UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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
(Exact name of registrant as specified in its charter)
|
|
|
|
|
(State or other jurisdiction of |
|
(I.R.S. Employer |
|
organization) |
|
Identification No.) |
|
|
|
|
|
(Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including area code (
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
|
|
|
|
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. ☑
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). ☑
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 |
☐ |
|
|
☑ |
|
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 October 31, 2020, the registrant had
TABLE OF CONTENTS
|
|
|
Page No. |
|
PART I |
FINANCIAL INFORMATION |
|
|
Item 1. |
Financial Statements (Unaudited) |
|
|
|
2 |
|
|
|
3 |
|
|
|
4 |
|
|
|
Condensed Consolidated Statements of Stockholders’ Equity (Deficit) |
6 |
|
|
8 |
|
|
|
|
|
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
26 |
|
|
33 |
||
|
33 |
||
|
|
|
|
|
34 |
||
|
34 |
||
|
34 |
||
|
37 |
||
|
37 |
||
|
37 |
||
|
37 |
||
|
41 |
||
|
|
42 |
1
U.S. WELL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)
|
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
||
|
ASSETS |
|
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
Restricted cash |
|
|
|
|
|
|
|
|
|
Accounts receivable (net of allowance for doubtful accounts of $ |
|
|
|
|
|
|
|
|
|
Inventory, net |
|
|
|
|
|
|
|
|
|
Prepaids and other current assets |
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
|
|
|
|
|
|
|
Intangible assets, net |
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
|
|
|
|
|
|
|
Deferred financing costs, net |
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
|
|
|
$ |
|
|
|
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
|
|
|
$ |
|
|
|
Accrued expenses and other current liabilities |
|
|
|
|
|
|
|
|
|
Notes payable |
|
|
|
|
|
|
|
|
|
Current portion of long-term equipment financing |
|
|
|
|
|
|
|
|
|
Capital lease obligation |
|
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
|
- |
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
|
|
|
|
Long-term equipment financing |
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
|
|
|
|
Other long-term liabilities |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
|
|
|
|
|
|
|
Commitments and contingencies (NOTE 16) |
|
|
|
|
|
|
|
|
|
MEZZANINE EQUITY |
|
|
|
|
|
|
|
|
|
Series A Redeemable Convertible Preferred Stock, par value $ outstanding as of September 30, 2020 and December 31, 2019, respectively; aggregate liquidation preference of $ 2020 and December 31, 2019, respectively |
|
|
|
|
|
|
|
|
|
Series B Redeemable Convertible Preferred Stock, par value $ 2020 and December 31, 2019, respectively; aggregate liquidation preference of $ |
|
|
|
|
|
|
- |
|
|
STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
|
Class A Common Stock, par value of $ authorized; as of September 30, 2020 and December 31, 2019, respectively |
|
|
|
|
|
|
|
|
|
Class B Common Stock, par value of $ authorized; as of September 30, 2020 and December 31, 2019, respectively |
|
|
- |
|
|
|
|
|
|
Additional paid in capital |
|
|
|
|
|
|
|
|
|
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
|
Total stockholders' equity (deficit) attributable to U.S. Well Services, Inc. |
|
|
( |
) |
|
|
|
|
|
Noncontrolling interest |
|
|
- |
|
|
|
|
|
|
Total Stockholders' Equity (Deficit) |
|
|
( |
) |
|
|
|
|
|
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT) |
|
$ |
|
|
|
$ |
|
|
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 September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
Revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services (excluding depreciation and amortization) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of long-lived assets |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
Loss on disposal of assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Interest expense, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Loss on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Income tax expense (benefit) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
Net loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Net loss attributable to noncontrolling interest |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Net loss attributable to U.S. Well Services, Inc. |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Dividends accrued on Series A preferred stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Dividends accrued on Series B preferred stock |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
Deemed and imputed dividends on Series A preferred stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Net loss attributable to U.S. Well Services, Inc. common stockholders |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Loss per common share (See Note 12): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
Nine Months Ended September 30, |
|
|||||
|
|
|
2020 |
|
|
2019 |
|
||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
Adjustments to reconcile net loss to cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
Impairment of long-lived assets |
|
|
|
|
|
|
- |
|
|
Provision for losses on accounts receivable |
|
|
|
|
|
|
|
|
|
Provision for losses on inventory obsolescence |
|
|
|
|
|
|
- |
|
|
Loss on disposal of assets |
|
|
|
|
|
|
|
|
|
Amortization of discount on debt |
|
|
|
|
|
|
|
|
|
Deferred financing costs amortization |
|
|
|
|
|
|
|
|
|
Loss on extinguishment of debt |
|
|
- |
|
|
|
|
|
|
Share-based compensation expense |
|
|
|
|
|
|
|
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
|
|
|
|
( |
) |
|
Inventory |
|
|
|
|
|
|
( |
) |
|
Prepaids and other current assets |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
( |
) |
|
|
|
|
|
Accrued liabilities |
|
|
( |
) |
|
|
|
|
|
Accrued interest |
|
|
( |
) |
|
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
|
( |
) |
|
|
( |
) |
|
Proceeds from sale of property and equipment |
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Proceeds from revolving credit facility |
|
|
|
|
|
|
|
|
|
Repayment of revolving credit facility |
|
|
( |
) |
|
|
( |
) |
|
Proceeds from issuance of long-term debt |
|
|
|
|
|
|
|
|
|
Repayments of long-term debt |
|
|
( |
) |
|
|
( |
) |
|
Payment of fees related to debt extinguishment |
|
|
- |
|
|
|
( |
) |
|
Proceeds from issuance of note payable |
|
|
- |
|
|
|
|
|
|
Repayments of notes payable |
|
|
( |
) |
|
|
( |
) |
|
Repayments of amounts under equipment financing |
|
|
( |
) |
|
|
( |
) |
|
Principal payments under finance lease obligation |
|
|
( |
) |
|
|
( |
) |
|
Proceeds from issuance of preferred stock and warrants, net |
|
|
|
|
|
|
|
|
|
Deferred financing costs |
|
|
( |
) |
|
|
( |
) |
|
Net cash provided by (used in) financing activities |
|
|
( |
) |
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents and restricted cash |
|
|
( |
) |
|
|
|
|
|
Cash and cash equivalents and restricted cash, beginning of period |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents and restricted cash, end of period |
|
$ |
|
|
|
$ |
|
|
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)
|
|
|
Nine Months Ended September 30, |
|
|||||
|
|
|
2020 |
|
|
2019 |
|
||
|
Supplemental cash flow disclosure: |
|
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
|
|
|
$ |
|
|
|
Income tax paid |
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
Issuance of Class A common stock to senior secured term loan lenders |
|
|
|
|
|
|
- |
|
|
Issuance of Series B preferred stock to senior secured term loan lenders |
|
|
|
|
|
|
|
|
|
Beneficial conversion feature of Series A preferred stock |
|
|
- |
|
|
|
|
|
|
Issuance of warrants to purchase common stock associated with Series A preferred stock offering |
|
|
- |
|
|
|
|
|
|
Conversion of Series A preferred stock to Class A common stock |
|
|
|
|
|
|
- |
|
|
Deemed and imputed dividends on Series A preferred stock |
|
|
|
|
|
|
|
|
|
Accrued Series A preferred stock dividends |
|
|
|
|
|
|
|
|
|
Accrued Series B preferred stock dividends |
|
|
|
|
|
|
- |
|
|
Changes in accrued and unpaid capital expenditures |
|
|
|
|
|
|
|
|
|
Assets under finance lease obligations |
|
|
- |
|
|
|
|
|
|
Financed equipment purchases |
|
|
- |
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
U.S. WELL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (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, 2018 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
Adoption of ASC 606 as of January 1, 2019 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Conversion of Class B common stock to Class A common stock |
|
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Restricted stock granted to employees |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Class A common stock granted to board members |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Restricted stock forfeitures |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Issuance of warrants to purchase common stock associated with preferred stock offering |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Beneficial conversion feature of Series A preferred stock |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Deemed and imputed dividends on Series A preferred stock |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
Accrued Series A preferred stock dividends |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|||||||||||||||||