EXHIBIT 99.1
 Report of Independent Registered Public Accounting Firm
     
 
 1




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INOVA GEOPHYSICAL EQUIPMENT LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
As at December 31, 2010
(In thousands)
 ASSETSCurrent assets:Cash and cash equivalents
    
    $
    10,329Accounts receivable from third parties, net
    
    
    16,177Accounts receivable from related parties
    
    
    16,477Notes receivable
    
    
    6,671Inventories
    
    
    74,487Prepaid expenses and other current assets
    
    
    5,300Total current assets
    
    
    129,441Property, plant and equipment, net
    
    
    19,020Seismic rental equipment, net
    
    
    42,146Goodwill
    
    
    25,148Intangible assets, net
    
    
    35,100Total assets
    
    $
    250,855LIABILITIES AND OWNERS EQUITYCurrent liabilities:Current maturities of long-term debt
    
    $
    4,019Accounts payable
    
    
    10,635Accrued expenses
    
    
    13,421Accounts payable to related parties
    
    
    4,618Deferred revenue
    
    
    2,313Total current liabilities
    
    
    35,006Long term debt, net of current maturities (related party  $10,000)
    
    
    23,164Related party loan guarantee
    
    
    1,000Total liabilities
    
    
    59,170Commitments and contingenciesOwners equity:Owners investment
    
    
    241,810Accumulated deficit
    
    
    (51,107
    )Accumulated other comprehensive income
    
    
    982Total owners equity
    
    
    191,685Total liabilities and owners equity
    
    $
    250,855
  2




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INOVA GEOPHYSICAL EQUIPMENT LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Period from March 26, 2010 to December 31, 2010
(In thousands)
 Revenues from third parties
    
    $
    70,164Revenues from related parties
    
    
    22,924Net revenues
    
    
    93,088Cost of sales (including excess and obsolete inventory charge of $20,238)
    
    
    103,516Gross profit (loss)
    
    
    (10,428
    )Operating expenses:Research, development and engineering
    
    
    17,178Marketing and sales
    
    
    7,062General and administrative
    
    
    11,012Costs charged by a related party
    
    
    2,492Costs incurred by a related party for the benefit of INOVA
    
    
    510Total operating expenses
    
    
    38,254Loss from operations
    
    
    (48,682
    )Interest expense, net
    
    
    (2,126
    )Other income
    
    
    1,170Loss before income taxes
    
    
    (49,638
    )Income tax expense
    
    
    1,469Net loss
    
    $
    (51,107
    )
  3




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INOVA GEOPHYSICAL EQUIPMENT LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Period from March 26, 2010 to December 31, 2010
(In thousands)
 Cash flows from operating activities:Net loss
    
    $
    (51,107
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    20,608Excess & obsolete inventory expense
    
    
    20,238Bad debt expense
    
    
    629Amortization of debt premium
    
    
    (397
    )Costs incurred by a related party for the benefit of INOVA
    
    
    510Profits and (gains) losses on sale of property, plant, equipment and
seismic rental equipment
    
    
    (9,308
    )Purchase of seismic rental equipment
    
    
    (710
    )Proceeds from sale of seismic rental equipment
    
    
    17,819Change in operating assets and liabilities:Accounts and notes receivable
    
    
    3,090Inventories
    
    
    16,670Accounts payable and accrued expenses
    
    
    (7,150
    )Deferred revenue
    
    
    (304
    )Due to/from related parties
    
    
    (11,860
    )Other assets and liabilities
    
    
    (3,137
    )Net cash used in operating activities
    
    
    (4,409
    )Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (2,839
    )Cash from acquired business
    
    
    4,552Net cash provided by investing activities
    
    
    1,713Cash flows from financing activities:Borrowings under revolving credit facility
    
    
    20,000Repayments under revolving credit facility
    
    
    (10,000
    )Borrowings from owners
    
    
    11,500Repayments to owners
    
    
    (11,500
    )Payments on secured equipment financing
    
    
    (2,331
    )Repayment of capital lease obligations
    
    
    (2,369
    )Net cash provided by financing activities
    
    
    5,300Effect of change in foreign currency exchange rates on cash and cash equivalents
    
    
    1,460Net increase in cash and cash equivalents
    
    
    4,064Cash and cash equivalents at beginning of period
    
    
    6,265Cash and cash equivalents at end of period
    
    $
    10,329Non-cash items from investing and financing activities:Net non-cash assets contributed by owners
    
    $
    226,371INOVA assumption of BGP guarantee of ION debt
    
    $
    1,000Costs incurred by BGP for the benefit of INOVA
    
    $
    510Property, plant and equipment additions from prepaid expenses
    
    $
    1,180Supplemental disclosure of cash flow information:Interest paid, net
    
    $
    1,643Income taxes received
    
    $
    199
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INOVA GEOPHYSICAL EQUIPMENT LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OWNERS EQUITY AND
COMPREHENSIVE LOSS
Period from March 26, 2010 to December 31, 2010
(In thousands)
 AccumulatedOther
    
    
    TotalOwners Investment
    
    
    Accumulated
    
    
    Comprehensive
    
    
    OwnersBGP
    
    
    ION
    
    
    Deficit
    
    
    Income
    
    
    EquityBalance at March 25, 2010
    
    $
    11,377
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    11,377Owners contributions
    
    
    112,196
    
    
    
    118,727
    
    
    
    
    
    
    
    
    
    
    
    230,923INOVA assumption of BGP guarantee of ION debt
    
    
    (1,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,000
    )BGP costs incurred for benefit of INOVA
    
    
    510
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    510Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    (51,107
    )
    
    
    
    
    
    
    (51,107
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    982
    
    
    
    982Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50,125
    )Balance at December 31, 2010
    
    $
    123,083
    
    
    $
    118,727
    
    
    $
    (51,107
    )
    
    $
    982
    
    
    $
    191,685
  5




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INOVA GEOPHYSICAL EQUIPMENT LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) Summary of Significant Accounting Policies
 General Description and Principles of Consolidation
   Overview of Formation of INOVA
    INOVA Formation
 Use of Estimates
  Cash and Cash Equivalents
  Accounts and Notes Receivable
  6




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Inventories
  Property, Plant, Equipment and Seismic Rental Equipment
  YearsMachinery and equipment
    
    
    3-15Buildings
    
    
    5-20Seismic rental equipment
    
    
    2-7Leased equipment and other
    
    
    3-5
   Financial Instruments
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Goodwill and Other Intangible Assets
 Intangibles Goodwill and
Other,
   Goodwill
 Accounting for
the Impairment and Disposal of Long-Lived Assets  Intangible Assets
  Estimated Useful Life(Years)Trademarks
    
    
    12-14Patents
    
    
    5-14
 Fair Value Measurements
 Fair Value Measurements,
 INOVA Formation  INOVA Formation Overview of
Formation of INOVA
 Goodwill
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 Goodwill
 ION Loan Guarantee  Guarantee of ION Credit Facility
 Revenue Recognition
  Sale of Acquisition Systems and Other Seismic Equipment Revenue
Recognition
 Rental of Acquisition Systems and Other Seismic Equipment
 Multi-element Arrangements Accounting for
Multiple-Element Revenue Arrangement . Revenue Arrangements with Multiple Deliverables
    Product Warranty
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Research, Development and Engineering
  Income Taxes
  Income Taxes
 Comprehensive Net Loss
  Foreign Currency Gains and Losses
  Concentration of Credit and Foreign Sales Risks
   Recent Accounting Pronouncements
 Fair Value
Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements
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(2) INOVA Formation
  Summary of Significant Accounting Policies  Overview of Formation
of INOVA  Long-Term Debt
 Business Combinations
 Fair values of assets and liabilities:Net current assets
    
    $
    126,482Property, plant, equipment and seismic rental equipment
    
    
    64,292Net other long-term assets
    
    
    238Intangible assets (trademarks and patents)
    
    
    37,100Goodwill
    
    
    25,102Secured equipment financing and capital lease liability
    
    
    (22,291
    )Total allocated purchase price
    
    
    230,923Less cash of acquired business
    
    
    (4,552
    )Owners investment contributed, net of cash acquired
    
    $
    226,371
      Long-Term Debt
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(3) Accounts and Notes Receivable
  Accounts receivable, principally trade
    
    $
    16,769Less allowance for doubtful accounts
    
    
    (592
    )Accounts receivable, net
    
    $
    16,177
  Balance at March 25, 2010
    
    $
    Additions charged to bad debt expense
    
    
    (629
    )Write-offs charged against the allowance
    
    
    37Balance at December 31, 2010
    
    $
    (592
    )
  (4) Inventories
  Raw materials and subassemblies
    
    $
    48,402Work-in-process
    
    
    4,422Finished goods
    
    
    41,825Reserve for excess and obsolete inventories
    
    
    (20,162
    )Total
    
    $
    74,487
  (5) Property, Plant, Equipment and Seismic Rental Equipment
  Land
    
    $
    25Buildings
    
    
    1,110Machinery and equipment
    
    
    12,751Seismic rental equipment
    
    
    63,563Furniture and fixtures
    
    
    981Other
    
    
    376Total
    
    
    78,807Less accumulated depreciation
    
    
    (17,641
    )Property, plant, equipment and seismic rental equipment, net
    
    $
    61,166
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(6) Goodwill
   Canada
    
    
    U.S.A.
    
    
    TotalBalance at March 25, 2010
    
    $
    
    
    
    $
    
    
    
    $
    Goodwill acquired during the year
    
    
    1,863
    
    
    
    23,239
    
    
    
    25,102Impact of foreign currency translation adjustments
    
    
    46
    
    
    
    
    
    
    
    46Balance at December 31, 2010
    
    $
    1,909
    
    
    $
    23,239
    
    
    $
    25,148
 (7) Intangible Assets
  WeightedAverageAmortization
    
    
    Gross
    
    
    AccumulatedPeriod
    
    
    Amount
    
    
    Amortization
    
    
    NetTrademarks
    
    
    13
    
    
    $
    15,802
    
    
    $
    (890
    )
    
    $
    14,912Patents
    
    
    12
    
    
    
    21,530
    
    
    
    (1,342
    )
    
    
    20,188Total
    
    
    13
    
    
    $
    37,332
    
    
    $
    (2,232
    )
    
    $
    35,100
  Years Ended December 31,2011
    
    $
    2,9562012
    
    $
    2,9562013
    
    $
    2,9562014
    
    $
    2,9562015
    
    $
    2,881
 (8) Accrued Expenses
  Compensation, including compensation-related taxes and commissions
    
    $
    3,480Accrued taxes (primarily income taxes)
    
    
    6,118Product warranty
    
    
    2,497Other
    
    
    1,326Total accrued expenses
    
    $
    13,421
  Balance at March 25, 2010
    
    $
    Warranty obligations acquired during the period
    
    
    2,573Accruals (expirations) for warranties issued/expired during the period
    
    
    116Settlements made (in cash or in kind) during the period
    
    
    (192
    )Balance at December 31, 2010
    
    $
    2,497
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(9) Long-term Debt
  $40.0 million related party revolving credit facility
    
    $
    10,000Secured equipment financing
    
    
    16,047Unamortized non-cash debt premium
    
    
    1,136Total
    
    
    27,183Current portion of long-term debt
    
    
    (4,019
    )Non-current portion of long-term debt
    
    $
    23,164
 Revolving Credit Facility
 st st
 st st
  Secured Equipment Financing
      14




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Capital Lease Obligations
  (10) Guarantee of ION Credit Facility
     
    
    Maintain a minimum fixed charge coverage ratio in an amount equal to at least
1.125 to 1;
    
    Not exceed a maximum leverage ratio of 3.25 to 1; and
    
    Maintain a minimum tangible net worth of at least 60% of IONs tangible net
worth as of March 31, 2010, as defined.
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(11) Income Taxes
  Domestic (China)
    
    $
    (4,883
    )Foreign
    
    
    (44,755
    )Total
    
    $
    (49,638
    )
  Expected income tax benefit at 25%
    
    $
    (12,410
    )Foreign taxes (tax rate differential and foreign tax differences)
    
    
    (6,127
    )Nondeductible expenses and other
    
    
    (225
    )Deferred tax asset valuation allowance:Deferred tax asset valuation allowance on operations
    
    
    20,231Total income tax expense
    
    $
    1,469
  Current deferred:Deferred income tax assets:Accrued expenses
    
    $
    929Allowance accounts
    
    
    278Inventory
    
    
    7,445Total current deferred income tax asset
    
    
    8,652Valuation allowance
    
    
    (8,652
    )Net current deferred income tax asset
    
    $
    Non-current deferred:Deferred income tax assets:Net operating loss carry-forward
    
    $
    36,117Basis in research and development
    
    
    23,167Tax credit carry-forwards and other
    
    
    794Total non-current deferred income tax asset
    
    
    60,078Valuation allowance
    
    
    (52,064
    )Net non-current deferred income tax asset
    
    
    8,014Deferred income tax liabilities:Basis in identified intangibles
    
    
    (2,515
    )Basis in property, plant, equipment and seismic rental equipment
    
    
    (5,499
    )Net non-current deferred income tax asset
    
    $
    
 Accounting for
Income Taxes,
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(12) Operating Leases
  Years Ended December 31,2011
    
    $
    3,1832012
    
    
    1,8682013
    
    
    1,5102014
    
    
    1,2662015
    
    
    1,270Total
    
    $
    9,097
 (13) Benefit Plans
  (14) Legal Matters
  (15) Certain Relationships and Related Party Transactions
   17




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