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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from [ ] to [ ]

Commission file number 001-38025

U.S. WELL SERVICES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

81-1847117

(State or other jurisdiction of

 

(I.R.S. Employer

organization)

 

Identification No.)

 

1360 Post Oak Boulevard, Suite 1800, Houston, TX

 

77056

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code (832) 562-3730

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

CLASS A COMMON SHARES $0.0001, par value

WARRANTS

USWS

USWSW

NASDAQ Capital Market

NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during 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 filing requirements for the past 90 days. Yes No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). [ ]Yes []No

 

As of April 30, 2021, the registrant had 90,068,356 shares of Class A Common Stock and no shares of Class B Common Stock outstanding.

 

 

 


 

TABLE OF CONTENTS

 

 

 

Page No.

PART I

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

 

 

Condensed Consolidated Balance Sheets

2

 

Condensed Consolidated Statements of Operations

3

 

Condensed Consolidated Statements of Cash Flows

4

 

Condensed Consolidated Statements of Stockholders’ Deficit

6

 

Notes to Condensed Consolidated Financial Statements

7

 

 

 

Item 2.

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

23

Item 3.

Quantitative and Qualitative Disclosure about Market Risk

28

Item 4.

Controls and Procedures

28

 

 

 

PART II

OTHER INFORMATION

29

Item 1.

Legal Proceeding

29

Item 1A.

Risk Factors

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

29

Item 3.

Defaults Upon Senior Securities

29

Item 4.

Mine Safety Disclosures

29

Item 5.

Other Information

29

Item 6.

Exhibits

30

SIGNATURES

 

31

 

 

 

1


 

U.S. WELL SERVICES, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(in thousands, except share and per share amounts)

 

(unaudited)

 

 

 

March 31, 2021

 

 

December 31, 2020

(As Restated)

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

17,726

 

 

$

3,693

 

Restricted cash

 

 

519

 

 

 

1,569

 

Accounts receivable (net of allowance for doubtful accounts of

   $0 and $12,000 as of March 31, 2021 and December 31, 2020, respectively)

 

 

61,756

 

 

 

44,393

 

Inventory, net

 

 

8,077

 

 

 

7,965

 

Prepaids and other current assets

 

 

14,048

 

 

 

10,707

 

Total current assets

 

 

102,126

 

 

 

68,327

 

Property and equipment, net

 

 

233,502

 

 

 

235,332

 

Intangible assets, net

 

 

13,225

 

 

 

13,466

 

Goodwill

 

 

4,971

 

 

 

4,971

 

Deferred financing costs, net

 

 

781

 

 

 

1,127

 

TOTAL ASSETS

 

$

354,605

 

 

$

323,223

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

45,113

 

 

$

36,362

 

Accrued expenses and other current liabilities

 

 

11,989

 

 

 

14,781

 

Notes payable

 

 

9,123

 

 

 

998

 

Current portion of long-term equipment financing

 

 

3,564

 

 

 

3,519

 

Current portion of capital lease obligation

 

 

218

 

 

 

54

 

Current portion of long-term debt

 

 

10,000

 

 

 

10,000

 

Total current liabilities

 

 

80,007

 

 

 

65,714

 

Warrant liabilities

 

 

8,775

 

 

 

1,619

 

Long-term equipment financing

 

 

8,438

 

 

 

9,347

 

Long-term capital lease obligation

 

 

661

 

 

 

-

 

Long-term debt

 

 

293,503

 

 

 

274,555

 

Other long-term liabilities

 

 

3,617

 

 

 

3,539

 

TOTAL LIABILITIES

 

 

395,001

 

 

 

354,774

 

Commitments and contingencies (NOTE 16)

 

 

 

 

 

 

 

 

MEZZANINE EQUITY

 

 

 

 

 

 

 

 

Series A Redeemable Convertible Preferred Stock, par value $0.0001 per share; 55,000 shares

   authorized; 50,000 shares issued and outstanding as of March 31, 2021 and December 31, 2020;

   aggregate liquidation preference of $62,230 and $60,418 as of March 31, 2021 and

   December 31, 2020, respectively

 

 

53,252

 

 

 

50,975

 

Series B Redeemable Convertible Preferred Stock, par value $0.0001 per share; 22,050 shares

   authorized; 21,288 shares and 22,050 shares issued and outstanding as of March 31, 2021 and

   December 31, 2020, respectively; aggregate liquidation preference of $24,013 and $24,100 as of

   March 31, 2021 and December 31, 2020, respectively

 

 

22,600

 

 

 

22,686

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Class A Common Stock, par value of $0.0001 per share; 400,000,000 shares authorized;

   90,068,356 shares and 72,515,342 shares issued and outstanding as of March 31, 2021 and

   December 31, 2020, respectively

 

 

9

 

 

 

7

 

Class B Common Stock, par value of $0.0001 per share; 20,000,000 shares authorized; 0 shares

   and 2,302,936 shares issued and outstanding as of March 31, 2021 and December 31, 2020,

   respectively

 

 

-

 

 

 

-

 

Additional paid in capital

 

 

226,740

 

 

 

217,212

 

Accumulated deficit

 

 

(342,997

)

 

 

(322,431

)

Total Stockholders' Deficit

 

 

(116,248

)

 

 

(105,212

)

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' DEFICIT

 

$

354,605

 

 

$

323,223

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

2


 

 

U.S. WELL SERVICES, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(in thousands, except per share amounts)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

(As Restated)

 

Revenue

 

$

76,258

 

 

$

112,035

 

Costs and expenses:

 

 

 

 

 

 

 

 

Cost of services (excluding depreciation and amortization)

 

 

62,631

 

 

 

85,153

 

Depreciation and amortization

 

 

11,106

 

 

 

32,008

 

Selling, general and administrative expenses

 

 

7,390

 

 

 

19,058

 

Impairment of long-lived assets

 

 

-

 

 

 

147,543

 

Loss on disposal of assets

 

 

2,436

 

 

 

4,244

 

Loss from operations

 

 

(7,305

)

 

 

(175,971

)

Interest expense, net

 

 

(6,183

)

 

 

(7,956

)

Change in fair value of warrant liabilities

 

 

(7,151

)

 

 

6,553

 

Other income

 

 

29

 

 

 

6

 

Loss before income taxes

 

 

(20,610

)

 

 

(177,368

)

Income tax benefit

 

 

-

 

 

 

(750

)

Net loss

 

 

(20,610

)

 

 

(176,618

)

Net loss attributable to noncontrolling interest

 

 

(44

)

 

 

(10,800

)

Net loss attributable to U.S. Well Services, Inc.

 

 

(20,566

)

 

 

(165,818

)

Dividends accrued on Series A preferred stock

 

 

(1,813

)

 

 

(1,751

)

Dividends accrued on Series B preferred stock

 

 

(711

)

 

 

-

 

Deemed and imputed dividends on Series A preferred stock

 

 

(464

)

 

 

(6,972

)

Deemed dividends on Series B preferred stock

 

 

(4,168

)

 

 

-

 

Net loss attributable to U.S. Well Services, Inc. common stockholders

 

$

(27,722

)

 

$

(174,541

)

Loss per common share (See Note 13):

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.35

)

 

$

(2.90

)

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic and diluted

 

 

78,977

 

 

 

58,620

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

3


 

U.S. WELL SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

(As Restated)

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(20,610

)

 

$

(176,618

)

Adjustments to reconcile net loss to cash provided by

operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

11,106

 

 

 

32,008

 

Change in fair value of warrant liabilities

 

 

7,151

 

 

 

(6,553

)

Impairment of long-lived assets

 

 

-

 

 

 

147,543

 

Provision for losses on accounts receivable

 

 

9

 

 

 

9,031

 

Provision for losses on inventory obsolescence

 

 

106

 

 

 

37

 

Loss on disposal of assets

 

 

2,436

 

 

 

4,244

 

Amortization of discount on debt

 

 

1,188

 

 

 

221

 

Deferred financing costs amortization

 

 

270

 

 

 

359

 

Share-based compensation expense

 

 

1,648

 

 

 

2,078

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(17,373

)

 

 

(19,342

)

Inventory

 

 

(218

)

 

 

(603

)

Prepaids and other current assets

 

 

(7,973

)

 

 

945

 

Accounts payable

 

 

10,424

 

 

 

15,825

 

Accrued liabilities

 

 

(3,159

)

 

 

(2,702

)

Accrued interest

 

 

3,979

 

 

 

(18,032

)

Net cash used in operating activities

 

 

(11,016

)

 

 

(11,559

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(14,218

)

 

 

(35,017

)

Proceeds from sale of property and equipment and insurance proceeds from

   damaged property and equipment

 

 

6,393

 

 

 

14,907

 

Net cash used in investing activities

 

 

(7,825

)

 

 

(20,110

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from revolving credit facility

 

 

21,174

 

 

 

9,476

 

Repayment of revolving credit facility

 

 

(9,000

)

 

 

(2,381

)

Proceeds from issuance of long-term debt

 

 

3,004

 

 

 

-

 

Repayments of long-term debt

 

 

(1,250

)

 

 

(2,500

)

Proceeds from issuance of note payable

 

 

9,139

 

 

 

-

 

Repayments of notes payable

 

 

(1,014

)

 

 

(2,042

)

Repayments of amounts under equipment financing

 

 

(864

)

 

 

(1,308

)

Principal payments under capital lease obligation

 

 

(34

)

 

 

(1,393

)

Proceeds from issuance of common stock, net

 

 

10,669

 

 

 

-

 

Net cash provided by (used in) financing activities

 

 

31,824

 

 

 

(148

)

Net increase (decrease) in cash and cash equivalents

   and restricted cash

 

 

12,983

 

 

 

(31,817

)

Cash and cash equivalents and restricted cash,

   beginning of period

 

 

5,262

 

 

 

41,404

 

Cash and cash equivalents and restricted cash,

   end of period

 

$

18,245

 

 

$

9,587

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


U.S. WELL SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

(As Restated)

 

Supplemental cash flow disclosure:

 

 

 

 

 

 

 

 

Interest paid

 

$

578

 

 

$

25,121

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Conversion of Series B preferred stock to Class A common stock

 

 

797

 

 

 

-

 

Deemed and imputed dividends on Series A preferred stock

 

 

464

 

 

 

6,972

 

Accrued Series A preferred stock dividends

 

 

1,813

 

 

 

1,751

 

Accrued Series B preferred stock dividends

 

 

711

 

 

 

-

 

Changes in accrued and unpaid capital expenditures

 

 

2,744

 

 

 

11,039

 

Assets under capital lease obligations

 

 

684

 

 

 

-

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

5


 

U.S. WELL SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(in thousands, except share amounts)

(unaudited)

 

 

 

Class A Common

Stock

 

 

Class B Common

Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paid in

 

 

Accumulated

 

 

Noncontrolling

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Interest

 

 

Equity

 

Balance, December 31, 2019      

(As Restated)

 

 

62,857,624

 

 

$

5

 

 

 

5,500,692

 

 

$

1

 

 

$

225,382

 

 

$

(93,091

)

 

$

10,633

 

 

$

142,930

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,911

 

 

 

-

 

 

 

167

 

 

 

2,078

 

Tax withholding related to vesting of

   share-based compensation

 

 

(154,253

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(70

)

 

 

-

 

 

 

-

 

 

 

(70

)

Restricted stock forfeitures

 

 

(347,714

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

Deemed and imputed dividends on

   Series A preferred stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,972

)

 

 

-

 

 

 

-

 

 

 

(6,972

)

Accrued Series A preferred stock dividends

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,751

)

 

 

-

 

 

 

-

 

 

 

(1,751

)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(165,818

)

 

 

(10,800

)

 

 

(176,618

)

Balance, March 31, 2020

(As Restated)

 

 

62,355,657

 

 

$

5

 

 

 

5,500,692

 

 

$

1

 

 

$

218,500

 

 

$

(258,909

)

 

$

-

 

 

$

(40,403

)

 

 

 

Class A Common

Stock

 

 

Class B Common

Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paid in

 

 

Accumulated

 

 

Noncontrolling

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Interest

 

 

Equity

 

Balance, December 31, 2020

(As Restated)

 

 

72,515,342

 

 

$

7

 

 

 

2,302,936

 

 

$

-

 

 

$

217,212

 

 

$

(322,431

)

 

$

-

 

 

$

(105,212

)

Class A common stock issuance

 

 

12,624,657

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

10,350

 

 

 

-

 

 

 

-

 

 

 

10,351

 

Conversion of Class B common stock

   to Class A common stock

 

 

2,302,936

 

 

 

-

 

 

 

(2,302,936

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Conversion of Series B preferred stock

   to Class A common stock

 

 

2,745,778

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

797

 

 

 

-

 

 

 

-

 

 

 

798

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,519

 

 

 

-

 

 

 

44

 

 

 

1,563

 

Tax withholding related to vesting of

   share-based compensation

 

 

(103,697

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(150

)

 

 

-

 

 

 

-

 

 

 

(150

)

Restricted stock forfeitures

 

 

(16,660

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Deemed and imputed dividends on

   Series A preferred stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(464

)

 

 

-

 

 

 

-

 

 

 

(464

)

Accrued Series A preferred stock

   dividends

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,813

)

 

 

-

 

 

 

-

 

 

 

(1,813

)

Accrued Series B preferred stock

   dividends

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(711

)

 

 

-

 

 

 

-

 

 

 

(711

)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(20,566

)

 

 

(44

)

 

 

(20,610

)

Balance, March 31, 2021