##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
 Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    September 30,
    2010o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Transition Period
    From          to   Commission File
    No. 001-34404
  DAWSON GEOPHYSICAL
    COMPANY
  Texas

75-0970548(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   508 West
    Wall, Suite 800, Midland, Texas 79701
    (Principal Executive Office)
    Telephone Number:
    432-684-3000
    Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Exchange on Which RegisteredCommon Stock, $0.33 and
    1/3 par
    value

The NASDAQ Stock Market   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
  1 3
  1 3
    DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### 





TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


2Item 1A.


Risk Factors


7Item 1B.


Unresolved Staff Comments


13Item 2.


Properties


13Item 3.


Legal Proceedings


13Item 4.


(Removed and Reserved)


13PART IIItem 5.


Market for Our Common Equity and Related
    Stockholder Matters


14Item 6.


Selected Financial Data


16Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


16Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


22Item 8.


Financial Statements and Supplementary Data


22Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


22Item 9A.


Controls and Procedures


22Item 9B.


Other Information


23PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


23Item 11.


Executive Compensation


24Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


24Item 13.


Certain Relationships and Related Transactions
    and Director Independence


24Item 14.


Principal Accounting Fees and Services


24PART IVItem 15.


Exhibits and Financial Statement Schedules


25Signatures


26Index to Financial Statements


F-1Index to ExhibitsEX-3.2EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   1




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANYFORM 10-K
    For the Fiscal Year Ended September 30, 2010
    DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
  Form 10-K Form 10-K,
 Part I  Item 1.
    BUSINESS  General
  2-D, 3-D 3-D
  3-D
   2




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##### Table of Contents



Business
    Strategy
    
    Attracting and retaining skilled and experienced personnel for
    our data acquisition and processing operations;
    Providing integrated in-house services necessary in each phase
    of seismic data acquisition and processing, including project
    design, land access permitting, surveying and related support
    functions as well as continuing the enhancement of our in-house
    health, safety, security and environmental programs;
    Maintaining the focus of our operations solely on the domestic
    onshore seismic market;
    Continuing to operate with conservative financial discipline;
    Updating our capabilities to incorporate advances in geophysical
    and supporting technologies; and
    Acquiring equipment to expand the recording channel capacity on
    our existing crews and equipping additional crews as market
    conditions dictate.  Business
    Description
  Geophysical Services Overview.
  2-D 3-D 2-D 3-D 3-D 3-D 3-D 2-D
  3-D 3-D 3-D
 3




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##### Table of Contents



Data Acquisition. 3-D
          AHV4-364
  Data Processing.
 4




---



##### Table of Contents



Integrated Services.
  Equipment
    Acquisition and Capital Expenditures
    Clients
       5




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##### Table of Contents



Contracts
  project-by-project
    Competition
    Employees
    Available
    Information
  Form 10-K, Form 10-Q, Form 8-K Form 10-K. 1-800-SEC-0330
 6




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##### Table of Contents



Item 1A.
    RISK
    FACTORS  An investment in our common stock is subject to a number of
    risks discussed below. You should carefully consider these
    discussions of risk and the other information included in this
    Form 10-K.
    These risk factors could materially adversely affect our
    business, financial condition or results of operations.
  Our
    business depends on the level of exploration and production
    activities by the oil and natural gas industry. If oil and
    natural gas prices or the level of capital expenditures by oil
    and gas companies were to decline, demand for our services would
    decline and our results of operations would be adversely
    affected.
      
    the level of supply and demand for oil and natural gas;
    the level of prices, and expectations about future prices, for
    oil and natural gas;
    the ability of oil and gas producers to raise equity capital and
    debt financing;
    the worldwide political, military and economic conditions,
    including the length and severity of the recent recession and
    the effect of such recession on economic activity;
    the ability of the Organization of Petroleum Exporting Countries
    to set and maintain production levels and prices for oil;
    the rate of discovery of new oil and gas reserves and the
    decline of existing oil and gas reserves;
    the cost of exploring for, developing and producing oil and
    natural gas;
    the ability of exploration and production companies to generate
    funds or otherwise obtain capital for exploration, development
    and production operations;
    technological advances affecting energy exploration, production
    and consumption; 7




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##### Table of Contents




    government policies, including environmental regulations and tax
    policies, regarding the exploration for, production and
    development of oil and natural gas reserves and the use of
    fossil fuels; and
    weather conditions, including large-scale weather events such as
    hurricanes that affect oil and gas operations over a wide area
    or affect prices or locally inclement weather that can preclude
    or delay our seismic operations.    Weakness
    in the global economy during the past few years decreased demand
    for our seismic services, caused downward pressure on the prices
    we charge and affected our results of operations during the past
    few years, and continued weakness in the global economy would
    continue to affect us.
    We
    face intense competition in our business that could result in
    downward pricing pressure and the loss of market
    share.
    Our
    clients could delay, reduce or cancel their service contracts
    with us on short notice, which may lead to lower than expected
    demand and revenues.
    The
    high fixed costs of our operations could adversely affect our
    results of operations.
   8




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Our
    revenues are subject to fluctuations that are beyond our control
    which could adversely affect our results of operations in any
    financial period. Weather conditions and delays in obtaining
    land access rights from third parties have particularly affected
    our results of operations in past periods and are likely to
    affect our results in future periods.
      and/or
  Our
    profitability is determined, in part, by the productivity of our
    crews and the type of contracts we enter into and is affected by
    numerous external factors that are beyond our
    control.
      A
    limited number of customers account for a significant portion of
    our revenues, and the loss of one of these customers could harm
    our results of operations; we bear the risk if any of our
    clients become insolvent and fail to pay amounts owed to us, so
    any failure to pay by these clients could harm our results of
    operations.
     9




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We may
    be unable to attract and retain skilled and technically
    knowledgeable employees which could adversely affect our
    business and our growth.
    Capital
    requirements for our operations are large. If we are unable to
    finance these requirements, we may not be able to maintain our
    competitive advantage.
    We
    rely on a limited number of key suppliers for specific seismic
    services and equipment.
      Technological
    change in our business creates risks of technological
    obsolescence and requirements for future capital expenditures.
    If we are unable to keep up with these technological advances,
    we may not be able to compete effectively.
   10




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Our
    results of operations could be adversely affected by asset
    impairments.
    We
    operate under hazardous conditions that subject us to risk of
    damage to property or personal injuries and may interrupt our
    business.
    We may
    be subject to liability claims that are not covered by our
    master service agreements or by insurance.
      We may
    be held liable for the actions of our
    subcontractors.
    Our
    industry is subject to governmental regulation which may
    adversely affect our future operations.
   11




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##### Table of Contents



and/or
        Certain
    provisions of our charter and bylaws and our shareholder rights
    plan may make it difficult for a third party to acquire us, even
    in situations that may be viewed as desirable by
    shareholders.
   12




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##### Table of Contents



Failure
    to maintain effective internal controls in accordance with
    Section 404 of the Sarbanes-Oxley Act could have a material
    adverse effect on our stock price.
    Item 1B.
    UNRESOLVED
    STAFF COMMENTS    Item 2.
    PROPERTIES    Owned or



Building AreaLocation

Leased

Purpose

Square FeetMidland, TX

Leased

Executive offices and data processing


29,960Midland, TX

Owned

Field office


61,402Equipment fabrication facilityMaintenance and repairs shop       Item 3.
    LEGAL
    PROCEEDINGS      Item 4.
    (REMOVED
    AND RESERVED) 13




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##### Table of Contents



Part II  Item 5.
    MARKET
    FOR OUR COMMON EQUITY AND RELATED STOCKHOLDER
    MATTERS  ®
  Quarter Ended

High

LowDecember 31, 2008

$
46.15


$
14.31March 31, 2009

$
22.23


$
9.96June 30, 2009

$
31.42


$
13.13September 30, 2009

$
35.98


$
23.60December 31, 2009

$
29.61


$
21.00March 31, 2010

$
32.00


$
21.68June 30, 2010

$
31.22


$
20.58September 30, 2010

$
26.91


$
20.05         Equity
    Compensation Plan Information
  Number ofSecurities RemainingAvailable forNumber of



Future IssuanceSecurities to



Under Equitybe Issued



Compensation PlansUpon Exercise

Weighted-Average Exercise

(Excluding Securitiesof Outstanding

Price of

Reflected inPlan Category

Options

Outstanding Options

Column (a))(a)

(b)

(c)Equity compensation plans approved by security holders


151,000


$
18.91



694,860
(1)Equity compensation plans not approved by security holders










Total


151,000


$
18.91



694,860
(1)   (1)
    
    Although 238,550 shares are available to be issued under
    the 2004 Incentive Stock Plan, the Company does not intend to
    grant additional shares from this Plan. There are
    456,310 shares available to be issued under the 2006 Stock
    and Performance Incentive Plan. 14




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##### Table of Contents



Performance
    Graph
    Comparison
    of 5 Year Cumulative Total Return* Among
    Dawson Geophysical Company, the S & P 500 Index
    and the Value-Line Oilfield Services Index
  
  9/05

9/06

9/07

9/08

9/09

9/10DAWSON GEOPHYSICAL COMPANY


100.00



98.18



256.23



154.35



90.51



88.10S & P 500


100.00



110.79



129.01



100.66



93.70



103.22VALUE-LINE OILFIELD SERVICES


100.00



109.83



168.64



131.69



112.03



119.90   *
    $100 invested on 9/30/05 in stock or index, including
    reinvestment of dividends. Fiscal year ending September 30.  ©
  The stock price performance included in this graph is not
    necessarily indicative of future stock price performance.
 15




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##### Table of Contents



Item 6.
    SELECTED
    FINANCIAL DATA    Years Ended September 30,

2010


2009


2008


2007


2006(In thousands, except per share amounts)Operating revenues

$
205,272


$
243,995


$
324,926


$
257,763


$
168,550Net (loss) income

$
(9,352
)

$
10,222


$
35,007


$
27,158


$
15,855Basic (loss) income per common share

$
(1.20
)

$
1.31


$
4.57


$
3.57


$
2.11Weighted average equivalent common shares outstanding


7,777



7,807



7,669



7,602



7,518Total assets

$
235,076


$
237,157


$
233,621


$
195,862


$
149,418Revolving line of credit

$



$



$



$
5,000


$
Long-term debt-less current maturities

$



$



$



$



$
Stockholders equity

$
190,225


$
198,379


$
185,960


$
149,155


$
119,208   Item 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K. Form 10-K.
  Overview
       16




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Results
    of Operations
  Fiscal
    Year Ended September 30, 2010 Versus Fiscal Year Ended
    September 30, 2009
  Operating Revenues.
  Operating Costs.
       17




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Taxes.
  Fiscal
    Year Ended September 30, 2009 Versus Fiscal Year Ended
    September 30, 2008
  Operating Revenues.
  Operating Costs.
        Taxes.
  Liquidity
    and Capital Resources
  Introduction.
 18




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##### Table of Contents



Cash Flows.
      Capital Expenditures.
  3-D
  Capital Resources.
  30-day
 19




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##### Table of Contents



Payments Due by Period (in 000s)Less than


1-3


3-5


More thanTotal


1 Year


Years


Years


5 YearsOperating lease obligations

$
2,082


$
738


$
749


$
581


$
14     Off-Balance
    Sheet Arrangements
    Effect of
    Inflation
    Critical
    Accounting Policies
    Revenue Recognition.
  out-of-pocket out-of-pocket
 20




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Allowance for Doubtful Accounts.
  Impairment of Long-Lived Assets.
  Depreciable Lives of Property, Plant and
    Equipment.
    Tax Accounting.
  Stock-Based Compensation.
  Recently
    Issued Accounting Pronouncements
  2010-06 2010-06
 21




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##### Table of Contents



Item 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  30-day available-for-sale.
  Item 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA    Item 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    Item 9A.
    CONTROLS
    AND PROCEDURES  Managements
    Evaluation of Disclosure Controls and Procedures
  Rule 13a-15(e) 15d-15(e)
  Managements
    Report on Internal Control over Financial Reporting
  Internal Control  Integrated Framework
 22




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##### Table of Contents



page F-3.
  Changes
    in Internal Control over Financial Reporting
  Rule 13a-15(f) 15d-15(f)
  Item 9B.
    OTHER
    INFORMATION   Part III  Item 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Regulation S-K) http://www.dawson3d.com
  Executive
    Officers of the Registrant
    Name

Age

PositionL. Decker Dawson


90


Chairman of the Board of DirectorsStephen C. Jumper


49


President, Chief Executive Officer and DirectorC. Ray Tobias


53


Executive Vice President, Chief Operating OfficerChristina W. Hagan


55


Executive Vice President, Secretary and Chief Financial OfficerHowell W. Pardue


74


Executive Vice PresidentK.S. Forsdick


59


Senior Vice President       L. Decker Dawson. (1989-1990),
 23




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##### Table of Contents



Stephen C. Jumper. 3-D
  C. Ray Tobias.
  Christina W. Hagan.
  Howell W. Pardue.
  K.S. Forsdick.
  Item 11.
    EXECUTIVE
    COMPENSATION    Item 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Form 10-K.
  Item 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE    Item 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES   24




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##### Table of Contents



Part IV  Item 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES    Financial Statements.
    
  Financial Statement Schedules.
  page F-22
      Exhibits.
  Form 10-K
 25




---



##### Table of Contents



SIGNATURES  rd
    By:
    /s/  Stephen
    C. Jumper        Signature

Title

Date/s/  L.
    Decker DawsonL.
    Decker Dawson

Chairman of the Board of Directors

11-23-10/s/  Stephen
    C. JumperStephen
    C. Jumper

President, Chief Executive Officer and Director (principal
    executive officer)

11-23-10/s/  Paul
    H. BrownPaul
    H. Brown

Director

11-23-10/s/  Craig
    W. CooperCraig
    W. Cooper

Director

11-23-10/s/  Gary
    M. HooverGary
    M. Hoover

Director

11-23-10/s/  Jack
    D. LaddJack
    D. Ladd

Director

11-23-10/s/  Ted
    R. NorthTed
    R. North

Director

11-23-10/s/  Tim
    C. ThompsonTim
    C. Thompson

Director

11-23-10/s/  Christina
    W. HaganChristina
    W. Hagan

Executive Vice President, Secretary and Chief Financial Officer
    (principal financial and accounting officer)

11-23-10  26




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##### Table of Contents



INDEX TO
    FINANCIAL STATEMENTS   
 Financial Statements of Dawson Geophysical Company

PageReports of Independent Registered Public
    Accounting Firm, dated November 23, 2010


F-2Balance Sheets as of September 30, 2010 and
    2009


F-4Statements of Operations for the years ended
    September 30, 2010, 2009 and 2008


F-5Statements of Stockholders Equity and Other
    Comprehensive Income (Loss) for the years ended
    September 30, 2010, 2009 and 2008


F-6Statements of Cash Flows for the years ended
    September 30, 2010, 2009 and 2008


F-7Notes to Financial Statements


F-8Financial Statement Schedule:Schedule II  Valuation and
    Qualifying Accounts for the years ended September 30, 2010,
    2009 and 2008


F-22  F-1




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REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Internal Control 
    Integrated Framework
      F-2




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Internal Control 
    Integrated Framework
        Internal Control  Integrated
    Framework
        F-3




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  BALANCE SHEETS
  September 30,


September 30,2010


2009ASSETSCurrent assets:Cash and cash equivalents

$
29,675,000


$
36,792,000Short-term investments


20,012,000



25,267,000Accounts receivable, net of allowance for doubtful accounts of
    $639,000 and $533,000 at September 30, 2010 and 2009,
    respectively


57,726,000



40,106,000Prepaid expenses and other assets


7,856,000



7,819,000Current deferred tax asset


1,764,000



1,694,000Total current assets


117,033,000



111,678,000Property, plant and equipment


248,943,000



240,820,000Less accumulated depreciation


(130,900,000
)


(115,341,000
)Net property, plant and equipment


118,043,000



125,479,000Total assets

$
235,076,000


$
237,157,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
14,274,000


$
6,966,000Accrued liabilities:Payroll costs and other taxes


3,625,000



2,720,000Other


7,963,000



10,600,000Deferred revenue


204,000



2,230,000Total current liabilities


26,066,000



22,516,000Deferred tax liability


18,785,000



16,262,000Stockholders equity:Preferred stock-par value $1.00 per share; 5,000,000 shares
    authorized, none outstanding






Common stock-par value
    $.331/3
    per share; 50,000,000 shares authorized, 7,902,106 and
    7,822,994 shares issued and outstanding at
    September 30, 2010 and 2009 respectively


2,634,000



2,608,000Additional paid-in capital


90,406,000



89,220,000Other comprehensive income, net of tax


4,000



18,000Retained earnings


97,181,000



106,533,000Total stockholders equity


190,225,000



198,379,000Total liabilities and stockholders equity

$
235,076,000


$
237,157,000    F-4




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  STATEMENTS
    OF OPERATIONS
  Years Ended September 30,2010


2009


2008Operating revenues

$
205,272,000


$
243,995,000


$
324,926,000Operating costs:Operating expenses


185,588,000



192,839,000



237,484,000General and administrative


7,131,000



7,856,000



6,762,000Depreciation


27,126,000



26,160,000



24,253,000219,845,000



226,855,000



268,499,000(Loss) income from operations


(14,573,000
)


17,140,000



56,427,000Other income (expense):Interest income


185,000



249,000



497,000Interest expense










(482,000
)Other income (expense)


398,000



326,000



(35,000
)(Loss) income before income tax


(13,990,000
)


17,715,000



56,407,000Income tax benefit (expense):Current


7,102,000



(5,193,000
)


(17,834,000
)Deferred


(2,464,000
)


(2,300,000
)


(3,566,000
)4,638,000



(7,493,000
)


(21,400,000
)Net (loss) income

$
(9,352,000
)

$
10,222,000


$
35,007,000Basic (loss) income per common share

$
(1.20
)

$
1.31


$
4.57Diluted (loss) income per common share

$
(1.20
)

$
1.30


$
4.53Weighted average equivalent common shares outstanding


7,777,404



7,807,385



7,669,124Weighted average equivalent common shares outstanding- assuming
    dilution


7,777,404



7,853,531



7,728,651    F-5




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DAWSON
    GEOPHYSICAL COMPANY
  STATEMENTS
    OF STOCKHOLDERS EQUITY AND OTHER COMPREHENSIVE INCOME
    (LOSS)  AccumulatedCommon Stock


Additional


OtherNumber





Paid-in


Comprehensive


Retainedof Shares


Amount


Capital


Income (Loss)


Earnings


TotalBalance September 30, 2007


7,658,494


$
2,553,000


$
85,090,000


$



$
61,512,000


$
149,155,000Impact of adopting certain provisions of
    ASC 740-10


















(208,000
)


(208,000
)Net income


















35,007,000



35,007,000Excess tax benefit of employee stock plan










440,000











440,000Stock-based compensation expense










836,000











836,000Issuance of common stock as compensation


6,500



2,000



423,000











425,000Issuance of restricted stock awards and unearned compensation


94,500



31,000



(32,000
)










(1,000
)Exercise of stock options


35,250



12,000



294,000











306,000Balance September 30, 2008


7,794,744



2,598,000



87,051,000







96,311,000



185,960,000Net income


















10,222,000



10,222,000Other comprehensive income net of tax:Unrealized holding gains arising during the period














31,000Income tax expense














(13,000
)Other comprehensive income














18,000







18,000Comprehensive income for the period






















10,240,000Excess tax benefit of employee stock plan










5,000











5,000Stock-based compensation expense










1,667,000











1,667,000Issuance of common stock as compensation


5,000



2,000



89,000











91,000Exercise of stock options


23,250



8,000



408,000











416,000Balance September 30, 2009


7,822,994



2,608,000



89,220,000



18,000



106,533,000



198,379,000Net loss


















(9,352,000
)


(9,352,000
)Other comprehensive loss net of tax:Realization of losses on investment














(28,000
)Unrealized holding gains arising during the period














3,000Income tax benefit














11,000Other comprehensive loss














(14,000
)






(14,000
)Comprehensive loss for the period






















(9,366,000
)Stock-based compensation expense










1,398,000











1,398,000Issuance of common stock as compensation


8,340



3,000



182,000











185,000Issuance of restricted stock awards and unearned compensation


84,100



28,000



(28,000
)










Exercise of stock options


250







4,000











4,000Shares exchanged for taxes on stock-based compensation


(13,578
)


(5,000
)


(370,000
)










(375,000
)Balance September 30, 2010


7,902,106


$
2,634,000


$
90,406,000


$
4,000


$
97,181,000


$
190,225,000    F-6




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  STATEMENTS
    OF CASH FLOWS
  Years Ended September 30,2010


2009


2008CASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income

$
(9,352,000
)

$
10,222,000


$
35,007,000Adjustments to reconcile net (loss) income to net cash provided
    by operating activities:Depreciation


27,126,000



26,160,000



24,253,000Noncash compensation


1,583,000



1,758,000



1,259,000Deferred income tax expense


2,464,000



2,300,000



3,566,000Excess tax benefit from share-based payment arrangement






(5,000
)


(440,000
)Provision for bad debts


256,000



993,000



32,000Other


(343,000
)


106,000



443,000Change in current assets and liabilities:(Increase) decrease in accounts receivable


(17,876,000
)


31,641,000



(15,743,000
)Increase in prepaid expenses and other assets


(37,000
)


(6,942,000
)


(62,000
)Increase (decrease) in accounts payable


6,181,000



(7,960,000
)


2,900,000(Decrease) increase in accrued liabilities


(1,732,000
)


(4,912,000
)


1,644,000(Decrease) increase in deferred revenue


(2,026,000
)


1,237,000



(1,929,000
)Net cash provided by operating activities


6,244,000



54,598,000



50,930,000CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures, net of noncash capital expenditures
    summarized below in noncash investing activities


(18,835,000
)


(4,192,000
)


(53,269,000
)Acquisition of short-term investments


(14,964,000
)


(25,313,000
)


Proceeds from maturity of short-term investments


20,000,000







Proceeds from disposal of assets


434,000



124,000



29,000Proceeds on fire insurance claim






2,843,000



Net cash used in investing activities


(13,365,000
)


(26,538,000
)


(53,240,000
)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from exercise of stock options


4,000



416,000



306,000Proceeds from revolving line of credit










15,000,000Repayment on revolving line of credit










(20,000,000
)Excess tax benefit from share-based payment arrangement






5,000



440,000Net cash provided (used) by financing activities


4,000



421,000



(4,254,000
)Net (decrease) increase in cash and cash equivalents


(7,117,000
)


28,481,000



(6,564,000
)CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


36,792,000



8,311,000



14,875,000CASH AND CASH EQUIVALENTS AT END OF PERIOD

$
29,675,000


$
36,792,000


$
8,311,000SUPPLEMENTAL CASH FLOW INFORMATION:Cash paid for interest expense

$



$



$
541,000Cash paid during the period for income taxes

$
839,000


$
13,222,000


$
18,812,000Cash received during the period for income taxes

$
8,125,000


$



$
NONCASH INVESTING ACTIVITIES:Accrued purchases of property and equipment

$
1,127,000


$



$
382,000Equipment purchase through asset trade in

$
2,260,000


$



$
Equipment purchase through reduction of insurance proceeds

$



$
638,000


$
Unrealized gain on investments

$
3,000


$
31,000


$
    F-7




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANYNOTES TO FINANCIAL
    STATEMENTS
  1.
    Summary
    of Significant Accounting Policies  Organization
    and Nature of Operations
  2-D, 3-D
  Cash
    Equivalents
    Short-Term
    Investments
  available-for-sale
  Fair
    Value of Financial Instruments
    Concentrations
    of Credit Risk
    Property,
    Plant and Equipment
     F-8




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Impairment
    of Long-Lived Assets
    Revenue
    Recognition
    out-of-pocket out-of-pocket
    Allowance
    for Doubtful Accounts
    Tax
    Accounting
   F-9




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Use of
    Estimates in the Preparation of Financial
    Statements
    Stock-Based
    Compensation
    2.
    Short-term
    Investments    As of September 30, 2010 (in 000s)Amortized


Unrealized


Unrealized


EstimatedCost


Gains


Losses


Fair ValueShort-term investments:U.S. Treasury bills

$
14,991


$
2


$



$
14,993FDIC guaranteed bonds


5,015



4







5,019Total

$
20,006


$
6
(a)

$



$
20,012   (a)
    
    Other comprehensive income reflected on the Balance Sheet
    reflects unrealized gains and losses net of the tax effect of
    approximately $2,000.  As of September 30, 2009 (in 000s)Amortized


Unrealized


Unrealized


EstimatedCost


Gains


Losses


Fair ValueShort-term investments:U.S. Treasury bills

$
9,987


$
7


$



$
9,994U.S. Treasury notes


10,153



20







10,173FDIC guaranteed bonds


5,096



4







5,100Total

$
25,236


$
31
(a)

$



$
25,267   (a)
    
    Other comprehensive income reflected on the Balance Sheet
    reflects unrealized gains and losses net of the tax effect of
    approximately $13,000.  available-for-sale.
  3.
    Fair
    Value of Financial Instruments   F-10




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      As of September 30, 2010 (in 000s)Fair Value Measurements at Reporting Date Using:Quoted Prices in


Significant Other


SignificantActive Markets for


Observable


UnobservableIdentical Assets


Inputs


InputsTotal


(Level 1)


(Level 2)


(Level 3)Short-term investments:U.S. Treasury bills

$
14,993


$
14,993


$



$
FDIC guaranteed bonds


5,019



5,019







Total

$
20,012


$
20,012


$



$
   As of September 30, 2009 (in 000s)Fair Value Measurements at Reporting Date Using:Quoted Prices in


Significant Other


SignificantActive Markets for


Observable


UnobservableIdentical Assets


Inputs


InputsTotal


(Level 1)


(Level 2)


(Level 3)Short-term investments:U.S. Treasury bills

$
9,994


$
9,994


$



$
U.S. Treasury notes


10,173



10,173







FDIC guaranteed bonds


5,100



5,100







Total

$
25,267


$
25,267


$



$
   available-for-sale
  4.
    Property,
    Plant and Equipment    September 30,2010


2009


Useful LivesLand, building and other

$
6,467,000


$
5,589,000



3 to 40 yearsRecording equipment


155,949,000



149,444,000



5 to 10 yearsVibrator energy sources


59,103,000



58,745,000



10 to 15 yearsVehicles


27,133,000



26,856,000



2 to 10 yearsOther(a)


291,000



186,000



248,943,000



240,820,000Less accumulated depreciation


(130,900,000
)


(115,341,000
)Net property, plant and equipment

$
118,043,000


$
125,479,000   (a)
    
    Other represents accumulated costs associated with equipment
    fabrication and modification not yet completed. F-11




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  5.
    Supplemental
    Balance Sheet Information    September 30,2010


2009Trade and accrued trade receivables

$
54,697,000


$
33,910,000Allowance for doubtful accounts


(639,000
)


(533,000
)Insurance receivable associated with fire damage






1,836,000Accrued receivable for workers compensation stop loss
    policy


3,668,000



4,893,000Total accounts receivable

$
57,726,000


$
40,106,000     September 30,2010


2009Prepaid expenses and other

$
616,000


$
591,000Income tax receivable


7,240,000



7,228,000Total prepaid expenses and other assets

$
7,856,000


$
7,819,000     September 30,2010


2009Accrued self insurance reserves

$
5,318,000


$
6,698,000Accrued bonus and profit sharing






1,014,000Income and franchise taxes payable


879,000



674,000Other accrued expenses and current liabilities


1,766,000



2,214,000Total other current liabilities

$
7,963,000


$
10,600,000   6.
    Debt  30-day
  7.
    Stock-Based
    Compensation     F-12




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      Incentive
    Stock Options:
      Group A


Group BExpected term


4 years



6 yearsExpected volatility


57.57%



56.85%Risk free interest rate


1.67%



2.82%Expected dividend yield






     WeightedWeighted


AverageNumber of


Average


Remaining


AggregateOptioned


Exercise


Contractual


IntrinsicShares


Price


Term in Years


Value ($000)Balance as of September 30, 2009


152,000


$
18.91Granted






Exercised


(250
)


18.91






$
1Forfeited


(750
)


18.91Balance as of September 30, 2010


151,000


$
18.91



8.172


$
1,169Exercisable as of September 30, 2010


37,750


$
18.91



8.172


$
292    F-13




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      Number of


Weighted AverageNonvested


Grant DateShare Awards


Fair ValueNonvested option awards outstanding September 30, 2009


152,000


$
18.91Granted






Vested


(38,000
)


18.91Forfeited


(750
)


18.91Nonvested option awards outstanding September 30, 2010


113,250


$
18.91           Stock
    Awards:
    Number of


Weighted AverageRestricted


Grant DateShare Awards


Fair ValueNonvested restricted shares outstanding September 30, 2009


94,500


$
43.43Granted


84,100


$
23.33Vested


(56,000
)

$
27.05Nonvested restricted shares outstanding September 30, 2010


122,600


$
37.12      F-14




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      Weighted AverageNumber of

Grant DateShares Granted

Fair Value2010


8,340


$
22.112009


5,000


$
18.192008


6,500


$
65.30     8.
    Employee
    Benefit Plans    9.
    Advertising
    Costs    10.
    Income
    Taxes      Year Ended September 30,2010


2009


2008Current Federal

$
(7,342,000
)

$
3,770,000


$
16,082,000Current State


240,000



1,423,000



1,752,000Deferred Federal


2,817,000



1,921,000



3,296,000Deferred State


(353,000
)


379,000



270,000Total

$
(4,638,000
)

$
7,493,000


$
21,400,000  F-15




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##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Year Ended September 30,2010


2009


2008Tax (benefit) expense computed at statutory rate of 35%

$
(4,896,000
)

$
6,200,000


$
19,743,000Change in valuation allowance


(39,000
)


(12,000
)


(18,000
)State income tax (benefit) expense


(82,000
)


1,089,000



1,270,000Other


379,000



216,000



405,000Income tax (benefit) expense

$
(4,638,000
)

$
7,493,000


$
21,400,000     September 30,2010


2009Deferred tax assets:Receivables

$
129,000


$
199,000Restricted stock


802,000



978,000Workers compensation


368,000



408,000State tax net operating loss (NOL) carry forward


484,000



Other


580,000



716,000Total gross deferred tax assets


2,363,000



2,301,000Less valuation allowance


(19,000
)


(58,000
)Total net deferred tax assets


2,344,000



2,243,000Deferred tax liabilities:Property and equipment


(19,363,000
)


(16,798,000
)Other


(2,000
)


(13,000
)Total gross deferred tax liabilities


(19,365,000
)


(16,811,000
)Net deferred tax liability

$
(17,021,000
)

$
(14,568,000
)Current portion of net deferred tax asset/liability

$
1,764,000


$
1,694,000Non-current portion of net deferred tax asset/liability


(18,785,000
)


(16,262,000
)Total net deferred tax liability

$
(17,021,000
)

$
(14,568,000
)      F-16




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    September 30,2010


2009Balance at beginning of fiscal year

$
416,000


$
135,000Increase (decrease) in prior year tax positions






350,000Increase (decrease) in current year tax positions






Settlement with taxing authorities






Expiration of statutes of limitations


(181,000
)


(69,000
)Balance at end of fiscal year

$
235,000


$
416,000         11.
    Net
    Income (loss) per Common Share      2010


2009


2008Numerator:Net (loss) income and numerator for basic and diluted net (loss)
    income per common share  income available to common
    shareholders

$
(9,352,000
)

$
10,222,000


$
35,007,000Denominator:Denominator for basic net (loss) income per common
    share-weighted average common shares


7,777,404



7,807,385



7,669,124Effect of dilutive securities-employee stock options and
    restricted stock grants






46,146



59,527Denominator for diluted net (loss) income per common
    share-adjusted weighted average common shares and assumed
    conversions


7,777,404



7,853,531



7,728,651Basic (loss) income per common share

$
(1.20
)

$
1.31


$
4.57Diluted (loss) income per common share

$
(1.20
)

$
1.30


$
4.53  F-17




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    12.
    Major
    Customers    2010

2009

2008A


32
%


31
%


36
%B










20
%     13.
    Commitments
    and Contingencies  pick-up
           F-18




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Payments Due by Period (in 000s)Less than








More thanTotal


1 Year


1-3 Years


3-5 Years


5 YearsOperating lease obligations

$
2,082


$
738


$
749


$
581


$
14       14.
    Rights
    Agreement         F-19




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      and/or
    15.
    Recently
    Issued Accounting Pronouncements  2010-06 2010-06
  16.
    Subsequent
    Events  Form 10-K
 F-20




---



##### Table of Contents



DAWSON
    GEOPHYSICAL COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  17.
    Quarterly
    Financial Data (Unaudited)  Quarter EndedDecember 31


March 31


June 30


September 30Fiscal 2009:Operating revenues

$
80,216,000


$
64,625,000


$
52,319,000


$
46,835,000Income (loss) from operations

$
12,445,000


$
9,951,000


$
(2,337,000
)

$
(2,919,000
)Net income (loss)

$
7,734,000


$
6,170,000


$
(1,626,000
)

$
(2,056,000
)Net income (loss) per common share

$
1.00


$
0.79


$
(0.21
)

$
(0.26
)Net income (loss) per common share assuming dilution

$
0.99


$
0.79


$
(0.21
)

$
(0.26
)Fiscal 2010:Operating revenues

$
36,330,000


$
48,585,000


$
61,178,000


$
59,179,000(Loss) income from operations

$
(6,720,000
)

$
(4,330,000
)

$
(1,571,000
)

$
(1,952,000
)Net (loss) income

$
(4,216,000
)

$
(2,706,000
)

$
(1,019,000
)

$
(1,411,000
)Net (loss) income per common share

$
(0.54
)

$
(0.35
)

$
(0.13
)

$
(0.18
)Net (loss) income per common share assuming dilution

$
(0.54
)

$
(0.35
)

$
(0.13
)

$
(0.18
)    F-21




---



##### Table of Contents



Schedule II



Dawson
    Geophysical Company



Valuation
    and Qualifying Accounts Balance at


Charged to





Balance atBeginning


Costs and





End ofof Period


Expenses


Deductions


PeriodAllowance for doubtful accounts*:Fiscal Year:2010

$
533,000


$
256,000


$
150,000


$
639,0002009


55,000



993,000



515,000



533,0002008


176,000



32,000



153,000



55,000Valuation allowance for deferred tax assets:Fiscal Year:2010

$
58,000


$
(39,000
)

$



$
19,0002009


70,000



(12,000
)






58,0002008


88,000



(18,000
)






70,000   *
    
    Deductions related to allowance for doubtful accounts represent
    amounts that have been deemed uncollectible and written off by
    the Company. F-22




---



##### Table of Contents



INDEX TO
    EXHIBITS  Number

Exhibit3
.1

Second Restated Articles of Incorporation of the Company, as
    amended (filed on February 9, 2007 as Exhibit 3.1 to
    the Companys Quarterly Report on
    Form 10-Q
    for the first quarter ended December 31, 2006 (File
    No. 000-10144)
    and incorporated herein by reference and filed on
    November 28, 2007 as Exhibit 3.1 to the Companys
    Current Report on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).3
.2*

Second Amended and Restated Bylaws of the Company, as amended.3
.3

Statement of Resolution Establishing Series of Shares of
    Series A Junior Participating Preferred Stock of the
    Company (filed on July 9, 2009 as Exhibit 3.1 to the
    Companys Current Report on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).4
.1

Rights Agreement effective as of July 23, 2009 between the
    Company and Mellon Investor Services LLC as Rights Agent, which
    includes as Exhibit A the form of Statement of Resolution
    Establishing Series of Shares of Series A Junior
    Participating Preferred Stock setting forth the terms of the
    Preferred Stock, as Exhibit B the form of Rights
    Certificate and as Exhibit C the Summary of Rights to
    Purchase Preferred Stock (filed on July 9, 2009 as
    Exhibit 4.1 to the Companys Current Report on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.1

Dawson Geophysical Company 2006 Stock and Performance Incentive
    Plan (the 2006 Plan), dated November 28, 2006
    (filed on January 29, 2007 as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.2

Dawson Geophysical Company 2004 Incentive Stock Plan (filed on
    March 12, 2004 as Exhibit 10.1 to the Companys
    Registration Statement on
    Form S-8
    (File
    No. 333-113576)
    and incorporated herein by reference).10
.3

Form of Restricted Stock Agreement for the 2006 Plan (filed on
    February 11, 2008 as Exhibit 10.3 to the
    Companys Quarterly Report on
    Form 10-Q
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.4

Form of Stock Option Agreement for the 2006 Plan (filed on
    February 11, 2008 as Exhibit 10.4 to the
    Companys Quarterly Report on
    Form 10-Q
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.5

Form of Restricted Stock Agreement for the 2006 Plan (filed on
    August 6, 2007 as Exhibit 10.1 to the Companys
    Current Report on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.6

Form of Stock Option Agreement for the 2006 Plan (filed on
    August 6, 2007 as Exhibit 10.2 to the Companys
    Current Report on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.7

Description of Profit Sharing Plan (filed on December 3,
    2007 as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.8

Description of Profit Sharing Plan (filed on September 29,
    2008 as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.9

Summary of Non-Employee Director Compensation (filed on
    February 9, 2009 as Exhibit 10.3 to the Companys
    Quarterly Report on
    Form 10-Q
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.10

Form of Master Geophysical Data Acquisition Agreement (filed on
    December 11, 2003 as Exhibit 10 to the
    Registrants Annual Report on
    Form 10-K
    for the fiscal year ended September 30, 2003 (File
    No. 000-10144)
    and incorporated herein by reference).10
.11

Master Geophysical Data Acquisition Agreement between SandRidge
    Energy, Inc. and the Company, dated December 19, 2006
    (filed on February 9, 2009 as Exhibit 10.1 to the
    Companys Quarterly Report on
    Form 10-Q
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.12

Master Service Contract between Chesapeake Operating, Inc. and
    the Company, dated December 18, 2003 (filed on
    February 9, 2009 as Exhibit 10.2 to the Companys
    Quarterly Report on
    Form 10-Q
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.13

Revolving Line of Credit Loan Agreement, dated June 2,
    2009, between the Company and Western National Bank (filed on
    June 5, 2009 as Exhibit 10.1 to the Companys
    Current Report on
    Form 8-K
    (File
    No. 000-10144)
    and incorporated herein by reference).10
.14

Security Agreement, dated June 2, 2009, between the Company
    and Western National Bank (filed on June 5, 2009 as
    Exhibit 10.2 to the Companys Current Report on
    Form 8-K
    and incorporated herein by reference).23
.1*

Consent of Independent Registered Public Accounting Firm.




---



##### Table of Contents



Number

Exhibit31
.1*

Certification of Chief Executive Officer of Dawson Geophysical
    Company pursuant to
    Rule 13a-14(a)
    promulgated under the Securities Exchange Act of 1934, as
    amended.31
.2*

Certification of Chief Financial Officer of Dawson Geophysical
    Company pursuant to
    Rule 13a-14(a)
    promulgated under the Securities Exchange Act of 1934, as
    amended.32
.1*

Certification of Chief Executive Officer of Dawson Geophysical
    Company pursuant to
    Rule 13a-14(b)
    promulgated under the Securities Exchange Act of 1934, as
    amended, and Section 1350 of Chapter 63 of
    Title 18 of the United States Code. Pursuant to SEC Release
    34-47551,
    this Exhibit is furnished to the SEC and shall not be deemed to
    be filed.32
.2*

Certification of Chief Financial Officer of Dawson Geophysical
    Company pursuant to
    Rule 13a-14(b)
    promulgated under the Securities Exchange Act of 1934, as
    amended, and Section 1350 of Chapter 63 of
    Title 18 of the United States Code. Pursuant to SEC Release
    34-47551,
    this Exhibit is furnished to the SEC and shall not be deemed to
    be filed.   *
    
    Filed herewith.
    
    Identifies exhibit that consists of or includes a management
    contract or compensatory plan or arrangement.