe 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 and surveys aregenerally borne by our customers. Although our direct costs of complying with applicable laws and regulations have historically not been material, thechanging nature of such laws and regulations makes it impossible to predict the cost or impact of such laws and regulations on future operations. AdditionalUnited 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 couldalso negatively impact the demand for our services.Employees and Subcontractors As of February 29, 2016, we had 2,218 employees, 307 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 we describeare not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair ourbusiness or operations. Any adverse effect on our business, financial position, results of operations or liquidity could result in a decline in the value of ourcommon stock and other securities.Risks Relating to Our Business and Industry 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 natural gas prices, increased supply, and reduced demand, such has occurred recently, has had an adverseeffect on our business, liquidity and results of 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 supplies and prices. The markets for oil and natural gas have historically been volatileand are likely to continue to be so in the future. In addition to the market prices of oil and natural gas, our customers’ willingness to explore, develop andproduce depends largely upon prevailing industry conditions that are influenced by numerous factors over which our management has no control. A declinein oil and natural gas exploration activities and commodity prices, as has occurred recently, has adversely affected the demand for our services and our resultsof 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;11•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 natural gas reserves and the decline of existing oil and natural 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 and productionoperations;•technological advances affecting energy exploration, production and consumption;•government policies, including environmental regulations and tax policies, regarding the exploration for, production and development of oil andnatural gas reserves, the use of fossil fuels and alternative energy sources and climate change;•weather conditions, including large-scale weather events such as hurricanes that affect oil and natural gas operations over a wide area or affectprices; and•changes in the Alaskan oil and gas tax credit system which may significantly affect the level of exploration spending within Alaska.Over the last eighteen months, oil prices have declined significantly due in large part to increasing supplies, weakening demand growth, OPEC's and other oiland gas producing countries' position to not cut production and the lifting of sanctions against Iran. The weakening economic outlook for non-U.S. oildemand, especially in China and Europe, has put more downward pressure on prices. Thus, the price for crude oil has decreased significantly beginning in thethird quarter of 2014.As a result of recent decreases in crude oil prices, many E&P companies have announced that they are reducing their capital expenditures, which has resultedin diminished demand for our services and products and could cause downward pressure on the prices we charge or the level of work we do for our customers.We cannot assure you that the exploration and development activities by our customers will be maintained at current levels. Any significant decline inexploration or production-related spending by our customers, whether due to a decrease in the market prices for oil and natural gas or otherwise, would have amaterial adverse effect on our results of operations. Additionally, increases in oil and natural gas prices may not increase demand for our products andservices or 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 may be significant and could adversely affect our results of operations in anyfinancial period. Our operating results may vary in material respects from quarter to quarter. Factors that cause variations include the timing of the receipt and commencementof contracts for seismic data acquisition, processing or interpretation and customers’ budgetary cycles, all of which are beyond our control. In addition, in anygiven period, we could have idle crews which result in a significant portion of our revenues, cash flows and earnings coming from a relatively small numberof crews. Lower crew utilization rates can be caused by land access permit and weather delays, seasonal factors such as holiday schedules, shorter winter daysor agricultural or hunting seasons, and crew repositioning and crew utilization and productivity. Additionally, due to location, type of service or particularproject, some of our individual crews may achieve results that constitute a significant percentage of our consolidated operating results. Should any of ourcrews experience changes in timing or delays due to one or more of these factors, our financial results could be subject to significant variations from period toperiod. Combined with our fixed costs, these revenue fluctuations could also produce unexpected adverse results of operations in any fiscal period.In addition to the above potential fluctuations in our revenue, we may also have significant third-party pass-through costs that are reflected in our revenuesbut correspond to a very small administrative margin charged to the customer. Therefore, our revenues for certain periods may include a large amount of thesethird-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.12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 additional work, whichis 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 currentprojects are operated under a close to even mix of turnkey and term agreements but the relative mix of turnkey and term agreements can vary widely fromtime to time. The revenue, cost and gross profit realized on a turnkey contract can vary from our estimated amount because of changes in job conditions,variations in labor and equipment productivity from the original estimates, and the performance of subcontractors. In addition, if conditions exist on aparticular project that were not anticipated in the customer contract such as excessive weather delays, community issues, governmental issues or equipmentfailure, then the revenue timing and amount from a project can be affected substantially. Turnkey contracts may also cause us to bear substantially all of therisks of business interruption caused by weather delays and other hazards. Those variations, delays and risks inherent in billing customers at a fixed price mayresult in us experiencing reduced profitability or losses on projects.The significant fixed costs of our operations could result in operating losses. We are subject to significant fixed operating costs, which primarily consist of depreciation and maintenance expenses associated with our equipment, certaincrew costs and interest expense under our senior secured notes. Extended periods of significant downtime or low productivity caused by reduced demand,weather interruptions, equipment failures, permit delays or other causes could negatively affect our results and have a material adverse effect on our financialcondition and results of operations because we will not be able 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 equipment or other assetsand require 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 the credit and security agreement with Wells Fargo Bank, N.A., which providesfor our $20 million asset-based credit facility. Our working capital needs are difficult to forecast and may vary significantly, which could cause liquidity issues and require us to seek additionalfinancing that we may not be able to 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, the timing ofour projects, our customers’ budgetary cycles and our receipt of payment. Our working capital requirements may continue to increase, due to contraction inour business or expansion of infrastructure that may be required to keep pace with technological advances. In order to remain competitive, we must continueto invest additional capital to maintain, upgrade and expand our seismic data acquisition capabilities. In addition, some of our larger projects requiresignificant upfront costs. We therefore may be subject to significant and rapid increases in our working capital needs that could require us to seek additionalfinancing sources. While we have a revolving line of credit, restrictions in our debt agreements may impair our ability to obtain other sources of financing,and access to additional sources of financing may not be available on terms acceptable to us, or at all.Our cash flows may be influenced by the availability of State of Alaska exploration tax credits and our client’s or our ability to quickly monetize such taxcredits. The expiration, elimination, reduction, or inability to quickly monetize such tax credits will have a material adverse effect on our liquidity andfinancial position.The State of Alaska currently offers two types of exploration tax credits (“Tax Credits”) which can be used to offset certain eligible costs related to theacquisition of seismic data that we generate. From time to time we may have accounts receivable due from customers in Alaska where the timing and amountof payment to us may be dependent upon when the customer can monetize the Tax Credits or receive the certificate from the State of Alaska. Our Alaskancustomers manage the Tax Credit process, which includes filing an application, undergoing an audit and receiving a Tax Credit certificate for the permittedamount. By statute 40% of the value of the application for Tax Credits must be processed within 120 days of the filing and the remainder must be processedwithin 180 days after June 30 of the year earned; however, the ultimate disposition and timing of the process of the issuance of a Tax Credit certificate isoutside our control. Typically applicants have been able to quickly monetize Tax Credits before the issuance of the certificates and remit prompt payment tous by securing a loan from a financial institution secured by the Tax Credits. While issuance of the Tax Credit certificate is required by law, depressed oil andgas prices and uncertainty about the timing of reimbursement from the State of Alaska currently seem to be adversely affecting the ability to quicklymonetize Tax Credits. If our customer is unable to monetize the Tax Credits, they may assign the Tax Credits to us, but we must then wait for the certif13icates to be issued or monetize the Tax Credits ourselves. This could adversely affect our liquidity and financial position. Without monetization of some ofthe Tax Credits or some other action to improve cash flow, we may face significant cash flow difficulties until the Tax Credits can be monetized or thecertificates issued.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 often in difficult or harsh climate conditions, and are therefore subject to weather andseasonality. In Canada and Alaska, the primary season for seismic data acquisition is during the winter, from December to April, as many areas are onlyaccessible when the ground is frozen. The weather conditions during this time of year can affect the timing and efficiency of operations. In addition, thisprime 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. In all areasin which we operate, the weather is an uncontrollable factor that affects our operations at various times of the year. Due to the unpredictability of weatherconditions, there may be times when adverse conditions may cause our operations to be delayed and result in additional costs and may negatively affect ourresults 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 private landand/or mineral owners. We cannot begin surveys on property without obtaining any required permits from governmental entities as well as the permission ofthe private landowners who own the land being surveyed. In recent years, it has become more difficult, costly and time-consuming to obtain access rights ofway as drilling activities have expanded into more populated areas. Additionally, while landowners generally are cooperative in granting access rights, somehave become more resistant to seismic and drilling activities occurring on their property. In addition, governmental entities do not always grant permitswithin the time periods expected. Delays associated with obtaining such permits and rights of way may negatively affect our results of operations. 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 projects for which a customer has executed a contract or signed a binding letter of award. Our backlog can varysignificantly from time to time, particularly if the backlog is made up of multi-year contracts with some of our more significant customers. Backlog estimatesare based on a number of assumptions and estimates including assumptions related to foreign exchange rates and proportionate performance of contracts. Therealization of our backlog estimates is further affected by our performance under term rate contracts, as the early or late completion of a project under termrate contracts will generally result in decreased or increased, as the case may be, revenues derived from those projects. Contracts for services are alsooccasionally modified by mutual consent and often can be terminated for convenience by the customer. Because of potential changes in the scope orschedule of our customers’ projects, and the possibility of early termination of customer contracts, we cannot predict with certainty when or if our backlogwill be realized. Material delays, payment defaults or cancellations on the underlying contracts could reduce the amount of backlog currently reported and,consequently, could inhibit the conversion of that backlog into revenues. In addition, worsening overall market conditions could result in further reductionsof backlog which will impact our financial performance.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 years included price,crew experience, asset availability and capacity, technological expertise and reputation for quality and dependability. We also face increasing competitionfrom nationally owned companies in various international jurisdictions that operate under less significant financial constraints than those we experience.Many of our competitors have greater financial and other resources, more customers, greater market recognition and more established relationships andalliances in the industry than we do. They and other competitors may be better positioned to withstand and adjust more quickly to volatile marketconditions, such as fluctuations in oil and natural gas prices and production levels, as well as changes in government regulations. Additionally, the seismicdata acquisition business is extremely price competitive and has a history of protracted periods of months or years where seismic contractors under financialduress bid jobs at unattractive pricing levels and therefore adversely affect industry pricing. Competition from those and other competitors could result indownward pricing pressure, which could adversely affect our margins, and could result in the loss of market share.14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 of seismicequipment may develop new systems that have competitive advantages relative to systems now in use that either render the equipment we currently useobsolete 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 restricting ourpurchase of equipment to equipment that we believe will remain highly utilized, and we strategically rent equipment utilizing the most current technology tocover peak periods in equipment demands. We may not be able to finance all of our capital requirements, however, when and if needed, to acquire newequipment. If we are unable to do so, there may be a material negative impact on our operations and financial condition.Our revenues are generated by a concentrated number of customers. We derive our revenues from a concentrated customer base in the international oil and natural gas industry, however, we are not substantially dependent onany one customer. Our largest customers can and typically do change from year to year and our largest customers in any one year may not be indicative of ourlargest customers in the future. During the year ended December 31, 2015, four customers aggregated 77% of our consolidated revenue for the period, withour most significant customer representing 37% of our consolidated revenue for the period. During the year ended December 31, 2014, two other customersaggregated 47% of our consolidated revenue for the period, with our most significant customer representing 34% of our consolidated revenue for the period.Many of our customer contracts may be terminated at any time for convenience. If any of our customers were to terminate their contract with us on a largeproject or fail to contract for our services in the future because they are acquired, alter their exploration or development strategy, experience financialdifficulties or for any other reason, and we were not able to replace their business with business from other customers, our business, financial condition andresults of operations could be materially and adversely affected. 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, the detonation ofexplosives, and operations in remote areas of developing countries. Operating in such environments, and under such conditions, carries with it inherent 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 an adverseoperating environment. Those risks could cause us to experience injuries to our personnel, equipment losses, and interruptions in our business.Although we maintain insurance, our insurance contains certain coverage exclusions and policy limits. There can be no assurance that our insurance will besufficient or adequate to cover all losses or liabilities or that insurance will continue to be available to us on acceptable terms, or at all. Further, we mayexperience difficulties in collecting from insurers as such insurers may deny all or a portion of our claims for insurance coverage. A claim for which we are notfully insured, or which is excluded from coverage or exceeds the policy limits of our applicable insurance, could have a material adverse effect on ourfinancial 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 perform services andprovide products. While we generally obtain contractual indemnification and insurance covering the acts of those subcontractors, and require thesubcontractors 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 could result in increased liability, costs and expenses for our projects. We enter into master service agreements with many of our customers that allocate certain operational risks. Despite the inclusion of risk allocation provisionsin our agreements, our operations may be affected by a number of events that are unforeseen or not within our control and our agreements may not adequatelyprotect us from each possible event. If an event occurs which we have not contemplated or otherwise addressed in our agreement we, and not our customer,will likely bear the increased cost or liability.15To the extent our agreements do not adequately address those and other issues, or we are not able to successfully resolve resulting disputes, we may incurincreased liability, costs and expenses. This may have a material adverse effect on our results of operations. 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 States and foreignjurisdictions, including stringent laws and regulations relating to protection of the environment, particularly those relating to emissions to air, discharges towater, treatment, storage and disposal of regulated materials and remediation of soil and groundwater contamination. 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 United States andgovernmental bodies with control over environmental matters in foreign jurisdictions, have the power to enforce compliance with those laws and regulationsand any permits issued under them, oftentimes requiring difficult and costly actions. We may incur substantial costs, including fines, damages, criminal orcivil sanctions, remediation costs and natural resource damage claims, or experience interruptions in our operations for violations or liabilities arising underthese laws and regulations. Further, we may become liable for damages against which we cannot adequately insure or against which we may elect not toinsure because of high costs or other reasons. Our customers are subject to similar environmental laws and regulations.We expend financial and managerial resources to comply with all the laws and regulations applicable to our operations. Any changes in environmental lawsand regulations or re-interpretation of enforcement policies that result in more stringent and costly regulations, or that change waste handling, storage,transport, disposal or remediation requirements could have a material adverse effect on our results of operations and financial position. The fact that suchlaws or regulations change frequently makes it impossible for us to predict the cost or impact of such laws and regulations on our future operations. The costsof complying with applicable environmental laws and regulations are likely to increase over time and we cannot provide any assurance that we will be ableto remain in compliance with respect to existing or new laws and regulations or that such compliance will not have a material adverse effect on our business,financial condition and results of operations, or on the operations of our customers which could affect demand for our services. Although regulatorydevelopments that may occur in subsequent years could have the effect of reducing industry activity, we cannot predict the nature of any new restrictions orregulations that may be imposed. We may be required to increase operating expenses or capital expenditures in order to comply with any new restrictions orregulations. In addition, as a result of the mobility of our equipment, operations in foreign jurisdictions and the utilization of a multi-national work force, we and ourcustomers are subject to various federal, provincial, state and local laws and regulations in the United States and foreign jurisdictions relating to the import orexport of equipment and the immigration and employment of non-citizen employees or sub-contractors. Numerous governmental authorities, such as the U.S.Customs and Border Protection, the Bureau of Industry and Security and the Office of Foreign Assets Control, and analogous governmental bodies in foreignjurisdictions have laws and regulations which prohibit or restrict operations in certain jurisdictions and doing business with certain persons in suchjurisdictions, and we and our customers may be required to obtain and maintain licenses, permits, visas and similar documentation for operations. We mayincur substantial costs, including fines and damages, criminal or civil sanctions for violations or liabilities arising under these laws and regulations.Our operations outside of the United States are subject to additional political, economic, and other risks and uncertainties that could adversely affect ourbusiness, 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 24% of our consolidated revenue in 2015 and 67% of our consolidated revenue in2014. Our international operations are subject to a number of risks inherent in any business operating in foreign countries, and especially those operating inemerging markets. As we continue to increase our presence in those countries, our operations will continue to encounter the following risks, among others:•government instability or armed conflict, which can cause our potential customers to withdraw or delay investment in capital projects, therebyreducing or eliminating the viability of some markets for our services;•potential expropriation, seizure, nationalization or detention of assets;16•risks relating to foreign currency, as described below;•import/export quotas or unexpected changes in regulatory environments and trade barriers;•civil uprisings, riots and war, which can make it unsafe to continue operations, adversely affect both budgets and schedules and expose us to losses;•availability of suitable personnel and equipment, which can be affected by government policy, or changes in policy, which limit the importation ofqualified crew members or specialized equipment in areas where local resources are insufficient, and legal restrictions or other limitations on ourability to dismiss employees;•laws, regulations, decrees and court decisions under legal systems that are not always fully developed and that may be retroactively applied andcause 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 statutes andrequirements of taxing authorities worldwide. Our tax returns are subject to routine examination by taxing authorities, and those examinations may result inassessments 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 may notsucceed 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 risks relating tofluctuations in currency exchange rates. In the future, and especially as we further expand our operations in international markets, our customers mayincreasingly make payments in non-U.S. currencies. Fluctuations in foreign currency exchange rates could affect our revenues, operating costs 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 in repatriatingprofits from foreign countries in the form of taxes or other restrictions, which could restrict our cash flow.Economic and political conditions in Latin America pose numerous risks to our operations.Our business operations in the Latin American region constitute a material portion of our business. As events in the region have demonstrated, negativeeconomic or political developments in one country in the region can lead to or exacerbate economic or political instability elsewhere in the region.Furthermore, events in recent years in other developing markets have placed pressures on the stability of the currencies of a number of countries in LatinAmerica in which we operate, including Brazil, Colombia and Peru. While certain areas in the Latin American region have experienced economic growth, thisrecovery remains fragile.Certain Latin American economies have experienced shortages in foreign currency reserves and have adopted restrictions on the use of certain mechanisms toexpatriate local earnings and convert local currencies into U.S. Dollars. Any such shortages or restrictions may limit or impede our ability to transfer or toconvert such currencies into U.S. Dollars and to expatriate such funds for the purpose of making timely payments of interest and principal on ourindebtedness. In addition, currency devaluations in one country may have adverse effects in another country. Some Latin American countries havehistorically experienced high rates of inflation. Inflation and some measures implemented to curb inflation have had significant negative effects on theeconomies of these countries. Governmental actions taken in an effort to curb inflation, coupled with speculation about possible future actions, havecontributed to economic uncertainty at times in most Latin American countries. These countries may experience high levels of inflation in the future thatcould lead to further government intervention in the economy, including the introduction of government17policies that could adversely affect our results of operations. In addition, if any of these countries experience high rates of inflation, we may not be able toadjust the price of our services sufficiently to offset the effects of inflation on our cost structures. A high inflation environment would also have negativeeffects on the level of economic activity and employment and adversely affect our business, results of operations and financial condition.Current and future legislation or regulation relating to climate change and hydraulic fracturing could negatively affect the exploration and production ofoil 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 dioxide andmethane), may be contributing to global climate change, legislative and regulatory measures to address the concerns are in various phases of discussion orimplementation at the federal, state and international levels. Many states, either individually or through multi-state regional initiatives, have already takenlegal measures intended to reduce GHG emissions, primarily through the planned development of GHG emission inventories and/or GHG cap and tradeprograms.Although various climate change legislative measures have been under consideration by the U.S. Congress, it is not possible at this time to predict whether orwhen Congress may act on climate change legislation. The EPA has promulgated a series of rulemakings and taken other actions that the EPA states willresult in the regulation of GHG as “air pollutants” under the existing federal Clean Air Act. Furthermore, in 2010, EPA regulations became effective thatrequire monitoring and reporting of GHG emissions on an annual basis, including extensive GHG monitoring and reporting requirements. While this ruledoes not control GHG emission levels from any facilities, it will cause covered facilities to incur monitoring and reporting costs. Moreover, lawsuits havebeen 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 and our customers. This couldcause us to incur additional direct costs in complying with any new environmental regulations, as well as increased indirect costs resulting from ourcustomers incurring additional compliance costs that get passed on to us. Moreover, passage of climate change legislation or other legislative or regulatoryinitiatives that regulate or restrict emissions of GHG may curtail production and demand for fossil fuels such as oil and natural gas in areas where ourcustomers operate and thus adversely affect future demand for our services. Reductions in our revenues or increases in our expenses as a result of climatecontrol 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 natural gas wells. Hydraulic fracturing involves the injection ofwater, sand and chemical additives under pressure into rock formations to stimulate oil and natural gas production. Due to public concerns raised regardingpotential impacts of hydraulic fracturing, legislative and regulatory efforts at the federal level and in some states have been initiated to require or make morestringent the permitting, reporting and compliance requirements for hydraulic fracturing operations. These legislative and regulatory initiatives imposingadditional reporting obligations on, or otherwise limiting, the hydraulic fracturing process could make it more difficult or costly to complete oil and naturalgas wells. Shale gas and shale oil 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, operations and reputation. We operate in certain parts of the world that have experienced governmental corruption to some degree and, in certain circumstances, strict compliance withanti-bribery laws may conflict with local customs and practices. We may be subject to competitive disadvantages to the extent that our competitors are ableto secure business, licenses or other preferential treatment by making payments to government officials and others in positions of influence or using othermethods 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 intermediaries from makingimproper payments to foreign officials for the purpose of obtaining or keeping business and which imposes stringent recordkeeping requirements. Inparticular, we may be held liable for actions taken by our strategic or local partners even though our partners are not subject to the FCPA. Any such violationscould result in substantial civil and/or criminal penalties and might adversely affect our results of operations and our ability to continue to work in thosecountries.18The enactment of legislation implementing changes in U.S. or foreign tax laws affecting the taxation of international business activities or the adoption ofother tax reform policies could materially impact our financial position and results of operations.Changes to U.S. or foreign tax laws could impact the tax treatment of our foreign earnings. Due to the scope of our international business operations, anychanges in the U.S. or foreign taxation of these operations may increase our worldwide effective tax rate and adversely affect our financial condition andoperating results. The international scope of our operations and our corporate and financing structure may expose us to potentially adverse tax consequences.We are subject to taxation in and to the tax laws and regulations of multiple jurisdictions as a result of the international scope of our operations and ourcorporate and financing structure. We are also subject to intercompany pricing laws, including those relating to the flow of funds between our companies.Adverse developments in these laws or regulations, or any change in position regarding the application, administration or interpretation of these laws orregulations in any applicable jurisdiction, could have a material adverse effect on our business, financial condition and results of operations. In addition, thetax authorities in any applicable jurisdiction, including the United States, may disagree with the positions we have taken or intend to take regarding the taxtreatment or characterization of any of our transactions, including the tax treatment or characterization of our indebtedness, intercompany loans andguarantees. If any applicable tax authorities, including the U.S. tax authorities, were to successfully challenge the tax treatment or characterization of any ofour transactions, it could result in the disallowance of deductions and the imposition of tax withholding.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 officers andemployees possess many years of industry experience and are highly skilled, and members of our management team also have relationships with oil and gascompanies and others in the industry that are integral to our ability to market and sell our services. Our inability to retain such individuals could adverselyaffect our ability to compete in the seismic service industry. We may face significant competition for such skilled personnel, particularly during periods ofincreased demand for seismic services. Although we utilize employment agreements and other incentives to retain certain of our key employees, there is noguarantee that we will be able to retain those personnel. If we do not manage growth and contractions in our business effectively, our results of operations could be adversely affected. Historically, we have experienced significant growth. Growth has placed significant demands on our personnel, management, infrastructure and supportmechanisms and other resources. We must continue to improve our operational, financial, management, legal compliance and information systems to keeppace with the growth of and contractions in our business. We may also expand through the strategic acquisition of companies and assets. We must plan andmanage any acquisitions effectively to achieve revenue growth and maintain profitability in our evolving market. If we fail to manage growth andcontractions in our business effectively, our ability to provide services could be adversely affected, which could negatively affect our operating results.The requirements of being a public company increase our operating expenses and divert management’s attention. 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 require us to incur significantadditional legal, accounting and other expenses that we would not incur if we were not a public company.The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results. TheSarbanes-Oxley Act and the 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 has been and will continue to be diverted from other business concerns, which could harm our business andoperating results.Because we are a smaller reporting company, to date our independent auditor has not been required to issue an attestation report regarding our internalcontrol over financial reporting in the annual reports on Form 10-K that we file with the SEC, and we have been subject to scaled disclosure requirements. Wewill remain a 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 secondfiscal quarter each year. If we cease to be a smaller reporting company, our expenses will further increase and additional time will be required of ourmanagement to comply with those additional requirements.19Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our financial obligations.As of December 31, 2015, we had $148.1 million of total debt outstanding (including $140.0 million of our senior secured notes, $7.9 million of borrowingsunder our Revolving Credit Facility and $170 thousand of existing capital leases). Our high level of indebtedness could have significant effects on ourbusiness. For example, our level of indebtedness and the terms of our debt agreements may: •increase the risk that we may default on our debt obligations;•prevent us from raising the funds necessary to repurchase Notes tendered to us if there is a change of control (as defined in the Indenture) or other eventrequiring such a repurchase, and any failure to repurchase Notes tendered for repurchase would constitute a default under the Indenture and mayconstitute a default under other debt instruments;•require us to use a substantial portion of our cash flow from operations to pay interest and principal on our Notes and other debt, which would reducethe funds available for working capital, capital expenditures and other general corporate purposes;•limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and other investments, or general corporatepurposes particularly in light of the fact that a substantial portion of our assets have been pledged to secure our Notes and our Revolving CreditFacility, which may limit the ability to execute our business strategy;•heighten our vulnerability to downturns in our business, our industry or in the general economy and restrict us from exploiting business opportunitiesor making acquisitions;•place us at a competitive disadvantage compared to those of our competitors that may have proportionately less debt;•limit management’s discretion in operating our business;•limit our flexibility in planning for, or reacting to, changes in our business, the industry in which we operate or the general economy; and•result in higher interest expense if interest rates increase and we have outstanding floating rate borrowings.Each of these factors may have a material adverse effect on our business, financial condition and results of operations. Our ability to make payments withrespect to our Notes, our Revolving Credit Facility and to satisfy our other debt obligations will depend on our future operating performance, which will beaffected by a broad range of factors, including prevailing economic conditions and financial, business and other factors affecting us and our industry, manyof which are beyond our control. Despite existing debt levels, we may still be able to incur substantially more debt, which would increase the risks associated with our leverage. Even with our existing debt levels, we and our subsidiaries may be able to incur substantial amounts of additional debt in the future, including debt underour line of credit pursuant to our Revolving Credit Facility. Although the terms of the indenture for our Notes (the "Indenture") and the Credit Agreement forour Revolving Credit Facility will limit our ability to incur additional debt, these terms may not prevent us from incurring substantial amounts of additionaldebt. If new debt is added to our current debt levels, the risks associated with our leverage may intensify. The Indenture for our Notes and Credit Agreement for our Revolving Credit Facility impose significant operating and financial restrictions on us and oursubsidiaries that may prevent us from pursuing certain business opportunities and restrict our ability to operate our business. The Indenture and the Credit Agreement contain covenants that restrict our and our restricted subsidiaries’ ability to take various actions, such as: •transferring or selling certain assets;•paying dividends or distributions, repaying subordinated indebtedness (if any) or making certain investments or other restricted payments;•incurring or guaranteeing additional indebtedness or, with respect to our restricted subsidiaries, issuing preferred stock;20•creating or incurring liens securing indebtedness;•incurring dividend or similar payment restrictions affecting restricted subsidiaries;•consummating a merger, consolidation or sale of all or substantially all our and our restricted subsidiaries’ assets;•entering into transactions with affiliates; and•engaging in a business other than our current business and businesses related, ancillary or complementary, to our current businesses or immaterialbusinesses.In addition, the security documents executed pursuant to the Indenture and the Credit Agreement restrict us and our restricted subsidiaries from taking oromitting to take certain actions that would adversely affect or impair in any material respect the collateral securing those obligations. Any future debtinstruments may also require us to comply with a number of affirmative and negative covenants in addition to the covenants listed above. We may be prevented from taking advantage of business opportunities that arise if we fail to meet certain financial ratios or because of the limitationsimposed on us by the restrictive covenants under these agreements. In addition, the restrictions contained in the Indenture and Credit Agreement or otherdebt instruments may also limit our ability to plan for or react to market conditions or meet capital needs, or may otherwise restrict our activities or businessplans and adversely affect our ability to finance our operations, enter into acquisitions, execute our business strategy, effectively compete with companiesthat are not similarly restricted or engage in other business activities that would be in our interest. In the future, we may incur other debt obligations thatmight subject us to additional and different restrictive covenants that could also adversely affect our financial and operational flexibility. In the event that wedefault under any of these financial or other covenants, we would be required to seek waivers or amendments to the applicable agreements or to refinance theapplicable indebtedness, and we cannot assure you that we would be able to do so on terms we deem acceptable, or at all. Failure to comply with applicablecovenants would constitute a default under the applicable debt instrument and would generally allow the applicable lenders or other debt holders to demandimmediate repayment of all indebtedness outstanding thereunder and, in the case of secured indebtedness and subject to the intercreditor agreement, ifapplicable, to seize and sell the collateral and to apply the proceeds from those sales to satisfy such indebtedness, any of which could have a material adverseimpact on our results of operations and financial condition. These events would likely in turn trigger cross-acceleration and cross-default rights under otherdebt instruments, which would allow the applicable lenders or other debt holders to exercise similar rights and remedies. If the amounts outstanding underany future credit facility, our Notes, the Credit Agreement or any other indebtedness were to be accelerated or if the applicable lenders or other debt holderswere to foreclose upon the collateral securing any such indebtedness, we cannot assure you that our assets would be sufficient to repay the money owed toour lenders. We have in the past failed to comply with financial and other covenants in debt instruments and have therefore been required to obtain waiversand amendments from prior lenders, and there can be no assurance that we will not experience similar defaults in the future or that waivers or amendmentswill be obtained. Our debt agreements contain restrictive covenants that may limit our ability to respond to changes in market conditions or pursue business opportunities. The Indenture for our Notes and the Credit Agreement for our Revolving Credit Facility contain restrictive covenants that limit our ability to, among otherthings: •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.21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.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 the Indenture for our Notes and the Credit Agreement for our Revolving Credit Facility,there could be a default under the terms of those agreements. In the event of a default under those agreements, lenders could terminate their commitments tolend or accelerate the loans and declare all amounts borrowed due and payable. Borrowings under other debt instruments that contain cross-acceleration orcross-default provisions, may also be accelerated and become due and payable. In addition, our obligations under the Indenture and the Credit Agreement aresecured by a lien on substantially all of our U.S. assets and certain of our foreign assets, including 65% of the equity interests in our first-tier foreignsubsidiaries. In the event of foreclosure, liquidation, bankruptcy or other insolvency proceeding relating to us or to our subsidiaries that have guaranteed ourdebt, holders of our secured indebtedness and our other lenders will have prior claims on our assets. If any of those events occur, our assets might not besufficient to repay in full all of our outstanding indebtedness and we may be unable to find alternative financing. Even if we could obtain alternativefinancing, it might not be on terms that are favorable or acceptable to us. Additionally, we may not be able to amend our debt agreements or obtain neededwaivers on satisfactory terms or without incurring substantial costs. Failure to maintain existing or secure new financing could have a material adverse effecton our liquidity and financial position.We have had and in the future may have 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 accounting personnel andsystems to adequately execute accounting processes and limited other supervisory resources with which to address internal control over financial reporting,especially in its early years. We and our independent registered public accounting firm identified material weaknesses during the preparation of our financialstatements as of and for the year ended December 31, 2013 and quarterly periods within 2013 that resulted in restatements of the first and second quarterlyperiods within 2013. During 2014 we took substantial steps in improving and fortifying our internal controls and remediated the material weaknesses ininternal control over financial reporting identified in 2013. While these measures correct the material weaknesses identified by us or our independent publicaccounting firm, we cannot assure that there will not be other material weaknesses that we or our independent registered public accounting firm will identify.If additional material weaknesses in our internal controls are discovered in the future, they may adversely affect our ability to record, process, summarize, andreport financial information timely and accurately.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 of 6,448,443shares (after rounding up for fractional shares) of our common stock. While such shares were initially subject to lock-up agreements, pursuant to which theFormer SAE common stockholders could not sell any of the shares of our common stock that they received as a result of the Merger, such restrictions haveexpired.We entered into a registration rights agreement at the closing of the Merger with CLCH, LLC (“CLCH”), which became an “affiliate” of ours as a result of theissuance of shares of our common stock in the Merger. Under the registration rights agreement, CLCH is entitled to demand that we register the shares issuedto it in the Merger under the Securities Act of 1933, as amended (the “Securities Act”). In addition, CLCH has certain “piggy-back” registration rights withrespect to certain registration statements filed subsequent to consummation of the Merger. Furthermore, the Former SAE common stockholders, includingCLCH and any other Former SAE common stockholder who may be deemed an “affiliate” of ours, may sell shares of our common stock pursuant to Rule 144under 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.With the expiration of the applicable lock-up periods, and upon effectiveness of any registration statement we may 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.22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 to make ademand 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 shares may bereleased 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 “WarrantExchange”). Each warrant holder had the opportunity to receive one share of common stock in exchange for every ten outstanding warrants tendered by theholder and exchanged pursuant to the Warrant Exchange. The Warrant Exchange offer period expired on February 7, 2014, and a total of 14,418,193 warrantswere tendered and accepted for exchange. On February 14, 2014, we issued 1,441,813 shares and paid $52 in cash in lieu of fractional shares in exchange forthe tendered warrants. The holders of shares of our common stock issued in the Warrant Exchange, who are not affiliates of ours (and who have not beenaffiliates of ours within three months preceding a proposed sale) may resell those shares without restriction under the Federal securities laws. In addition, theholders of shares issued in the Warrant Exchange who are affiliates of ours (or who have been affiliates of ours within three months preceding a proposedsale), are entitled to make a demand that we register the resale of the shares they received at any time. Furthermore, the Initial Stockholders have certain“piggy-back” registration rights with respect to certain registration statements filed subsequent to the Merger. Holders of warrants issued by Former SAE alsohave “piggy-back” registration rights with respect to certain registration statements we file as to the shares of our common stock issuable in respect of suchwarrants. The presence of these additional shares of common stock trading in the public market may have an adverse effect on the market price of oursecurities.We are not currently in compliance with the NASDAQ Global Select Market minimum public float requirement of $15 million. If our common stock isdelisted, the market price and liquidity of our common stock and our ability to raise additional capital would be adversely impacted.Our common stock is currently listed on the NASDAQ Global Select Market (“NASDAQ”). Continued listing of a security on NASDAQ is conditioned uponcompliance with various continued listing standards. On February 3, 2016, we received a letter from NASDAQ (the “Notice”) notifying us that, for the last 30consecutive business days, we had not met the $15 million minimum market value of publicly held shares continued listing standard as required by NASDAQListing Rule 5450(b)(3)(C). As provided in the NASDAQ rules, we have 180 calendar days, or until August 1, 2016, to regain compliance. To regaincompliance, the market value of our publicly held shares must be $15 million or more for a minimum of ten consecutive business days at any time prior toAugust 1, 2016.If we have not regained compliance with such standard prior to August 1, 2016, we will consider whether to apply to transfer our common stock to theNASDAQ Capital Market. The ability to transfer to the NASDAQ Capital Market would be dependent upon our meeting the applicable listing requirementsfor that exchange, which we currently do not. If we are eligible to, and decide to, transition to the NASDAQ Capital Market, the transition would not impactour obligation to file periodic reports and other reports with the Securities and Exchange Commission under applicable federal securities laws. If we do nottransfer our securities to the NASDAQ Capital Market or regain compliance with Rule 5450(b)(3)(C) by August 1, 2016, the NASDAQ staff will issue a noticethat our securities are subject to delisting. We would then have the right to appeal the decision to a NASDAQ Listing Qualifications Panel. We have not yetdetermined what other actions we may pursue to regain compliance with the above NASDAQ continued listing requirement, and there can be no assurancethat we will be able to regain compliance with such requirement.If our common stock were to be delisted from NASDAQ, trading of our common stock most likely would be conducted in the over-the-counter market on anelectronic bulletin board established for unlisted securities such as the OTC Bulletin Board. Such trading would likely reduce the market liquidity of ourcommon stock. As a result, an investor would find it more difficult to dispose of, or obtain accurate quotations for the price of, our common stock. If ourcommon stock is delisted from NASDAQ and the trading price remains below $5.00 per share, trading in our common stock might also become subject to therequirements of certain rules promulgated under the Exchange Act, which require additional disclosure by broker-dealers in connection with any tradeinvolving a stock defined as a “penny stock” (generally, any equity security not listed on a national securities exchange or quoted on NASDAQ that has amarket price of less than $5.00 per share, subject to certain exceptions). Many brokerage firms are reluctant to recommend low-priced stocks to their clients.Moreover, various regulations and policies restrict the ability of stockholders to borrow against or “margin” low-priced stocks, and declines in the stock pricebelow certain levels may trigger unexpected margin calls. Additionally, because brokers’ commissions on low-priced stocks generally represent a higherpercentage of the stock price than commissions on higher priced stocks, the current price of the common stock can result in an individual stockholder payingtransaction costs that represent a higher percentage of total share value than would be the case if our share price were higher. This factor may also limit thewillingness of institutions to purchase our common stock. Finally, the additional23burdens imposed upon broker-dealers by these requirements could discourage broker-dealers from facilitating trades in our common stock, which couldseverely limit the market liquidity of the stock and the ability of investors to trade our common stock. As a result, the ability of our stockholders to reselltheir shares of common stock, and the price at which they could sell their shares, could be adversely affected. The delisting of our stock from NASDAQ wouldalso make it more difficult for us to raise additional capital.ITEM 2. Properties. Properties We lease all of the facilities used in our operations. Our principal facilities are summarized in the table below. Location Square Footage PurposeHouston, Texas, U.S.A. 13,449 Executive officesCalgary, Alberta, Canada 11,344 Executive officesCalgary, Alberta, Canada 12,335 WarehouseAnchorage, Alaska, U.S.A. 4,800 Field OfficeAnchorage, Alaska, U.S.A. 7,524 WarehouseLima, Peru 3,300 Field OfficeLima, Peru 15,919 WarehouseIquitos, Peru 31,000 WarehouseBogotá, Colombia 4,639 Field OfficeBogotá, Colombia 13,271 WarehouseSanta Cruz, Bolivia 2,153 Field OfficeSanta Cruz, Bolivia 28,000 WarehouseRio de Janeiro, Brazil 2,153 Field OfficeBahia, Brazil 4,500 WarehouseKuala Lumpur, Malaysia 2,600 Field Office The leases expire at various times over the next five years and most contain renewal options for additional one year periods. The leases generally require us topay all operating costs, such as maintenance and insurance. We believe that our facilities are generally well maintained and adequate to meet our current andforeseeable requirements 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 and a varietyof other matters. Although the results of these other legal proceedings cannot be predicted with certainty, we do not believe that the final outcome of thesematters should have a material adverse effect on our business, results of operations, cash flows or financial condition.24PART IIITEM 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 Bulletin Boardunder the symbol “SAEXW.” While our common stock continues to trade on the Nasdaq Global Market, we received a deficiency notice stating that we hadnot met the $15 million minimum market value of publicly held shares continued listing standard. We have until August 1, 2016 to regain compliance.The following table sets forth the high and low sales prices for the common stock and bid prices for the warrants for the periods indicated: Common Stock Warrants High Low High LowFiscal 2015: Fourth Quarter$2.04 $1.97 $0.07 $0.07Third Quarter$2.65 $2.60 $0.10 $0.08Second Quarter$3.40 $3.40 $0.12 $0.12First Quarter$3.92 $3.23 $0.20 $0.20Fiscal 2014: Fourth Quarter$8.26 $3.20 $0.62 $0.15Third Quarter$9.13 $8.15 $0.78 $0.54Second Quarter$9.80 $7.95 $1.38 $0.65First Quarter$9.98 $7.80 $1.25 $0.78Holders As of March 9, 2016, there were 66 holders of record of our common stock and two holders of record of our warrants. We believe there are more than 425beneficial owners of our common stock and approximately five beneficial owners of our warrants.Dividends We have not paid any cash dividends on our common stock to date. It is the present intention of our board of directors to retain all earnings, if any, for use inour business operations and, accordingly, our board does not anticipate declaring any dividends in the foreseeable future. The payment of dividends will bewithin the discretion of our board of directors and will be contingent upon our revenues and earnings, if any, capital requirements and general financialcondition, the restrictions on dividends contained in the Indenture for our Notes and the Credit Agreement for our Revolving Credit Agreement, and othermatters.Securities Authorized for Issuance under Equity Compensation Plans The following table presents information regarding securities authorized for issuance under our equity compensation plans as of December 31, 2015:25Plan Category Number of Securitiesto be Issued UponExercise ofOutstanding Options,Warrants and Rights Weighted-AverageExercise Price ofOutstanding Options,Warrants and Rights Number of SecuritiesRemaining Availablefor Future IssuanceUnder EquityCompensation Plan(Excluding SecuritiesReflected in the FirstColumn)Equity compensation plans approved by security holders 459,056 $2.17 463,054Equity compensation plans not approved by security holders — — —Total 459,056 $2.17 463,054 For a description of the material features of our equity compensation plans, see Note 12 of “Notes to Consolidated Financial Statements.”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 financial statements andnotes to those statements included in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Please see thesections entitled “Cautionary Note regarding Forward-Looking Statements” and “Risk Factors” in this report.Introduction We are an internationally-focused oilfield services company offering a full range of vertically-integrated seismic data acquisition and logistical supportservices in Alaska, Canada, South America and Southeast Asia to our customers in the oil and natural gas industry. 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 other similar business combination with one or morebusiness entities. On June 24, 2013, our wholly-owned subsidiary completed the Merger with Former SAE, at which time the business of Former SAE becameour business.The Merger was accounted for as a reverse acquisition in accordance with accounting principles generally accepted in the United States of America(“GAAP”). Under this method of accounting, we were treated as the “acquired” company for financial reporting purposes. This determination was primarilybased on Former SAE comprising the ongoing operations of the combined entity, Former SAE senior management comprising the senior management of thecombined company, and the Former SAE common stockholders having a majority of the voting power of the combined entity. In accordance with guidanceapplicable to these circumstances, the Merger was considered to be a capital transaction in substance. Accordingly, for accounting purposes, the Merger wastreated as the equivalent of Former SAE issuing stock for our net assets, accompanied by a recapitalization. Our net assets were stated at fair value, with nogoodwill or other intangible assets recorded. Operations prior to the Merger are those of Former SAE. The equity structure after the Merger reflects our equitystructure.Overview of our Business Our services include the acquisition of 2D, 3D, time-lapse 4D and multi-component seismic data on land, in transition zones between land and water, andoffshore in depths reaching 3,000 meters. In addition, we offer a full suite of logistical support and in-field data processing services. Our customers includemajor integrated oil companies, national oil companies and independent oil and gas exploration and production companies. Our services are primarily usedby our customers to identify and analyze drilling prospects and to maximize successful drilling, making demand for such services dependent upon the levelof customer spending on exploration, production, development and field management activities, which is influenced by the fluctuation in oil and natural gascommodity prices. Demand for our services is also impacted by long-term supply concerns based on significant increases in production, national oil policiesand other country-specific economic and geopolitical conditions. We have expertise in logistics and focus upon providing a complete service package,particularly in our international operations, which allows efficient movement into remote areas, giving us what we believe to be a strategic advantage overour competitors. Many of the areas of the world where we work have limited seasons for seismic data acquisition, requiring high utilization of key personneland redeployment of equipment from one part of the world to another. All of our remote area camps, drills and support equipment are easily26containerized and made for easy transport to locations anywhere in the world. As a result, if conditions deteriorate in a current location or demand rises inanother location, we are able to quickly redeploy our crews and equipment to other parts of the world. By contrast, we tend to subcontract out more of ourservices in North America than in other regions, and our North American revenues tend to be more dependent upon data acquisition services rather than ourfull 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 the bargainingpower of our customers relating to our services, as well as the productivity and utilization levels of our data acquisition crews. Our logistical expertise can bea mitigating factor in service price negotiation with our customers, allowing us to maintain larger margins in certain regions of the world, particularly in themost remote or most challenging climates of the world. Factors impacting the productivity and utilization levels of our crews include permitting delays,downtime related to inclement weather, decrease in daylight working hours during winter months, time and expense of repositioning crews, the number andsize of each crew, and the number of recording channels available to each crew. We have the ability to optimize the utilization of personnel and equipment,which is a key factor to stabilizing margins in the various regions in which we operate. Specifically, we are investing in equipment that is lighter weight andmore easily shipped between the different regions. The ability to reduce both the costs of shipment and the amount of shipping time increases our operatingmargins and utilization of equipment. Similar logic applies to the utilization of personnel. We focus on employing field managers who are mobile and havethe expertise and knowledge of many different markets within our operations. This allows for better timing of operations and the ability of management staffto run those operations while at the same time minimizing personnel costs. An added benefit of a highly mobile field management team is better internaltransfer of skill and operational knowledge and the ability to spread operational efficiencies rapidly between the various regions.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 QHSE objectives.Key Accomplishments Despite a recent contraction in our business due to the deteriorating oil and natural gas industry, since inception, we have grown at a rapid pace, withoperating revenue growing from $23.4 million in 2007, the first full year of operations, to $228.1 million in 2015. We continue to develop our core marketswhile consistently evaluating opportunities to further expand our geographical footprint, operational capabilities and logistical expertise to provide seismicdata acquisition in logistically challenging areas.Since our progression from providing services exclusively in South America to now operating in North America and Southeast Asia, we are able to achievebetter utilization of our personnel through redeployment of key personnel and seismic equipment from off-season areas to in-season areas, helping reducesome of the peaks and valleys in our financial performance. We anticipate future improvement in financial performance and more consistent operating resultsas 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 in the global oil and natural gas exploration services market.During the last three years, in line with our focus on wireless land data acquisition, we purchased a wireless seismic data acquisition system which allows upto three crews to operate under the system at the same time. Following customer needs for higher density land programs using a single point receiverapplication and to answer the demand for conventional and unconventional oil and gas exploration, we purchased high sensitivity geophones and two typesof vibrators, further strengthening our position as a full solution provider for land data acquisition methods and technologies. Additional equipmentinvestments were made for ongoing operations in Alaska in order to increase efficiency. We also invested in cable equipment in order to provide customers inSouth America with reliable systems as wireless technology is slower to take hold in that market. Capital expenditures for 2015 and 2014 totaled $6.4 millionand $28.2 million, respectively.Focusing on current worldwide oil and natural gas markets, we will continue to employ our wireless equipment on a worldwide basis while maintaining theability to provide services to the still existing cable markets. Our capital purchases have and will allow us to take advantage of all aspects of the geophysicalexploration services market, ranging from land, marine and transition zone data acquisition; 2D, 3D, 4D and multi-component data acquisition; use ofdifferent methods to acquire data such as using vibroseis (vibrating) and impulsive sources; as well as vertical seismic profiling and reservoir monitoring.Investments in expanding further into our South America and Southeast Asia markets will also focus upon surveying, drilling and base camp operations.27Fiscal 2015 Summary The following discussion is intended to assist in understanding our financial position at December 31, 2015, and our results of operations for the year endedDecember 31, 2015. Financial and operating results for the year ended December 31, 2015 include:•Revenues from services were $228.1 million in 2015, a decrease of 41.0% from $386.8 million in 2014.•Gross profit was $50.8 million in 2015, a decrease of $5.4 million, or 9.7%, from $56.2 million in 2014.•Operating income was $15.6 million in 2015, a decrease of $1.1 million, or 1.3%, from $16.7 million in 2014.•Net loss was $5.4 million in 2015, a decrease of $33.0 million, or 85.8%, from a net loss of $38.4 million in 2014.•Adjusted EBITDA was $37.1 million in 2015, an increase of 8.8% from $34.1 million in 2014.•Cash and cash equivalents totaled $11.3 million as of December 31, 2015 compared to $12.3 million as of December 31, 2014.Results of Operations The following section sets forth, for the periods indicated, certain financial data derived from our consolidated statements of operations. Amounts arepresented in thousands unless otherwise indicated.Revenues by Geographic RegionThe following table is a summary of our revenues by the geographic region in which we provided services for the years ended December 31, 2015 and 2014: Years Ended December 31, 2015 % of Revenue 2014 % of Revenue Increase(Decrease) PercentageChangeRevenue from services: North America$173,416 76.0% $127,804 33.0% $45,612 35.7 %South America27,252 12.0% 258,266 66.8% (231,014) (89.4)%Southeast Asia27,469 12.0% 750 0.2% 26,719 3,562.5 %Total revenue$228,137 100.0% $386,820 100.0% $(158,683) (41.0)%North America: The increase in revenue was due principally to increased 2015 revenue in Alaska resulting from an overall greater seismic activity and marketshare in the North Slope region compared to 2014, partially offset by significantly reduced revenue in Canada. The market in the North Slope region ofAlaska experienced significant growth during the 2015 winter season as a result of favorable market and regulatory conditions for oil and gas producers.However, also in 2015, the Canadian market was adversely impacted by an overall reduction in exploration activity related to the commodity priceenvironment.South America: The decrease in revenue during 2015 was primarily due to the completion of major projects in Colombia and Bolivia in the latter part of2014 and in Peru during the first quarter of 2015. In 2015, the Colombian market was adversely impacted by regulatory issues that slowed the governmentapproval process, resulting in some project delays. Overall, seismic activity in South America has been at reduced levels in 2015 compared to prior periods.Southeast Asia: The increase in revenue during 2015 was primarily due to a deep water ocean bottom marine project in Malaysia completed in the secondquarter of 2015, compared to minimal activity during 2014.Comparison of Operating Results for the Years Ended December 31, 2015 and 2014 The following table is a summary of the results of operations for the years ended December 31, 2015 and 2014:28 Years Ended December 31, 2015 % of Revenue 2014 % of RevenueRevenue from services$228,137 100.0 % $386,820 100.0 %Gross profit50,763 22.3 % 56,210 14.5 %Selling, general and administrative expenses35,174 15.5 % 39,543 10.2 %Income from operations15,589 6.8 % 16,667 4.3 %Other expense, net(18,338) (8.0)% (42,186) (10.9)%Provision for income taxes2,693 1.2 % 12,876 3.3 %Less: net income attributable to noncontrolling interest4,433 1.9 % 3,358 0.9 %Net loss attributable to the Corporation$(9,875) (4.3)% $(41,753) (10.8)%Revenue from Services. Our revenue from services decreased by $158,683 or 41.0%, from $386,820 in 2014 to $228,137 in 2015. As explained above, 2015revenue increased significantly in Alaska and Malaysia, which was more than offset by decreased 2015 revenue in South America.Gross Profit. Gross profit decreased by $5,447 or 9.7%, from $56,210 in 2014, representing 14.5% of revenue, to $50,763 in 2015, representing 22.3% ofrevenue. The improvement in gross profit as a percentage of revenue was primarily related to the improved operational execution in Alaska and the favorableperformance on the Malaysian deep water ocean bottom marine project completed in the second quarter of 2015.Within the seismic data services industry, gross profit is presented both with or without depreciation and amortization expense on equipment used inoperations. Our gross profit is presented after reduction for depreciation and amortization expense on equipment used in operations. The following summarydiscloses gross profit on both bases: Years Ended December 31, 2015 % of Revenue 2014 % ofRevenue Increase(Decrease) Percentage ChangeGross profit as presented$50,763 22.3% $56,210 14.5% $(5,447) (9.7)%Depreciation and amortization expense includedin cost of services18,137 7.9% 15,205 4.0% 2,932 19.3 %Gross profit excluding depreciation andamortization expense included in cost of services$68,900 30.2% $71,415 18.5% $(2,515) (3.5)%Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses decreased in 2015 by $4,369 to $35,174 or 15.5% ofrevenues compared to $39,543 or 10.2% of revenues for 2014. SG&A expenses in 2015 as a percentage of revenue increased versus 2014 due to lower overallrevenue partially offset by headcount reductions and cost controls implemented during 2015. SG&A expense for 2015 includes $1,255 in severance costsincurred in our Peru, Colombia, Canada, Alaska and corporate locations related to the workforce reduction program that began in early 2015.Total Other Income (Expense). Total other income (expense) was comprised of the following: Years Ended December 31, 2015 2014 Increase(Decrease)Other income (expense): Gain (loss) on early extinguishment of debt$3,014 $(17,157) $20,171Change in fair value of note payable to Former SAE stockholders— (5,094) 5,094Interest expense, net(16,739) (16,778) 39Foreign exchange loss, net(4,393) (3,451) (942)Other, net(220) 294 (514)Total other expense, net$(18,338) $(42,186) $23,84829The decrease in 2015 expense was primarily due to:•The loss on early extinguishment of debt in the amount of $17,157 recorded in 2014 as a result of the repayment with the proceeds of our seniorsecured notes and termination of our prior $80,000 senior Credit Agreement, as amended, on July 2, 2014;•The change in fair value of notes payable to related parties which resulted in a charge of $5,094 in 2014 due to the adjustment of the note balance tothe amount ultimately repaid on July 2, 2014, with the proceeds of our senior secured notes; and•The gain on early extinguishment of debt in the amount of $3,014 recorded in 2015 which resulted from the exchange of senior secured notes forcommon stock; partially offset by•The higher loss on foreign currency transactions in 2015, which resulted from the strengthening of the U.S. dollar compared to South Americancurrencies.Income Taxes. Our income tax provision decreased $10,183 in 2015 compared to 2014 primarily as a result of pre-tax losses in our foreign operations, offsetby the valuation allowance increase of $414 and the effects of differences between U.S. and foreign tax rates.We operate in Canada, Bolivia, Brazil, Colombia, Malaysia, Peru, Papua New Guinea and New Zealand through wholly-owned subsidiaries or branches of aU.S. entity (whereby the earnings of the branches are included as U.S. taxable income). These subsidiaries or branches are subject to foreign taxation based onthe financial results of the operations under the laws of each applicable tax jurisdiction.Corporate income taxes are calculated based on GAAP and U.S. and various international tax codes and regulations. The appropriate foreign taxes paid in thecountry of operations are credited against U.S. corporate taxes subject to the U.S. foreign tax credit limitations. Deferred tax assets and liabilities arerecognized using the asset and liability method based on the differences between the financial statement carrying amounts of existing assets and liabilitiesand their respective tax bases, operating losses and tax credit carry forwards, as stipulated under GAAP. Where appropriate, valuation allowances are providedto 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 to variousprovisions 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 and discloseuncertain 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 arerequired to make many subjective assumptions and judgments regarding our tax positions that can materially affect amounts recognized in our consolidatedbalance sheets and statements of operations.Our U.S. statutory tax rate was 35% for years ended December 31, 2015 and 2014. For 2015, our effective tax rate was (98.0)% due to the effects of differencesbetween U.S. and foreign tax rates, net of federal benefit. For 2014, our effective tax rate was (50.5)% due principally to permanent differences, the effects ofdifferences between U.S. and foreign tax rates, and the recording of the valuation allowances against the U.S. deferred tax assets.In June 2014, we initiated a Foreign Subsidiary Reorganization plan to normalize our consolidated effective tax rate through the restructuring of our foreignbranch offices into subsidiaries. Pursuant to this plan, we transferred the assets used in our foreign branch operations as of December 31, 2014 to existing ornew subsidiaries incorporated in the same jurisdictions in which the branches were located. The operational aspects of the plan are in the process ofimplementation in South America and we currently expect to begin realizing the benefits from a more efficient tax structure in future years.Net Income Attributable to Noncontrolling Interest. The $1,075 increase in 2015 compared to 2014 is due to the increased distributions earned by thenoncontrolling interest ("Joint Venture Partner") under contracts performed by us on the North Slope of Alaska. Under the terms of our agreement with theJoint Venture Partner, they receive 51% of the portion of the applicable contracts' gross revenues paid to the joint venture entity as discussed further underNote 13 of "Notes to Consolidated Financial Statements".Net Loss Attributable to the Corporation. For the year ended December 31, 2015, net loss attributable to the Corporation was $9,875 compared to a net lossof $41,753 for the year ended December 31, 2014. The decrease in net loss attributable to the Corporation for the year ended December 31, 2015 wasprimarily due to the following factors:•Lower SG&A expenses;•Lower other expense primarily due to the 2015 credit and 2014 charge for the early extinguishment of debt and the 2014 charge for the change infair value of the note payable to related parties; and30•Lower provision for income taxes; partially offset by•Lower gross profit dollars on lower revenue;•Higher unrealized loss on foreign currency transactions; and•Severance costs in our Peru, Colombia, Canada, Alaska and corporate locations.Liquidity and Capital Resources Our principal source of cash is from the seismic data acquisition services we provide to customers, supplemented as necessary by drawing against ourrevolving credit facility with Wells Fargo Bank, N.A. Our cash is primarily used to provide additional seismic data acquisition services, including thepayment of expenses related to operations and the acquisition of new seismic data equipment, and to pay the interest on outstanding debt obligations. Ourcash position and revenues depend on the level of demand for our services. Historically, cash generated from operations, along with cash reserves andborrowings from commercial, private, and related parties, have been sufficient to fund our working capital and to acquire or lease seismic data equipment.Amounts in the remainder of this section are presented in thousands unless otherwise indicated.Working Capital. Working capital as of December 31, 2015 was $36,826 compared to $31,926 as of December 31, 2014. The increase in working capitalduring 2015 was principally the result of cash generated by operations, partially offset by payments during 2015 for capital expenditures and the distributionto our Joint Venture Partner.While we believe that our current level of working capital should be sufficient for us to operate and to continue to implement our business plan, there can beno assurance, however, that our current level of working capital will be adequate, particularly in light of the cash flow difficulties identified below withrespect to State of Alaska exploration tax credits.Cash Flows. Cash provided by operations during 2015 was $3,098, compared to cash used in operations of $19,901 during 2014, an increase in cashprovided by operations of $22,999. Cash provided by the net loss and net cash adjustments to net loss increased to $16,089 for 2015 compared to cash usedof $4,522 for 2014, primarily due to the penalty for early repayment of the 2012 Credit Agreement in 2014. Net changes in operating assets and liabilitiesresulted in cash used of $12,991 for 2015 compared to $15,379 for 2014, which decreased primarily due to cash used by accounts payable and income andother taxes payable, partially offset by cash provided by accounts receivable and prepaid expenses.At December 31, 2015, we had $50.4 million due from a customer in Alaska where the timing and amount of their payment of our accounts receivable may bedependent upon when our customer can monetize the Tax Credits or receive the certificates evidencing the Tax Credits from the State of Alaska. See “RiskFactors - Our cash flows may be influenced by the availability of State of Alaska tax credits and our client’s or our ability to quickly monetize such taxcredits. The expiration, elimination, reduction, or inability to quickly monetize such tax credits will have a material adverse effect on our liquidity andfinancial position.” Our Alaskan customers manage the Tax Credit process, which includes filing an application, undergoing an audit and receiving a TaxCredit certificate for the permitted amount. By statute 40% of the value of the applications for Tax Credits must be processed within 120 days of the filingand the remainder of the applications must be processed within 180 days after June 30 of the year earned; however, the ultimate disposition and timing of theprocess is outside our control. Typically applicants have been able to quickly monetize Tax Credits before the issuance of the certificates by securing a loanfrom a financial institution secured by the Tax Credit. While issuance of the Tax Credit certificate is required by law, depressed oil and natural gas prices anduncertainty regarding the timing of reimbursements from the State of Alaska, currently seem to be adversely affecting the ability to monetize Tax Credits.Once the certificates are issued, there is a market for the certificates as producers of oil and natural gas may use the certificates as credits against productiontaxes due the State of Alaska. Due to the size of the accounts receivable amount subject to the timing issue, we may experience significant cash flowdifficulties until the Tax Credits are monetized or the certificates are issued. We are currently working with our customer to find other sources of financing forit to monetize the Tax Credits before the certificates are issued. If our customer is not able to do so by April 30, 2016, we expect that our customer will assignthe Tax Credits to us. If that should occur, we are currently working on ways to monetize our accounts receivable and Tax Credits, most likely by factoringour Alaska accounts receivable and related Tax Credits. To do so it is likely we will have to receive waivers or consents from the Lender and a majority ininterest of our Notes. We also expect that this issue will affect additional accounts receivable generated in the first quarter of 2016. While there can be noassurance that we will be able to avoid cash flow difficulties in the second quarter or thereafter as a result of this timing issue, we believe that it is probablethat the actions described above can be implemented to do so. See Note 2 in "Notes to Consolidated Financial Statements".Capital Expenditures. Cash used in investing activities during 2015 was $6,277, compared to $28,084 during 2014, a decrease in cash used of $21,807. Thedecrease resulted from lower capital expenditures during 2015 compared to 2014, primarily due to the deteriorating oil and natural gas industry landscape,which presented limited to no growth opportunities. Capital expenditures in 2015 totaled $6,443, which primarily consisted of purchases of data processingsoftware and equipment and the remaining cash payments for our 2014 purchase of non-seismic recording equipment necessary to outfit a second crew on theNorth Slope in31Alaska. Capital expenditures in 2014 totaled $28,203, which primarily consisted of purchasing equipment for our Alaska operations, camp and drillingequipment in Peru and Colombia in line with our focus on South American operations, and a combination of mechanical equipment, computer equipmentand electronics associated with our wireless strategy in Southeast Asia and North and South America.During the last three years, in line with our focus on wireless land data acquisition, we purchased a cableless seismic data acquisition system which allows upto three crews to operate under the system at the same time. Following customer needs for higher density land programs using a single point receiverapplication and to answer the demand for conventional and unconventional oil and gas exploration, we purchased high sensitivity geophones and two typesof vibrators, further strengthening our position as a full solution provider for land data acquisition methods and technologies. Additional equipmentinvestments were made for ongoing operations in Alaska in order to increase efficiency. We also invested in cable equipment in order to provide customers inLatin America with cable systems as wireless technology is slower to take hold in that market. Financing. Cash provided by financing activities during 2015 was $2,412, compared to $41,188 during 2014, a decrease in cash provided of $38,776. Cashprovided by financing activities in 2015 was primarily from the net borrowings under the revolving credit facility, partially offset by the distributionpayment to the noncontrolling interest in our joint venture to perform contracts for the acquisition and development of geophysical and seismic data andrelated services on the North Slope of Alaska. Cash provided by financing activities in 2014 was primarily from the issuance of our senior secured notes asdiscussed further below, less debt repaid with the proceeds and loan issuance costs incurred on the transaction. As of December 31, 2015, our totaloutstanding indebtedness was $148,069, consisting of senior secured notes of $140,000, borrowings under the revolving credit facility of $7,899 and capitallease obligations of $170.Senior Secured Notes. On July 2, 2014, we entered into an Indenture ("Indenture") under which we issued $150,000 of senior secured notes due July 15,2019, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons in offshore transactionspursuant to Regulation S under the Securities Act. On June 19, 2015, all outstanding senior secured notes were exchanged for an equal amount of new seniorsecured notes ("Notes"), which are substantially identical in terms to the original senior secured notes except that the Notes are registered under the SecuritiesAct.The Notes bear interest at the annual rate of 10% payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2015.The Notes are guaranteed on a senior secured basis with a lien on substantially all assets of SAExploration Holdings, Inc. and each of our existing and futuredomestic subsidiaries, except for any immaterial subsidiaries ("Guarantors"). The liens securing the Notes are subject to certain exceptions and permittedliens, which are contractually subordinated to a first priority lien on certain U.S. assets securing the Revolving Credit Facility under the IntercreditorAgreement discussed in the Revolving Credit Facility section below.The proceeds from the original issuance of the senior secured notes were used to pay the amounts outstanding under the 2012 Credit Agreement, pay the notepayable to the Former SAE common stockholders, pay related fees and expenses, fund the purchase of equipment related to our Alaska operations, and forgeneral corporate purposes.On August 26, 2015, we entered into a privately-negotiated exchange agreement with certain funds managed by Fidelity Management & Research Company("Holders") to exchange $10,000 principal amount of Notes ("Exchanged Notes") for 2,366,307 shares of our common stock ("Exchanged Stock"), asdetermined using a 30-day volume weighted average share price as of August 26, 2015. In connection with the exchange, we paid all accrued unpaid intereston the Exchanged Notes to the Holders in cash, and the Exchanged Notes were canceled. The Exchanged Stock was valued at $6,602 based on the $2.79average share price on August 27, 2015, the closing date ("Closing Date") of the exchange. The exchange resulted in a gain on early extinguishment of debtof $3,014 in the year ended December 31, 2015, consisting of the difference between the principal amount of the Exchanged Notes less the fair value of theExchanged Stock, reduced by the Exchanged Notes prorata portion of the Notes unamortized deferred loan issuance costs on the Closing Date of $343 andlegal fees of $41.We have the right to redeem some or all of the Notes at the redemption prices (expressed as percentages of the principal amount to be redeemed) set forthbelow, together with accrued and unpaid interest to, but not including, the redemption date, if redeemed on or after January 15, 2017 as indicated:PeriodPercentageOn or after January 15, 2017 and prior to July 15, 2017107.5%On or after July 15, 2017 and prior to July 15, 2018105.0%On and after July 15, 2018100.0% 32We also have the right to redeem some or all of the Notes at any time or from time to time prior to January 15, 2017, at a redemption price equal to 100% ofthe principal amount thereof plus an applicable premium determined in accordance with the Indenture and accrued and unpaid interest to, but not including,the redemption date. In addition, we have the right to redeem from time to time up to 35% of the aggregate outstanding principal amount of the Notes beforeJanuary 15, 2017, with the net proceeds of an equity offering at a redemption price equal to 110% of the principal amount thereof, plus accrued but unpaidinterest to, but not including, the redemption date. Subject to certain exceptions, upon the occurrence of a Change of Control (as defined in the Indenture), each holder of Notes will have the right to require usto purchase that holder’s Notes for a cash price equal to 101% of the principal amounts to be purchased, plus accrued and unpaid interest to the date ofpurchase. Upon the occurrence of an Asset Sale (as defined in the Indenture), each holder of Notes will have the right to require us to purchase that holder’sNotes for a cash price equal to 100% of the principal amounts to be purchased, plus accrued and unpaid interest to the date of purchase from any proceedsfrom the Asset Sale in excess of $7.5 million that are not otherwise used by us to either reduce our debt, reinvest in assets or acquire a permitted business. The Indenture contains covenants which include limitations on our ability to:•transfer or sell assets;•pay dividends, redeem subordinated indebtedness or make other restricted payments;•incur or guarantee additional indebtedness or, with respect to our restricted subsidiaries, issue preferred stock;•create or incur liens;•incur dividend or other payment restrictions affecting our restricted subsidiaries;•consummate a merger, consolidation or sale of all or substantially all of our or our subsidiaries’ assets;•enter into transactions with affiliates;•engage in business other than our current business and reasonably related extensions thereof; and•take or omit to take any actions that would adversely affect or impair in any material respect the collateral securing the Notes.We are in compliance with the Indenture covenants as of December 31, 2015. We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open marketpurchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidityrequirements, contractual restrictions and other factors. The amounts involved may be material.Revolving Credit Facility. On November 6, 2014, SAExploration, Inc., SAExploration Holdings, Inc., and our other domestic subsidiaries (collectively, "we"or "our") and Wells Fargo Bank, National Association (“Lender”) entered into a Credit and Security Agreement (“Credit Agreement”). The Credit Agreementprovides for a $20,000 revolving line of credit facility (the “Revolving Credit Facility”) secured by our U.S. assets, including accounts receivable andequipment, subject to certain exclusions and exceptions as set forth in the Credit Agreement. The proceeds of the Revolving Credit Facility are usedprimarily to fund our working capital needs for our operations and for general corporate purposes. As of December 31, 2015 and 2014, borrowings of $7,899and $0 , respectively, were outstanding under the Revolving Credit Facility. The weighted average interest rate on borrowings outstanding as of December31, 2015 was 3.61%. Borrowings made under the Revolving Credit Facility bear interest, payable monthly, at a rate of daily three months LIBOR plus 3% (3.61% and 3.26% atDecember 31, 2015 and 2014, respectively). The Revolving Credit Facility has a maturity date of November 6, 2017, unless terminated earlier. We mayrequest, and the Lender may grant, an increase to the maximum amount available under the Revolving Credit Facility in minimum increments of $1,000 notto exceed an additional $10,000 in the aggregate, so long as certain conditions as described in the Credit Agreement are met.The Credit Agreement includes a sub-facility for letters of credit in amounts up to the lesser of the available borrowing base or $10,000. Letters of credit aresubject to Lender approval and a fee, which accrues at the annual rate of 3% of the undrawn daily balance of the outstanding letters of credit, payablemonthly. An unused line fee of 0.5% per annum of the daily average of the33maximum Revolving Credit Facility amount reduced by outstanding borrowings and letters of credit is payable monthly. An aggregate of $100 and $0 wereoutstanding in letters of credit under the sub-facility as of December 31, 2015 and 2014, respectively. Under the Revolving Credit Facility, borrowings are subject to borrowing base availability and may not exceed 85% of the amount of eligible accountsreceivable, as defined, plus the lesser of $20,000 or 85% of the orderly net liquidation value of existing eligible equipment per appraisal and 85% of hardcosts of acquired eligible equipment, less the aggregate amount of any reserves established by the Lender. If borrowings under the Revolving Credit Facilityexceed $5,000, we are subject to minimum rolling 12 months EBITDA requirements of $20,000 on a consolidated basis and $8,000 on our operations in theState of Alaska. The Credit Agreement contains covenants including, but not limited to:•commitments to maintain and deliver to Lender, as required, certain financial reports, records and other items,•subject to certain exceptions under the Credit Agreement, restrictions on our ability to incur indebtedness, create or incur liens, enter intofundamental changes to our corporate structure or to the nature of our business, dispose of assets, permit a change in control, acquire non-permittedinvestments, enter into affiliate transactions or make distributions,•maintain the minimum EBITDA specified above, and•maintain eligible equipment, as defined, located in the State of Alaska with a value of at least 75% of the value of such equipment included in theborrowing base availability. Eligible equipment also includes the value of certain equipment outside the United States as defined in the CreditAgreement.The Credit Agreement also contains representations, warranties, covenants and other terms and conditions, including relating to the payment of fees to theLender, which are customary for agreements of this type. We are in compliance with the Credit Agreement covenants as of December 31, 2015. The Credit Agreement also provides for customary events of default. If an event of default occurs and is continuing, then the Lender may, among otheroptions as described in the Credit Agreement, declare our obligations to be due and payable immediately or declare the funding obligations of the Lenderterminated immediately, subject to the terms of the Intercreditor Agreement described below. The Credit Agreement is subject to the Intercreditor Agreement (“Intercreditor Agreement”) dated as of November 6, 2014 between the Lender and U.S. BankNational Association, as trustee and collateral agent (“Noteholder Agent”) pursuant to the Indenture dated as of July 2, 2014 relating to our Notes. TheIntercreditor Agreement sets forth various terms between the Lender and Noteholder Agent, including, but not limited to, (i) the priority of liens betweenthose granted by the Indenture and the Credit Agreement, (ii) enforcement action procedures, (iii) the application of the proceeds of the senior collateralreceived by either the Noteholder Agent or the Lender, (iv) the process by which any liens may be released, (v) insolvency proceeding procedures, (vi) aprohibition on amending various agreements in a manner inconsistent with or in violation of the Intercreditor Agreement, and (vii) the option of theNoteholder Agent to purchase our debt under the Credit Agreement from the Lender if certain triggering conditions are met. The Intercreditor Agreement alsocontains customary representations, warranties, covenants and other terms and conditions.Use of EBITDA (Non-GAAP measure) as a Performance Measure We use an adjusted form of EBITDA to measure period over period performance, which is a non-GAAP measurement. Adjusted EBITDA is defined as net lossplus interest expense, less interest income, plus (gain) loss on early extinguishment of debt, plus change in fair value of notes payable to related parties, plusincome taxes, plus depreciation and amortization, plus nonrecurring major expenses outside of operations, plus nonrecurring one-time expenses and foreignexchange loss. Our management uses adjusted EBITDA as a supplemental financial measure to assess: •the financial performance of our assets without regard to financing methods, capital structures, taxes, historical cost basis or nonrecurringexpenses;•our liquidity and operating performance over time in relation to other companies that own similar assets and calculate EBITDA in a similarmanner; and•the ability of our assets to generate cash sufficient to pay potential interest cost.We consider adjusted EBITDA as presented below to be the primary measure of period-over-period changes in our operational cash flow performance. 34The terms EBITDA and adjusted EBITDA are not defined under GAAP, and we acknowledge that these are not a measure of operating income, operatingperformance or liquidity presented in accordance with GAAP. When assessing our operating performance or liquidity, investors and others should notconsider this data in isolation or as a substitute for net loss, cash flow from operating activities or other cash flow data calculated in accordance with GAAP.In addition, our calculation of adjusted EBITDA may not be comparable to EBITDA or similarly titled measures utilized by other companies since such othercompanies may not calculate EBITDA in the same manner. Further, the results presented by adjusted EBITDA cannot be achieved without incurring the coststhat the measure excludes. The computation of our adjusted EBITDA (a non-GAAP measure) from net loss, the most directly comparable GAAP financial measure, is provided in thetable below (in thousands): Years Ended December 31, 2015 2014Net loss$(5,442) $(38,395)Depreciation and amortization (1)18,721 16,379Interest expense, net16,739 16,778Provision for income taxes2,693 12,876(Gain) loss on early extinguishment of debt (2)(3)(3,014) 17,157Change in fair value of notes payable to related parties (4)— 5,094Foreign exchange loss (5)4,393 3,451Nonrecurring expense (6)(7)3,006 761Adjusted EBITDA$37,096 $34,101(1)Depreciation and amortization expense was charged to the statements of operations as follows: Years Ended December 31, 2015 2014Cost of services$18,137 $15,205Selling, general and administrative expenses584 1,174Total depreciation and amortization expense$18,721 $16,379(2)The privately-negotiated agreement dated August 26, 2015 with certain funds managed by Fidelity Management & Research Company to exchange$10,000 principal amount of Notes for 2,366,307 shares of our common stock resulted in a gain on early extinguishment of debt of $3,014 in the yearended December 31, 2015. The gain consisted of the principal amount of the Exchanged Notes less the fair value of the Exchanged Stock, reduced by theExchanged Notes prorata portion of the Notes unamortized deferred loan issuance costs of $343 and legal fees of $41.(3)The repayment and termination of the 2012 Credit Agreement on July 2, 2014 resulted in a $17,157 charge to loss on early extinguishment of debt forthe year ended December 31, 2014. The charge consisted of prepayment penalties of $8,877, write-off of unamortized loan discount and issuance coststotaling $7,983, and legal fees of $297.(4)The note payable to Former SAE stockholders was recorded at fair value as discussed in Note 6 in "Notes to Consolidated Financial Statements". Allamounts outstanding under the note payable to the Former SAE stockholders were repaid on July 2, 2014 from proceeds of the issuance of our Notes andthe promissory note cancelled.(5)Foreign exchange loss, net includes the effect of both realized and unrealized foreign exchange transactions.(6)Nonrecurring expenses in 2015 primarily consist of severance payments of $1,255 incurred in our Peru, Colombia, Canada, Alaska and corporatelocations and customer and vendor claims of $1,459.(7)Nonrecurring expenses in 2014 primarily consist of the $657 settlement of disputed fees with a former financial advisor.Critical Accounting Policies Our financial statements have been prepared on the accrual basis of accounting in accordance with GAAP. Preparation of financial statements in conformitywith GAAP requires certain assumptions and estimates to be made that affect the reported amounts of35assets and liabilities at the financial statement date and the reported amounts of revenues and expenses during the reporting periods covered by the financialstatements. Because of the use of assumptions and estimates inherent in the reporting process, actual results could differ from those estimates.Revenue RecognitionOur services are provided under master service agreements that set forth our obligations and the obligations of our customers. A supplemental agreement isentered into for each data acquisition project which sets forth the terms of the specific project including the right of either party to cancel on short notice.Customer contracts for services vary in terms and conditions. Contracts are either “turnkey” (fixed price) agreements that provide for a fixed fee per unit ofmeasure, or “term” (variable price) agreements that provide for a fixed hourly, daily or monthly fee during the term of the project. Under turnkey agreements,we recognize revenue based upon output measures as work is performed. This method requires revenue recognition to be based upon quantifiable measures ofprogress, such as square or linear kilometers surveyed or each unit of data recorded. Expenses associated with each unit of measure are immediatelyrecognized. If it is determined that a contract will have a loss, the entire amount of the loss associated with the contract is immediately recognized. Revenueunder a “term” contract is billed as the applicable rate is earned under the terms of the agreement. Under contracts that require the customer to pay separatelyfor the mobilization of equipment, we recognize 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 under service contracts for which the revenue has not yet been earned, thosecosts are deferred on the balance sheet within deferred costs on contracts until the revenue is earned, at which point the costs are recognized as cost ofservices over the life of the contract. If we determine that the costs are not recoverable, the costs are 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 the grossamount including out-of-pocket expenses. We also utilize subcontractors to perform certain services to facilitate the completion of customer contracts.Customers are billed for the cost of these subcontractors plus an administrative fee. We record amounts billed to our customers related to subcontractors at thegross amount and record the related cost of subcontractors as cost of services. Sales taxes collected from customers and remitted to government authorities areaccounted for on a net basis and are excluded from revenues in the consolidated 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 oradvance payments from customers related to equipment leasing.Multiple-Element ArrangementsWe evaluate each contract to determine if the contract is a multiple-element arrangement requiring different accounting treatments for varying components ofthe contract. If a contract is deemed to have separate units of accounting, arrangement consideration is allocated based on the each unit of accounting'srelative selling price and the applicable revenue recognition criteria are considered separately for each of the separate units of accounting. We account foreach contract element when the applicable criteria for revenue recognition have been met. During 2014, we delivered both professional services andequipment under a lease arrangement. The equipment leased under the contracts is highly customized and specialized to perform specific surveyingoperations. We use our best estimate of selling price when allocating multiple-element arrangement consideration. In estimating our selling price for theleased equipment, we consider the cost to acquire the equipment, the profit margin for similar arrangements, customer demand, effect of competitors on theequipment, and other market constraints.Allowance for Doubtful AccountsWe maintain an allowance for doubtful accounts for estimated losses in our accounts receivable portfolio. We utilize the specific identification method forestablishing and maintaining the allowance for doubtful accounts. Account balances are charged off against the allowance after all means of collection havebeen exhausted and the potential for recovery is considered remote. While the collectability of outstanding customer invoices is continually assessed, thecyclical nature of our industry may affect our customers’ operating performance and cash flows, impacting our ability to collect on the invoices. Some of ourcustomers are located in certain international areas that are inherently subject to economic, political and civil risks, which may also impact our ability tocollect receivables.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 is basedon circumstances that exist in the seismic industry and information available at the time of the asset purchase.36Changes in technology have a significant impact on these estimates. As circumstances change and new information becomes available, these estimates couldchange. Seismic equipment is typically 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 accumulated depreciation areremoved from the balance sheet, and any resulting gain or loss is reflected in the results of operations for such period.Leases as LesseeWe lease certain equipment and vehicles under lease agreements. Each lease is evaluated to determine its appropriate classification as an operating or capitallease for financial reporting purposes. Any lease that does not meet the criteria for a capital lease is accounted for as an operating lease. Minimum rentpayments under operating leases are recognized on a straight-line basis over the term of the lease including any periods of free rent. The assets and liabilitiesunder capital leases are recorded at the lower of the present value of the minimum lease payments or the fair market value of the related assets. Assets undercapital leases are amortized using the straight-line method over the initial lease term. Amortization of assets under capital leases is included in depreciationexpense.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, we first compare undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If thecarrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment loss is recognized to the extent thatthe carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quotedmarket values and third-party independent appraisals, as considered necessary.Currency TranslationThe majority of our operations are conducted outside the United States in countries with stable currencies. Many contracts and local expenses are paid inlocal currencies and not in U.S. Dollars (“USD”). Our results of operations and cash flows could be impacted by changes in foreign currency exchange rates.We do not hold or issue foreign currency forward contracts, option contracts or other derivative financial instruments for speculative purposes or to mitigatethe currency exchange rate risk.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 ratesfor the period. Equity is translated at historical rates, and the resulting cumulative foreign currency translation adjustments resulting from this process areincluded as a component of accumulated other comprehensive income (loss), net of income taxes. Therefore, the USD value of these items in the financialstatements fluctuates from period to period, depending on the value of the USD against these functional currencies. Exchange gains and losses arising fromtransactions denominated in a currency other than the functional currency of the entity involved are included in the consolidated statements of operations asforeign exchange gain (losses). For the foreign subsidiaries and branches using USD as their functional currency, any local currency operations are re-measured to USD. The re-measurement of these operations is included in the consolidated statements of operations as foreign exchange gain (loss).Income TaxesIncome taxes are accounted for under the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities arerecognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities andtheir respective tax basis. This method also requires the recognition of future tax benefits for net operating loss (“NOL”) carryforwards. Deferred tax assetsand liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to berecovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactmentdate. The deferred tax asset is reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of thedeferred tax assets will not be realized.Our methodology for recording income taxes requires judgment regarding assumptions and the use of estimates, including the valuation of deferred taxassets, 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. or37Canadian statutory rates, and in many of those cases we receive a foreign tax credit for U.S. or Canadian purposes. In other foreign jurisdictions, the localincome tax rate may be less than the U.S. or Canadian statutory rates. In other foreign jurisdictions we may be subject to a tax on revenues when the amountof tax liability would exceed that computed on our net income before tax in the jurisdiction, and in such cases, the tax is treated as an income tax foraccounting purposes. Uncertain tax positions and the related interest and penalties are provided for based upon management’s assessment of whether a taxbenefit is more likely than not to be sustained upon examination by tax authorities.GoodwillGoodwill represents the excess of purchase price over the fair value of the net assets acquired in the 2011 Datum Exploration Ltd. acquisition. All of ourgoodwill resides in the Canadian operations reporting unit ("Reporting Unit").We are required to evaluate the carrying value of its goodwill at least annually for impairment, or more frequently if facts and circumstances indicate that it ismore likely than not impairment has occurred. We first perform a qualitative assessment by evaluating relevant events or circumstances to determine whetherit is more likely than not that the fair value of the Reporting Unit exceeds its carrying amount. If we are unable to conclude qualitatively that it is more likelythan not that the Reporting Unit’s fair value exceeds its carrying value, we will then apply a two-step quantitative assessment.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 impaired and nofurther testing is performed. The second step is performed if the carrying value exceeds the fair value. The implied fair value of the Reporting Unit’s goodwillmust be determined and compared to the carrying value of the goodwill. If the carrying value of the Reporting Unit’s goodwill exceeds its implied fair value,an impairment loss equal to the difference will be recorded.In determining the fair value of the Reporting Unit, we rely on the Income Approach and the Market Approach. Under the Income Approach, the fair value ofa business unit is based on the discounted cash flows it can be expected to generate over its remaining life. The estimated cash flows are converted to theirpresent value equivalent using an appropriate rate of return. Under the Market Approach, the fair value of the business is based on the Guideline PublicCompany (“GPC”) methodology using guideline public companies whose stocks are actively traded that were considered similar to ours as of the valuationdate. Valuation multiples for the GPCs were determined as of the valuation date and were applied to the Reporting Unit's operating results to arrive at anestimate of value.Share-Based CompensationWe record the grant date fair value of share-based compensation arrangements as compensation cost using a straight-line method over the requisite serviceperiod for each separately vesting tranche of an award. The amount of share-based compensation cost recognized during a period is based on the value of theawards that are ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeituresdiffer from those estimates. The forfeiture rate is updated annually.ContingenciesLiabilities 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.Comprehensive IncomeComprehensive income includes net income (loss) 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. We report foreign currency translation gains andlosses as a component of comprehensive (loss) income. Foreign currency translation gains and losses are not presented net of income taxes because theearnings of the foreign subsidiaries are considered permanently invested abroad and therefore not subject to income taxes or the income tax benefit of foreigncurrency translation losses would be offset by a valuation allowance.Variable Interest EntitiesWe evaluate our joint venture and other entities in which we have a variable interest (a “VIE”), to determine if we have a controlling financial interest and arerequired to consolidate the entity as a result. The reporting entity with a controlling financial interest in38the VIE will have both of the following characteristics: (i) the power to direct the activities of a VIE that most significantly impact the VIE’s economicperformance and (ii) the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive benefit from the VIEthat could potentially be significant to the VIE.Fair Value MeasurementsWe have certain assets and liabilities that are required to be measured and disclosed at fair value in accordance with GAAP. Fair value is defined as the pricethat would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketparticipants on the measurement date. When an asset or liability is required to be measured at fair value, an entity is required to maximize the use ofobservable inputs and minimize the use of unobservable inputs using a fair value hierarchy as follows:Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.Level 2: Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices forsimilar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions. Measurement is based on prices or valuation models requiringinputs that are both significant to the fair value measurement and supported by little or no market activity.Our financial instruments include cash and cash equivalents, restricted cash, accounts receivable, other current assets, accounts payable, accrued liabilities,borrowings under the revolving credit facility and equipment note payable. Due to their short-term maturities, the carrying amounts of these financialinstruments approximate fair value at the respective balance sheet dates. Our financial instruments also include various issuances of notes payable. Therewere no financial instruments measured at fair value on a recurring basis at December 31, 2015 and 2014. The note payable to related parties – Former SAEstockholders were outstanding during 2014 and measured at fair value on a recurring basis until their repayment in July 2014.Our non-financial assets include goodwill, property and equipment, and other intangible assets, which are classified as Level 3 assets. These assets aremeasured at fair value on a nonrecurring basis as part of our impairment assessments and as circumstances require.Reportable SegmentThe chief operating decision maker regularly reviews financial data by country to assess performance and allocate resources, resulting in the conclusion thateach country in which it operates represents a reporting unit. To determine our reportable segments, we evaluated whether and to what extent the reportingunits should be aggregated. The evaluation included consideration of each reporting unit's services, types of customers, methods used to provide our services,and regulatory environment. We determined that our reporting units sold similar types of seismic data contract services to similar types of major non-U.S. andgovernment owned/controlled oil and gas customers operating in a global market. We concluded that our seismic data contract services operations compriseone single reportable segment.Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements as of December 31, 2015 or 2014. 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 fiscal years.Recently Issued Accounting Pronouncements Revenue RecognitionIn May 2014, the Financial Accounting Standards Board ("FASB") issued new guidance intended to change the criteria for recognition of revenue. The newguidance establishes a single revenue recognition model for all contracts with customers, eliminates39industry specific requirements and expands disclosure requirements. The core principle of the guidance is that an entity should recognize revenue to depictthe transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange forthose goods or services. To achieve this core principle, an entity should apply the following five steps: (1) identify contracts with customers, (2) identify theperformance obligations in the contracts, (3) determine the transaction price, (4) allocate the transaction price to the performance obligation in the contract,and (5) recognize revenue as the entity satisfies performance obligations. The new guidance is effective for annual reporting periods beginning afterDecember 15, 2017, including interim periods within that reporting period. Early application is permitted for annual reporting periods beginning afterDecember 15, 2016, including interim periods within that reporting period. We are currently evaluating what impact adoption of this guidance will have onour financial position, results of operations, cash flows and disclosures.Going ConcernIn August 2014, the FASB issued new guidance on disclosures of uncertainties about an entity's ability to continue as a going concern. The guidance requiresmanagement's evaluation of whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern withinone year after the date that the financial statements are issued. This assessment must be made in connection with preparing financial statements for eachannual and interim reporting period. Management's evaluation should be based on the relevant conditions and events that are known and reasonablyknowable at the date the financial statements are issued. If conditions or events raise substantial doubt about the entity's ability to continue as a goingconcern, but this doubt is alleviated by management's plans, the entity should disclose information that enables the reader to understand what the conditionsor events are, management's evaluation of those conditions or events and management's plans that alleviate that substantial doubt. If conditions or eventsraise substantial doubt and the substantial doubt is not alleviated, the entity must disclose this in the footnotes. The entity must also disclose informationthat enables the reader to understand what the conditions or events are, management's evaluation of those conditions or events and management's plans thatare intended to alleviate that substantial doubt. The amendments are effective for annual periods and interim periods within those annual periods beginningafter December 15, 2016. We do not expect adoption will have a material impact on our financial position, results of operations, cash flows or disclosures.ConsolidationIn February 2015, the FASB issued amended guidance on the consolidation of legal entities including limited partnerships and limited liability corporations.The guidance modifies the consolidation models to be analyzed in determining whether a reporting entity should consolidate certain types of legal entities.The guidance must be applied using one of two retrospective application methods and will be effective for fiscal years beginning after December 15, 2015and for interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. We do not expect adoption will havea material impact on our financial position, results of operations, cash flows or disclosures.Debt Issuance CostsIn April 2015, the FASB issued new guidance which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carryingvalue of the associated debt liability, consistent with the presentation of a debt discount. The guidance does not affect the recognition and measurement ofdebt issuance costs. Therefore, the amortization of such costs will continue to be calculated using the interest method and be reported as interest expense. Theguidance does not specifically address, and therefore does not affect, the balance sheet presentation of debt issuance costs for revolving debt arrangements.The new guidance is effective for financial statements issued in fiscal years beginning after December 15, 2015, and will be applied on a retrospective basis.Early adoption is permitted for financial statements that have not been previously issued. Upon adoption of the new guidance, we will report our unamortizeddeferred loan issuance costs on the senior secured notes as a reduction of the associated debt liability rather than as assets, resulting in an equal reduction inour total assets and total liabilities compared to the prior presentation. The amount of our deferred loan issuance costs on the senior secured notes, net ofamortization, was $4,370 and $6,022 at December 31, 2015 and 2014, respectively. Other than this balance sheet reclassification, adoption of the guidancewill have no impact on our consolidated financial statements.Deferred Income TaxesIn November 2015, the FASB issued new guidance on the balance sheet classification of deferred taxes, which requires that all deferred tax assets andliabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each taxing jurisdiction will now onlyhave one net noncurrent deferred tax asset or liability. The new guidance does not change the existing requirement that prohibits companies from offsettingdeferred tax liabilities from one taxing jurisdiction against deferred tax assets of another taxing jurisdiction. The guidance is effective for financial statementsissued for annual and interim periods beginning after December 15, 2016, with earlier application permitted. We elected to apply this guidance to ourfinancial40statements for the quarter ended December 31, 2015 and retrospectively for all periods presented. As a result of the adoption of the new guidance, currentdeferred income tax assets and liabilities in the amount of $520 and $587, respectively, were reclassified to noncurrent deferred income tax assets andliabilities in the December 31, 2014 balance sheet. Other than these balance sheet reclassifications, adoption of the guidance had no impact on ourconsolidated financial statements.Financial InstrumentsIn January 2016, the FASB issued new guidance on financial instruments which primarily changes the accounting for equity investments, financial liabilitiesrecorded under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidancerelated to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. Theclassification and measurement guidance will be effective for public business entities in fiscal years beginning after December 15, 2017, including interimperiods within those fiscal years. All entities can early adopt the provision to record fair value changes for financial liabilities under the fair value optionresulting from instrument-specific credit risk in other comprehensive income. Early adoption of these provisions can be elected by public business entities forall financial statements of fiscal years and interim periods that have not yet been issued or that have not yet been made available for issuance. We do notexpect adoption will have a material impact on our financial position, results of operations, cash flows or disclosures.LeasesIn February 2016, the FASB issued new guidance on lease accounting affecting lessees and lessors. Lessees will be required to recognize assets and liabilitieson the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. As under current GAAP, the recognition,measurement, and presentation of expenses and cash flows arising from a lease for lessees will primarily depend on its classification as a finance or operatinglease. For operating leases, lessees will recognize a single total lease expense. For finance leases, lessees will recognize amortization of the right-of-use assetseparately from interest on the lease liability. For both types of leases, lessees will recognize a right-of-use asset and a lease liability on its balance sheet.Lessor accounting under the new standard will remain similar to lessor accounting under current GAAP. The new standard contains changes that are intendedto align lessor accounting with the lessee accounting model and the revenue recognition standard issued in 2014. For public companies, the new guidance iseffective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We are currentlyevaluating what impact adoption of this guidance will have on our financial position, results of operations, cash flows and disclosures.ITEM 8. Financial Statements and Supplementary Data. The information required by this item appears beginning on page F-1 hereof and is incorporated herein by reference.ITEM 9A. Controls and Procedures.Management’s Evaluation of Disclosure Controls and Procedures We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive and principal financialofficers, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of theperiod covered by this report. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of December 31,2015, our disclosure controls and procedures were effective, in all material respects, with regard to the recording, processing, summarizing and reporting,within the time periods specified in the SEC’s rules and forms for information required to be disclosed by us in the reports that we file or submit under theExchange Act. Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in reportsfiled or submitted under the Exchange Act is accumulated and communicated to our management, including our President and Chief Executive Officer andour Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.Management's Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting was designed by management, under the supervision of the Chief ExecutiveOfficer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statementsfor external purposes in accordance with accounting principles generally accepted in the United States of America, and includes those policies andprocedures that:41(i)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;(ii)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accountingprinciples generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance withauthorizations of our management and directors; and(iii)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have amaterial effect on our financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies and procedures may deteriorate.Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2015. In making this assessment, management usedthe criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013).Based on our evaluation under the criteria in Internal Control-Integrated Framework (2013), management has concluded that we maintained effectiveinternal control over financial reporting as of December 31, 2015.Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the fourth quarter of the period covered by this report that havematerially affected, or are reasonably likely to materially affect, our internal control over financial reporting.PART IIIITEM 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 connection with our2016 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 connection with our2016 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 connection with our2016 Annual Meeting of Stockholders.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 connection with our2016 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 connection with our2016 Annual Meeting of Stockholders.42PART IVITEM 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 beginning on page F-1 and are incorporated by reference into Part II, Item8: Report of Independent Registered Public Accounting FirmConsolidated Balance Sheets as of December 31, 2015 and 2014Consolidated Statements of Operations for the Years Ended December 31, 2015 and 2014Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2015 and 2014Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2015 and 2014Consolidated Statements of Cash Flows for the Years Ended December 31, 2015 and 2014Notes 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.43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 be signed onits behalf by the undersigned, thereunto duly authorized. SAEXPLORATION HOLDINGS, INC. Date: March 15, 2016By:/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 of them,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 to executein 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 allexhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and hereby ratify and confirm all that suchattorneys-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 and in thecapacities and on the dates indicated.SIGNATURE TITLE DATE /s/ Jeff Hastings Executive Chairman and Director March 15, 2016Jeff Hastings /s/ Brian A. Beatty Chief Executive Officer, President and Director March 15, 2016Brian A. Beatty (Principal Executive Officer) /s/ Brent Whiteley Chief Financial Officer, General Counsel, March 15, 2016Brent Whiteley Secretary, and Director (Principal Financial Officer) /s/ Trisha M. Gerber Chief Accounting Officer March 15, 2016Trisha M. Gerber (Principal Accounting Officer) /s/ Eric S. Rosenfeld Director March 15, 2016Eric S. Rosenfeld /s/ David D. Sgro Director March 15, 2016David D. Sgro /s/ Gary Dalton Director March 15, 2016Gary Dalton /s/ Gregory R. Monahan Director March 15, 2016Gregory R. Monahan 44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 December10, 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 Reorganizationdated as of May 23, 2013, by and among the Registrant, TrioMerger Sub, 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 ContinentalStock Transfer & Trust Company and the Registrant. By Reference S-1/A April 28, 2011 4.4 Amendment to Warrant Agreement dated June 24, 2013, byand between Continental Stock Transfer & Trust Companyand the Registrant. By Reference 8-K June 28, 2013 4.5 Indenture, dated July 2, 2014, by and among the Company,the guarantors named therein and U.S. Bank NationalAssociation, as trustee and noteholder collateral agent. By Reference 8-K July 9, 2014 4.6 Form of 10.000% Senior Secured Notes due 2019. By Reference 10-Q August 7, 2015 4.7 Notation of Guarantee executed June 19, 2015, among theCompany, SAExploration Sub, Inc., SAExploration, Inc.,SAExploration Seismic Services (US), LLC, and NES, LLC. By Reference 10-Q August 7, 2015 10.1 Indemnity Escrow Agreement dated as of June 24, 2013, byand among SAExploration Holdings, Inc., CLCH, LLC, andContinental Stock Transfer & Trust Company. By Reference 8-K June 28, 2013 10.2 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 4510.3 Registration Rights Agreement dated June 24, 2013 by andbetween SAExploration Holdings, Inc. and CLCH, LLC. By Reference 8-K June 28, 2013 10.4 Form of Indemnification Agreement. By Reference 8-K June 28, 2013 10.5 Employment Agreement dated June 24, 2013, by and betweenSAExploration Holdings, Inc. and Jeff Hastings. By Reference(*) 8-K June 28, 2013 10.6 Employment Agreement dated June 24, 2013, by and betweenSAExploration Holdings, Inc. and Brian Beatty. By Reference(*) 8-K June 28, 2013 10.7 Employment Agreement dated June 24, 2013, by and betweenSAExploration Holdings, Inc. and Brent Whiteley. By Reference(*) 8-K June 28, 2013 10.8 Form of Non-Disclosure Agreement between the Registrantand each of Jeff Hastings, Brian Beatty and Brent Whiteley. By Reference 8-K June 28, 2013 10.9 Employment Agreement dated July 1, 2011, by and betweenSAExploration, Inc. (f/k/a South American Exploration LLC)and Mike Scott. By Reference(*) 8-K June 28, 2013 10.10 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 10.11 SAExploration Holdings, Inc. 2013 Long-Term IncentivePlan. By Reference(*) 8-K June 28, 2013 10.12 SAExploration Holdings, Inc. 2013 Non-Employee DirectorShare Incentive Plan. By Reference(*) 8-K August 19, 2013 10.13 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 10.14 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 10.15 Form of Investment Management Trust Agreement betweenContinental Stock Transfer & Trust Company and theRegistrant. By Reference S-1/A May 23, 2011 10.16 Form of Registration Rights Agreement among the Registrantand the Initial Stockholders and EarlyBirdCapital, Inc. By Reference S-1/A April 28, 2011 4610.17 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 10.18 Form of Warrant Consent and Support Agreement. By Reference 8-K December 11, 2012 10.19 Security Agreement, dated July 2, 2014, by and among theCompany, the guarantors named therein and U.S. BankNational Association, as noteholder collateral agent. By Reference 8-K July 9, 2014 10.20 Registration Rights Agreement, dated July 2, 2014, by andamong the Company, the guarantors named therein andJefferies LLC, as initial purchaser. By Reference 8-K July 9, 2014 10.21 Employment Agreement dated as of September 29, 2014,between the Registrant and Trisha M. Gerber. By Reference(*) 10-Q November 7, 2014 10.22 Non-Disclosure Agreement dated as of September 29, 2014,between the Registrant and Trisha M. Gerber. By Reference(*) 10-Q November 7, 2014 10.23 Credit and Security Agreement, dated November 6, 2014, byand among SAExploration, Inc. as Borrower, SAExplorationHoldings, Inc., SAExploration Sub, Inc., SAExplorationSeismic Services (US), LLC, and NES, LLC as Guarantors, andWells Fargo Bank, National Association as Lender. By Reference 8-K November 12, 2014 10.24 Intercreditor Agreement, dated November 6, 2014, by andbetween Wells Fargo Bank, National Association, as Lender,U.S. Bank National Association, as Trustee and CollateralAgent, and acknowledged and consented to by the LoanParties (as defined therein). By Reference 8-K November 12, 2014 10.25 Exchange Agreement by and among SAExploration Holdings,Inc., Fidelity Securities Fund: Fidelity Leveraged CompanyStock Fund and Fidelity Advisor Series I: Fidelity AdvisorLeveraged Company Stock Fund dated August 26, 2015. By Reference 8-K August 27, 2015 10.26 Form of Notice of Stock Units Award and Stock Units AwardAgreement under the SAExploration Holdings, Inc. 2013Long-Term Incentive Plan. By Reference(*) 10-Q August 7, 2015 10.27 Form of Notice of Stock Option Award and Stock OptionAward Agreement under the SAExploration Holdings, Inc.2013 Long-Term Incentive Plan. By Reference(*) 10-Q August 7, 2015 14.1 Code of Ethics. By Reference S-1/A April 28, 2011 21.1 List of subsidiaries. By Reference S-4 April 30, 201547 23.1 Consent of Pannel Kerr Forster of Texas, P.C. 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.48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, 2015 and 2014 FS-3 Consolidated Statements of Operations for the years ended December 31, 2015 and 2014 FS-4 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2015 and 2014 FS-5 Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the years ended December 31, 2015 and 2014 FS-6 Consolidated Statements of Cash Flows for the years ended December 31, 2015 and 2014 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) and subsidiaries (the “Company”)as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity(deficit), and cash flows for each of the two years in the period ended December 31, 2015. These financial statements are the responsibility of the Company’smanagement. 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 audits 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, 2015 and 2014, and the results of their operations and their cash flows for each of the two years in theperiod ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America./s/ Pannell Kerr Forster of Texas, P.C.Houston, TexasMarch 15, 2016FS-2SAExploration Holdings, Inc. and SubsidiariesCONSOLIDATED BALANCE SHEETS(In thousands, except share and per share amounts) As of December 31, 2015 2014ASSETS Current assets: Cash and cash equivalents$11,300 $12,322Restricted cash518 723Accounts receivable, net67,882 73,584Deferred costs on contracts5,135 4,631Prepaid expenses887 17,037Total current assets85,722 108,297Property and equipment, net61,828 77,096Intangible assets, net789 1,050Goodwill1,658 1,977Deferred loan issuance costs, net4,891 6,826Deferred income tax assets3,756 2,229Other assets150 —Total assets$158,794 $197,475 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable$16,575 $34,255Accrued liabilities17,818 19,554Income and other taxes payable2,586 20,261Borrowings under revolving credit facility7,899 —Equipment note payable— 1,654Current portion of capital leases115 460Deferred revenue3,903 187Total current liabilities48,896 76,371Senior secured notes140,000 150,000Long-term portion of capital leases55 185Deferred income tax liabilities55 —Total liabilities189,006 226,556Commitments and contingencies— —Stockholders’ deficit: 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 17,451,353 and 14,922,497 issued andoutstanding at December 31, 2015 and 2014, respectively2 2Additional paid-in capital35,763 28,185Accumulated deficit(66,139) (56,264)Accumulated other comprehensive loss(4,271) (4,362)Total stockholders’ deficit attributable to the Corporation(34,645) (32,439)Noncontrolling interest4,433 3,358Total stockholders’ deficit(30,212) (29,081)Total liabilities and stockholders’ deficit$158,794 $197,475 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 share and per share amounts) Years Ended December 31, 2015 2014Revenue from services$228,137 $386,820Cost of services excluding depreciation and amortization159,237 315,405Depreciation and amortization included in cost of services18,137 15,205Gross profit50,763 56,210Selling, general and administrative expenses35,174 39,543Income from operations15,589 16,667Other income (expense): Gain (loss) on early extinguishment of debt3,014 (17,157)Change in fair value of note payable to related parties— (5,094)Interest expense, net(16,739) (16,778)Foreign exchange loss, net(4,393) (3,451)Other, net(220) 294Total other expense, net(18,338) (42,186)Loss before income taxes(2,749) (25,519)Provision for income taxes2,693 12,876Net loss(5,442) (38,395)Less: net income attributable to noncontrolling interest4,433 3,358Net loss attributable to the Corporation$(9,875) $(41,753) Net loss attributable to Corporation per common share: Basic$(0.63) $(2.84)Diluted$(0.63) $(2.84) Weighted average shares: Basic15,766,764 14,697,061Diluted15,766,764 14,697,061 The accompanying notes are an integral part of these consolidated financial statements.FS-4SAExploration Holdings, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)(In thousands) Years Ended December 31, 2015 2014Net loss$(5,442) $(38,395)Foreign currency translation gain (loss)91 (2,279)Total comprehensive loss(5,351) (40,674)Less: comprehensive income attributable to noncontrolling interest4,433 3,358Comprehensive loss attributable to the Corporation$(9,784) $(44,032) The accompanying notes are an integral part of these consolidated financial statements.FS-5SAExploration Holdings, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)For the Years Ended December 31, 2015 and 2014(In thousands, except share amounts) CommonShares IssuedandOutstanding CommonStock atParValue AdditionalPaid-InCapital AccumulatedDeficit AccumulatedOtherComprehensiveIncome (Loss)-Foreign CurrencyTranslation TotalCorporationStockholders’Equity (Deficit) Non-controllingInterest TotalStockholders’Equity (Deficit)Balance at December 31, 201313,428,736 $2 $27,485 $(14,511) $(2,083) $10,893 $45 $10,938Conversion - notes payable— — 500 — — 500 — 500Warrant exchange for commonshares1,441,813 — — — — — — —Foreign currency translation loss— — — — (2,279) (2,279) — (2,279)Distribution to noncontrollinginterest— — — — — — (45) (45)Issuance of restricted shares tonon-employee directors51,948 — 200 — — 200 — 200Net income (loss)— — — (41,753) — (41,753) 3,358 (38,395)Balance at December 31, 201414,922,497 2 28,185 (56,264) (4,362) (32,439) 3,358 (29,081)Foreign currency translation gain— — — — 91 91 — 91Distribution to noncontrollinginterest— — — — — — (3,358) (3,358)Employee share-basedcompensation expense— — 861 — — 861 — 861Vesting of employee restrictedstock awards108,703 — — — — — — —Grantee election to fund payrolltaxes out of restricted stock(29,834) — (85) — — (85) — (85)Issuance of restricted shares tonon-employee directors83,680 — 200 — — 200 — 200Exchange of senior secured notesfor common stock2,366,307 — 6,602 — — 6,602 — 6,602Net income (loss)— — — (9,875) — (9,875) 4,433 (5,442)Balance at December 31, 201517,451,353 $2 $35,763 $(66,139) $(4,271) $(34,645) $4,433 $(30,212) The accompanying notes are an integral part of these consolidated financial statements.FS-6SAExploration Holdings, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Years Ended December 31, 2015 2014Operating activities: Net loss attributable to Corporation$(9,875) $(41,753)Net income attributable to noncontrolling interest4,433 3,358Net loss(5,442) (38,395)Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization18,721 16,379(Gain) loss on early extinguishment of debt(3,014) 17,157Amortization of loan costs and debt discounts1,592 2,298Payment in kind interest— 1,022Deferred income taxes(1,472) (1,145)Loss on disposal of property and equipment632 851Share-based compensation1,061 200Payment of payroll taxes resulting from grantee election(85) —Notes payable early repayment penalty and fees to advisors(41) (9,174)Change in fair value of notes payable to Former SAE stockholders— 5,094Unrealized loss on foreign currency transactions4,137 1,191Changes in operating assets and liabilities: Accounts receivable1,804 (38,198)Prepaid expenses14,888 (13,403)Deferred costs on contracts(607) (1,556)Accounts payable(15,280) 17,582Accrued liabilities(804) 13,506Income and other taxes payable(16,908) 14,510Deferred revenue3,716 (7,741)Other, net200 (79)Net cash provided by (used in) operating activities3,098 (19,901)Investing activities: Purchase of property and equipment(6,443) (28,203)Proceeds from sale of property and equipment166 119Net cash used in investing activities(6,277) (28,084)Financing activities: Proceeds from issuance of senior secured notes— 150,000Repayment of notes payable(1,654) (99,659)Payment of loan issuance costs— (7,543)Revolving credit facility borrowings37,687 —Revolving credit facility repayments(29,788) —Repayments of capital lease obligations(475) (493)Distribution to noncontrolling interest(3,358) (45)Dividend payments on Former SAE preferred shares— (1,072)Net cash provided by financing activities2,412 41,188Effect of exchange rate changes on cash and cash equivalents(255) 1,768Net change in cash and cash equivalents(1,022) (5,029)Cash and cash equivalents at the beginning of year12,322 17,351Cash and cash equivalents at the end of year$11,300 $12,322 Supplemental disclosures of cash flow information: Interest paid$16,225 $11,170Income taxes paid$3,314 $10,610Non-cash investing and financing activities: Exchange of senior secured notes for common stock$6,602 $—Capital assets acquired under equipment note payable$— $1,654Capital assets acquired under capital leases$— $92Capital assets included in accounts payable$— $2,434Conversion of notes payable to related parties -- directors$— $500The accompanying notes are an integral part of these consolidated financial statements.FS-7SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share and per share amounts and as otherwise noted)NOTE 1 — NATURE OF OPERATIONS SAExploration Holdings, Inc. and its Subsidiaries (collectively, the “Corporation”) is an internationally-focused oilfield services company offering seismicdata acquisition and logistical support services in Alaska, Canada, South America, and Southeast Asia to its customers in the oil and natural gas industry. Inaddition to the acquisition of 2D, 3D, time-lapse 4D and multi-component seismic data on land, in transition zones between land and water, and offshore indepths reaching 3,000 meters, the Corporation offers a full-suite of logistical support and in-field data processing services. The Corporation operates crewsaround the world that utilize over 29,500 owned land and marine channels of seismic data acquisition equipment and other equipment as needed to completeparticular projects. Seismic data is used by its customers, including major integrated oil companies, national oil companies and large internationalindependent oil and gas exploration and production companies, to identify and analyze drilling prospects and maximize successful drilling. The results ofthe seismic surveys the Corporation conducts belong to its customers and are proprietary in nature; the Corporation does not acquire data for its own accountor for future sale or maintain multi-client data libraries.NOTE 2 — LIQUIDITYCertain customers in the State of Alaska receive exploration tax credits which can be used to offset certain eligible costs related to the acquisition of seismicdata generated by the Corporation (“Tax Credits”). These customers may utilize the proceeds from the Tax Credits to pay the accounts receivable due to theCorporation either from the cash received for the Tax Credits from the State of Alaska or more likely from the proceeds of a loan from a financial institutionutilizing the Tax Credits as security. The customers manage the Tax Credit process, which includes filing an application, undergoing an audit and receiving aTax Credit certificate for the permitted amount. Depressed oil and gas prices and uncertainty regarding the timing of any reimbursement from the State ofAlaska may adversely affect a customer's ability to monetize these Tax Credits in a timely manner before the certificate is issued. Once the certificates areissued, there is a market for the certificates as producers may use the certificates as credits against production taxes due to the State of Alaska. At December 31, 2015, accounts receivable of $50,407 were due from a customer for which the timing of collection by the Corporation is dependent onmonetization of the Tax Credits. By statute 40% of the value of the applications for Tax Credits must be processed within 120 days of the filing and theremainder must be processed within 180 days after June 30 of the year earned; however, the ultimate disposition and timing of the process of the issuance of aTax Credit certificate is outside the Corporation's control. The Corporation is currently working with its customer to find sources of financing for it tomonetize the Tax Credits sooner than certificates are issued. If the customer is unable to monetize the Tax Credit by April 30, 2016, it is expected that thecustomer will assign the Tax Credits to the Corporation, after which it will be responsible for monetization of the Tax Credits. Due to the size of the accountsreceivable amount subject to the timing issue, the Corporation may experience significant cash flow difficulties until the Tax Credits are monetized. As aresult, the Corporation is currently working on ways to monetize the Tax Credits before issuance of the certificates, but there can be no assurance that it cando so and the Corporation may need to receive waivers or consents from its lender and possibly its note holders to do so. Nonetheless the Corporationbelieves that it is probable that the actions described above can be implemented to monetize the Tax Credits prior to the issuance of the certificatesevidencing the Tax Credits.NOTE 3 — SIGNIFICANT ACCOUNTING POLICIES Principles of ConsolidationThe accompanying consolidated financial statements include the accounts of SAExploration Holdings, Inc. and its wholly-owned subsidiaries as well as thevariable interest entity discussed in Note 13 in which the Corporation is the primary beneficiary. All significant intercompany balances and transactions havebeen eliminated upon consolidation. The consolidated financial statements of the Corporation have been prepared on the accrual basis of accounting inaccordance with accounting principles generally accepted in the United States of America (“GAAP”).Certain amounts in the consolidated balance sheet as of December 31, 2014 and notes to consolidated financial statements presented herein have beenreclassified to conform to the current period presentation. These reclassifications had no effect on net loss attributable to the Corporation, comprehensiveloss, stockholders' deficit, or cash flows.FS-8SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 3 — SIGNIFICANT ACCOUNTING POLICIES – (continued)Use of EstimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts ofassets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amounts of revenuesand expenses during the reporting period. Significant areas requiring the use of management estimates and assumptions include, but are not limited to,accounting for contracts in process, allowance for doubtful accounts, useful lives for depreciation and amortization purposes, valuation of property andequipment, valuation of goodwill and intangible assets, deferred income taxes and income tax uncertainties, share-based compensation, warrants, andcontingencies. While management believes current estimates are reasonable and appropriate actual results could differ materially from current estimates.Significant Risks and UncertaintiesThe Corporation’s primary market risks include fluctuations in oil and natural gas commodity prices which affect demand for and pricing of services. Also,the Corporation conducts operations outside the United States, which exposes the Corporation to market risks from changes in exchange rates. All of theCorporation’s customers are involved in the oil and natural gas industry, which exposes 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 revenues and accounts receivable of the Corporation at any given time as discussed further inNote 15. Due to the nature of the Corporation’s contracts and customers’ projects, the largest customers can change from year to year and the largestcustomers in any year may not be indicative of the largest customers in any subsequent year. If any key customers were to terminate their contracts or fail tocontract for future services due to changes in ownership or business strategy or for any other reason, the Corporation’s results of operations could be affected. 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 may exceed insured limits established in the United States and foreign countries. The Corporation has not experienced any losses insuch accounts and management believes it is not exposed to any significant credit risk on cash and cash equivalents. The Corporation conducts operationsoutside the United States, which exposes the Corporation to market risks from changes in exchange rates. As of December 31, 2015 and 2014, the balance ofcash in subsidiaries outside of the United States totaled $3,275 and $5,032, respectively.Restricted CashRestricted cash consists primarily of cash collateral for labor claims, office rental and customs bonds.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. Approximately 26% of the Corporation's trade accounts receivable at December 31, 2015were from customers outside the United States. Substantially all of the Corporation's accounts receivable at December 31, 2014 were from customers outsidethe United States. The Corporation maintains an allowance for doubtful accounts for estimated losses in its accounts receivable portfolio. It utilizes thespecific identification method for establishing and maintaining the allowance for doubtful accounts. Account balances are charged off against the allowanceafter all means of collection have been exhausted and the potential for recovery is considered remote.FS-9SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 3 — SIGNIFICANT ACCOUNTING POLICIES – (continued)Revenue RecognitionThe Corporation’s services are provided under master service agreements that set forth the respective obligations of the Corporation and its customers. Asupplemental agreement is entered into for each data acquisition project which sets forth the terms of the specific project including the right of either party tocancel on short notice. 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, or “term” (variable price) agreements that provide for a fixed hourly, daily or monthly fee during the term of the project. Underturnkey agreements, the Corporation recognizes revenue based upon output measures as work is performed. This method requires that the Corporationrecognize revenue based upon quantifiable measures of progress, such as square or linear kilometers surveyed or each unit of data recorded. Expensesassociated with each unit of measure are immediately recognized. If it is determined that a contract will have a loss, the entire amount of the loss associatedwith the contract is immediately recognized. Revenue under a “term” contract is billed as the applicable rate is earned under the terms of the agreement.Under contracts that require the customer to pay separately for the mobilization of equipment, the Corporation recognizes such mobilization fees as revenueduring the performance of the seismic data acquisition, using the same output measures as for the seismic work. To the extent costs have been incurred underservice contracts for which the revenue has not yet been earned, those costs are deferred on the balance sheet within deferred costs on contracts until therevenue is earned, at which point the costs are recognized as cost of services over the life of the contract or, until the Corporation determines the costs are notrecoverable, at which time they are expensed.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 cost of services. Sales taxes collected from customers and remitted to government authorities are accounted for on a net basis and are excluded from revenue 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.Deferred revenue of $3,903 and $187 at December 31, 2015 and 2014, respectively, consists primarily of payments for mobilization and seismic services.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 2014, the Corporation delivered bothprofessional services and equipment under a lease arrangement. The equipment leased under the contract was highly customized and specialized to performspecific surveying operations. The Corporation uses its best estimate of selling price when allocating multiple-element arrangement consideration. Inestimating its selling price for the leased equipment, the Corporation considered the cost to acquire the equipment, the profit margin for similar arrangements,customer demand, effect of competitors 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 during the first three years of the service contract ending in2014. Equipment fee income, included in revenue, as a result of this contract was $0 and $3,175 for the years ended December 31, 2015 and 2014,respectively.FS-10SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 3 — SIGNIFICANT ACCOUNTING POLICIES – (continued)Leases as LesseeThe Corporation leases certain equipment and vehicles under lease agreements. The Corporation evaluates each lease to determine its appropriateclassification as an operating or capital lease for financial reporting purposes. Any lease that does not meet the criteria for a capital lease is accounted for asan operating lease. Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease including any periods offree rent. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair market valueof the related assets. Assets under capital leases are amortized using the straight-line method over the initial lease term. Amortization of assets under capitalleases is included in depreciation expense.Property and EquipmentProperty and equipment is capitalized at historical cost and depreciated over the useful life of the asset. Depreciation on property and equipment is calculatedon 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 this useful lifeis based on circumstances that exist in the seismic industry and information available at the time of the purchase of the asset. Useful lives and residual valuesof property and equipment are reviewed on an ongoing basis considering the effect of events or changes in circumstances. Repairs and maintenance, whichare not considered betterments and do not extend the useful life of the property, are charged to expense as incurred. When property and equipment are retiredor otherwise disposed of the asset and accumulated depreciation or amortization are removed from the accounts and the resulting gain or loss is reflected inselling, general and administrative expenses.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 its fair value. Fair value is determined through various valuation techniques including discounted cash flowmodels, quoted market values and third-party independent appraisals, as considered necessary. No long-lived assets were impaired during the years endedDecember 31, 2015 or 2014.GoodwillGoodwill represents the excess of purchase price over the fair value of the net assets acquired in the 2011 Datum Exploration Ltd. acquisition. All of theCorporation’s goodwill resides in its Canadian operations reporting unit ("Reporting Unit"). Changes in the carrying value of goodwill since 2011 are theresult of foreign currency translation adjustments.The Corporation is required to evaluate the carrying value of its goodwill at least annually for impairment, or more frequently if facts and circumstancesindicate that it is more likely than not impairment has occurred. The Corporation first performs a qualitative assessment by evaluating relevant events orcircumstances to determine whether it is more likely than not that the fair value of the Reporting Unit exceeds its carrying amount. If the Corporation isunable to conclude qualitatively that it is more likely than not that the Reporting Unit’s fair value exceeds its carrying value, it will then apply a two-stepquantitative assessment.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 impaired and nofurther testing is performed. The second step is performed if the carrying value exceeds the fair value. The implied fair value of the Reporting Unit’s goodwillmust be determined and compared to the carrying value of the goodwill. If the carrying value of the Reporting Unit’s goodwill exceeds its implied fair value,an impairment loss equal to the difference will be recorded. The Corporation’s 2015 and 2014 evaluations of goodwill concluded that it was not impaired.In determining the fair value of the Reporting Unit, the Corporation relied on the 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 be expected to generate over its remaining life. The estimated cash flows areconverted to their present value equivalent using an appropriate rate of return. Under the Market Approach, the fair value of the business is based on theGuideline Public Company (“GPC”) methodology usingFS-11SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 3 — SIGNIFICANT ACCOUNTING POLICIES – (continued)guideline public companies whose stocks are actively traded that were considered similar to the Corporation as of the valuation date. Valuation multiples forthe GPCs were determined as of the valuation date and were applied to the Reporting Unit’s operating results to arrive at an estimate of value.Intangible AssetsIntangible assets represent customer relationships recorded at cost in connection with the 2011 Datum Exploration Ltd. acquisition. Intangible assets areamortized over their estimated useful lives of 13 years and recorded in selling, general and administrative expense.Deferred Loan Issuance CostsDeferred loan issuance costs are amortized over the term of the related debt and recorded in interest expense using the effective interest method. Income TaxesIncome taxes are accounted for under the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities arerecognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities andtheir respective tax basis. This method also requires the recognition of future tax benefits for net operating loss (“NOL”) carryforwards. Deferred tax assetsand liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to berecovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactmentdate. The deferred tax asset is reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of thedeferred tax assets will not be realized.The Corporation's methodology for recording income taxes requires judgment regarding assumptions and the use of estimates, including the valuation ofdeferred tax assets, which can create a variance between actual results and estimates and could have a material impact on the provision or benefit for incometaxes. The Corporation is required to file income tax returns in the United States (federal) and in various state and local jurisdictions, as well as ininternational jurisdictions. In certain foreign jurisdictions, the local income tax rate may exceed the U.S. or Canadian statutory rates, and in many of thosecases the Corporation receives a foreign tax credit for U.S. or Canadian purposes. In other foreign jurisdictions, the local income tax rate may be less than theU.S. or Canadian statutory rates. In other foreign jurisdictions the Corporation may be subject to a tax on revenues when the amount of tax liability wouldexceed that computed on net income before tax in the jurisdiction and, in such cases, the tax is treated as an income tax for accounting purposes. Foreign Exchange Gains and LossesThe Corporation conducts operations outside the United States, which exposes the Corporation to market risks from changes in foreign exchange rates. TheCorporation’s reporting currency is the U.S. dollar (“USD”). For foreign subsidiaries and branches using local currency as their functional currency, assets andliabilities are translated at exchange rates in effect at the balance sheet dates. Revenues and expenses of these foreign subsidiaries are translated at averageexchange rates for the period. Equity is translated at historical rates, and the resulting cumulative foreign currency translation adjustments resulting from thisprocess are reported as a component of accumulated other comprehensive income (loss), net of income taxes. 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. The foreign subsidiaries andbranches using USD as their functional currency are Bolivia, Peru, Malaysia, United Kingdom and Singapore.Exchange gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in theconsolidated statements of operations as foreign exchange gain (losses). For the foreign subsidiaries and branches using USD as their functional currency, anylocal currency operations are re-measured to USD. The re-measurement of these operations is included in the consolidated statements of operations as foreignexchange gain (loss).FS-12SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 3 — SIGNIFICANT ACCOUNTING POLICIES – (continued)Share-Based CompensationThe Corporation records the grant date fair value of share-based compensation arrangements as compensation cost using a straight-line method over therequisite service period for each separately vesting tranche of an award. The amount of share-based compensation cost recognized during a period is based onthe value of the awards that are ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods ifactual forfeitures differ from those estimates. The Corporation updates its forfeiture rate annually. ContingenciesLiabilities 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. Comprehensive Income Comprehensive income includes net income (loss) 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 other comprehensive income (loss). Foreign currency translation gains and losses are not presented net of income taxesbecause the earnings of the foreign subsidiaries are considered permanently invested abroad and therefore not subject to income taxes or the income taxbenefit of foreign currency translation losses would be offset by a valuation allowance.Variable Interest EntitiesThe Corporation evaluates its joint venture and other entities in which it has a variable interest (a “VIE”), to determine if it has a controlling financial interestand is required to consolidate the entity as a result. The reporting entity with a controlling financial interest in the VIE will have both of the followingcharacteristics: (i) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorbthe losses of the VIE that could potentially be significant to the VIE or the right to receive benefit from the VIE that could potentially be significant to theVIE. See the discussion on the Corporation’s joint venture in Note 13. Fair Value MeasurementsThe Corporation has certain assets and liabilities that are required to be measured and disclosed at fair value in accordance with GAAP. Fair value is definedas the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transactionbetween market participants on the measurement date. When an asset or liability is required to be measured at fair value, an entity is required to maximize theuse of observable inputs and minimize the use of unobservable inputs using a fair value hierarchy as follows: Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.Level 2: Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices forsimilar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions. Measurement is based on prices or valuation models requiringinputs that are both significant to the fair value measurement and supported by little or no market activity.The Corporation’s financial instruments include cash and cash equivalents, restricted cash, accounts receivable, other current assets, accounts payable,accrued liabilities, borrowings under the revolving credit facility and an equipment note payable. Due to their short-term maturities, the carrying amounts ofthese financial instruments approximate fair value at the respective balanceFS-13SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 3 — SIGNIFICANT ACCOUNTING POLICIES – (continued)sheet dates. The Corporation's financial instruments also include various issuances of notes payable. There were no Corporation financial instrumentsmeasured at fair value on a recurring basis at December 31, 2015 and 2014. The note payable to related parties – Former SAE stockholders were outstandingduring 2014 and measured at fair value on a recurring basis until their repayment in July 2014.The Corporation's non-financial assets include goodwill, property and equipment, and other intangible assets, which are classified as Level 3 assets. Theseassets are measured at fair value on a nonrecurring basis as part of the Corporation's impairment assessments and as circumstances require.Reportable SegmentThe chief operating decision maker regularly reviews financial data by country to assess performance and allocate resources, resulting in the conclusion thateach country in which it operates represents a reporting unit. To determine its reportable segments, the Corporation evaluated whether and to what extent thereporting units should be aggregated. The evaluation included consideration of each reporting unit's services, types of customers, methods used to provide itsservices, and regulatory environment. The Corporation determined that its reporting units sold similar types of seismic data contract services to similar typesof major non-U.S. and government owned/controlled oil and gas customers operating in a global market. The Corporation concluded that its seismic datacontract services operations comprise one single reportable segment.Recently Issued Accounting PronouncementsRevenue RecognitionIn May 2014, the Financial Accounting Standards Board ("FASB") issued new guidance intended to change the criteria for recognition of revenue. The newguidance establishes a single revenue recognition model for all contracts with customers, eliminates industry specific requirements and expands disclosurerequirements. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customersin an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle,an entity should apply the following five steps: (1) identify contracts with customers, (2) identify the performance obligations in the contracts, (3) determinethe transaction price, (4) allocate the transaction price to the performance obligation in the contract, and (5) recognize revenue as the entity satisfiesperformance obligations. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods withinthat reporting period. Early application is permitted for annual reporting periods beginning after December 15, 2016, including interim periods within thatreporting period. The Corporation is currently evaluating what impact adoption of this guidance would have on its financial position, results of operations,cash flows and disclosures.Going ConcernIn August 2014, the FASB issued new guidance on disclosures of uncertainties about an entity's ability to continue as a going concern. The guidance requiresmanagement's evaluation of whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern withinone year after the date that the financial statements are issued. This assessment must be made in connection with preparing financial statements for eachannual and interim reporting period. Management's evaluation should be based on the relevant conditions and events that are known and reasonablyknowable at the date the financial statements are issued. If conditions or events raise substantial doubt about the entity's ability to continue as a goingconcern, but this doubt is alleviated by management's plans, the entity should disclose information that enables the reader to understand what the conditionsor events are, management's evaluation of those conditions or events and management's plans that alleviate that substantial doubt. If conditions or eventsraise substantial doubt and the substantial doubt is not alleviated, the entity must disclose this in the footnotes. The entity must also disclose informationthat enables the reader to understand what the conditions or events are, management's evaluation of those conditions or events and management's plans thatare intended to alleviate that substantial doubt. The amendments are effective for annual periods and interim periods within those annual periods beginningafter December 15, 2016. The Corporation does not expect adoption will have a material impact on its financial position, results of operations, cash flows ordisclosures.FS-14SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 3 — SIGNIFICANT ACCOUNTING POLICIES – (continued)ConsolidationIn February 2015, the FASB issued amended guidance on the consolidation of legal entities including limited partnerships and limited liability corporations.The guidance modifies the consolidation models to be analyzed in determining whether a reporting entity should consolidate certain types of legal entities.The guidance must be applied using one of two retrospective application methods and will be effective for fiscal years beginning after December 15, 2015and for interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. The Corporation does not expectadoption will have a material impact on its financial position, results of operations, cash flows or disclosures.Debt Issuance CostsIn April 2015, the FASB issued new guidance which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carryingvalue of the associated debt liability, consistent with the presentation of a debt discount. The guidance does not affect the recognition and measurement ofdebt issuance costs. Therefore, the amortization of such costs will continue to be calculated using the interest method and be reported as interest expense. Theguidance does not specifically address, and therefore does not affect, the balance sheet presentation of debt issuance costs for revolving debt arrangements.The new guidance is effective for financial statements issued in fiscal years beginning after December 15, 2015, and will be applied on a retrospective basis.Early adoption is permitted for financial statements that have not been previously issued. Upon adoption of the new guidance, the Corporation will report itsunamortized deferred loan issuance costs on the senior secured notes as a reduction of the associated debt liability rather than as assets, resulting in an equalreduction in the Corporation's total assets and total liabilities compared to the prior presentation. The amount of Corporation deferred loan issuance costs onthe senior secured notes, net of amortization, was $4,370 and $6,022 at December 31, 2015 and 2014, respectively. Other than this balance sheetreclassification, adoption of the guidance will have no impact on the Corporation's consolidated financial statements.Deferred Income TaxesIn November 2015, the FASB issued new guidance on the balance sheet classification of deferred taxes, which requires that all deferred tax assets andliabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each taxing jurisdiction will now onlyhave one net noncurrent deferred tax asset or liability. The new guidance does not change the existing requirement that prohibits companies from offsettingdeferred tax liabilities from one taxing jurisdiction against deferred tax assets of another taxing jurisdiction. The guidance is effective for financial statementsissued for annual and interim periods beginning after December 15, 2016, with earlier application permitted. The Corporation elected to apply this guidanceto its financial statements for the quarter ended December 31, 2015 and retrospectively for all periods presented. As a result of the adoption of the newguidance, current deferred income tax assets and liabilities in the amount of $520 and $587, respectively, were reclassified to noncurrent deferred income taxassets and liabilities in the December 31, 2014 balance sheet. Other than these balance sheet reclassifications, adoption of the guidance had no impact on theCorporation's consolidated financial statements.Financial InstrumentsIn January 2016, the FASB issued new guidance on financial instruments which primarily changes the accounting for equity investments, financial liabilitiesrecorded under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidancerelated to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. Theclassification and measurement guidance will be effective for public business entities in fiscal years beginning after December 15, 2017, including interimperiods within those fiscal years. All entities can early adopt the provision to record fair value changes for financial liabilities under the fair value optionresulting from instrument-specific credit risk in other comprehensive income. Early adoption of these provisions can be elected by public business entities forall financial statements of fiscal years and interim periods that have not yet been issued or that have not yet been made available for issuance. TheCorporation does not expect adoption will have a material impact on its financial position, results of operations, cash flows or disclosures.LeasesIn February 2016, the FASB issued new guidance on lease accounting affecting lessees and lessors. Lessees will be required to recognize assets and liabilitieson the balance sheet for the rights and obligations created by all leases with terms of more than 12FS-15SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 3 — SIGNIFICANT ACCOUNTING POLICIES – (continued)months. As under current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease for lessees will primarilydepend on its classification as a finance or operating lease. For operating leases, lessees will recognize a single total lease expense. For finance leases, lesseeswill recognize amortization of the right-of-use asset separately from interest on the lease liability. For both types of leases, lessees will recognize a right-of-use asset and a lease liability on its balance sheet. Lessor accounting under the new standard will remain similar to lessor accounting under current GAAP.The new standard contains changes that are intended to align lessor accounting with the lessee accounting model and the revenue recognition standardissued in 2014. For public companies, the new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods withinthose fiscal years. Early adoption is permitted. The Corporation is currently evaluating what impact adoption of this guidance will have on its financialposition, results of operations, cash flows and disclosures.NOTE 4 — DETAIL OF SELECTED BALANCE SHEET ACCOUNTSAccounts ReceivableAccounts receivable is comprised of the following: December 31, 2015 2014Accounts receivable$67,882 $73,584Less allowance for doubtful accounts— —Accounts receivable, net$67,882 $73,584Changes in the allowance for doubtful accounts were as follows: Years Ended December 31, 2015 2014Beginning balance$— $254Charges to expense— —Write-offs— 254Ending balance$— $—Prepaid ExpensesPrepaid expenses include the following: December 31, 2015 2014Prepaid taxes$95 $13,244Deposits195 868Other597 2,925Total prepaid expenses$887 $17,037Property and Equipment Property and equipment is comprised of the following: FS-16SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 4 — DETAIL OF SELECTED BALANCE SHEET ACCOUNTS – (continued) December 31, Estimated Useful Life 2015 2014Field operating equipment3 – 10 years $100,001 $100,379Vehicles3 – 5 years 16,041 15,851Leasehold improvements2 – 5 years 481 498Software3 – 5 years 1,906 2,672Computer equipment3 – 5 years 3,856 2,808Office equipment3 – 10 years 901 1,000 123,186 123,208Less: accumulated depreciation and amortization (61,358) (46,112)Property and equipment, net $61,828 $77,096 Total depreciation and amortization expense for the years ended December 31, 2015 and 2014 was $18,622 and $16,265, respectively, of which $18,137 and$15,205, respectively, was recorded in cost of services and $485 and $1,060, respectively, was recorded in selling, general and administrative expense.GoodwillChanges in the carrying value of goodwill were as follows: Balance at December 31, 2013$2,150Foreign currency translation adjustment(173)Balance at December 31, 20141,977Foreign currency translation adjustment(319)Balance at December 31, 2015$1,658 There have been no goodwill impairment charges since the 2011 Datum Exploration Ltd. acquisition was initially recorded.Intangible AssetsChanges in the carrying value of intangible assets and related accumulated amortization were as follows: Gross CarryingAmount AccumulatedAmortization Net CarryingAmountBalance at December 31, 2013$1,587 $(327) $1,260Amortization expense— (114) (114)Foreign currency translation adjustment(96) — (96)Balance at December 31, 20141,491 (441) 1,050Amortization expense— (99) (99)Foreign currency translation adjustment(162) — (162)Balance at December 31, 2015$1,329 $(540) $789 Intangible assets consist of customer relationships recorded in connection with the 2011 Datum Exploration Ltd. acquisition. The weighted average usefullife of customer relationships at December 31, 2015 and 2014 was 13 years. Future amortization expense is as follows: FS-17SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 4 — DETAIL OF SELECTED BALANCE SHEET ACCOUNTS – (continued)2016$91201791201891201991202091Thereafter334Total$789 Deferred Loan Issuance CostsChanges in deferred loan issuance costs and related accumulated amortization were as follows: Gross CarryingAmount AccumulatedAmortization Net CarryingAmountBalance at December 31, 2013$12,029 $(2,914) $9,115Write-off of 2012 Credit Agreement deferred loan issuance costs due to repayment andtermination of agreement(12,029) 4,421 (7,608)Senior secured notes loan issuance costs6,691 — 6,691Revolving credit agreement loan issuance costs852 — 852Amortization expense— (2,224) (2,224)Balance at December 31, 20147,543 (717) 6,826Write-off of prorata portion of deferred loan issuance costs due to exchange of senior securednotes for common stock(446) 103 (343)Amortization expense— (1,592) (1,592)Balance at December 31, 2015$7,097 $(2,206) $4,891The Corporation issued the senior secured notes in July 2014 and used a portion of the proceeds to repay the 2012 credit agreement prior to maturity. Uponrepayment of the 2012 credit agreement, the balance of deferred loan issuance costs was charged to loss on early extinguishment of debt in the statement ofoperations for the year ended December 31, 2014. Loan issuance costs incurred for the senior secured notes and revolving credit agreement signed inNovember 2014 were capitalized during the year ended December 31, 2014 and are being amortized over five years and three years, respectively.Accrued LiabilitiesAccrued liabilities include the following: December 31, 2015 2014Accrued payroll liabilities$5,794 $8,652Accrued interest6,463 7,489Other accrued liabilities5,561 3,413Total accrued liabilities$17,818 $19,554NOTE 5 — REVOLVING CREDIT FACILITYOn November 6, 2014, SAExploration, Inc. (“Borrower”), SAExploration Holdings, Inc. (“Corporation”) and the Corporation’s other domestic subsidiariesand Wells Fargo Bank, National Association (“Lender”) entered into a Credit and Security Agreement (“Credit Agreement”). The Credit Agreement providesfor a $20,000 revolving line of credit facility (the “Revolving Credit Facility”) secured by the Corporation’s and the Corporation's domestic subsidiaries' U.S.assets, including accounts receivable andFS-18SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 5 — REVOLVING CREDIT FACILITY – (continued)equipment, subject to certain exclusions and exceptions as set forth in the Credit Agreement. The proceeds of the Revolving Credit Facility are usedprimarily to fund the Corporation’s working capital needs for its operations and for general corporate purposes. As of December 31, 2015 and 2014,borrowings of $7,899 and $0, respectively, were outstanding under the Revolving Credit Facility. The weighted average interest rate on borrowingsoutstanding as of December 31, 2015 was 3.61%. Borrowings made under the Revolving Credit Facility bear interest, payable monthly, at a rate of daily three months LIBOR plus 3% (3.61% and 3.26% atDecember 31, 2015 and 2014, respectively). The Revolving Credit Facility has a maturity date of November 6, 2017, unless terminated earlier. TheCorporation may request, and the Lender may grant, an increase to the maximum amount available under the Revolving Credit Facility in minimumincrements of $1,000 not to exceed an additional $10,000 in the aggregate, so long as certain conditions as described in the Credit Agreement are met.The Credit Agreement includes a sub-facility for letters of credit in amounts up to the lesser of the available borrowing base or $10,000. Letters of credit aresubject to Lender approval and a fee, which accrues at the annual rate of 3% of the undrawn daily balance of the outstanding letters of credit, payablemonthly. An unused line fee of 0.5% per annum of the daily average of the maximum Revolving Credit Facility amount reduced by outstanding borrowingsand letters of credit is payable monthly. An aggregate of $100 and $0 were outstanding in letters of credit under the sub-facility as of December 31, 2015 and2014, respectively. Under the Revolving Credit Facility, borrowings are subject to borrowing base availability and may not exceed 85% of the amount of eligible accountsreceivable, as defined, plus the lesser of $20,000 or 85% of the orderly net liquidation value of existing eligible equipment per appraisal and 85% of hardcosts of acquired eligible equipment, less the aggregate amount of any reserves established by the Lender. If borrowings under the Revolving Credit Facilityexceed $5,000, the Corporation is subject to minimum rolling 12 months EBITDA requirements of $20,000 on a consolidated basis and $8,000 on theCorporation’s operations in the State of Alaska. The minimum EBITDA for the consolidated basis calculation is lowered by $17,000 if the month of July2014 is included within the rolling 12 months period and also excludes the effect of the change in fair value of notes payable to related parties. The Credit Agreement contains covenants including, but not limited to (i) commitments to maintain and deliver to the Lender, as required, certain financialreports, records and other items, (ii) subject to certain exceptions under the Credit Agreement, restrictions on the ability of the Corporation to incurindebtedness, create or incur liens, enter into fundamental changes to corporate structure or to the nature of the business of the Corporation, dispose of assets,permit a change in control, acquire non-permitted investments, enter into affiliate transactions or make distributions, (iii) maintain the minimum EBITDAspecified above and (iv) maintain eligible equipment, as defined, located in the State of Alaska with a value of at least 75% of the value of such equipmentplus the value of equipment outside the United States which would be otherwise eligible under the Credit Agreement. The Credit Agreement also containsrepresentations, warranties, covenants and other terms and conditions, including relating to the payment of fees to the Lender, which are customary foragreements of this type. The Corporation is in compliance with the Credit Agreement covenants as of December 31, 2015. The Credit Agreement also provides for customary events of default. If an event of default occurs and is continuing, then the Lender may, among otheroptions as described in the Credit Agreement, declare the obligations of the Borrower to be due and payable immediately or declare the funding obligationsof the Lender terminated immediately, subject to the terms of the Intercreditor Agreement described below. The Credit Agreement is subject to the Intercreditor Agreement (“Intercreditor Agreement”) dated as of November 6, 2014 between the Lender and U.S. BankNational Association, as trustee and collateral agent (“Noteholder Agent”) pursuant to the Indenture dated as of July 2, 2014 relating to the Corporation’s10% Senior Secured Notes due 2019. The Intercreditor Agreement sets forth various terms between the Lender and Noteholder Agent, including, but notlimited to, (i) the priority of liens between those granted by the Indenture and the Credit Agreement, (ii) enforcement action procedures, (iii) the applicationof the proceeds of the senior collateral received by either the Noteholder Agent or the Lender, (iv) the process by which any liens may be released,(v) insolvency proceeding procedures, (vi) a prohibition on amending various agreements in a manner inconsistent with or in violation of the IntercreditorAgreement, and (vii) the option of the Noteholder Agent to purchase the Borrower’s debt under the Credit Agreement from the Lender if certain triggeringconditions are met. The Intercreditor Agreement also contains customary representations, warranties, covenants and other terms and conditions.FS-19SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 6 — NOTES PAYABLE Notes payable consist of the following: December 31, 2015 2014 Senior secured notes$140,000 $150,000Equipment note payable— 1,654Total notes payable outstanding140,000 151,654Less current portion of equipment note payable— 1,654Total long-term portion of notes payable$140,000 $150,000Senior Secured NotesOn July 2, 2014, the Corporation entered into an Indenture ("Indenture") under which it issued $150,000 of senior secured notes due July 15, 2019, in aprivate offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons in offshore transactions pursuant toRegulation S under the Securities Act. On June 19, 2015, all outstanding senior secured notes were exchanged for an equal amount of new senior securednotes ("Notes"), which are substantially identical in terms to the existing senior secured notes except that the Notes are registered under the Securities Act.The Notes bear interest at the annual rate of 10% payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2015.The Notes are guaranteed on a senior secured basis with a lien on substantially all assets of SAExploration Holdings, Inc. and each of its existing and futuredomestic subsidiaries, except for any immaterial subsidiaries ("Guarantors"). The liens securing the Notes are subject to certain exceptions and permittedliens, which are contractually subordinated to a first priority lien on certain U.S. assets securing the Revolving Credit Facility under the IntercreditorAgreement discussed in Note 5.The proceeds from the original issuance of the senior secured notes were used to pay the amounts outstanding under the 2012Credit Agreement, pay the note payable to the Former SAE common stockholders, pay related fees and expenses, fund the purchase of equipment related tothe Corporation’s Alaska operations, and for general corporate purposes.On August 26, 2015, the Corporation entered into a privately-negotiated exchange agreement with certain funds managed by Fidelity Management &Research Company ("Holders") to exchange $10,000 principal amount of Notes ("Exchanged Notes") for 2,366,307 shares of the Corporation’s commonstock ("Exchanged Stock"), as determined using a 30-day volume weighted average share price as of August 26, 2015. In connection with the exchange, theCorporation paid all accrued unpaid interest on the Exchanged Notes to the Holders in cash, and the Exchanged Notes were canceled. The Exchanged Stockwas valued at $6,602 based on the $2.79 average share price on August 27, 2015, the closing date ("Closing Date") of the exchange. The exchange resulted ina gain on early extinguishment of debt of $3,014 in the year ended December 31, 2015, consisting of the difference between the principal amount of theExchanged Notes less the fair value of the Exchanged Stock, reduced by the Exchanged Notes prorata portion of the Notes unamortized deferred loanissuance costs on the Closing Date of $343 and legal fees of $41.The Corporation has the right to redeem some or all of the Notes at the redemption prices (expressed as percentages of the principal amount to be redeemed)set forth below, together with accrued and unpaid interest to, but not including, the redemption date, if redeemed on or after January 15, 2017 as indicated:PeriodPercentageOn or after January 15, 2017 and prior to July 15, 2017107.5%On or after July 15, 2017 and prior to July 15, 2018105.0%On and after July 15, 2018100.0% The Corporation also has the right to redeem some or all of the Notes at any time or from time to time prior to January 15, 2017, at a redemption price equal to100% of the principal amount thereof plus an applicable premium determined in accordance with the Indenture and accrued and unpaid interest to, but notincluding, the redemption date. In addition, the Corporation has the right to redeem from time to time up to 35% of the aggregate outstanding principalamount of the Notes before January 15, 2017, withFS-20SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 6 — NOTES PAYABLE – (continued)the net proceeds of an equity offering at a redemption price equal to 110% of the principal amount thereof, plus accrued but unpaid interest to, but notincluding, the redemption date. Subject to certain exceptions, upon the occurrence of a Change of Control (as defined in the Indenture), each holder of Notes will have the right to require theCorporation to purchase that holder’s Notes for a cash price equal to 101% of the principal amounts to be purchased, plus accrued and unpaid interest to thedate of purchase. Upon the occurrence of an Asset Sale (as defined in the Indenture), each holder of Notes will have the right to require the Corporation topurchase that holder’s Notes for a cash price equal to 100% of the principal amounts to be purchased, plus accrued and unpaid interest to the date of purchasefrom any proceeds from the Asset Sale in excess of $7.5 million that are not otherwise used by the Corporation to either reduce its debt, reinvest in assets oracquire a permitted business. The Indenture contains covenants which include limitations on the Corporation's ability to: (i) transfer or sell assets; (ii) pay dividends, redeem subordinatedindebtedness or make other restricted payments; (iii) incur or guarantee additional indebtedness or, with respect to the Corporation's restricted subsidiaries,issue preferred stock; (iv) create or incur liens; (v) incur dividend or other payment restrictions affecting its restricted subsidiaries; (vi) consummate a merger,consolidation or sale of all or substantially all of its or its subsidiaries’ assets; (vii) enter into transactions with affiliates; (viii) engage in business other thanits current business and reasonably related extensions thereof; and (ix) take or omit to take any actions that would adversely affect or impair in any materialrespect the collateral securing the Notes. The Corporation is in compliance with the Indenture covenants as of December 31, 2015. Equipment Note PayableOn November 18, 2014, the Corporation entered into a note payable to Sercel, Inc. in the amount of $1,838, bearing interest at the annual rate of 8%. Thenote payable was secured by geophones and related accessories which were delivered in December 2014. A payment of $184 was made upon delivery of theequipment with principal and interest payments of $144 due monthly thereafter. The note was paid in full in December 2015.Notes Payable under 2012 Credit AgreementOn November 28, 2012, Former SAE entered into a four year term Credit Agreement for $80,000 (as amended, the “2012 Credit Agreement”), bearing interestat 13.5%. The 2012 Credit Agreement was collateralized by all the assets of Former SAE. The Corporation joined the 2012 Credit Agreement in the samecapacity as Former SAE upon consummation of the Merger discussed below under Notes Payable to Former SAE Common Stockholders. The 2012 CreditAgreement required quarterly principal payments of $200 plus 0.25% of any additional amounts borrowed, with the remaining unpaid balance due atmaturity in 2016. Under the terms of the 2012 Credit Agreement, warrants were issued for 1% of Former SAE common stock deemed outstanding, whichincluded any securities or contract of a dilutive nature that were exercisable.Loan issuance costs totaling $12,029 were deferred and amortized over the four year term of the notes using the effective interest method. The discountassociated with the 2012 Credit Agreement was amortized over its four year term using the effective interest method. Under the 2012 Credit Agreement, the Corporation could elect to treat up to 2.5% of the interest expense incurred as payment in kind (“PIK”), which resultedin the elected interest amount recorded as interest expense and added to the balance of the note. For the year ended December 31, 2014, the Corporationelected to exercise the PIK option in the amount of $1,022.All amounts outstanding under the 2012 Credit Agreement were repaid on July 2, 2014 from proceeds of the Notes and the 2012 Credit Agreement wasterminated. The repayment and termination of the 2012 Credit Agreement resulted in a $17,157 charge to loss on early extinguishment of debt in the yearended December 31, 2014. The charge consisted of prepayment penalties of $8,877, write-off of unamortized loan discount and issuance costs totaling$7,983, and legal fees of $297.FS-21SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 6 — NOTES PAYABLE – (continued)Notes Payable to Related PartiesNote Payable to Former SAE Common StockholdersThe Corporation was initially formed on February 2, 2011 under the name Trio Merger Corp. as a blank check company in order to effect a merger, capitalstock exchange, asset acquisition or other similar business combination with one or more business entities. On June 24, 2013 (the "Closing"), a wholly-ownedsubsidiary of the Corporation completed a merger ("Merger") under an Agreement and Plan of Reorganization, as amended ("Merger Agreement") with theentity formerly known as SAExploration Holdings, Inc. (“Former SAE”), at which time the business of Former SAE became the Corporation’s business.On June 24, 2013, as Merger consideration to the Former SAE common stockholders, the Corporation issued a $17,500 unsecured promissory note due June24, 2023 to CLCH, the Former SAE stockholders' representative, bearing interest at the annual rate of 10.0%. At the date of issuance, the Corporation electedthe fair value option for recording the note. As of the issuance date, the fair value of the promissory note was determined to be $11,775, utilizing a net presentvalue approach based on a discount rate of 17.6%. In calculating the net present value, the Corporation used the average yield for similar instruments todetermine the discount rate. The resulting change in fair value was reported in the results of operations under change in fair value of note payable to relatedparties. All amounts outstanding under the note payable to Former SAE common stockholders were repaid on July 2, 2014 from proceeds of the Notes, andthe promissory note was cancelled.In October 2013, CLCH, Seismic Management Holdings Inc. and Brent Whiteley entered into a waiver agreement with the Corporation, pursuant to whicheach agreed to allow the Corporation to defer payment of interest on the note payable to Former SAE common stockholders until such payments werepermitted to be made under the 2012 Credit Agreement. Cumulative deferred interest payments totaling $2,007 were paid on July 2, 2014.Notes Payable to DirectorsPrior to the Merger, Eric S. Rosenfeld, the Corporation’s Chairman of the Board and Chief Executive Officer (director post-Merger), and David D. Sgro, theCorporation’s Chief Financial Officer and a director (director post-Merger), held non-interest bearing convertible promissory notes for working capital loansto the Corporation in principal amounts totaling $300 and $200, respectively. As of October 10, 2013, the convertible promissory notes were amended toextend the maturity date to December 31, 2013 and to allow the principal balance of the notes to be converted, at the holder’s option, to an aggregate of up to1,000,000 warrants (the “Convertible Debt Warrants”). Each Convertible Debt Warrant was exercisable for one share of the Corporation's common stockeither at a cash exercise price of $12.00 or on a cashless basis as defined in the warrant, at the holder’s option. On January 8, 2014, Messrs. Rosenfeld andSgro elected to convert the full principal balance of the notes into warrants to purchase an aggregate of 1,000,000 shares of the Corporation's common stock,and tendered such warrants in a cashless transaction for an aggregate of 100,000 shares of the Corporation's common stock as part of the warrant exchangecompleted in February 2014 as described in Note 10.Future Principal Payments for Notes PayableRequired future principal payments for notes payable outstanding at December 31, 2015 are as follows during the years ending December 31: Amount2016$—2017—2018—2019140,0002020—Thereafter—Total$140,000 FS-22SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 7 — LEASES Capital LeasesThe Corporation leases certain machinery and equipment under agreements that are classified as capital leases. As of December 31, 2015, the future minimumlease payments required under the capital leases and the present value of the net minimum lease payments for the years ending December 31 are as follows: Amount2016$1302017532018—2019—2020—Thereafter—Total minimum lease payments183Less: amount representing interest(13)Present value of net minimum lease payments170Less: current maturities of capital lease obligations(115)Long-term capital lease obligations$55Assets recorded under capital leases and included in property and equipment in the Corporation’s consolidated balance sheets consist of the following: December 31, 2015 2014Field operating equipment$— $757Vehicles373 403Computer equipment— 235Office equipment102 122Total cost of property and equipment under capital leases475 1,517Less: accumulated amortization(256) (639)Property under capital leases, net$219 $878 Operating LeasesThe Corporation has several noncancelable operating leases, primarily for office, warehouse space, and corporate apartments that are set to expire over thenext 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. Rental expense for operating leases for the years ended December 31, 2015 and 2014 was $7,288 and $53,351, respectively. As of December 31, 2015, future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year)for the years ending December 31 are as follows: FS-23SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 7 — LEASES – (continued) Amount2016$1,95820171,79020181,53820198842020202Thereafter—Total future minimum lease payments$6,372 NOTE 8 — EARNINGS PER SHARE Basic income (loss) per share is computed by dividing net income (loss) attributable to the Corporation by the weighted average number of common sharesoutstanding during each period. Diluted income (loss) per share is computed by dividing net income (loss) attributable to the Corporation by the sum of theweighted-average number of shares outstanding during each period and the dilutive potential common shares outstanding during the period determinedunder the treasury stock method. In loss periods, basic net loss and diluted net loss are the same since the effect of potential common shares is anti-dilutiveand therefore excluded.Dilutive potential common shares consist of shares issuable upon (i) the vesting of restricted stock, (ii) the exercising of warrants at average market pricesgreater than their exercise prices, and (iii) the exercising of stock options at average market prices greater than their exercise prices. Under the treasury stockmethod, dilutive potential common shares are determined based on the assumed exercise of dilutive restricted stock, stock options and warrants less thenumber of treasury shares assumed to be purchased from the amount that must be paid to exercise stock options, the amount of compensation expense forfuture service that has not yet been recognized for restricted stock and stock options, and the amount of tax benefits that will be recorded in additional paid-in capital when the dilutive awards become deductible.The computation of basic and diluted net loss per share is as follows: Net LossAttributable to theCorporation Shares Per ShareYear Ended December 31, 2015: Basic loss per share $(9,875) 15,766,764 $(0.63)Effect of dilutive securities — — —Diluted loss per share $(9,875) 15,766,764 $(0.63) Year Ended December 31, 2014: Basic loss per share $(41,753) 14,697,061 $(2.84)Effect of dilutive securities — — —Diluted loss per share $(41,753) 14,697,061 $(2.84)Warrants to purchase 581,807 shares of common stock were excluded from the calculation of diluted net loss per share for the years ended December 31, 2015and 2014 since the $12.00 warrant exercise price was higher than the weighted average share price during the respective periods, thus being anti-dilutive.Options to purchase 241,642 shares of common stock were excluded from the calculation of diluted net loss per share for the year ended December 31, 2015since the $4.12 option exercise price was higher than the weighted average share price during the period the options were outstanding, thus being anti-dilutive. Unvested restricted stock units representing 217,411 issuable shares were excluded from the calculation of diluted net loss per share for the yearended December 31, 2015 since they were anti-dilutive.FS-24SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 9 — INCOME TAXES Income (loss) before income taxes attributable to U.S. (including its foreign branches) and foreign operations are as follows: Years Ended December 31, 2015 2014U.S.$15,263 $(50,154)Foreign(18,012) 24,635Total$(2,749) $(25,519) No income taxes are attributable to the noncontrolling interest. The provision for income taxes shown in the consolidated statements of operations and comprehensive income (loss) consists of current and deferred expense(benefit) as shown in the following table: Years Ended December 31, 2015 2014Current income tax expense: U.S. – federal and state$242 $307Foreign3,923 13,714Total current income tax expense4,165 14,021Deferred income tax benefit: U.S. – federal and state— —Foreign(1,472) (1,145)Total deferred income tax benefit(1,472) (1,145)Total provision for income taxes$2,693 $12,876A reconciliation of the provision for income tax expense (benefit) expected at the U.S. federal statutory income tax rate to the effective income tax rate is asfollows: Years Ended December 31, 2015 2014Expected income tax benefit at 35%$(962) $(8,932)Effects of expenses not deductible for tax purposes2,850 1,431Tax effect of valuation allowance on deferred tax assets414 18,725Effects of differences between U.S. and foreign tax rates, net of federal benefit(917) 1,652Foreign withholding and AMT1,501 —Other adjustments(193) —Provision for income taxes$2,693 $12,876The net deferred tax assets consist of the following: December 31, 2015 2014Noncurrent deferred tax asset, net$3,756 $2,229Noncurrent deferred tax liability, net(55) —Net deferred tax asset$3,701 $2,229The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:FS-25SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 9 — INCOME TAXES – (continued) December 31, 2015 2014Deferred tax assets: Deferred charges$1,316 $1,191Stock compensation expense98 —Other accruals2,427 1,774Research and development credits2,406 2,406Capital lease obligation134 124Foreign tax credit and AMT credit carry forwards13,188 12,538Financing costs1,974 —Unrealized loss on foreign currency transactions914 507Property and equipment— 1,981Net operating loss carry forwards14,093 13,749Total deferred tax assets36,550 34,270Less: valuation allowance(26,137) (25,723)Total deferred tax assets, net10,413 8,547Deferred tax liabilities: Other receivables— (329)Property and equipment(6,372) (5,416)Deferred contract costs— (258)Intangible assets(340) (315)Total deferred tax liabilities(6,712) (6,318)Net deferred tax assets$3,701 $2,229 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 the United States, Malaysia, Brazil and Canada at December 31, 2015. Accordingly, the Corporation had avaluation allowance totaling $26,137 and $25,723 at December 31, 2015 and 2014, respectively. Should the factors underlying management’s analysischange, future valuation adjustments to the Corporation’s net deferred tax assets may be necessary. The valuation allowance was increased by $414 and$18,725 during the years ended December 31, 2015 and 2014, respectively.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 2008.Foreign earnings are considered to be permanently reinvested in operations outside the United States and therefore the Corporation has not provided for U.S.income taxes on these unrepatriated foreign earnings.The details of the Corporation’s tax attributes are shown below:FS-26SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 9 — INCOME TAXES – (continued) December 31,Net Operating Loss Carryforwards:2015 2014United States$17,752 $25,462Canada5,408 2,750Malaysia5,726 5,412Brazil6,894 2,595Others7,038 4,670Total$42,818 $40,889 December 31,Foreign Tax Credits Carryforwards:2015 2014United States$11,604 $11,519Canada641 641United Kingdom356 356Total$12,601 $12,516 December 31,Net Deferred Tax Assets (Liabilities):2015 2014Bolivia$1,467 $—Canada— 337Colombia1,735 208Malaysia(55) 429Peru554 792Others— 463Total$3,701 $2,229 Uncertain tax positions and the related interest and penalties are provided for based upon management’s assessment of whether a tax benefit is more likelythan not to be sustained upon examination by tax authorities. To the extent interest and penalties are assessed with respect to the uncertain tax positions,amounts accrued are reflected as income tax expense. Based on the Corporation’s evaluation, it has been concluded that there are no significant uncertain taxpositions requiring recognition in the Corporation’s consolidated financial statements during the years ended December 31, 2015 and 2014.The total amount of accrued interest and penalties included in accrued expenses as of December 31, 2015 and 2014 was $0 and $51, respectively. Interest andpenalties recognized as expense amounted to $135 and $83 for the years ended December 31, 2015 and 2014, respectively.Net Operating LossesAs of December 31, 2015, the Corporation had U.S. federal tax net operating loss (“NOLs”) carryforwards of approximately $17,752, which begin to expire infiscal year 2034. These net operating loss carryforwards, subject to certain requirements and restrictions, including limitations on their use in the event offuture ownership changes, 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.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 onFS-27SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 9 — INCOME TAXES – (continued)or after January 1, 2014; however, they are considered enacted as of the date of issuance. As a result of the new regulations, the Corporation is required toreview its existing income tax accounting methods related to tangible property, and determine which, if any, income tax accounting method changes arerequired; whether the Corporation will file any income tax accounting method changes with its 2014 federal income tax return; and the potential financialstatement impact. Because additional implementation guidance from the IRS is anticipated, the Corporation is in the process of reviewing its existing incometax accounting methods related to tangible property; however, the Corporation believes that certain of its historical income tax accounting policies maydiffer from what is prescribed in the new regulations. Based on the Corporation’s initial assessment, the new regulations will not have a material effect on theCorporation’s consolidated financial statements. NOTE 10 — WARRANTS Trio Merger Corp. WarrantsThe Corporation sold warrants ("Trio Merger Corp. Warrants") for the purchase of an aggregate of 14,000,000 shares of the Corporation's common stock at theexercise price of $7.50 in the following transactions:•In a private sale in February 2011, the Corporation sold 6,500,000 units, with each unit consisting of one share of common stock and one warrant, tothe holders of the Corporation's common stock prior to its initial public offering ("Private Warrants").•In a private sale in February 2011, the Corporation sold 600,000 warrants to EarlyBirdCapital, Inc., the representative of the underwriters for theCorporation’s initial public offering, and its designees ("Private Warrants").•In its initial public offering in June 2011, the Corporation closed the sale of 6,000,000 units, with each unit consisting of one share of common stockand one warrant ("Public Warrants").•Pursuant to an over-allotment option granted to the underwriters, the Corporation sold an additional 900,000 units in June 2011, with each unitconsisting of one share of common stock and one warrant ("Public Warrants").The units, consisting of one share of common stock and one warrant, were mandatorily separated into their component parts effective March 26, 2012.Following the completion of a business combination, the Corporation then could call the Public Warrants for redemption at $0.01 per warrant if the last saleprice of the Corporation's common stock equals or exceeds $12.50 per share, for any 20 trading days within a 30 consecutive trading day period. If theWarrants are called for redemption, the Corporation will have the option to require any holder that wishes to exercise its warrant to do so on a “cashlessbasis". The terms of the Private Warrants and Convertible Debt Warrants are identical to the Public Warrants, except that such warrants are exercisable forcash or on a “cashless basis,” at the holder’s option, and are not redeemable by the Corporation, in each case so long as the warrants are still held by theinitial purchasers or their affiliates.Concurrent with the Closing of the Merger in June 2013, the Corporation, with the written consent of the majority of the holders of the then outstandingwarrants, entered into an amendment to the warrant agreement with Continental Stock Transfer & Trust Company, as warrant agent for all Trio Merger Corp.and Convertible Debt Warrants, to (i) increase the exercise price of the warrants from $7.50 to $12.00 per share of the Corporation’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.On January 7, 2014, the Corporation commenced an offer to exchange the Trio Merger Corp. warrants for its common stock as discussed under WarrantExchange below. After completion of the Warrant Exchange, 581,807 of the original Trio Merger Corp. Public Warrants remain outstanding and expire onJune 24, 2016. As of December 31, 2015 and 2014, a total of 581,807 warrants were outstanding at the end of both years.Convertible Debt WarrantsAs discussed in Note 6, convertible promissory notes totaling $500 were amended as of October 10, 2013 to extend the maturity date to December 31, 2013and to allow the principal balance of the notes to be converted, at the holder’s option, to an aggregate of 1,000,000 warrants. Each Convertible Debt Warrantwas exercisable for one share of the Corporation's common stock either at a cash exercise price of $12.00 or on a cashless basis as defined in the warrant, atthe holder’s option. On January 8, 2014, Messrs. Rosenfeld and Sgro elected to convert the full principal balance of the notes into warrants to purchase anaggregate of 1,000,000 shares of the Corporation's common stock, and tendered such warrants in a cashless transaction for an aggregate ofFS-28SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 10 — WARRANTS – (continued)100,000 shares of the Corporation's common stock as part of the Warrant Exchange discussed below. This transaction resulted in no gain or loss as theconversion feature was in the original convertible promissory note agreements.Warrant ExchangeOn January 7, 2014, the Corporation commenced an offer to exchange all outstanding Trio Merger Corp. and Convertible Debt warrants for shares of itscommon stock in a cashless transaction (“Warrant Exchange”). Each warrant holder had the opportunity to receive one share of the Corporation’s commonstock in exchange for every ten outstanding warrants tendered by the holder and exchanged pursuant to the Warrant Exchange. In lieu of issuing fractionalshares of common stock, the Corporation paid cash to each holder of warrants who would otherwise have been entitled to receive fractional shares, afteraggregating all such 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 theCorporation’s common 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 of the 15,000,000 warrants outstanding were tendered andaccepted for exchange. On February 14, 2014, the Corporation issued 1,441,813 shares of common stock and paid $52 cash in lieu of fractional shares inexchange for such tendered warrants.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 warrants have anexercise price of $0.01 a share. A portion of the merger consideration payable at Closing was allocable to liability warrant holders of Former SAE that werenot converted or exchanged prior to the Merger. As of December 31, 2015, a total of 25,890 shares of common stock were held in escrow pending theconversion or exercise of those derivative securities (the “Merger Consideration Escrow”). The escrow agreement provides that CLCH, LLC ("CLCH"), asnominee of the Corporation, will have voting control over all shares of the Corporation's common stock held in the Merger Consideration Escrow.NOTE 11 — 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, 2015, 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, 2015, a total of17,451,353 shares were issued and outstanding.Merger Indemnification EscrowIn connection with the Merger, 545,635 shares of Corporation common stock issued to Former SAE stockholders at Closing were deposited in escrow tosecure the indemnification obligations under the Merger Agreement. As of December 31, 2015, 272,817 shares of Corporation common stock remain inescrow which will be released 30 days after the Corporation files its annual report on Form 10-K for its 2015 fiscal year, less any shares reserved to satisfy taxor environmental indemnification claims made prior to such date.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-29SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 12 — SHARE-BASED COMPENSATIONNon-Employee Director Share Incentive PlanEffective November 1, 2013, stockholders approved the Corporation’s non-employee director share incentive plan, which provides for discretionary grants ofstock awards to the Corporation’s independent non-employee directors as determined by the Corporation’s board of directors. The awards may take the formof unrestricted or restricted shares of the Corporation’s unissued common stock or options to purchase shares of the Corporation’s unissued common stock.The Corporation has reserved 400,000 shares of common stock for issuance under the 2013 Non-Employee Director Plan, of which 238,300 shares remain forissuance as of December 31, 2015.During 2015, 83,680 restricted shares were issued under the plan which vested immediately upon issuance, resulting in share-based compensation expense of$200 for the year ended December 31, 2015. The restricted shares granted and vested had a weighted-average grant date fair value of $2.39. During 2014,51,948 restricted shares were issued under the plan which vested immediately upon issuance, resulting in share-based compensation expense of $200 for theyear ended December 31, 2014. The restricted shares granted and vested had a weighted-average grant date fair value of $3.85. Share-based compensationexpense for the 2013 Non-Employee Director Plan is reported under selling, general and administrative expense.2013 Long-Term Incentive Compensation PlanOn June 21, 2013, the stockholders approved the Corporation’s 2013 Long-Term Incentive Compensation Plan ("Plan") for the benefit of certain employeesperforming services for the Corporation. The Plan reserves up to 792,513 unissued shares of Corporation common stock for issuance in accordance with thePlan’s terms including a maximum of up to 396,256 shares that may be issued pursuant to awards of restricted stock. On June 29, 2015, the initial awards weregranted under the Plan of 241,642 stock options with an exercise price of $4.12 and 326,117 restricted stock units. The awards vest one-third on each ofninety days, one year, and two years after the date of grant. At December 31, 2015, 224,754 shares of Corporation common stock are available for futureawards under the Plan, of which a maximum of 70,139 shares of restricted stock may be awarded.Share-Based Compensation ExpenseShare-based compensation expense for stock option, restricted stock and restricted stock unit awards was as follows: Years Ended December 31, 2015 2014Cost of services$— $—Selling, general and administrative expenses1,061 200Total share-based compensation expense1,061 200Income tax benefit(371) (70)Increase in net loss$690 $130 Increase in net loss per share: Basic$0.04 $0.01Diluted$0.04 $0.01Stock Options A summary of stock option activity for the year ended December 31, 2015 was as follows:FS-30SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 12 — SHARE–BASED COMPENSATION – (continued) Number ofShares WeightedAverage ExercisePrice WeightedAverage GrantDate Fair Value WeightedAverageRemainingContractualTerm (Years) Aggregate IntrinsicValueOutstanding at December 31, 2014— $— — $—Granted241,642 $4.12 $1.49 Exercised— $— Forfeited— $— Expired— $— Outstanding at December 31, 2015241,642 $4.12 9.5 $—Exercisable at December 31, 201580,548 $4.12 9.5 $—The total grant date fair value of stock options awarded during 2015 was $359. The total fair value of stock options vested during 2015 was $120.The Corporation computed the fair value of each stock option on the date of grant, June 29, 2015, using the Black-Scholes option pricing model based on thefollowing assumptions: 2015Expected volatility52.3%Expected lives (in years)5.5Risk-free interest rate1.8%Expected dividend yield—%The expected volatility is based on the historical volatility of comparable companies for a period commensurate with the expected lives assumption. Thesimplified method is used to estimate expected lives for options granted during the period for each vesting tranche. The risk-free interest rate is based on theyield on U.S. Treasury securities for a period commensurate with the expected lives assumption. The Corporation has not historically issued dividends anddoes not expect to do so in the future.At December 31, 2015, there was approximately $149 of unrecognized compensation expense, net of estimated forfeitures, for unvested stock option awardswith a weighted average vesting period of 1.5 years.Restricted Stock UnitsA summary of restricted stock units activity for the year ended December 31, 2015 was as follows: Number of Shares Weighted AverageGrant Date FairValueNonvested at December 31, 2014— $—Granted326,117 $3.40Vested(108,703) $3.40Forfeited— $—Nonvested at December 31, 2015217,414 $3.40The total grant date fair value of stock units awarded during 2015 was $1,109. The total fair value of stock units vested during 2015 was $310. AtDecember 31, 2015, there was approximately $459 of unrecognized compensation expense, net of estimated forfeitures, for unvested restricted stock unitawards with a weighted average vesting period of 1.5 years.FS-31SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 13 — NONCONTROLLING INTEREST Effective November 19, 2012, an agreement was entered into between a subsidiary of the Corporation and Kuukpik Corporation (“Kuukpik”) to form aseparate legal entity (“Joint Venture”) for the purpose of performing contracts for the acquisition and development of geophysical and seismic data and forgeophysical 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. TheCorporation and Kuukpik’s percentage ownership interest in the Joint Venture are 49% and 51%, respectively. The sole source of revenue of the JointVenture is contracts performed by the Corporation. Pre-award costs incurred on potential contracts by Kuukpik and the Corporation are absorbed by eachparty and not by the Joint Venture. The Joint Venture receives 10% of gross revenues of all North Slope of Alaska contracts performed by the Corporation,which is distributed to Kuukpik and the Corporation based on their relative ownership percentages. Risk of loss on a contract, including credit risk, is theCorporation's sole responsibility. Based on its power to influence the significant business activities of the Joint Venture and its responsibility to absorbcontract losses, the Corporation was determined to be the primary beneficiary under GAAP and as such consolidates the Joint Venture. The results of the JointVenture are combined with the Corporation and all intercompany transactions are eliminated upon consolidation. Amounts reflected for the Joint Venture inthe consolidated financial statements consist of the balances reported under net income attributable to noncontrolling interest for the years endedDecember 31, 2015 and 2014 and noncontrolling interest on the December 31, 2015 and 2014 balance sheets.NOTE 14 — EMPLOYEE BENEFITSThe Corporation offers a Retirement Registered Saving Plan for all eligible employees of its Canadian operations. The Corporation matches each employee’scontributions up to the maximum allowed under the plan or until the Canada Revenue Agency annual limit is reached. For the years ended December 31,2015 and 2014, the Corporation expensed matching contributions totaling of $153 and $327, respectively.The Corporation offers a 401(k) Plan for all eligible employees of its U.S. operations. The Corporation matches each employee’s contributions up to themaximum allowed under the plan. For the years ended December 31, 2015 and 2014, the Corporation expensed matching contributions totaling $112 and$169, respectively.NOTE 15 — GEOGRAPHIC AND RELATED INFORMATION A summary of revenue and identifiable assets by geographic areas is as follows: Revenue from Services Identifiable Assets Years Ended December 31, December 31, 2015 2014 2015 2014North America: United States$162,066 $107,515 $54,664 $68,118Canada11,350 20,289 4,050 5,722Total173,416 127,804 58,714 73,840South America: Peru15,218 117,829 1,878 3,448Colombia7,065 68,415 3,970 7,877Bolivia2,822 60,080 1,051 558Other2,147 11,942 2,390 134Total27,252 258,266 9,289 12,017Southeast Asia: Malaysia27,469 350 1,300 1,071Other— 400 13 21Total27,469 750 1,313 1,092Consolidated$228,137 $386,820 $69,316 $86,949Total excluding United States$66,071 $279,305 $14,652 $18,831FS-32SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 15 — GEOGRAPHIC AND RELATED INFORMATION – (continued)Revenue is presented based on the location of the services provided. Identifiable assets include property and equipment, intangible assets and goodwill.A summary of customers with revenue or accounts receivable in excess of 10% of the consolidated total for 2015 and 2014 is as follows: Revenue from Services Accounts Receivable, Net Years Ended December 31, December 31, Amount % ofConsolidated Amount % ofConsolidated2015 Customer A$83,851 37% $50,407 74%Customer B$40,050 18% Customer C$27,469 12% Customer D$23,400 10% 2014 Customer E$131,756 34% $10,763 15%Customer F$49,917 13% $25,128 34%Customer G $9,465 13%Customer H $7,360 10%NOTE 16 — FINANCIAL INSTRUMENTS Corporation financial instruments measured at fair value on a recurring basis are as follows: Fair Value CarryingAmount Quoted Prices inActive Markets(Level 1) Significant OtherObservable Inputs(Level 2) SignificantUnobservableInputs (Level 3)Note payable to related parties – Former SAE common stockholders: Balance at December 31, 2013$12,406 $— $— $12,406Realized loss5,094 — — 5,094Repayment of notes(17,500) — — (17,500)Balance at December 31, 2014$— $— $— $—From issuance on June 24, 2013 through March 31, 2014, the fair value of the note payable to related parties – Former SAE common stockholders wasderived using the net present value of expected cash flow discounted using a rate based on yield curves for similar U.S. Dollar debt instruments adjusted forthe specific terms of the note payable to related parties – Former SAE common stockholders and other factors such as the Corporation’s own cost of capital inrecent financing transactions. Under this methodology, an unrealized loss of $631 was reported under change in fair value of note payable to related partiesfor the year ended December 31, 2013. Beginning June 30, 2014, the fair value of note payable to related parties – Former SAE stockholders was derivedbased on a probability weighted approach including consideration of the risk of refinancing, resulting in an unrealized loss of $5,094 reported under changein fair value of note payable to related parties. On July 2, 2014, the note payable to related parties – Former SAE stockholders was refinanced, resulting in itsrepayment and termination, and the realization of the loss previously recorded.Corporation financial instruments recorded at historical cost consist of the Notes issued on June 19, 2015. At December 31, 2015, the carrying value of theNotes was $140,000 and the estimated fair value was $93,842. The fair value is determined by a marketFS-33SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 16 — FINANCIAL INSTRUMENTS – (continued)approach using dealer quoted period-end bond prices. This instrument is classified as Level 2 as valuation inputs for fair value measurements are dealerquoted market prices at December 31, 2015 obtained from independent third party sources. However, no assurance can be given that the fair value would bethe amount realized in an active market exchange.NOTE 17 — RELATED PARTY TRANSACTIONSThe following related party transactions occurred during the years ended December 31, 2015 and 2014 and are primarily related to the Merger transactionwhich closed on June 24, 2013 or events prior to the Merger. All positions and directorships referenced below are with the Corporation unless otherwiseindicated.In connection with the Merger, the outstanding Series A Convertible Preferred Stock of Former SAE (the “Preferred Shares”) owned by CLCH, LLC(“CLCH”), which is controlled by Jeff Hastings, Executive Chairman of the Board and Director, was redeemed for $5,000 and retired. Cumulative dividendson the Preferred Shares in the amount of $1,072 were accrued in 2013 and paid to CLCH on July 2, 2014.In connection with the Merger, the Corporation issued a promissory note in the principal amount of $17,500 to CLCH, as a representative of the Former SAEcommon stockholders, as Merger consideration to the Former SAE common stockholders as discussed further in Note 6. The promissory note was repaid withinterest on July 2, 2014, at which time principal and interest in the amount of $9,873, $3,581, $853, $127 and $93 was received by CLCH; SeismicManagement, LLP (“Seismic”), which is controlled by Brian A. Beatty, Chief Executive Officer, President and Director; Brent Whiteley, Chief FinancialOfficer, General Counsel and Secretary and a Director; Mike Scott, Executive Vice President-Operations, and Darrin Silvernagle, Executive Vice President-Marine, respectively.Prior to the Merger, Eric S. Rosenfeld, Chairman of the Board and Chief Executive Officer prior to the Merger and now a Director, and David D. Sgro, ChiefFinancial Officer and a Director prior to the Merger and currently a Director, held convertible promissory notes for working capital advanced to theCorporation in the amounts of $300 and $200, respectively, as discussed further in Note 6. On January 8, 2014, Messrs. Rosenfeld and Sgro elected to convertthe full principal balance of the notes into warrants to purchase an aggregate of 1,000,000 shares of the Corporation's common stock, and tendered suchwarrants in a cashless exchange for an aggregate of 100,000 shares of the Corporation's common stock as part of the Warrant Exchange completed in February2014 as discussed in Note 10.Three of the Corporation’s directors, Messrs. Rosenfeld, Sgro and Monahan, have registration rights for some portion of the shares of its common stock ownedby them that they originally purchased in the initial private offering of common stock as set forth in a registration rights agreement dated June 20, 2011. Asof June 24, 2014, holders of a majority of the initially issued shares have the right to demand up to two registration rights, and holders of such initial shareshave piggy-back rights on any offering of the Corporation's common stock or securities exercisable or exchangeable for its common stock. CLCH, pursuantto a registration rights agreement dated June 24, 2013, has one right to demand registration of its shares of the Corporation's common stock that it acquired inthe Merger, and has similar piggy-back rights to those held by Messrs. Rosenfeld, Sgro and Monahan. The Corporation will bear the expenses incurred inconnection with any registration statement filed as a result of the exercise of any demand registration rights.NOTE 18 — COMMITMENTS AND CONTINGENCIESOn August 14, 2013, a former investment banker for the Corporation filed a lawsuit in Canada seeking damages for alleged entitlement to a success fee. OnJuly 24, 2014, the Corporation entered into an agreement to settle the disputed fees resulting in a charge of $657 to selling, general and administrativeexpenses for the year ended December 31, 2014.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 final outcome of such legal proceedings cannot be predicted with certainty, the Corporation believes thefinal outcome will not have a materially adverse effect on its financial position, results of operations, or cash flows.FS-34SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 19 — CONDENSED CONSOLIDATING FINANCIAL INFORMATIONIn July 2014, the Corporation sold $150,000 of senior secured notes due in 2019. On June 19, 2015, all outstanding senior secured notes were exchanged foran equal amount of new senior secured notes ("Notes"), which are substantially identical in terms to the existing senior secured notes except that the Notes areregistered under the Securities Act. The Notes were issued by SAExploration Holdings, Inc. and are guaranteed by its 100% owned U.S. subsidiaries:SAExploration Sub, Inc.; SAExploration, Inc.; NES LLC; and SAExploration Seismic Services (U.S.), Inc. (“the Guarantors”). The Guarantors have fully andunconditionally guaranteed the payment obligations of SAExploration Holdings, Inc. on a joint and several basis with respect to these debt securities. As ofDecember 31, 2014, foreign branches of the Guarantors in Bolivia, Colombia and Peru have been reorganized as 100% owned foreign subsidiaries ofSAExploration, Inc. and are reported under "Other Subsidiaries" in the condensed consolidated financial statements for all periods presented.The following condensed consolidating financial information presents the results of operations, financial position and cash flows for:•SAExploration Holdings, Inc. (Reflects investments in subsidiaries utilizing the equity method of accounting. The equity in earnings of subsidiariesis recognized for the period beginning after the Closing of the Merger on June 24, 2013 as discussed in Note 6).•Guarantor subsidiaries (Reflects investments in subsidiaries utilizing the equity method of accounting).•All other subsidiaries of SAExploration Holdings, Inc. that are not Guarantors.•The consolidating adjustments necessary to present SAExploration Holdings, Inc. and subsidiaries' financial statements on a consolidated basis.The condensed consolidating financial information should be read in conjunction with the accompanying consolidated financial statements and notes.Certain amounts in the condensed consolidated balance sheets as of December 31, 2014 presented herein have been reclassified to conform to the currentperiod presentation. These reclassifications had no effect on net loss attributable to the Corporation, comprehensive income (loss), stockholders' deficit, orcash flows.FS-35SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 19 — CONDENSED CONSOLIDATING FINANCIAL INFORMATION – (continued) December 31, 2015 Balance SheetSAExplorationHoldings, Inc. TheGuarantors OtherSubsidiaries ConsolidatingAdjustments TotalConsolidatedASSETS Current assets: Cash and cash equivalents$— $8,025 $3,275 $— $11,300Restricted cash— — 518 — 518Accounts receivable, net— 51,198 16,684 — 67,882Deferred costs on contracts— 390 4,745 — 5,135Prepaid expenses26 181 680 — 887Total current assets26 59,794 25,902 — 85,722Property and equipment, net— 49,623 12,205 — 61,828Investment in subsidiaries(15,022) 58,752 7,500 (51,230) —Intercompany receivables115,691 — — (115,691) —Intangible assets, net— — 789 — 789Goodwill— — 1,658 — 1,658Deferred loan issuance costs, net4,370 521 — — 4,891Deferred income tax assets— — 3,756 — 3,756Other assets— 150 — — 150Total assets$105,065 $168,840 $51,810 $(166,921) $158,794 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable$— $7,253 $9,322 $— $16,575Accrued liabilities6,495 7,336 3,987 — 17,818Income and other taxes payable13 376 2,197 — 2,586Borrowings under revolving credit facility— 7,899 — — 7,899Current portion of capital leases— 57 58 — 115Deferred revenue— — 3,903 — 3,903Total current liabilities6,508 22,921 19,467 — 48,896Senior secured notes payable140,000 — — — 140,000Long-term portion of capital leases— 39 16 — 55Intercompany payables— 69,417 46,274 (115,691) —Deferred income tax liabilities— — 55 — 55Total liabilities146,508 92,377 65,812 (115,691) 189,006Stockholders’ equity (deficit): Common stock2 — — — 2Additional paid-in capital35,763 43,861 22,708 (66,569) 35,763Retained earnings (accumulated deficit)(77,208) 28,169 (32,439) 15,339 (66,139)Accumulated other comprehensive loss— — (4,271) — (4,271)Total stockholders’ equity attributable to the Corp.(41,443) 72,030 (14,002) (51,230) (34,645)Noncontrolling interest— 4,433 — — 4,433Total stockholders’ equity (deficit)(41,443) 76,463 (14,002) (51,230) (30,212)Total liabilities and stockholders’ equity (deficit)$105,065 $168,840 $51,810 $(166,921) $158,794FS-36SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 19 — CONDENSED CONSOLIDATING FINANCIAL INFORMATION – (continued) December 31, 2014 Balance SheetSAExplorationHoldings, Inc. TheGuarantors OtherSubsidiaries ConsolidatingAdjustments TotalConsolidatedASSETS Current assets: Cash and cash equivalents$— $7,289 $5,033 $— $12,322Restricted cash— — 723 — 723Accounts receivable, net70 1,871 71,643 — 73,584Deferred costs on contracts— 3,626 1,005 — 4,631Prepaid expenses31 536 16,470 — 17,037Total current assets101 13,322 94,874 — 108,297Property and equipment, net— 61,292 15,804 — 77,096Investment in subsidiaries(14,245) 80,003 3,510 (69,268) —Intercompany receivables126,466 — — (126,466) —Intangible assets, net— — 1,050 — 1,050Goodwill— — 1,977 — 1,977Deferred loan issuance costs, net6,022 804 — — 6,826Deferred income tax assets15 626 1,588 — 2,229Total assets$118,359 $156,047 $118,803 $(195,734) $197,475 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable$— $9,429 $24,826 $— $34,255Accrued liabilities7,519 2,592 9,443 — 19,554Income and other taxes payable— 42 20,219 — 20,261Equipment note payable— 1,654 — — 1,654Current portion of capital leases— 49 411 — 460Deferred revenue— — 187 — 187Total current liabilities7,519 13,766 55,086 — 76,371Senior secured notes150,000 — — — 150,000Long-term portion of capital leases— 96 89 — 185Intercompany payables— 66,006 60,460 (126,466) —Total liabilities157,519 79,868 115,635 (126,466) 226,556Stockholders’ equity (deficit): Common stock2 — — — 2Additional paid-in capital28,185 43,861 17,493 (61,354) 28,185Retained earnings (accumulated deficit)(67,347) 28,960 (9,963) (7,914) (56,264)Accumulated other comprehensive loss— — (4,362) — (4,362)Total stockholders’ equity attributable to the Corp.(39,160) 72,821 3,168 (69,268) (32,439)Noncontrolling interest— 3,358 — — 3,358Total stockholders’ equity (deficit)(39,160) 76,179 3,168 (69,268) (29,081)Total liabilities and stockholders’ equity (deficit)$118,359 $156,047 $118,803 $(195,734) $197,475FS-37SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 19 — CONDENSED CONSOLIDATING FINANCIAL INFORMATION – (continued) Year Ended December 31, 2015Income StatementSAExplorationHoldings, Inc. TheGuarantors OtherSubsidiaries ConsolidatingAdjustments TotalConsolidatedRevenue from services$— $162,067 $66,070 $— $228,137Cost of services— 118,845 58,529 — 177,374Gross profit— 43,222 7,541 — 50,763Selling, general and administrative expenses1,545 14,485 19,144 — 35,174Income (loss) from operations(1,545) 28,737 (11,603) — 15,589Other expense, net(7,535) (4,394) (6,409) — (18,338)Equity in income (losses) of investments(777) (18,676) — 19,453 —Income (loss) before income taxes(9,857) 5,667 (18,012) 19,453 (2,749)Provision for income taxes18 2,011 664 — 2,693Net income (loss)(9,875) 3,656 (18,676) 19,453 (5,442)Less: net income attributable to noncontrolling interest— 4,433 — — 4,433Net income (loss) attributable to the Corporation$(9,875) $(777) $(18,676) $19,453 $(9,875) Comprehensive net income (loss)$(9,875) $3,656 $(18,585) $19,453 $(5,351)Less: comprehensive net income attributable to noncontrollinginterest— 4,433 — — 4,433Comprehensive net income (loss) attributable to the Corporation$(9,875) $(777) $(18,585) $19,453 $(9,784) Year Ended December 31, 2014Income StatementSAExplorationHoldings, Inc. TheGuarantors OtherSubsidiaries ConsolidatingAdjustments TotalConsolidatedRevenue from services$— $107,514 $279,306 $— $386,820Cost of services— 95,462 235,667 (519) 330,610Gross profit— 12,052 43,639 519 56,210Selling, general and administrative expenses418 10,504 28,621 — 39,543Income (loss) from operations(418) 1,548 15,018 519 16,667Other expense, net(11,230) (24,710) (5,727) (519) (42,186)Equity in income (losses) of investments(30,105) 17 — 30,088 —Income (loss) before income taxes(41,753) (23,145) 9,291 30,088 (25,519)Provision for income taxes— 3,602 9,274 — 12,876Net income (loss)(41,753) (26,747) 17 30,088 (38,395)Less: net income attributable to noncontrolling interest— 3,358 — — 3,358Net income (loss) attributable to the Corporation$(41,753) $(30,105) $17 $30,088 $(41,753) Comprehensive net income (loss)$(41,753) $(26,747) $(2,262) $30,088 $(40,674)Less: comprehensive net income attributable to noncontrollinginterest— 3,358 — — 3,358Comprehensive net income (loss) attributable to the Corporation$(41,753) $(30,105) $(2,262) $30,088 $(44,032)FS-38SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 19 — CONDENSED CONSOLIDATING FINANCIAL INFORMATION – (continued) Year Ended December 31, 2015Statement of Cash FlowsSAExplorationHoldings, Inc. TheGuarantors OtherSubsidiaries ConsolidatingAdjustments TotalConsolidatedOperating activities: Net cash provided by (used in) operating activities$(10,775) $(303) $17,976 $(3,800) $3,098Investing activities: Purchase of property and equipment— (3,985) (2,458) — (6,443)Capital contribution to affiliate— (1,225) (3,990) 5,215 —Proceeds from sale of property and equipment— — 166 — 166Net cash provided by (used in) investing activities— (5,210) (6,282) 5,215 (6,277)Financing activities: Repayments of notes payable— (1,654) — — (1,654)Revolving credit facility borrowings— 37,687 — — 37,687Revolving credit facility repayments— (29,788) — — (29,788)Repayments of capital lease obligations— (49) (426) — (475)Distribution to noncontrolling interest— (3,358) — — (3,358)Intercompany lending10,775 3,411 (14,186) — —Capital contribution from affiliate— — 5,215 (5,215) —Dividend payments to affiliate— — (3,800) 3,800 —Net cash provided by (used in) financing activities10,775 6,249 (13,197) (1,415) 2,412Effects of exchange rate changes on cash and cash equivalents— — (255) — (255)Net change in cash and cash equivalents— 736 (1,758) — (1,022)Cash and cash equivalents at the beginning of period— 7,289 5,033 — 12,322Cash and cash equivalents at the end of period$— $8,025 $3,275 $— $11,300FS-39SAExploration Holdings, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In thousands, except for share amounts and as otherwise noted)NOTE 19 — CONDENSED CONSOLIDATING FINANCIAL INFORMATION – (continued) Year Ended December 31, 2014Statement of Cash FlowsSAExplorationHoldings, Inc. TheGuarantors OtherSubsidiaries ConsolidatingAdjustments TotalConsolidatedOperating activities: Net cash provided by (used in) operating activities$1,012 $6,036 $(13,728) $(13,221) $(19,901)Investing activities: Purchase of property and equipment— (25,177) (3,026) — (28,203)Capital contribution to affiliate— 5,253 (3,515) (1,738) —Proceeds from sale of property and equipment— 80 39 — 119Net cash used in investing activities— (19,844) (6,502) (1,738) (28,084)Financing activities: Proceeds from issuance of senior secured notes150,000 — — — 150,000Repayments of notes payable(17,500) (82,159) — — (99,659)Payment of loan issuance costs(6,691) (852) — — (7,543)Repayments of capital lease obligations— (88) (405) — (493)Distribution to noncontrolling interest— (45) — — (45)Intercompany lending(126,821) 101,924 24,897 — —Capital contribution from affiliate— — (1,738) 1,738 —Dividend payments on Former SAE preferred shares— (1,072) — — (1,072)Dividend payments to affiliate— — (13,221) 13,221 —Net cash provided by (used in) financing activities(1,012) 17,708 9,533 14,959 41,188Effects of exchange rate changes on cash and cash equivalents— — 1,768 — 1,768Net change in cash and cash equivalents— 3,900 (8,929) — (5,029)Cash and cash equivalents at the beginning of period— 3,389 13,962 — 17,351Cash and cash equivalents at the end of period$— $7,289 $5,033 $— $12,322FS-40Exhibit 23.1 Consent of Independent Registered Public Accounting Firm We have issued our report dated March 15, 2016, with respect to the consolidated balance sheets as of December 31, 2015 and 2014 and the relatedconsolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity (deficit), and cash flows for each of the two years in theperiod ended December 31, 2015 included in the Annual Report of SAExploration Holdings, Inc. on Form 10-K for the year ended December 31, 2015. Wehereby consent to the incorporation by reference of said report in the Registration Statements of SAExploration Holdings, Inc. on Forms S-4 (File No. 333-192034, effective January 7, 2014 and File No. 333-203752, effective May 19, 2015) and on Forms S-8 (File No. 333-195365, effective April 18, 2014, andFile No. 333-195366, effective April 18, 2014). /s/ Pannell Kerr Forster of Texas, P.C. Houston, TexasMarch 15, 2016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, 2015 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 forexternal purposes 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 theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.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; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: March 15, 2016/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, 2015 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 forexternal purposes 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 theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.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; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.Date: March 15, 2016/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, 2015, 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; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Date: March 15, 2016/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, 2015, 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; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: March 15, 2016/s/ Brent Whiteley Brent Whiteley Chief Financial Officer, General Counsel and Secretary(Principal Financial Officer) 

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