UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☐ | Definitive Proxy Statement | |
☒ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to §240.14a-12 |
U.S. Well Services, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee required. | |||
☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
(1) | Title of each class of securities to which transaction applies:
| |||
(2) | Aggregate number of securities to which transaction applies:
| |||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
| |||
(4) | Proposed maximum aggregate value of transaction:
| |||
(5) | Total fee paid:
| |||
☐ | Fee paid previously with preliminary materials. | |||
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid:
| |||
(2) | Form, Schedule or Registration Statement No.:
| |||
(3) | Filing Party:
| |||
(4) | Date Filed:
|
Supplement to Definitive Proxy Statement
The following disclosure supplements the definitive proxy statement filed by U.S. Well Services, Inc. with the Securities and Exchange Commission on April 13, 2021. This supplemental information should be read in conjunction with the definitive proxy statement, which should be read in its entirety.
On April 12, 2021, the Staff of the Securities and Exchange Commission (the SEC) released a statement entitled Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (the SEC Statement) informing market participants that warrants issued by special purpose acquisition companies (SPACs) may require classification as a liability of the entity measured at fair value, with changes in fair value each period reported in earnings.
U.S. Well Services, Inc. (the Company), a Delaware corporation formerly known as Matlin & Partners Acquisition Company (MPAC), has previously classified its private placement warrants and public warrants (collectively, the private and public warrants), which were initially issued by MPAC in connection with its initial public offering, as equity. A form of the private and public warrants is included as Exhibit 4.2 to the Companys Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 11, 2021 (the Private and Public Warrant Agreement). Additionally, the Company issued warrants to certain institutional investors in connection with the Companys private placement of Series A Preferred Stock on May 24, 2019 (the series a warrants, and together with the private and public warrants, the warrants), which series a warrants were also previously classified by the Company as equity. A form of the series a warrants is included as Exhibit 4.5 to the Companys Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 11, 2021 (the Series A Warrant Agreement, and together with the Private and Public Warrant Agreement, the Warrant Agreements).
Management initially evaluated the accounting treatment for the warrants and believed its positions to be appropriate at those times, and while the terms of the warrants, as described in the Warrant Agreements, have not changed, as a result of the SEC Statement, the Company has determined to reclassify the warrants as liabilities, and will subsequently measure them at fair value through earnings pursuant to Accounting Standards Codification 815.
As previously disclosed, on May 11, 2021, the Audit Committee of the Board of Directors of the Company (the Audit Committee), after considering the recommendation of and consultation with management and KPMG LLP, the Companys independent registered public accounting firm, concluded that the Companys previously issued audited consolidated financial statements as of and for the years ended on each of December 31, 2018, December 31, 2019 and December 31, 2020, and the Companys previously issued unaudited condensed consolidated financial statements for the quarterly periods in the years ended December 31, 2019 and December 31, 2020 (collectively, the Affected Periods) included in the Companys previously filed Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q for the Affected Periods should be restated to reflect the impact of this guidance by the SEC and accordingly, should no longer be relied upon. Similarly, any previously furnished or filed reports, related earnings releases, investor presentations and similar communications of the Company describing the Companys financial results for the Affected Periods should no longer be relied upon.
The Company intends to promptly file an amendment to its Annual Report on Form 10-K for the year ended December 31, 2020 (the Amended Form 10-K) reflecting the reclassification described herein for the Affected Periods. The Company will file the Amended Form 10-K prior to the filing of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and may, therefore, extend the deadline to file the Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 in accordance with Rule 12b-25 under the Securities Exchange Act of 1934, as amended, if necessary.
As a result of the determination that the warrants were improperly accounted for as equity for the Affected Periods and that the Amended Form 10-K is required to be filed to correctly classify the warrants as liabilities in the financial statements for the Affected Periods, the Companys management concluded that a material weakness in the Companys internal control over financial reporting exists related to the accounting for a significant and unusual transaction related to the warrants.
Currently, the Company has approximately 24 million warrants outstanding, all of which are subject to the reclassification described herein.
On a preliminary unaudited basis, the accounting for the warrants as a liability is expected to result in the changes set forth in the tables below to the financial results reported in the Affected Periods (amounts in thousands).
CONSOLIDATED BALANCE SHEETS (unaudited) | ||||||||||||
As Previously Reported |
Restatement Adjustments |
As Restated | ||||||||||
As of December 31, 2020 |
||||||||||||
Total liabilities |
$ | 353,155 | $ | 1,619 | $ | 354,774 | ||||||
Series A Redeemable Convertible Preferred Stock |
$ | 52,776 | $ | (1,802 | ) | $ | 50,974 | |||||
Total stockholders equity (deficit) |
$ | (105,394 | ) | $ | 183 | $ | (105,211 | ) | ||||
As of December 31, 2019 |
||||||||||||
Total liabilities |
$ | 426,114 | $ | 8,147 | $ | 434,261 | ||||||
Series A Redeemable Convertible Preferred Stock |
$ | 38,928 | $ | (3,337 | ) | $ | 35,591 | |||||
Total stockholders equity |
$ | 147,740 | $ | (4,810 | ) | $ | 142,930 | |||||
As of December 31, 2018 |
||||||||||||
Total liabilities |
$ | 239,881 | $ | 29,110 | $ | 268,991 | ||||||
Total stockholders equity |
$ | 240,349 | $ | (29,110 | ) | $ | 211,239 |
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||||||||||
As Previously Reported |
Restatement Adjustments |
As Restated | ||||||||||
For the year ended December 31, 2020 |
||||||||||||
Net loss |
$ | (246,713 | ) | $ | 6,341 | $ | (240,372 | ) | ||||
For the year ended December 31, 2019 |
||||||||||||
Net loss |
$ | (116,082 | ) | $ | 12,103 | $ | (103,979 | ) | ||||
For the year ended December 31, 2018 |
||||||||||||
Net loss |
$ | (70,814 | ) | $ | 6,008 | $ | (64,806 | ) |
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) | ||||||||||||
As Previously Reported |
Restatement Adjustments |
As Restated | ||||||||||
As of September 30, 2020 |
||||||||||||
Total liabilities |
$ | 322,100 | $ | 1,187 | $ | 323,287 | ||||||
Series A Redeemable Convertible Preferred Stock |
$ | 50,907 | $ | (184) | $ | 50,723 | ||||||
Total stockholders equity (deficit) |
$ | (77,088) | $ | (1,003) | $ | (78,091) | ||||||
As of June 30, 2020 |
||||||||||||
Total liabilities |
$ | 328,069 | $ | 2,966 | $ | 331,035 | ||||||
Series A Redeemable Convertible Preferred Stock |
$ | 53,277 | $ | (1,976) | $ | 51,301 | ||||||
Total stockholders equity (deficit) |
$ | (63,826) | $ | (990) | $ | (64,816) | ||||||
As of March 31, 2020 |
||||||||||||
Total liabilities |
$ | 410,090 | $ | 1,598 | $ | 411,688 | ||||||
Series A Redeemable Convertible Preferred Stock |
$ | 46,928 | $ | (2,615) | $ | 44,313 | ||||||
Total stockholders equity (deficit) |
$ | (41,419) | $ | 1,017 | $ | (40,402) | ||||||
As of September 30, 2019 |
||||||||||||
Total liabilities |
$ | 431,877 | $ | 16,391 | $ | 448,268 | ||||||
Series A Redeemable Convertible Preferred Stock |
$ | 31,968 | $ | (3,736) | $ | 28,232 | ||||||
Total stockholders equity |
$ | 192,155 | $ | (12,655) | $ | 179,500 | ||||||
As of June 30, 2019 |
||||||||||||
Total liabilities |
$ | 458,611 | $ | 33,978 | $ | 492,589 | ||||||
Series A Redeemable Convertible Preferred Stock |
$ | 25,892 | $ | (3,906) | $ | 21,986 | ||||||
Total stockholders equity |
$ | 217,279 | $ | (30,072) | $ | 187,207 | ||||||
As of March 31, 2019 |
||||||||||||
Total liabilities |
$ | 394,659 | $ | 38,049 | $ | 432,708 | ||||||
Total stockholders equity |
$ | 213,355 | $ | (38,049) | $ | 175,306 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||
September 30, 2020 |
June 30, 2020 |
March 31, 2020 |
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
|||||||||||||||||||||
Net loss |
As Previously Reported |
$ | (15,988 | ) | $ | (18,234 | ) | $ | (183,167 | ) | $ | (21,249 | ) | $ | (26,911 | ) | $ | (28,489 | ) | |||||||
Adjustments | $ | 1,779 | $ | (1,369 | ) | $ | 6,549 | $ | 17,587 | $ | 4,989 | $ | (18,717 | ) | ||||||||||||
As Restated | $ | (14,209 | ) | $ | (19,603 | ) | $ | (176,618 | ) | $ | (3,662 | ) | $ | (21,922 | ) | $ | (47,206 | ) |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||||||||
Nine Months Ended September 30, |
Six Months Ended June 30, | |||||||||
2020 |
2019 |
2020 |
2019 | |||||||
Net loss |
As Previously Reported |
$(217,389) | $(76,649) | $(201,401) | $(55,400) | |||||
Adjustments | $ 6,960 | $ 3,860 | $ 5,181 | $(13,727) | ||||||
As Restated | $(210,429) | $(72,789) | $(196,220) | $(69,127) |
All estimates contained in this report are preliminary and subject to change as management completes the Amended Form 10-K and the Companys independent registered public accounting firm completes its audit and/or review of the restated financial statements. The Companys independent registered public accounting firm has not audited or reviewed these estimates. An audit of annual financial statements and/or review of quarterly financial statements could result in material changes to these estimates. Further details and remediation plans will be included in the Amended Form 10-K.
Any corrections to the Companys prior accounting treatment for the warrants as components of equity instead of as liabilities are expected to be non-operational and non-cash, and thus are not expected to have any impact on the Companys Revenue, Operating Income, or non-GAAP financial measures, including EBITDA, Adjusted EBITDA and Adjusted EBITDA margin in prior periods or moving forward
Forward-Looking Statements
The information above includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other than statements of historical facts, included herein are forward-looking statements, including statements regarding the expected timing of the restatement and the expected impact of the restatement on the Companys financial statements. These forward-looking statements may be identified by their use of terms and phrases such as may, expect, believe, intend, estimate, project, plan, anticipate, will, should, could, and similar terms and phrases. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve certain assumptions, risks and uncertainties. These forward-looking statements represent the Companys current expectations or beliefs concerning future events, and it is possible that the results described above will materially differ, including the expected timing and impacts of the restatement. These forward-looking statements are subject to certain risks, uncertainties and assumptions identified above or as disclosed from time to time in the Companys filings with the SEC. Factors that could cause actual results to differ from the Companys expectations include changes in market conditions and other factors described in the Companys public disclosures and filings with the SEC, including those described under Risk Factors
in its Annual Report on Form 10-K for the year ended December 31, 2020 filed on March 11, 2021, and its subsequent filings with the SEC. As a result of these factors, actual results may differ materially from those indicated or implied by forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, the Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for us to predict all such factors.