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

Registrant’s telephone number, including area ~~code:~~~~(203) 864-3144~~code (832) 562-3730

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~~☒ NoYes ☐No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive ~~Date~~Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). ~~Yes~~☒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”~~company,” and ~~“emerging~~"emerging growth ~~company”~~company" in Rule 12b-2 of the Exchange Act.

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 ~~Exchange~~ Act). ~~Yes~~[ ]Yes [☒X]No☐

As of ~~November 3, 2017, there were 32,500,000~~August 5, 2019, the registrant had 54,607,462 shares of ~~the Company’s~~ Class A ~~common stock, par value $0.0001 (the “Class A common stock”)~~Common Stock and ~~8,125,000~~13,775,400 shares of ~~the Company’s~~ Class ~~F common stock, par value $0.0001 (the “Class F common stock”) issued and~~B Common Stock outstanding.

(in thousands, except share and per share amounts)

(unaudited)

	June 30, 2019			December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	34,758		$	29,529
Restricted cash		16,976			507
Accounts receivable (net of allowance for doubtful accounts of $474 and $189 in 2019 and 2018, respectively)		108,406			58,026
Inventory, net		9,810			9,413
Prepaids and other current assets		11,760			16,437
Total current assets		181,710			113,912
Property and equipment, net		489,839			331,387
Intangible assets, net		24,091			27,890
Goodwill		4,971			4,971
Deferred financing costs, net		1,171			2,070
TOTAL ASSETS	$	701,782		$	480,230
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	114,394		$	89,360
Accrued expenses and other current liabilities		22,167			17,044
Notes payable		173			4,560
Current portion of long-term equipment financing		10,227			3,263
Current portion of long-term capital lease obligation		15,935			25,338
Current portion of long-term debt		3,750			900
Total current liabilities		166,646			140,465
Long-term equipment financing		13,272			8,304
Long-term capital lease obligation		2,786			-
Long-term debt		275,791			91,112
Deferred rent		116			-
TOTAL LIABILITIES		458,611			239,881
Commitments and contingencies (NOTE 16)
MEZZANINE EQUITY
Series A Convertible Redeemable Preferred Stock, par value $0.0001 per share; 10,000,000 shares authorized; 55,000 shares issued and outstanding as of June 30, 2019; aggregate liquidation preference of $55,660 as of June 30, 2019		25,892			-
STOCKHOLDERS' EQUITY
Class A Common Stock, par value of $0.0001 per share; 400,000,000 shares authorized; 54,607,462 shares and 49,254,760 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively		5			5
Class B Common Stock, par value of $0.0001 per share; 20,000,000 shares authorized; 13,775,400 shares and 13,937,332 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively		1			1
Additional paid in capital		236,398			204,928
Accumulated deficit		(61,039	)		(17,383	)
Total stockholders' equity attributable to U.S. Well Services, Inc.		175,365			187,551
Noncontrolling interest		41,914			52,798
Total Stockholders' Equity		217,279			240,349
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY	$	701,782		$	480,230

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

U.S. WELL SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018

Revenue	$	151,419		$	192,632		$	291,190		$	364,238
Costs and expenses:
Cost of services (excluding depreciation and amortization)		107,369			151,363			217,048			289,791
Depreciation and amortization		40,322			24,862			78,165			50,782
Selling, general and administrative expenses		7,638			5,278			16,258			9,615
Loss on disposal of assets		4,003			5,187			10,908			8,116
Income (loss) from operations		(7,913	)		5,942			(31,189	)		5,934
Interest expense, net		(7,820	)		(6,884	)		(12,935	)		(14,285	)
Loss on extinguishment of debt		(12,558	)		-			(12,558	)		-
Other income		1,686			5			1,712			322
Loss before income taxes		(26,605	)		(937	)		(54,970	)		(8,029	)
Income tax expense		306			-			430			-
Net loss		(26,911	)		(937	)		(55,400	)		(8,029	)
Net loss attributable to noncontrolling interest		(5,432	)		-			(11,649	)		-
Net loss attributable to U.S. Well Services, Inc.		(21,479	)		(937	)		(43,751	)		(8,029	)
Dividends accrued on Series A preferred stock		(660	)		-			(660	)		-
Deemed and imputed dividends on Series A preferred stock		(1,560	)		-			(1,560	)		-
Net loss attributable to U.S. Well Services, Inc. common stockholders	$	(23,699	)	$	(937	)	$	(45,971	)	$	(8,029	)
Loss per common share (See Note 12):
Basic and diluted	$	(0.46	)	$	(0.02	)	$	(0.92	)	$	(0.16	)
Weighted average common shares outstanding:
Basic and diluted		49,846			47,940			48,631			47,940

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

U.S. WELL SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(55,400	)	$	(8,029	)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization		78,165			50,782
Provision for losses on accounts receivable		285			723
Provision for losses on inventory obsolescence		-			85
Non-cash interest		-			3,525
Loss on disposal of assets		10,908			8,116
Amortization of discount on debt		1,168			-
Deferred financing costs amortization		687			1,042
Loss on extinguishment of debt		12,558			-
Share-based compensation expense		3,366			1,907
Changes in assets and liabilities:
Accounts receivable		(50,666	)		(23,521	)
Inventory		(871	)		(2,933	)
Prepaids and other current assets		5,712			(2,539	)
Accounts payable		2,857			10,067
Accrued liabilities		806			2,493
Accrued interest		4,436			-
Net cash provided by operating activities		14,011			41,718
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(144,889	)		(23,599	)
Net cash used in investing activities		(144,889	)		(23,599	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of revolving credit facility		49,025			-
Repayment of revolving credit facility		(65,000	)		-
Proceeds from issuance of long-term debt		285,000			-
Repayments of long-term debt		(75,000	)		-
Payment of fees related to debt extinguishment		(6,560	)
Repayments of long-term debt to related party		-			(1,710	)
Proceeds from issuance of note payable		-			1,394
Repayments of note payable		(4,387	)		(1,827	)
Repayments of amounts under equipment financing		(63,186	)		(8,245	)
Principal payments under finance lease obligation		(8,389	)		(4,793	)
Proceeds from issuance of preferred stock and warrants, net		54,524			-
Deferred financing costs		(13,451	)		-
Net cash provided by (used in) financing activities		152,576			(15,181	)
Net increase in cash and cash equivalents and restricted cash		21,698			2,938
Cash and cash equivalents and restricted cash, beginning of period		30,036			6,426
Cash and cash equivalents and restricted cash, end of period	$	51,734		$	9,364

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

U.S. WELL SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2019		2018
Supplemental cash flow disclosure:
Interest paid	$	6,679	$	7,847
Income tax paid		353	$	-
Non-cash investing and financing activities:
Beneficial conversion feature of Series A preferred stock		20,132		-
Issuance of warrants to purchase common stock associated with preferred stock offering		10,720		-
Deemed and imputed dividends on Series A preferred stock		1,560		-
Accrued Series A preferred stock dividends		660		-
Changes in accrued and unpaid capital expenditures		22,177		10,745
Assets under finance lease obligations		10,451		-
Financed equipment purchases		66,342		-

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

U.S. WELL SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands, except share amounts)

(Unaudited)

	Class A Common Stock				Class B Common Stock
									Additional				Members'
									Paid in		Members'		Accumulated			Accumulated		Noncontrolling		Total
	Shares		Amount		Shares		Amount		Capital		Interest		Deficit			Deficit		Interest		Equity
Balance, December 31, 2017		-	$	-		-	$	-	$	-	$	137,885	$	(93,622	)	$	-	$	-	$	44,263
Deemed contribution related to unit-based compensation		-		-		-		-		-		1,907		-			-		-		1,907
Net loss		-		-		-		-		-		-		(8,029	)		-		-		(8,029	)
Balance, June 30, 2018		-	$	-		-	$	-	$	-	$	139,792	$	(101,651	)	$	-	$	-	$	38,141

	Class A Common Stock				Class B Common Stock
										Additional					Members'
										Paid in			Members'		Accumulated		Accumulated			Noncontrolling			Total
	Shares		Amount		Shares			Amount		Capital			Interest		Deficit		Deficit			Interest			Equity
Balance, December 31, 2018		49,254,760	$	5		13,937,332		$	1	$	204,928		$	-	$	-	$	(17,383	)	$	52,798		$	240,349
Adoption of ASC 606 as of January 1, 2019 (Note 1)		-		-		-			-		-			-		-		95			27			122
Exercise of warrants		2,925,712		-		-			-		-			-		-		-			-			-
Conversion of Class B common stock to Class A common stock		161,932		-		(161,932	)		-		-			-		-		-			-			-
Restricted stock granted to employees		2,218,179		-		-			-		-			-		-		-			-			-
Class A Common stock granted to board members		46,879		-		-			-		331			-		-		-			87			418
Share-based compensation		-		-		-			-		2,507			-		-		-			651			3,158
Issuance of warrants to purchase common stock associated with preferred stock offering		-		-		-			-		10,720			-		-		-			-			10,720
Beneficial conversion feature of Series A preferred stock		-		-		-			-		20,132			-		-		-			-			20,132
Deemed and imputed dividends on Series A preferred stock		-		-		-			-		(1,560	)		-		-		-			-			(1,560	)
Accrued Series A preferred stock dividends		-		-		-			-		(660	)		-		-		-			-			(660	)
Net loss		-		-		-			-		-			-		-		(43,751	)		(11,649	)		(55,400	)
Balance, June 30, 2019		54,607,462	$	5		13,775,400		$	1	$	236,398		$	-	$	-	$	(61,039	)	$	41,914		$	217,279

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

U.S. WELL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (continued)
(in thousands, except share amounts)
(unaudited)

	Class A Common Stock					Class B Common Stock
											Additional					Members'
											Paid in			Members'		Accumulated			Accumulated			Noncontrolling			Total
	Shares		Amount			Shares			Amount		Capital			Interest		Deficit			Deficit			Interest			Equity
Balance, March 31, 2018		-	$	-			-		$	-	$	-		$	138,897	$	(100,714	)	$	-		$	-		$	38,183
Deemed contribution related to unit-based compensation		-		-			-			-		-			895		-			-			-			895
Net loss		-		-			-			-		-			-		(937	)		-			-			(937	)
Balance, June 30, 2018		-	$	-			-		$	-	$	-		$	139,792	$	(101,651	)	$	-		$	-		$	38,141

	Class A Common Stock					Class B Common Stock
											Additional					Members'
											Paid in			Members'		Accumulated			Accumulated			Noncontrolling			Total
	Shares		Amount			Shares			Amount		Capital			Interest		Deficit			Deficit			Interest			Equity
Balance, March 31, 2019		52,927,034	$	5			13,937,332		$	1	$	206,008		$	-	$	-		$	(39,560	)	$	46,901		$	213,355
Adoption of ASC 606 as of January 1, 2019 (Note 1)		-		-			-			-		-			-		-			-			-			-
Exercise of warrants		1,513,340		-			-			-		-			-		-			-			-			-
Conversion of Class B common stock to Class A common stock		161,932		-			(161,932	)		-		-			-		-			-			-			-
Restricted stock granted to employees		5,156		-			-			-		-			-		-			-			-			-
Class A Common stock granted to board members		-		-			-			-		-			-		-			-			-			-
Share-based compensation		-		-	��		-			-		1,758			-		-			-			445			2,203
Issuance of warrants to purchase common stock associated with preferred stock offering		-		-			-			-		10,720			-		-			-			-			10,720
Beneficial conversion feature of Series A preferred stock		-		-			-			-		20,132			-		-			-			-			20,132
Deemed and imputed dividends on Series A preferred stock		-		-			-			-		(1,560	)		-		-			-			-			(1,560	)
Accrued Series A preferred stock dividends		-		-			-			-		(660	)		-		-			-			-			(660	)
Net loss		-		-			-			-		-			-		-			(21,479	)		(5,432	)		(26,911	)
Balance, June 30, 2019		54,607,462	$	5			13,775,400		$	1	$	236,398		$	-	$	-		$	(61,039	)	$	41,914		$	217,279

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

~~PART I – FINANCIAL INFORMATION~~

U.S. WELL SERVICES, INC.

~~Item 1. Financial Statements~~

~~MATLIN & PARTNERS ACQUISITION CORPORATION~~
~~CONDENSED BALANCE SHEETS~~

September 30, 2017 December 31, 2016
(Unaudited) (Audited)
ASSETS:
Current assets:
Cash $ 853,555 $ 65,620
Prepaid expenses 153,639 -
Deferred offering costs - 154,380
Total current assets 1,007,194 220,000
Investments and cash held in trust account 325,829,443 -
Total assets $ 326,836,637 $ 220,000

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued expenses $ 187,502 $ -
Due to affiliate 71,034 -
Note payable - 200,000
Total current liabilities 258,536 200,000
Deferred underwriting commissions 10,250,000 -
Total liabilities 10,508,536 200,000

Class A common stock subject to possible redemption; $0.0001 par value; 31,132,810 shares (at redemption value of $10.00 per share) as of September 30, 2017 and none issued or outstanding as of December 31, 2016 311,328,100 -

Stockholders' equity:
Preferred stock, $0.0001 par value, 1,000,000 shares authorized, none issued or outstanding - -
Class A common stock, $0.0001 par value, 90,000,000 shares authorized, 1,367,190 shares issued and outstanding (excluding 31,132,810 shares subject to possible redemption) as of September 30, 2017 and none issued or outstanding as of December 31, 2016 137 -
Class F common stock, $0.0001 par value, 10,000,000 shares authorized, 8,125,000 and 8,625,000 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 813 863
Additional paid-in-capital 4,621,481 24,137
Retained earnings (accumulated deficit) 377,570 (5,000 )
Total stockholders' equity 5,000,0001 20,000
Total liabilities and stockholders' equity $ 326,836,637 $ 220,000

~~See accompanying notes to condensed financial statements.~~

~~MATLIN & PARTNERS ACQUISITION CORPORATION~~
~~CONDENSED STATEMENTS OF OPERATIONS~~

Three Months
Ended September 30,
Nine Months
Ended
September 30,
Period from
March 10, 2016 (inception)
through
September 30,

2017 2016 2017 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $ - $ - $ - $ -
General and administrative expenses (258,729 ) - (664,662 ) (5,000 )
Loss from operations (258,729 ) - (664,662 ) (5,000 )
Interest income 798,570 - 1,509,443 -
Income before income taxes 539,841 - 844,781 -
Provision for income taxes 254,514 - 462,211 -
Net income (loss) $ 285,327 $ - $ 382,570 $ (5,000 )

Weighted average number of shares outstanding:
Basic⁽¹⁾ 9,520,413 8,625,000 9,285,767 8,134,146
Diluted 40,625,000 8,625,000 32,068,223 8,134,146

Net income (loss) per common share:
Basic $ 0.03 $ (0.00 ) $ 0.04 $ (0.00 )
Diluted $ 0.01 $ (0.00 ) $ 0.01 $ (0.00 )

~~See accompanying notes to condensed financial statements.~~

~~(1)~~

~~This number excludes an aggregate of up to 31,132,810 shares subject to possible redemption on September 30, 2017.~~

~~MATLIN & PARTNERS ACQUISITION CORPORATION~~
~~CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY~~
~~Nine Months Ended September 30, 2017~~

~~(Unaudited)~~

Class A Common Stock Class F Common Stock
Additional
Paid-in
Retained
Earnings
(Accumulated Stockholders'
Shares Amount Shares Amount Capital Deficit) Equity
Balance at December 31, 2016 - $ - 8,625,000 $ 863 $ 24,137 $ (5,000 ) $ 20,000
Sale of Class A common stock to public 32,500,000 3,250 - - 324,996,750 - 325,000,000
Forfeiture of Class F common stock to Sponsor - - (500,000 ) (50 ) 50 - -
Sale of 15,500,000 Private Placement Warrants - - - - 7,750,000 - 7,750,000
Offering costs - - - - (16,824,469 ) - (16,824,469 )
Class A common stock subject to possible redemption (31,132,810 ) (3,113 ) - - (311,324,987 ) - (311,328,100 )
Net income - - - - - 382,570 382,570
Balance at September 30, 2017 1,367,190 $ 137 8,125,000 $ 813 $ 4,621,481 $ 377,570 $ 5,000,001

~~See accompanying notes to condensed financial statements.~~

~~MATLIN & PARTNERS ACQUISITION CORPORATION~~
~~CONDENSED STATEMENTS OF CASH FLOWS~~

Nine Months Ended Period from
March 10, 2016 (inception)
through

September 30,
2017
September 30,
2016
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income (loss) $ 382,570 $ (5,000 )
Changes in prepaid expenses (153,639 ) -
Changes in accounts payable and accrued expenses 187,502 5,000
Changes in due to affiliate 71,034 -
Interest earned in Trust Account (1,509,443 ) -
Net cash used in operating activities (1,021,976 ) -

Cash flows from investing activities:
Cash deposited in Trust Account (325,000,000 ) -
Interest income released from Trust Account for taxes 680,000 -
Net cash used in investing activities (324,320,000 ) -

Cash flows from financing activities:
Proceeds from sale of Class A common stock to public 325,000,000 -
Proceeds from sale of Class F common stock to the Sponsor - 25,000
Proceeds from sale of Private Placement Warrants 7,750,000 -
Note payable borrowings and advance 75,000 200,000
Note payable payment (275,000 ) -
Payment of offering costs (6,420,089 ) (151,750 )
Net cash provided by financing activities 326,129,911 73,250

Increase in cash 787,935 73,250
Cash at beginning of period 65,620 -
Cash at end of period $ 853,555 $ 73,250

Supplemental disclosure of non-cash financing activities:
Deferred underwriting commissions $ 10,250,000 $ -

~~See accompanying notes to condensed financial statements.~~

~~MATLIN & PARTNERS ACQUISITION CORPORATION~~
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(Unaudited)~~(unaudited)

~~Note~~NOTE 1 ~~— Description of Organization and Business Operations~~– DESCRIPTION OF BUSINESS

~~Organization and General~~

U.S. Well Services, Inc. (the “Company”), f/k/a Matlin & Partners Acquisition ~~Corporation (the “we”~~Corp (“MPAC”), ~~“us”, “our”~~is a Houston, Texas-based oilfield service provider of well stimulation services to the upstream oil and natural gas industry. The Company engages in high-pressure hydraulic fracturing in unconventional oil and natural gas basins in the United States. The fracturing process consists of pumping a specially formulated fluid into perforated well casing, tubing or ~~“Company”),~~open holes under high pressure, causing the underground formation to crack or fracture, allowing nearby hydrocarbons to flow more freely up the wellbore.

The Company’s fleets consist of mobile hydraulic fracturing units and other auxiliary heavy equipment to perform fracturing services. The Company has two designs for hydraulic fracturing units: (1) Conventional Fleets, which utilize traditional internal combustion engines, transmissions, radiators and are powered by diesel fuel and (2) Clean Fleets which replace the traditional engines, transmissions, and radiators with electric motors powered by electricity generated by natural gas fueled turbine generators. Both designs utilize high-pressure hydraulic fracturing pumps mounted on trailers. The Company refers to the group of pump trailers and other equipment necessary to perform a typical fracturing job as a “fleet”.

The Company was incorporated in Delaware in March 2016 as a ~~blank check~~special purpose acquisition company, ~~in Delaware on March 10, 2016. The Company was~~ formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or other similar business combination with one or more ~~operating businesses or assets that the Company has not yet identified~~target businesses.

On November 9, 2018 (the ~~“Initial Business Combination”~~“Closing Date”).

From March 10, 2016 (inception) through March 15, 2017, the Company’s efforts were limited to organizational activities and activities relating to its initial public offering (“Public Offering”) described below, and since the Public Offering, the search for a target business with which to consummate an Initial Business Combination. The Company will not generate any operating revenues until after completion of its Initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash from the proceeds derived from the Public Offering and investment securities purchased with such proceeds.

~~Sponsor and Financing~~

~~The Company’s sponsor is MP Acquisition Sponsor~~, MPAC acquired USWS Holdings LLC, a Delaware limited liability company ~~(the “Sponsor”~~(“USWS Holdings”), pursuant to the Merger and Contribution Agreement, dated as of July 13, 2018, and subsequently amended (as amended, the “Merger and Contribution Agreement”). The ~~registration statement for~~acquisition, together with the ~~Company’s Public Offering was declared effective~~other transactions contemplated by the ~~United States Securities~~Merger and ~~Exchange Commission (the “SEC”) on March 9, 2017. On March 15, 2017,~~Contribution Agreement are referred to herein as the Company consummated the Public Offering of 32,500,000 units (“Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”), which includes a partial exercise by Cantor Fitzgerald & Co., the sole underwriter for the Public Offering (the “Underwriter”) of its over-allotment option in the amount of 2,500,000 Units at $10.00 per Unit, generating gross proceeds of $325,000,000, which is described in Note 3.

~~Simultaneously~~“Transaction”. In connection with the closing of the Public Offering and the sale of the Units, the Company consummated a private placement (“Private Placement”) of an aggregate of 15,500,000 warrants (“Private Placement Warrants”) at a price of $0.50 per Private Placement Warrant,Transaction, MPAC changed its name to ~~the Sponsor and the Underwriter, generating gross proceeds of $7,750,000, which is described in Note 4.~~

Transaction costs amounted to $16,824,469, consisting of $6,000,000 of underwriting fees, $10,250,000 of deferred underwriting commissions (which are held in the Trust Account (defined below)) and $574,469 of Public Offering costs. As described in Note 7, the $10,250,000 of deferred underwriting commissions are contingent upon the consummation of an Initial Business Combination by March 15, 2019.

~~The Trust Account~~

U.S. Well Services, Inc.

Following the closing of the Public Offering on March 15, 2017, an amount of $325,000,000 from the net proceeds of the Public Offering and the Private Placement was placed in a trust account (“Trust Account”). The proceeds held in the Trust Account may be invested only in U.S. government treasury bills with a maturity of 180 days or less or in money market funds investing solely in U.S. treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of the Initial Business Combination, or (ii) the distribution of the Trust Account, as described below, if the Company is unable to complete the Initial Business Combination within 24 months from the closing of the Public Offering (the “Combination Period”) or upon any earlier liquidation of the Company. The remaining proceeds outside the Trust Account may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses.

The Company’s amended and restated certificate of incorporation provides that, other than the withdrawal of interest to pay taxes, if any, none of the funds held in the Trust Account will be released until the earlier of: (i) the completion of the Initial Business Combination; (ii) the redemption of any Public Shares that have been properly tendered in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation to modify the substance or timing of its obligation to redeem 100% of its Public Shares if it does not complete the Initial Business Combination within the Combination Period; and (iii) the redemption of 100% of the Public Shares if the Company is unable to complete an Initial Business Combination within the Combination Period (subject to the requirements of law). The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s public stockholders.

~~Initial Business Combination~~

~~The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although~~Transaction, substantially all of the ~~net proceeds~~Company’s assets and operations are ~~intended to be applied generally toward consummating the Initial Business Combination. Nasdaq Capital Market~~held and conducted by U.S. Well Services, LLC (“~~NASDAQ”~~USWS LLC”) ~~rules provide that~~, a wholly owned subsidiary of USWS Holdings, and the Company’s ~~Initial Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80%~~only assets are equity interests representing 79.9% ownership of USWS Holdings as of June 30, 2019.

Unless the ~~balance in the Trust Account (less any deferred underwriting commissions~~context otherwise requires, “the Company”, “USWS”, “we,” “us,” and taxes payable on interest earned) at the time of the signing of a definitive agreement in connection with the Initial Business Combination. There is no assurance that the Company will be able to successfully affect an Initial Business Combination.

The Company will provide its stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require the Company to seek stockholder approval under applicable law or stock exchange listing requirement. The public stockholders will be entitled to redeem their shares“our” refer, for a pro rata portion of the amount then on deposit in the Trust Account ($10.00 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The Company will proceed with an Initial Business Combination only if the Company has net tangible assets of at least $5,000,001 upon such consummation and a majority of the outstanding shares voted are voted in favor of the Initial Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC, and file tender offer documents with the SECperiods prior to completing an Initial Business Combination. If, however, a stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or other legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with an Initial Business Combination, the Company’s directors, officers and the Sponsor have agreed to vote their Founder Shares (as defined in Note 4) and any Public Shares they may acquire during or after this offering in favor of approving an Initial Business Combination.

If the Company holds a stockholder vote or there is a tender offer for shares in connection with an Initial Business Combination, a public stockholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including interest but less taxes payable. As a result, such shares of Class A common stock will be recorded at redemption amount and classified as temporary equity upon the completion of the ~~Public Offering, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity.”~~

~~The Company will also provide~~Transaction, to USWS Holdings and its ~~stockholders with the opportunity to redeem all~~subsidiaries and, for periods upon or a portion of their Public Shares in connection with any stockholder vote to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of Public Shares if it does not complete a Business Combination within the Combination Period. The stockholders will be entitled to redeem their shares for a pro rata portion of the amount then on deposit in the Trust Account ($10.00 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights with respect to the Company’s Warrants (as defined in Note 3) in connection with such a stockholder vote to approve such an amendment to the Company’s Amended and Restated Certificate of Incorporation. Notwithstanding the foregoing, the Company may not redeem shares in an amount that would cause its net tangible assets to be less than $5,000,001.

Pursuant to the Company’s amended and restated certificate of incorporation, if the Company is unable to complete the Initial Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest (which shall be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

~~The Company’s directors and officers and the Sponsor have agreed (i) to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with~~after the completion of the ~~Initial Business Combination,~~Transaction, to US Well Services, Inc. and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if the Company fails to complete the Initial Business Combination within the Combination Period (although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete the Initial Business Combination within the Combination Period). The Underwriter also agreed to waive its ~~rights to deferred underwriting commissions held in the Trust Account in the event the Company does not consummate the Initial Business Combination within the Combination Period~~subsidiaries, including USWS Holdings and in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per Unit in the Public Offering. Placing funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company seeks to have all vendors, service providers, prospective target businesses or other entities it engages execute agreements with the Company waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute such agreements.its subsidiaries.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Notwithstanding the foregoing redemption rights, if the Company seeks stockholder approval of its Initial Business Combination and it does not conduct redemptions in connection with its Initial Business Combination pursuant to the tender offer rules, the Company’s Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended, or the Exchange Act), will be restricted from redeeming its shares with respect to an aggregate of 20% or more of the shares sold in the Public Offering. However, there is no restriction on the Company’s stockholders’ ability to vote all of their shares for or against an Initial Business Combination.

In the event of a liquidation, dissolution or winding up of the Company after an Initial Business Combination, the Company’s stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. The Company’s stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that the Company will provide its stockholders with the opportunity to redeem their Public Shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, upon the completion of the Initial Business Combination, subject to the limitations described herein.

~~Note 2 — Summary of Significant Accounting Policies~~

Basis of Presentation

The accompanying unaudited ~~interim~~ condensed consolidated financial statements ~~of the Company are presented in U.S. dollars in conformity with~~were prepared using generally accepted accounting principles ~~generally accepted~~ in the United States of America (“GAAP”) for interim financial information and ~~pursuant~~the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read in conjunction with the ~~accounting~~annual financial statements included in the Company's 2018 Annual Report on Form 10-K (the “Annual Report”).

The accompanying unaudited condensed consolidated financial statements and ~~disclosure rules~~accompanying notes present the consolidated financial position, results of operations, cash flows, and ~~regulations~~equity of the ~~Securities~~Company as of June 30, 2019 and ~~Exchange Commission (“SEC”),~~December 31, 2018, and ~~reflect~~for the three and six months ended June 30, 2019 and 2018. The interim data includes all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the ~~financial position as of September 30, 2017 and~~results for the interim period. The results of operations ~~and cash flows~~ for the ~~periods presented. Certain information~~three and ~~disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. Interim results~~six months ended June 30, 2019 are not necessarily indicative of the results of operations expected for the entire fiscal year ended December 31, 2019.

Principles of Consolidation

The condensed consolidated financial statements comprise the financial statements of the Company, its wholly owned subsidiaries, and its subsidiaries that it controls due to ownership of a majority voting interest. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company. All significant intercompany balances and transactions are eliminated upon consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We regularly evaluate estimates and judgments based on historical experience and other relevant facts and circumstances. Significant estimates included in these financial statements primarily relate to allowance for doubtful accounts, allowance for inventory obsolescence, estimated useful lives and valuation of property and equipment and intangibles, impairment assessments of goodwill and other intangibles, Level 2 inputs used in fair value estimation of term loans, accounting for business combination, and the assumptions used in our Black-Scholes and Monte Carlo option pricing models associated with the valuation of share-based compensation and certain equity instruments. Actual results could differ from those estimates.

Restricted Cash

Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements, or are reserved for a ~~full year.~~specific purpose that is not readily available for immediate or general use are recorded in restricted cash in our condensed consolidated balance sheets. The restricted cash in our condensed consolidated balance sheet represents cash transferred into a trust account to support our workers’ compensation obligations and cash held for use in capital expenditures related to approved fleet expansion amounting to $0.5 million and $16.5 million, respectively, as of June 30, 2019, and $0.5 million and nil, respectively, as of December 31, 2018.

The ~~unaudited interim~~following table provides a reconciliation of the amount of cash and cash equivalents reported on the condensed ~~financial~~consolidated balance sheets to the total of cash and cash equivalents and restricted cash shown on the consolidated statements ~~should be read~~ of cash flows (in ~~conjunction with~~thousands):

	June 30, 2019		December 31, 2018
Cash and cash equivalents	$	34,758	$	29,529
Restricted cash		16,976		507
Cash and cash equivalents and restricted cash	$	51,734	$	30,036

Inventory

Inventory consists of proppant, chemicals, and other consumable materials and supplies used in our high-pressure hydraulic fracturing operations. Inventories are stated at the ~~audited financial statements and notes thereto included in the final prospectus filed~~lower of cost or net realizable value. Cost is determined principally on a first-in-first-out cost basis. All inventories are purchased for use by the Company in the delivery of its services with no inventory being sold separately to outside parties. Inventory quantities on hand are reviewed regularly and write-downs for obsolete inventory are recorded based on our forecast of the ~~SEC dated March 9, 2017~~inventory item demand in the near future. As of June 30, 2019 and December 31, 2018, the Company had inventory reserves of $0.4 million and $0.6 million, respectively, for obsolete and slow-moving inventory.

On certain contracts with our proppant vendors, we take ownership of proppant as it leaves the ~~audited~~sand mines. These in transit inventories are recognized as part of Inventory in our condensed consolidated balance sheets. As of June 30, 2019 and December 31, 2018, in transit inventories were nil and $0.3 million, respectively.

Fair Value of Financial Instruments

Fair value is defined under Accounting Standards Codification (ASC) 820, Fair Value Measurement, as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels are defined as follows:

Level 1–inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2–inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3–inputs are unobservable for the asset or liability.

The following is a summary of the carrying amounts and estimated fair values of our financial instruments as of June 30, 2019 and December 31, 2018:

Cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses and other current liabilities. These carrying amounts approximate fair value because of the short maturity of the instruments or because the carrying value is equal to the fair value of those instruments on the balance sheet ~~included~~dates.

Senior Secured Term Loan and Second Lien Term Loan. The carrying value of the Senior Secured Term Loan and Second Lien Term Loan approximates fair value as its terms are consistent with and comparable to current market rates as of June 30, 2019 and December 31, 2018, respectively.

Equipment financing. The carrying value of the equipment financing approximates fair value as its terms are consistent with and comparable to current market rates as of June 30, 2019 and December 31, 2018, respectively.

Revenue Recognition

Effective January 1, 2019, the Company adopted a comprehensive new revenue recognition standard, ASC 606, Revenue from Contracts with Customers. The details of the significant changes to accounting policies resulting from the adoption of the new standard are set out below. The Company adopted the standard using a modified retrospective method, allowing the Company to apply the cumulative effect of the standard in the ~~Form 8-K filed by~~most current period presented as an adjustment to retained earnings. As a result of the change in accounting principle, the Company ~~with~~recorded a $0.1 million increase in retained earnings due to the ~~SEC~~timing of expense recognition related to certain sales commissions considered to be costs of acquiring customer contracts.

Under the new standard, revenue recognition is based on ~~March 21, 2017.~~the customer’s ability to benefit from the services rendered in an amount that reflects the consideration expected to be received in exchange for those services. Taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore excluded from revenues in the Company’s financial statements.

~~Emerging Growth Company~~The Company’s revenues consist of providing hydraulic fracturing services for either a pre-determined term or number of stages/wells to exploration and production (E&P) companies operating in the onshore oil and natural gas basins of the United States. Revenues are earned as services are rendered, which is generally on a per stage or fixed monthly rate basis. Customers are invoiced according to contract terms either upon the completion of a stage, the completion of a well or monthly with payment due typically 30 days from invoice date.

Hydraulic fracturing is a well-stimulation technique intended to optimize hydrocarbon flow paths during the completion phase of wellbores. The process involves the injection of water, sand and chemicals under high pressure into shale formations. The Company’s performance obligations are satisfied over time, typically measured in number of stages completed or the number of pumping days a fleet is available to pump for a customer in a month. A field ticket is created for each stage completed that records all services performed, including any chemicals and proppant consumed in completing the stage. The field ticket is signed by a customer representative and evidences the amounts to which the Company has a right to invoice and thus to recognize as revenue. All revenue is recognized when a contract with a customer exists, collectability of amounts subject to invoice is probable, the performance obligations under the contract have been satisfied over time, and the amount to which the Company has the right to invoice has been determined. Contract fulfillment costs, such as mobilization costs and shipping and handling costs, are expensed as incurred and are recorded in cost of services in the unaudited condensed consolidated statements of operations. A portion of the Company’s contracts contain variable consideration; however, this variable consideration is typically unknown at the time of contract inception, and is not

known until the job is complete, at which time the variability is resolved. Examples of variable consideration include the amount of consumables (such as chemicals and proppants) that will be used to complete a job.

The Company has elected to use the “as invoiced” practical expedient to recognize revenue based upon the amount it has a right to invoice upon the completion of each performance obligation per the terms of the contract. The practical expedient permits an entity to recognize revenue in the amount to which it has a right to invoice the customer if that amount corresponds directly with the value to the customer of the entity’s performance completed to date. The Company believes that this is an accurate reflection of the value transferred to the customer as each incremental obligation is performed.

The Company has elected to expense sales commissions paid upon the successful signing of a new customer contract as incurred if the related contract will be fully satisfied within one year. For contracts that will not be fully satisfied within one year, these incremental costs of obtaining a contract with a customer will be recognized as a contract asset and amortized on a straight-line basis over the life of the contract.

Accounts Receivable

Accounts receivable are recorded at their outstanding balances adjusted for an allowance for doubtful accounts. The allowance for doubtful accounts is determined by analyzing the payment history and credit worthiness of each debtor. Receivable balances are charged off when they are considered uncollectible by management. Recoveries of receivables previously charged off are recorded as income when received. The Company held a reserve for doubtful accounts amounting to $0.5 million and $0.2 million as of June 30, 2019 and December 31, 2018, respectively.

Major Customer and Concentration of Credit Risk

The concentration of our customers in the oil and natural gas industry may impact our overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and industry conditions. We perform ongoing credit evaluations of our customers and do not generally require collateral in support of our trade receivables.

The following table shows the percentage of revenues from our significant customers for the three and six months ended June 30, 2019 and 2018:

	Three Months Ended June 30,
	2019	2018
Customer A	12.5%	27.6%
Customer B	*	24.2%
Customer C	*	10.6%
Customer D	16.1%	12.2%
Customer E	*	17.7%
Customer F	17.2%	*
Customer G	19.9%	*

	Six Months Ended June 30,
	2019	2018
Customer A	14.0%	28.2%
Customer B	*	22.8%
Customer C	*	11.6%
Customer D	18.0%	12.4%
Customer E	*	11.6%
Customer F	13.8%	*
Customer G	15.6%	*

An asterisk indicates that revenue is less than ten percent.

The following table shows the percentage of trade receivables from our significant customers as of June 30, 2019 and December 31, 2018:

	June 30, 2019	December 31, 2018
Customer A	*	18.4%
Customer B	*	17.7%
Customer C	*	10.8%
Customer D	*	26.1%
Customer E	13.0%	*
Customer F	10.0%	13.0%
Customer G	30.1%	*

An asterisk indicates that trade receivable is less than ten percent.

Fair Value of Preferred Stock

The fair value of preferred stock is estimated by calculating the present value of its one-year redemption cost to the Company and then discounted for lack of marketability.

Embedded Conversion Features

The Company evaluates embedded conversion features within a convertible instrument under ASC 815 Derivatives and Hedging to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require treatment under ASC 815, the instrument is evaluated under ASC 470-20 Debt with Conversion and Other Options for consideration of any beneficial feature.

The Company records a beneficial conversion feature (“BCF”) when the convertible instrument is issued with conversion features at fixed or adjustable rates that are below market value when issued. The BCF for convertible instruments is recognized and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. The intrinsic value is generally calculated at the commitment date as the difference between the conversion price and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible. If certain other securities are issued with the convertible security, the proceeds are allocated among the different components. The portion of the proceeds allocated to the convertible security is divided by the contractual number of the conversion shares to determine the effective conversion price, which is used to measure the BCF. The effective conversion price is used to compute the intrinsic value. The value of the BCF is limited to the basis that is initially allocated to the convertible security.

The BCF for the convertible instrument is recorded as a reduction, or discount, to the carrying amount of the convertible instrument equal to the fair value of the conversion feature. The discount is then amortized as deemed dividends over the period from the date of the convertible instrument’s issuance to the earliest redemption date, provided that the convertible instrument is not currently redeemable but probable of becoming redeemable in the future.

Warrants Issued with Convertible Instruments

The Company calculates the fair value of warrants issued with the convertible instruments using the Black-Scholes valuation method. The Company allocates the value of the proceeds received from a convertible instrument transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value is recorded as discount or premium.

Income Taxes

Prior to the completion of the Transaction, the Company was a limited liability company and was treated as a partnership for federal and certain state income tax purposes. As such, the results of operations were allocated to the members for inclusion in their income tax returns and therefore no provision or benefit for federal or certain state income taxes was included in our financial statements prior to the completion of the Transaction.

The Company under ASC 740 uses the asset and liability method of accounting for income taxes, under which deferred tax assets and liabilities are recognized for the future tax consequences of (i) temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and (ii) operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are based on enacted tax rates applicable to the future period when those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period the rate change is enacted. A valuation allowance is provided for deferred tax assets when it is more likely than not the deferred tax assets will not be realized.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties at June 30, 2019. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

NOTE 3 – ACCOUNTING STANDARDS

Recently Adopted Accounting Pronouncements

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and ~~stockholder~~shareholder approval of any golden parachute payments not previously approved.

Further, ~~section~~Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce the diversity in practice around how certain transactions are classified within the statement of cash flows. The new guidance will be effective for emerging growth companies for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019; however early adoption is permitted. The Company adopted this new guidance as of April 1, 2019 which resulted in the presentation of the cash portion of the loss on extinguishment of debt amounting to $6.6 million as cash used in financing activities rather than operating activities in the condensed consolidated statement of cash flows.

~~Net Income Per Common Share~~

~~Net income per common share is computed by dividing net income applicable~~In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers and subsequent amendments thereto. This pronouncement requires entities to ~~common stockholders~~recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration which the entity expects to be entitled to in exchange for those goods and services. In August 2015, the FASB deferred the effective date of ASU 2014-09. Since the original issuance of ASU 2014-09, the FASB has issued several amendments and updates to this guidance, and additional amendments and updates are currently being considered by the ~~weighted average number~~FASB. The Company adopted the guidance on January 1, 2019. The adoption of ~~common shares outstanding during~~this ASU did not have a material impact on the condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-1, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new guidance will be effective for emerging growth companies for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The Company adopted the guidance as of January 1, 2019 and did not have an impact on the condensed consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU No. 2015-17 eliminated the current requirement for organizations to present deferred tax liabilities and assets as current and non-current in a classified balance sheet. Instead, companies are required to classify all deferred tax assets and liabilities as non-current. The standard is effective for interim and annual periods beginning after December 15, 2016. The Company adopted this new guidance as of December 31, 2018, the first period ~~plus, to the extent dilutive, the incremental number of shares of common stock to settle warrants, as calculated using the treasury stock method. At September 30, 2017,~~in which the Company had deferred taxes. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and subsequent amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 (collectively, Topic 842). Topic 842 requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. We expect to adopt Topic ASC 842 using the effective date of January 1, 2020 as the date of our initial application of the standard. Consequently, financial information for the comparative periods will not be updated. We are currently evaluating the impact of our pending adoption of Topic 842 on our consolidated financial statements. We currently expect that most of our operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon our adoption of Topic 842, which will increase our total assets and total liabilities that we report relative to such amounts prior to adoption. The Company chose to use the modified retrospective with applied transition method upon adoption of the standard. Under this adoption method, all leases that are in effect and in existence as of, and subsequent to transition date will be applied as of the transition date, with a cumulative impact to retained earnings in that period. Prior period financial statements would be stated under the old guidance ASC 840 with no change to prior periods or disclosures associated with prior period.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates the second step of the previous two-step quantitative test of goodwill impairment. Under the new guidance, the quantitative test consists of a single step in which the carrying amount of the reporting unit is compared to its fair value. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the amount of the impairment would be limited to the total amount of goodwill allocated to the reporting unit. The guidance does not affect the existing option to perform the qualitative assessment for a reporting unit to determine whether the quantitative impairment test is necessary. The new guidance will be effective for emerging growth companies for fiscal years beginning after December 15, 2021; however, early adoption is permitted. The Company is currently evaluating the impact of adopting the new guidance on the consolidated financial statements.

NOTE 4 – PREPAIDS AND OTHER CURRENT ASSETS

Prepaids and other current assets as of June 30, 2019 and December 31, 2018 consisted of the following (in thousands):

	June 30, 2019		December 31, 2018
Prepaid insurance	$	2,390	$	6,011
Recoverable costs from insurance		2,886		3,540
Sales tax receivable		1,987		1,987
Other receivables		-		895
Income tax receivable		810		810
Other current assets		3,687		3,194
Total prepaid expenses and other current assets	$	11,760	$	16,437

In March 2017, some of our turbine equipment that we use to operate our Clean Fleets were damaged in an accident. As a result, we incurred costs primarily to rent replacement equipment in order to continue our operations. Recoverable costs from insurance as of December 31, 2018 included costs of $2.9 million we incurred as of December 31, 2018, which was recovered from the insurance company in January 2019.

In June 2018, we experienced a fire on one of our hydraulic fracturing fleets operating in Pennsylvania, damaging a portion of hydraulic fracturing equipment. Recoverable costs from insurance as of June 30, 2019 included $2.4 million representing an amount approved in June 2019 by the insurance company as final settlement to cover the cost of replacing damaged equipment and reimbursement of certain operating expenses incurred due to the fire. Of the amount approved by the insurance company, reimbursement of certain expenses incurred in the prior year amounting to $1.6 million was recorded as other income in the condensed consolidated statement of operations for the three and six months ended June 30, 2019. In July 2019, we received the final settlement amount in full.

NOTE 5 – INTANGIBLE ASSETS

A summary of intangible assets as of June 30, 2019 and December 31, 2018 consisted of the following (in thousands):

	Estimated Useful Life (in years)	Gross Carrying Value		Accumulated Amortization		Net Book Value
As of June 30, 2019
Order backlog	3	$	15,345	$	13,810	$	1,535
Trademarks	10		3,132		757		2,375
Patents	20		22,955		2,774		20,181
Covenants not to compete	2		1,524		1,524		-
Customer relationship	1		132		132		-
		$	43,088	$	18,997	$	24,091
As of December 31, 2018
Order backlog	3	$	15,345	$	10,742	$	4,603
Trademarks	10		3,132		600		2,532
Patents	20		22,955		2,200		20,755
Covenants not to compete	2		1,524		1,524		-
Customer relationship	1		132		132		-
		$	43,088	$	15,198	$	27,890

The intangible assets are amortized over the period the Company expects to receive the related economic benefit. Amortization expense related to amortizable intangible assets for the three months ended June 30, 2019 and 2018 was $1.9 million and $2.1 million, respectively, and is included as part of depreciation and amortization in the consolidated statements of operations. Amortization expense related to amortizable intangible assets for the six months ended June 30, 2019 and 2018 was $3.8 million and $4.2 million, respectively.

The estimated amortization expense for future periods is as follows (in thousands):

Fiscal Year	Estimated Amortization Expense
Remainder of 2019	$	2,265
2020		1,461
2021		1,461
2022		1,461
2023		1,461
Thereafter		15,982
Total	$	24,091

NOTE 6– PROPERTY AND EQUIPMENT, NET

Property and equipment as of June 30, 2019 and December 31, 2018 consisted of the following (in thousands):

	Estimated Useful Life (in years)	June 30, 2019			December 31, 2018
Fracturing equipment	1.5 to 10 years	$	635,066		$	449,685
Light duty vehicles	5 years		7,895			6,455
Furniture and fixtures	5 years		277			231
IT equipment	3 years		6,913			5,339
Auxiliary equipment	2 to 20 years		39,299			24,118
Leasehold improvements	Term of lease		725			335
			690,175			486,163
Less: Accumulated depreciation and amortization			(200,336	)		(154,776	)
Property and equipment, net		$	489,839		$	331,387

Depreciation and amortization expense for the three months ended June 30, 2019 and 2018 was $38.4 million and $22.8 million, respectively. Depreciation and amortization expense for the six months ended June 30, 2019 and 2018 was $74.4 million and $46.6 million, respectively.

Capital leases. In November 2018 and January 2019, we entered into two capital leases. The equipment under the capital lease in November 2018 was received at end of December 2018 and placed into service in 2019. The total amount capitalized under these capital leases was $29.8 million, presented as part of fracturing equipment in property and equipment, and the related accumulated depreciation was $11.3 million and $0 as of June 30, 2019 and December 31, 2018, respectively.

In January 2019, through equipment financing, we purchased certain equipment that were previously under capital leases entered into in August and September 2017. As a result, a difference of $0.1 million between the purchase price and the carrying amount of the capital lease obligation was recorded as adjustment to the carrying amount of the equipment. The total amount capitalized under this equipment financing was $7.6 million, presented as part of fracturing equipment in property and equipment.

The future minimum lease payments related to the capital leases as of June 30, 2019 amounts to $19.7 million, of which $13.8 million and $5.9 million are due in the remainder of 2019 and in 2020, respectively. Included in these amounts is imputed interest totaling $1.0 million.

NOTE 7 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities as of June 30, 2019 and December 31, 2018 consisted of the following (in thousands):

	June 30, 2019		December 31, 2018
Accrued payroll and benefits	$	7,239	$	7,087
Accrued taxes		7,413		8,119
Accrued interest		4,436		-
Other current liabilities		3,079		1,838
Accrued expenses and other current liabilities	$	22,167	$	17,044

NOTE 8 –SHORT – TERM NOTE PAYABLE

On November 9, 2018, the Company obtained insurance for its directors and officers liability coverage needs. The Company entered into a premium finance agreement with a credit finance institution to pay the premiums. The aggregate amount of the premiums financed was $0.8 million at an interest rate of 5.5%. Under the terms of the agreement, the Company agreed to pay nine equal monthly payments of $0.1 million beginning December 9, 2018 through maturity on August 9, 2019. The payments include nominal interest expense. The note had an outstanding ~~warrants~~balance of $0.2 million and $0.7 million as of June 30, 2019 and December 31, 2018, respectively.

Notes payable outstanding as of December 31, 2018 totaling $3.8 million relating to premium finance agreements for the Company’s workers’ compensation, pollution, umbrella, general liability, and auto coverage needs were paid in full as of June 30, 2019.

NOTE 9 – DEBT

Long-term debt as of June 30, 2019 and December 31, 2018 consisted of the following (in thousands):

	June 30, 2019			December 31, 2018
Senior Secured Term Loan	$	250,000		$	-
ABL Credit Facility		40,000			-
First Lien Credit Facility		-		$	55,975
Second Lien Term Loan		-			40,000
Equipment financing		23,500			11,567
Capital leases		18,721			25,338
Total debt		332,221			132,880
Unamortized discount on debt and debt issuance costs		(10,460	)		(3,963	)
Current maturities		(29,912	)		(29,501	)
Net Long-term debt	$	291,849		$	99,416

Senior Secured Term Loan

On May 7, 2019, USWS LLC (the “Borrower”), a subsidiary of the Company, and all of the other subsidiaries of the Company entered into a $250.0 million Senior Secured Term Loan Credit Agreement (as amended, the “Senior Secured Term Loan”). The Company is required to make quarterly principal payments of 2.0% per annum of the initial principal balance, commencing on January 15, 2020, with final payment due at maturity on May 7, 2024.

The Senior Secured Term Loan will bear interest at a variable rate per annum equal to the applicable LIBOR rate, subject to a 2.0% floor, plus 8.25%.

The Senior Secured Term Loan is not subject to financial covenants but is subject to certain non-financial covenants, including but not limited to reporting, insurance, notice and collateral maintenance covenants as well as limitations on the incurrence of indebtedness, permitted investments, liens on assets, dispositions of assets, paying dividends, transactions with affiliates, mergers and consolidations.

The Senior Secured Term Loan requires mandatory prepayments upon certain dispositions of property or issuance of other indebtedness, as defined, and quarterly a percentage of excess cash flow, if any, equal to 25% to 100% (depending on total debt outstanding) commencing in September 2019. Certain mandatory prepayments (excluding excess cash flows sweep) and optional prepayments are subject to a yield maintenance fee for the first two years and prepayment premium of 2% in year three and 1% in year four. Upon the final payment and termination of the Senior Secured Term Loan, the Borrower is subject to an exit fee equal to 2.0% of the principal amount of loans then outstanding and the aggregate optional prepayment of principal amounts repaid during the 120 days that occurred prior to such final payment.

Proceeds from the Senior Secured Term Loan were used to repay the outstanding balances of the First Lien Credit Facility, Second Lien Term Loan, and certain equipment financings, fund a cash account reserved solely for future expansion capital expenditures, and pay associated fees and expenses. The First Lien Credit Facility and Second Lien Term Loan were both terminated and accounted for as debt extinguishments which resulted in a $6.5 million loss on early repayment of debt, and write off of $1.7 million of unamortized debt issue costs related to the First Lien Credit Facility and write off of $4.3 million of unamortized original issue discount and debt issuance costs related to the Second Lien Term Loan, all of which were presented as part of loss on extinguishment of debt in the condensed consolidated statement of operations.

The Senior Secured Term Loan was issued at a $5.0 million discount and the Company incurred $5.8 million in debt issuance costs with both amounts recorded as a direct deduction to the face amount of the Senior Secured Term Loan. The debt issuance costs and debt discount related to the Senior Secured Term Loan are being amortized to interest expense based on the effective interest rate method over the term of the Senior Secured Term Loan.

As of June 30, 2019, the outstanding principal balance of the Senior Secured Term Loan was $250.0 million, of which $3.8 million was due within one year from the balance sheet date.

ABL Credit Facility

On May 7, 2019, the Company entered into a $75.0 million ABL Credit Agreement (the “ABL Credit Facility”) which matures on February 6, 2024. The ABL Credit Facility is subject to a borrowing base which is calculated based on a formula referencing the Loan Parties’ eligible accounts receivables. Borrowings under the ABL Credit Facility bear interest at LIBOR, plus an applicable LIBOR rate margin of 1.5% to 2.0% or base rate margin of 0.5% to 1.0% as defined in the ABL Credit Facility. The unused portion of the ABL Credit Facility is subject to an unused commitment fee of 0.250% to 0.375%.

All borrowings under the ABL Credit Facility are subject to the satisfaction of customary conditions, including the absence of a default and the accuracy of representations and warranties and certifications regarding sales of certain inventory, and to a borrowing base (described above). In addition, the ABL Credit Facility includes a consolidated fixed charge coverage ratio of 1.00 to 1.00 but only when a financial covenant trigger period is in effect as defined in the ABL Credit Agreement. Borrowings under the ABL Credit Facility are fully and unconditionally guaranteed jointly and severally by the Loan Parties, other than future unrestricted subsidiaries.

In connection with the ABL Credit Facility, the Company incurred $1.2 million in debt issuance costs, recorded as deferred financing costs, net in the condensed consolidated balance sheet. Debt issuance costs related to the ABL Credit Facility are being amortized to interest expense ratably over the term of the ABL Credit Facility.

As of June 30, 2019, the borrowing base was $75.0 million and the outstanding revolver loan balance was $40.0 million, classified as long-term debt in the condensed consolidated balance sheets.

Equipment Financing

From 2016 through 2019, the Company entered into security agreements with financing institutions for the purchase ~~24,000,000~~of certain fracturing equipment. As of June 30, 2019 and December 31, 2018, these financing agreements with maturities through 2023 had a total balance of $23.5 million and $11.6 million, respectively, of which $10.2 million and $3.3 million, respectively, was due within one year.

The weighted average interest rate for these agreements was 6.5% and 6.3% per annum as of June 30, 2019 and December 31, 2018, respectively.

Payments of Debt Obligations due by Period

Presented in the following table is a schedule of the repayment requirements of long-term debt as of June 30, 2019 (in thousands):

	Principal Amount
	of Long-term Debt
Remainder of 2019	$	20,555
2020		17,416
2021		10,594
2022		9,157
2023		5,749
Thereafter		268,750
Total	$	332,221

NOTE 10 – MEZZANINE EQUITY

Series A Convertible Redeemable Preferred Stock

The Company is authorized to issue up to 10,000,000 shares of ~~common stock. These~~preferred stock, par value $0.0001 per share. On May 23, 2019, the Company entered into a Purchase Agreement with certain institutional investors (collectively, the “Purchasers”) to issue and sell in a private placement 55,000 shares ~~were excluded from~~of newly created series of convertible redeemable preferred stock of the ~~calculation~~Company (“Series A preferred stock”), for an aggregate purchase price of ~~diluted income (loss)~~$1,000 per ~~common~~ share, ~~because their inclusion would have been antidilutive. An aggregate~~for total gross proceeds of ~~31,132,810~~$55.0 million.

At the initial closing on May 24, 2019 (“Closing Date”), the Purchasers purchased all of the Series A preferred stock and 2,933,333 initial warrants exercisable for shares of Class A common stock. Subject to there being Series A preferred stock outstanding, the Company will issue an additional 4,399,992 warrants to the Purchasers in quarterly installments of 488,888 warrants beginning nine months after the Closing Date. Crestview III USWS, L.P. and Crestview III USWS TE, LLC, two of the Purchasers, are part of an affiliate group which, prior to the Closing Date, held an aggregate 29.80% ownership interest in the Company and is entitled to designate for nomination by the Company for election two directors to serve on the Company’s Board of Directors.

Holders of shares of Series A preferred stock are entitled to receive cumulative dividends, compounding and accruing quarterly in arrears, from the Closing Date until the second anniversary of the Closing Date, at an annual rate of 12.0%, and thereafter, 16% of the stated value of $ 1,000 per share, subject to ~~possible redemption~~increase in connection with the payment of dividends in kind. Dividends are payable, at ~~September 30, 2017 have been excluded~~the Company’s option, in cash from legally available funds or in kind by increasing the calculation of basic income (loss) per common share since such shares, if redeemed, only participate in their pro rata share of earnings from the Trust Account. Due to a loss during the period ended September 30, 2016, diluted loss per common share is the same as basic loss per common share. At September 30, 2016, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company under the treasury stock method.

~~Concentration of Credit Risk~~

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal depository insurance coverage of $250,000. The Company had not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

~~Financial Instruments~~

~~The fair~~stated value of the ~~Company’s assets~~outstanding Series A preferred stock by the amount per share of the dividend on February 24, May 24, August 24, and ~~liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheets.~~

~~Use~~November 24 of ~~Estimates~~each year, commencing on August 24, 2019.

The ~~preparation of~~Series A preferred stock is redeemable by the ~~balance sheets in conformity with GAAP requires~~Company at any time for cash equal to the ~~Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at~~stated value per share on the date of redemption. Except for a redemption occurring prior to the ~~financial statements~~nine-month anniversary of the Closing Date, in which case the redemption price shall be $1,092.73 per share. If the Company notifies the holders that it has elected to redeem the Series A preferred stock, the holder may instead elect to convert such shares into Class A common stock. If the Company funds the redemption with proceeds of an equity offering within one year of the Closing Date, then any converting shares will convert at a ratio that is based on the higher of the price to the public in the offering or the ordinary conversion price of $6.67. Otherwise, such converting shares will convert by reference to the ordinary conversion price. In any event, the Series A preferred stock converting in response to a redemption notice will net settle for a combination of cash and ~~the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.~~Class A common stock.

~~Offering Costs~~

~~The Company complies with~~Following the requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — “Expenses of Offering.” Offering costs were $16,824,469 (including an underwriting fee of $6,000,000 and deferred underwriting commissions of $10,250,000), consisting principally of costs incurred in connection with formation and preparation for the Public Offering. These offering costs were charged to additional paid in capital upon closingfirst anniversary of the ~~Public Offering on March 15, 2017.~~

~~Redeemable Class~~Closing Date, each holder of Series A ~~Common Stock~~

~~As discussed in Note 1,~~preferred stock may convert all or any portion of ~~the 32,500,000~~its shares of Series A preferred stock into Class A common stock ~~sold~~based on the then-applicable liquidation preference at a conversion price of $6.67, subject to anti-dilution adjustments, at any time, but not more than once per quarter, so long as ~~parts~~any conversion is for at least $1.0 million.

The Company has the option to force a conversion of any then outstanding Series A preferred stock following the third anniversary of the ~~Units in~~Closing Date, and contingent upon (i) the Public Offering contain a redemption feature which allows for the redemption of Class A common stock under the Company’s Liquidation or Tender Offer/Stockholder Approval provisions. In accordance with FASB ASC 480, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of FASB ASC 480. Although the Company has not specified a maximum redemption threshold, its amended and restated certificate of incorporation provides that in no event will the Company redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001.

The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of the security to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable Class A common stock shall be affected by charges against additional paid in capital. Accordingly, at September 30, 2017, 31,132,810 of the 32,500,000 shares of Class A common stock included in the Units were classified outside of permanent equity at its redemption value. There were no shares of Class A common stock outstanding at December 31, 2016.

~~Income Taxes~~

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of September 30, 2017. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties at September 30, 2017. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. At September 30, 2017 and December 31, 2016, the Company had no material deferred tax assets.

~~Marketable Securities Held in Trust Account~~

The amounts held in the Trust Account represent proceeds from the Public Offering and the Private Placement of $325,000,000 which were invested in a money market instrument that invests in United States treasury obligations with original maturities of six months or less and can only be used by the Company in connection with the consummation of an Initial Business Combination.

~~Recent Accounting Pronouncements~~

~~Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.~~

~~Note 3 — Public Offering~~

Pursuant to the Public Offering, the Company sold 32,500,000 Units, including a partial exercise of the Underwriter’s over-allotment option of 2,500,000 Units. The Units were sold at an offering price of $10 per Unit, generating gross proceeds of $325,000,000. As a result of the Underwriter’s partial exercise of the over-allotment option, the Sponsor forfeited 500,000 shares of Class F common stock (see Note 4).

Each Unit consists of one share of the Company’s Class A common stock, $0.0001 par value per share, and one warrant (“Warrant”). Each Warrant entitles the holder to purchase one-half of one share of Class A common stock at an exercise price of $5.75 per half share ($11.50 per whole share). Each Warrant will become exercisable on the later of 30 days after the completion of the Company’s Initial Business Combination or 12 months from the closing of the Public Offering and will expire five years after the completion of the Company’s Initial Business Combination or earlier upon redemption or liquidation. Once the Warrants become exercisable, the Company may redeem the outstanding warrants in whole and not in part at a price of $0.01 per Warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if the last sale price of the Company’s Class A common stock ~~equals or exceeds $24.00 per share~~being greater than 130% of the Conversion Price for ~~any~~ 20 trading days ~~within a 30-trading~~during any 30-day consecutive trading day period, ~~ending on~~(ii) the ~~third~~average daily trading ~~day prior to the date on which the Company sent the notice of redemption to the Warrant holders.~~

~~Note 4 — Related Party Transactions~~

~~Private Placement Warrants~~

Simultaneously with the Public Offering, the Sponsor and the Underwriter purchased an aggregate of 15,500,000 Private Placement Warrants (14,500,000 Private Placement Warrants by the Sponsor and 1,000,000 Private Placement Warrants by the Underwriter) at a price of $0.50 per Private Placement Warrant, generating total proceeds of $7,750,000. Each Private Placement Warrant is exercisable for one-half of one sharevolume of the ~~Company’s~~ Class A common stock ~~at a price of $5.75 per half share ($11.50 per whole share). A portion~~exceeding 250,000 for 20 trading days and (iii) the Company having an effective registration statement on file with the Securities and Exchange Commission (“SEC”) covering resales of the purchase price of the Private Placement Warrants was added to the proceeds from the Public Offering held in the Trust Account pending completion of the Initial Business Combination such that at the closing of the Public Offering $325 million was held in the Trust Account. If the Initial Business Combination is not completed within the Combination Period, then the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants issued to the Sponsor and the Underwriter will expire worthless.

The Private Placement Warrants are not transferrable, assignable or salable until 30 days after the completion of the Initial Business Combination and the Private Placement Warrants are non-redeemable so long as they are held by the Sponsor, the Underwriter or their permitted transferees. The Private Placement Warrants may be exercised for cash or on a cashless basis. If the Private Placement Warrants are held by someone other than the Sponsor, the Underwriter or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by holders on the same basis as the Warrants underlying the Units issued in the Public Offering. In addition, for as long as the Private Placement Warrants are held by the Sponsor or the Underwriter or its designees or affiliates, they may not be exercised after March 9, 2022. Otherwise, the Private Placement Warrants have terms and provisions that are identical to the Warrants underlying the Units issued in the Public Offering including as to exercise price, exercisability and exercise period.

~~Founder Shares~~

On March 31, 2016, the Sponsor purchased 7,187,500 shares (the “Founder Shares”) of the Company’s Class F common stock, $0.0001 par value, for $25,000 or $0.004 per share. In May 2016, the Company effectuated a 1.2-for-1 stock split in the form of a dividend, resulting in an aggregate of 8,625,000 Founder Shares outstanding, including an aggregate of up to 1,125,000 shares subject to forfeiture by the Sponsor to the extent that the Underwriter’s over-allotment was not exercised in full, so that the Sponsor would collectively own 20% of the Company’s issued and outstanding shares after the Public Offering. As a result of the Underwriter’s election toexercise its over-allotment option to purchase 2,500,000 Units on March 15, 2017 and waiver of the remainder of its over-allotment option, 625,000 Founder Shares were no longer subject to forfeiture and 500,000 Founder Shares were forfeited.~~As used herein, unless the context otherwise requires, “Founder Shares” shall be deemed to include the shares of~~ Class A common stock ~~issuable~~to be received upon such conversion.

In connection with the Series A preferred stock offering, there were 55,000 shares of Series A preferred stock and 2,933,333 warrants outstanding as of June 30, 2019. The Series A preferred stock was recorded as Mezzanine Equity, net of issuance cost, on the condensed consolidated balance sheets because it has redemption features upon certain triggering events that are outside the Company’s control, such as change in control.

The Company has determined that the warrants should be accounted as a component of stockholders’ equity. On the Closing Date, the Company estimated the fair value of the warrants at $12.8 million using the Black-Scholes option pricing model using the following primary assumptions: contractual term of 6.5 years, volatility rate of 53.0%, risk-free interest rate of 2.2% and expected dividend rate of 0%. Based on the warrant’s relative fair value to the fair value of the Series A preferred stock, approximately $10.8 million of the $12.8 million of aggregate value was allocated to the warrants, creating a corresponding preferred stock discount in the same amount.

Due to the reduction of allocated proceeds to Series A preferred stock, the effective conversion ~~thereof.~~ price was approximately $5.40 per share creating a beneficial conversion feature of $20.1 million which further reduced the carrying value of the Series A preferred stock. Since the Holders’ conversion option of the Series A preferred stock could only be exercisable after the first anniversary of the Closing Date, the discount resulting from the beneficial conversion feature will be accreted over one year as deemed preferred dividends using the effective yield method, resulting in a corresponding increase in the carrying value of the Series A preferred stock over the same time period.

The ~~Founder~~ Series A preferred stock had similar characteristics of an “Increasing Rate Security” as described by SEC Staff Accounting Bulletin Topic 5Q, Increasing Rate Preferred Stock. As a result, the discount on Series A preferred stock is considered an unstated dividend cost that is amortized over the period preceding commencement of the perpetual dividend using the effective interest method, by charging imputed dividend cost against retained earnings, or additional paid in capital in the absence of retained earnings, and increasing the carrying amount of the Series A preferred stock by a corresponding amount. The discount is therefore being amortized over two years using the effective yield method. The amortization in each period is the amount which, together with the stated dividend in the period, results in a constant rate of effective cost with regard to the carrying amount of the Series A preferred stock.

NOTE 11 – STOCKHOLDERS’ EQUITY

Shares Authorized and Outstanding

Preferred Stock

At the Closing Date and pursuant to the Purchase Agreement, as defined in “Note 10 – Mezzanine Equity” in the Notes to the Condensed Consolidated Financial Statements, the Company adopted and filed with the Secretary of State of the State of Delaware the Certificate of Designations of the Company as an amendment to the Company’s Second Amended and Restated Certificate of Incorporation (as amended, the “Charter”) to authorize and establish the rights, preferences and privileges of the preferred shares. The preferred shares are ~~identical~~a new class of equity interests that rank senior to the Class A common stock ~~included~~and Class B common stock in the ~~Units sold in~~Company with respect to distributions. The preferred shares will have only specified voting rights, including with respect to the ~~Public Offering except~~issuance or creation of senior securities, amendments to the Charter that negatively impact the ~~Founder Shares automatically convert into~~rights of the preferred shares and the payment of dividends on, repurchase or redemption of Class A common ~~stock at the time of the Company’s Initial Business Combination and are subject to certain transfer restrictions, as described in more detail below.~~Holders of the Class F common stock and holders of the Class A common stock will vote together as a single class on all matters submitted to a vote of the Company’s stockholders, except as required by law.stock.

The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier of (i) one year after the completion of the Initial Business Combination; and (ii) the date on which the Company consummates a liquidation, merger, capital stock exchange, reorganization, or other similar transaction after the Initial Business Combination that results in all the Company’s public stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, if the last sale price of the Company’s Public Shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 trading-day period commencing at least 150 days after the Initial Business Combination, the Founder Shares will be released from the lock up.

~~Registration Rights~~

The holders of Founder Shares, Private Placement Warrants and Warrants that may be issued upon conversion of working capital loans (and any shares of common stock issuable upon the exercise of the Private Placement Warrants or Warrants issued upon conversion of the working capital loans) are entitled to registration rights pursuant to a registration rights agreement. These holders are entitled to make up to three demands, excluding short form registration demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have “piggy back” registration rights to include their securities in other registration statements filed by the Company. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock up period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

~~Related Party Transactions~~

Prior to the closing of the Public Offering, the Sponsor had made $275,000 in loans and advances to the Company. The loans and advances were non-interest bearing, unsecured and due on the earlier of June 30, 2017 or the closing of the Public Offering. The loans and advances of $275,000 were fully repaid upon the consummation of the Public Offering on March 15, 2017.

~~The Company has a due to affiliate balance of $71,034 as of September 30, 2017 for expenses paid by the Sponsor and its affiliate on behalf of the Company.~~

~~Note 5 — Investments and Cash Held in Trust Account~~

Upon the closing of the Public Offering and the Private Placement, $325,000,000 was placed in the Trust Account. At September 30, 2017, the Company’s Trust Account consisted of $98,086 of cash and $325,731,357 in investment securities, with investment securities consisting only of money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, which invest only in direct U.S. government obligations. Such investment securities are carried at cost, which approximates fair value.

~~Note 6 — Fair Value Measurements~~

The following table presents information about the Company’s assets that are measured on a recurring basis as of September 30, 2017 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability.

September 30, 2017 Quoted
Prices
in Active
Markets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Other
Unobservable
Inputs
(Level 3)
Investments in money market fund held in Trust Account $ 325,731,357 $ 325,731,357 $ - $ -
Total $ 325,731,357 $ 325,731,357 $ - $ -

~~Note 7 — Deferred Underwriting Commissions~~

The Underwriter was paid a cash underwriting fee of two percent (2.0%) of the gross proceeds of the Public Offering, excluding any amounts raised pursuant to the overallotment option, or $6,000,000. In addition, the Underwriter is entitled to aggregate deferred underwriting commissions of $10,250,000 consisting of (i) three percent (3.0%) of the gross proceeds of the Public Offering, excluding any amounts raised pursuant to the overallotment option, and (ii) five percent (5.0%) of the gross proceeds of the Units sold in the Public Offering pursuant to the overallotment option. The deferred underwriting commissions will become payable to the Underwriter from the amounts held in the Trust Account solely in the event that the Company completes the Initial Business Combination, subject to the terms of the underwriting agreement.

~~Note 8 — Stockholders’ Equity~~

~~Preferred Stock~~ — The Company is authorized to issue ~~1,000,000~~10,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors. At ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016,~~2018, there were 55,000 and no shares, respectively, of preferred stock issued orand outstanding.

Class A Common Stock —

The Company is authorized to issue ~~90,000,000~~400,000,000 shares of Class A common stock with a par value of $0.0001 per ~~share~~share. At June 30, 2019 and ~~10,000,000~~December 31, 2018, there were 54,607,462 and 49,254,760 shares of Class FA common stock issued and outstanding, respectively. At June 30, 2019, 1,000,000 outstanding shares of Class A common stock were subject to cancellation on November 9,

2024, unless the closing price per share of the Class A Common Stock has equaled or exceeded $12.00 for any 20 trading days within any 30-trading day period, and 609,677 outstanding shares of Class A common stock were subject to the same cancellation provision, but at a closing price per share of $13.50.

Class B Common Stock

The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. IfThe shares of Class B common stock are non-economic; however, holders are entitled to one vote per share. Each share of Class B common stock, together with one unit of USWS Holdings, is exchangeable for one share of Class A common stock or, at the ~~Company enters into~~Company’s election, the cash equivalent to the market value of one share of Class A common stock.

In June of 2019, 161,932 shares of Class B common stock were converted to an ~~Initial Business Combination, it may (depending on the terms of such a business combination) be required to increase the~~equivalent number of shares of Class A common stock. As of June 30, 2019 and December 31, 2018, there were 13,775,400 and 13,937,332 shares, respectively, of Class B common stock ~~which the Company is authorized to issue at the same time as the Company’s stockholders vote on the business combination~~issued and outstanding.

Warrants

Prior to the ~~extent the Company seeks stockholder approval in connection with the Initial Business Combination. Holders~~Transaction, 32,500,000 warrants were issued pursuant to our initial public offering and 15,500,000 warrants were sold simultaneously to Matlin & Partners Acquisition Sponsor, LLC (the “Sponsor”) and Cantor Fitzgerald (the “Underwriter”). Each warrant entitles its holder to purchase one half of ~~the Company’s common stock are entitled to~~ one ~~vote for each common share. At September 30, 2017, there were 32,500,000 shares~~share of Class A common stock ~~(of which 31,132,810 were classified outside~~at an exercise price of ~~permanent equity) and 8,125,000~~$5.75 per half share, to be exercised only for a whole number of shares of ~~Class F common stock issued and outstanding. At December 31, 2016, there were no shares of~~our Class A common ~~stock issued and outstanding and 8,625,000 shares of Class F common stock were issued and outstanding.~~stock. The Founder Shares are identical to the Class A Common Stock included in the Units sold in the Public Offering except that the Founder Shares automatically convert into shares of Class A Common Stock at the time of the Initial Business Combination.

~~Warrants~~ ~~—Warrants will become~~warrants became exercisable ~~on the later of (a)~~ 30 days after the completion of ~~a Business Combination or (b) 12 months from~~ the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the issuance of the shares of common stock issuable upon exercise of the warrantsTransaction and a current prospectus relating to them is available. The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of an Initial Business Combination, the Company will use its best efforts to file with the SEC and within 60 business days after the closing of an Initial Business Combination, have an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. Notwithstanding the foregoing, if the Company’s Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under the Securities Act, the Company, at its option, may require the warrant holders who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement. The warrants will expire five years after ~~the completion of an Initial Business Combination~~that date or earlier upon redemption or liquidation.

~~The~~ Once the warrants became exercisable, the Company may redeem the outstanding warrants ~~(except with respect to the Private Placement Warrants): (i) in whole and not in part; (ii)~~ at a price of $0.01 per ~~warrant; (iii)~~warrant upon a minimum of 30 days’ prior written notice of redemption, ~~which we refer to as the 30-day redemption period; and (iv) if, and only~~ if the last ~~reported~~ sale price of ~~our Class A~~the Company’s common stock equals or exceeds $24.00 per share ~~(as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like)~~ for any 20 trading days within a 30-trading day period ending on the third ~~trading~~business day ~~prior to the date on which~~before the Company ~~send~~sends the notice of redemption to the warrant holders. The private placement warrants, ~~holders.~~however, are nonredeemable so long as they are held by the Sponsor, the Underwriter or their permitted transferees.

IfIn March 2019, the Company ~~calls the~~entered into privately negotiated warrant exchange agreements with certain warrant holders to exchange 10,864,391 public warrants for ~~redemption, management will have~~Class A common stock at a ratio of 0.13 Class A common shares per warrant. In April 2019, pursuant to a previously announced public warrant exchange offer on March 14, 2019, the ~~option~~Company exchanged an additional 11,640,974 public warrants for Class A common stock at a ratio of 0.13 Class A common shares per warrant. As a result of the private and public warrant exchanges, our Class A common shares issued and outstanding increased by 2,925,712 shares. In May 2019, in connection with the Purchase Agreement, as defined in “Note 10 – Mezzanine Equity” in the Notes to ~~require all holders that wish to exercise~~ the Condensed Consolidated Financial Statements, the Company issued 2,933,333 initial warrants to ~~do so on a “cashless basis”. The exercise price~~certain institutional investors and ~~number~~will issue the remaining 4,399,992 warrants to them in quarterly installments beginning nine months after the initial closing date.

As of June 30, 2019, there remained 9,994,635 public warrants and 15,500,000 private placement warrants outstanding, the total of both are exercisable for 12,747,318 shares of common stock ~~issuable upon~~and 2,933,333 initial warrants issued pursuant to the Series A preferred equity Purchase Agreement as disclosed in “Note 10 – Mezzanine Equity” outstanding, which are exercisable for 2,933,333 shares of common stock.

Noncontrolling Interest

The Company’s noncontrolling ownership interest in consolidated subsidiaries is presented in the condensed consolidated balance sheet within shareholders’ equity as a separate component and represents approximately 20.1% ownership of USWS Holdings as of June 30, 2019.

Long-Term Incentive Plan

In connection with the Transaction, the Company’s Board of Directors adopted the U.S. Well Services, Inc. 2018 Long Term Incentive Plan (the “LTIP”). An aggregate 8,160,500 shares of Class A common stock were initially available for issuance under the LTIP. Shares issued under the LTIP are further discussed in “Note 13 - Share-Based Compensation” in the Notes to Condensed Consolidated Financial Statements. The aggregate amount of shares available for issuance as of June 30, 2019 was 4,297,280.

NOTE 12 – EARNINGS (LOSS) PER SHARE

Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed in the same manner as basic earnings per share except that the denominator is increased to include the number of additional common shares that could have been outstanding assuming the exercise of stock options, exercise of warrants, conversion of Series A preferred shares, conversion of Class B shares and vesting of restricted shares.

Basic and diluted net income per share excludes the ~~warrants~~income attributable to and shares associated with the 1,609,677 Class A shares that are subject to cancellation on November 9, 2024 if certain market conditions have not been met. The Company included in the calculation deemed dividends resulting from amortization of discounts related to the Series A preferred stock.

The following table sets forth the calculation of basic and diluted earnings per share for the periods indicated based on the weighted average number of common shares outstanding for the period subsequent to the corporate reorganization that occurred in connection with the Transaction (in thousands, except share and per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Basic Net Income Per Share
Numerator:
Net loss attributable to U.S. Well Services, Inc.	$	(21,479	)	$	(937	)	$	(43,751	)	$	(8,029	)
Net loss attributable to cancellable Class A shares		672			30			1,402			261
Basic net loss attributable to U.S. Well Services, Inc. shareholders		(20,807	)		(907	)		(42,349	)		(7,768	)
Dividends accrued on Series A preferred stock		(660	)		-			(660	)		-
Deemed and imputed dividends on Series A preferred stock		(1,560	)		-			(1,560	)		-
Basic net loss attributable to U.S. Well Services, Inc. common shareholders	$	(23,027	)	$	(907	)	$	(44,569	)	$	(7,768	)

Denominator:
Weighted average shares outstanding		51,455,923			49,549,676			50,240,247			49,549,676
Cancellable Class A shares		(1,609,677	)		(1,609,677	)		(1,609,677	)		(1,609,677	)
Basic and diluted weighted average shares outstanding		49,846,246			47,939,999			48,630,570			47,939,999
Basic and dilutive net income per share attributable to Class A shareholders	$	(0.46	)	$	(0.02	)	$	(0.92	)	$	(0.16	)

A summary of securities excluded from the computation of diluted earnings per share is presented below for the applicable periods:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Dilutive earnings per share:
Anti-dilutive stock options		1,068,162		-		1,068,162		-
Anti-dilutive warrants		15,680,651		-		15,680,651
Anti-dilutive restricted stock		2,748,179		-		2,748,179		-
Anti-dilutive Class B shares convertible into Class A common stock		13,775,400		-		13,775,400		-
Anti-dilutive Series A Preferred stock convertible into Class A common stock		8,344,828		-		8,344,828		-
Potentially dilutive securities excluded as anti-dilutive		41,617,220		-		41,617,220		-

NOTE 13 – SHARE-BASED COMPENSATION

Restricted Stock

The Company granted a total of 2,218,179 shares of restricted stock to certain employees of the Company pursuant to the Company’s LTIP during the first quarter of 2019. Restricted stock is subject to restrictions on transfer and is generally subject to a risk of forfeiture if the award recipient is no longer an employee of the Company prior to the lapse of the restriction. Stock-based compensation costs totaling $19.7 million associated with this award will be recognized over the four-year vesting period.

Rollforward of restricted stock awards as of June 30, 2019 is as follows:

			Weighted- average
	Unvested		grant-date fair value
Units at beginning of period		530,000	$	8.72
Granted		2,218,179		8.91
Vested		-		-
Forfeited		-		-
Units at end of period		2,748,179	$	8.87

Unrestricted stock

The Company also granted 46,879 shares of unrestricted Class A common stock during the first quarter of 2019 to certain board members in exchange for their services as a board member to the Company. These shares are fully vested and the weighted-average grant-date fair value per share is $8.91. Stock-based compensation cost amounting to $0.4 million associated with this award will be recognized over the one-year requisite service period.

The fair value of the restricted and unrestricted stock granted during the first quarter of 2019 was determined using the closing price of the Company’s Class A common stock on the grant date.

Stock Options

The Company granted a total of 1,068,162 stock options to certain employees of the Company pursuant to the Company’s LTIP during the first quarter of 2019. The fair value of stock options on the date of grant was $3.95 per option, which was calculated using the Black-Scholes valuation model. These stock options were granted with seven-year terms and vest over four years in equal installments each year on the anniversary of the grant date. The expected term of the options granted was based on the safe harbor rule of the SEC Staff Accounting Bulletin No. 107 “Share-Based Payment” as the Company lacks historical exercise data to estimate the expected term of these options. The expected stock price volatility is calculated based on the Company’s peer group because the Company does not have sufficient historical data and will continue to use peer group volatility information until historical volatility of the Company is available to measure expected volatility for future grants. The exercise price for stock options granted equals the closing market price of the underlying stock on the date of grant. These options are time-based and are not based upon attainment of performance goals. Stock based compensation costs totaling $4.2 million associated with this award will be recognized over the four-year vesting period.

The following table sets forth the assumptions used in the Black-Scholes valuation model:

Expected option term (years)	4.75 years
Expected price volatility		49.0	%
Expected dividend yield		0.0	%
Risk-free Rate		2.63	%
Grant date fair value per share	$	3.95
Grant date exercise price per share	$	8.91

For the three months ended June 30, 2019, stock-based compensation expense of $2.3 million related to restricted and unrestricted stock grants and stock option grants was recorded, of which $0.8 million is presented as part of cost of services, and $1.5 million presented as part of selling, general, and administrative expenses in the condensed consolidated statement of operations.

For the six months ended June 30, 2019, stock-based compensation expense of $3.4 million related to restricted and unrestricted stock grants and stock option grants was recorded, of which $1.1 million is presented as part of cost of services, and $2.3 million presented as part of selling, general, and administrative expenses in the condensed consolidated statement of operations.

As of June 30, 2019, total unrecognized compensation cost related to stock-based compensation grants under the LTIP was $25.2 million. We expect to recognize these costs over a weighted average period of 3.8 years.

NOTE 14 – EMPLOYEE BENEFIT PLAN

In 2013, the Company established the U.S. Well Services 401(k) Plan. The Company matches 100% of employee contributions up to 6% of the employee’s salary, subject to cliff vesting after two years of service. For the three months ended June 30, 2019 and 2018, matching contributions were $1.6 million and $0.9 million, respectively. For the six months ended June 30, 2019 and 2018, matching contributions were $2.7 million and $1.6 million, respectively. The matching contributions were included in cost of services and selling, general and administrative expenses in the condensed consolidated statement of operations.

NOTE 15 – INCOME TAXES

Prior to the completion of the Transaction, the Company was a limited liability company and was taxed as a partnership for federal and certain state income tax purposes. As such, the results of operations were allocated to the members for inclusion in their income tax returns and therefore no provision or benefit for federal or certain state income taxes were included in our financial statements prior to the completion of the Transaction.

The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions and is subject to examination by the taxing authorities.

The Company’s effective tax rate on continuing operations for the six months ended June 30, 2019 was (0.78)%. The difference between the effective tax rate and the U.S. federal statutory rate is due to state taxes, flow-through income not subject to tax, and a valuation allowance.

We follow guidance issued by the Financial Accounting Standards Board (“FASB”) in accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement.

We have considered our exposure under the standard at both the federal and state tax levels. We did not record any liabilities for uncertain tax positions as of June 30, 2019 or December 31, 2018. We record income tax-related interest and penalties, if any, as a component of income tax expense. We did not incur any material interest or penalties on income taxes.

After consideration of all of the information available, management determined that a valuation allowance was appropriate, as it is not more likely than not that the Company will not utilize its net deferred tax assets.

On December 22, 2017, the Tax Cuts and Jobs Act was signed into legislation. As part of the legislation, the U.S. corporate income tax rate was reduced to 21%. Since the Company was previously a flow-through entity, no deferred tax expense was recorded as a result of the reduced tax rate.

NOTE 16 – COMMITMENTS AND CONTINGENCIES

Litigation

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

Sand Purchase Agreements

The Company entered into agreements for the supply of proppant for use in its hydraulic fracturing operations. Under the terms of these agreements, the Company is subject to minimum purchase quantities on a monthly, quarterly, or annual basis at fixed prices or may ~~be adjusted in certain circumstances including~~pay penalties in the event of any shortfall. As of June 30, 2019, we estimated and accrued for a ~~stock dividend, or recapitalization, reorganization, merger or consolidation. However,~~shortfall in quantities. This accrual is presented as part of accrued liabilities on the ~~warrants will not~~condensed consolidated balance sheets.

The following is a schedule of the contracted volumes in dollars and minimum commitments under the proppant supply purchase agreements as of June 30, 2019 (in thousands):

			Minimum
	Contracted		Commitments
Remainder of 2019	$	39,957	$	10,324
2020		38,758		6,998
2021		25,290		2,448
Total	$	104,005	$	19,770

The minimum commitments represent the aggregate amounts that we would be ~~adjusted~~obligated to pay in the event that we procured no additional proppant under the contracts subsequent to June 30, 2019.

During the first quarter of 2019, we were involved in a contract dispute with a proppant vendor resulting in the cancellation of the contract. Accordingly, as of June 30, 2019, we have excluded $47.1 million and $48.0 million of contracted and minimum commitments, respectively, related to this contract. The litigation involving the contract in dispute is its early stages, as such no prediction can be made as to the outcome.

Operating Lease Agreements

The Company has various operating leases for ~~issuance~~facilities with terms ranging from 24 to 76 months.

Rent expense for the three months ended June 30, 2019 and 2018 was $0.7 million and $0.5 million, respectively, of ~~common stock at~~which $0.6 million and $0.4 million, respectively, are recorded as part of cost of services and $0.1 million, $0.1 million, respectively, are recorded as part of selling, general and administrative expenses in the condensed consolidated statements of operations.

Rent expense for the six months ended June 30, 2019 and 2018 was $1.3 million and $1.0 million, respectively, of which $1.1 million and $0.9 million, respectively, are recorded as part of cost of services and $0.2 million, $0.1 million, respectively, are recorded as part of selling, general and administrative expenses in the condensed consolidated statements of operations.

The following is a ~~price below its exercise price. Additionally,~~ schedule of minimum future payments on non-cancellable operating leases as of June 30, 2019 (in ~~no event will~~thousands):

	Gross Amount		Income from Sublease			Net
Remainder of 2019	$	952	$	(85	)	$	867
2020		1,283		(173	)		1,110
2021		651		(178	)		473
2022		476		(182	)		294
2023		288		(31	)		257
Thereafter		325		-			325
Total minimum future rentals, net	$	3,975	$	(649	)	$	3,326

On April 30, 2019, we entered into an agreement with a sublessee to sublease our old corporate office space. The term of the lease is for a period of 46 months commencing on May 1, 2019, with total rent throughout the term totaling $0.6 million. The monthly base rent is subject to escalation clause that is nominal in amount. The Company records rent income on a straight line basis, presented as other income on the condensed consolidated statements of operations.

Self-insurance

Beginning June 2014, the Company ~~be required~~established a self-insured plan for employees’ healthcare benefits except for losses in excess of varying threshold amounts. The Company charges to ~~net cash settle~~expense all actual claims made during each reporting period, as well as an estimate of claims incurred, but not yet reported. The amount of estimated claims incurred, but not reported was $0.4 million and $0.3 million as of June 30, 2019 and December 31, 2018, respectively, and was reported as accrued expenses in the ~~warrants. If~~condensed consolidated balance sheets. We believe that the liabilities we have recorded are appropriate based on the known facts and circumstances and do not expect further losses materially in excess of the amounts already accrued for existing claims.

NOTE 17 – RELATED PARTY TRANSACTIONS

During the three and six months ended June 30, 2019, the Company purchased $2.8 million and $4.7 million, respectively, in chemicals used for our hydraulic fracturing operations from Rockwater Energy Solutions (“Rockwater”), a subsidiary of Select Energy Services (“Select Energy”). Rockwater is ~~unable to complete an Initial Business Combination within~~considered a related party post-Transaction since following the ~~Combination Period~~Transaction Select Energy and the Company ~~liquidates~~share two board members and a common investor, Crestview Partners (“Crestview”). As of June 30, 2019 and December 31, 2018, the ~~funds held~~Company had $2.3 million and $0.3 million, respectively, in accounts payable owed to Rockwater.

Crestview purchased 20,000 shares of Series A preferred stock for a total payment of $20.0 million. Along with the Series A preferred stock, Crestview received 1,066,666 initial warrants and the right to receive up to 1,600,002 additional warrants according to the Purchase Agreement as described in “Note 10 – Mezzanine Equity” in the ~~Trust Account, holders of warrants will not receive any of such funds with respect~~Notes to ~~their warrants, nor will they receive any distribution from~~ the ~~Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.~~Condensed Consolidated Financial Statements.

~~Item 2.~~ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~

~~References to the "Company," "us," “our” or "we" refer Matlin & Partners Acquisition Corporation.~~ The following management discussion and analysis ("MD&A") of ~~our~~the financial condition and results of operations of US Well Services, Inc. together with its subsidiaries (collectively "USWS," "Company," "us," "we," or "our") for the three and six months ended June 30, 2019 should be read in conjunction with our ~~unaudited condensed~~previous annual report on Form 10-K, and the consolidated financial statements and ~~related~~ notes ~~included herein.~~

~~Cautionary Note Regarding Forward-Looking Statements~~

~~All statements other than statements of historical fact~~thereto included in ~~this~~our annual reports. The Company's consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q ~~including, without limitation,~~(this "Report") contains “forward-looking statements” as defined in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward looking statements ~~under "Management's Discussion~~usually relate to future events, conditions and ~~Analysis~~anticipated revenues, earnings, cash flows or other aspects of ~~Financial Condition and Results of Operations" regarding~~our operations or operating results. Forward-looking statements are often identified by the ~~Company's financial position, business strategy and the plans and objectives of management for future operations, are forward- looking statements. When used in this Form 10-Q,~~ words such as ~~"anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to us~~“believes,” “expects,” “intends,” “estimates,” “projects,” “anticipates,” “will,” “plans,” “may,” “should,” or the ~~Company's~~negative thereof. The absence of these words, however, does not mean that these statements are not forward-looking. These are based on our current expectation, belief and assumptions concerning future developments and business conditions and their potential effect on us. While management ~~identify forward-looking statements. Such~~believes that these forward-looking statements are ~~based on the beliefs~~reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All of ~~management, as well as~~our forward-looking statements involve risks and uncertainties (some of which are significant or beyond our control) and assumptions ~~made by, and information currently available~~that could cause actual results to ~~the Company's management. Actual results could~~ differ materially from ~~those contemplated by~~our historical experience and our present expectations or projections. These factors include the ~~forward- looking statements~~effectiveness of management's strategies and decisions, our ability to obtain financing, raise capital and continue as a ~~result~~going concern, our ability to implement our internal growth and acquisition growth strategies, general economic and business conditions specific to our primary customers, compliance with our debt agreements and equity-related securities, volatility in market prices, changes in government regulations, our ability to effectively integrate businesses we may acquire, new or modified statutory or regulatory requirements, availability of ~~certain~~materials and labor, inability to obtain or delay in obtaining government or third-party approvals and permits, non-performance by third parties of their contractual obligations, unforeseen hazards such as weather conditions, acts or war or terrorist acts and the governmental or military response thereto, cyber-attacks adversely affecting our operations, other geological, operating and economic factors ~~detailed~~and declining prices and market conditions, including reduced expected or realized oil and gas prices and demand for oilfield services and changes in supply or demand for maintenance, repair and operating products, equipment and service. This Report identifies other factors that could cause such differences. We cannot assure that these are all of the factors that could cause actual results to vary materially from the forward-looking statements. Factors that could cause or contribute to such differences also include, but are not limited to, those discussed in our filings with the ~~SEC. All subsequent written or oral~~SEC, including under "Risk Factors" in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2019. We caution you not to place undue reliance on any forward-looking statements, ~~attributable~~which speak only as of the date hereof. We assume no obligation and do not intend to usupdate these forward-looking statements. Unless the context otherwise requires, references in this Report to the “Company”, “USWS”, “we”, or ~~persons acting on the Company's behalf are qualified in their entirety by this paragraph.~~

“our” shall mean US Well Services, Inc. and its subsidiaries.

Overview

We provide high-pressure, hydraulic fracturing services in unconventional oil and natural gas basins. Both our conventional and Clean Fleets hydraulic fracturing fleets are among the most reliable and highest performing fleets in the industry, with the capability to meet the most demanding pressure and pump rate requirements in the industry. We operate in many of the active shale and unconventional oil and natural gas basins of the United States and our clients benefit from the performance and reliability of our equipment and personnel. Specifically, all of our fleets operate on a 24-hour basis and have the ability to withstand the high utilization rates that result in more efficient operations. Our senior management team has extensive industry experience providing pressure pumping services to exploration and production companies across North America.

We ~~are a blank check company incorporated~~were originally formed in March 2016 as a ~~Delaware corporation on March 10, 2016 and formed~~special purpose acquisition company under the name Matlin & Partners Acquisition Corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination ~~with~~involving one or more businesses. ~~We intend~~On November 9, 2018, we completed the Transaction with USWS Holdings. As part of the Transaction, we changed our name from Matlin & Partners Acquisition Corporation to ~~effectuate our Initial Business Combination using cash from~~U.S. Well Services, Inc. Following the ~~proceeds~~completion of the Transaction, substantially all of our ~~Public Offering~~assets and operations are held and conducted by USWS Holdings and its subsidiaries, including U.S. Well Services, LLC, and our only assets are equity interests in USWS Holdings. We own a majority of the economic and voting interests of USWS Holdings and are the sole manager of USWS Holdings.

How the Company Generates Revenue

We generate revenue by providing hydraulic fracturing services to our customers. We own and operate a fleet of hydraulic fracturing units to perform these services. We have written contractual arrangements with our customers. Under these contracts, we charge our customers base monthly rates, adjusted for activity and provision of materials such as proppant and chemicals or we charge a per stage amount based on the nature of the stage including well pressure, sand and chemical volumes and transportation.

Our Costs of Conducting Business

The principal costs involved in conducting our hydraulic fracturing services are materials, transportation, labor and maintenance costs. A large portion of our costs are variable, based on the number and requirements of hydraulic fracturing jobs. We manage our fixed costs, other than depreciation and amortization, based on factors including industry conditions and the ~~Private Placement~~expected demand for our services.

Materials include the cost of ~~warrants~~sand delivered to the basin of operations, chemicals, and other consumables used in our operations. These costs vary based on the quantity and quality of sand and chemicals utilized when providing hydraulic fracturing services. Transportation represents the costs to transport materials and equipment from receipt points to customer locations. Labor costs include payroll and benefits related to our field crews and other employees. A majority of our employees are paid on an hourly basis. Maintenance costs include preventative and other repair costs that ~~occurred simultaneously with~~do not require the ~~consummation~~replacement of ~~the Public Offering,~~major components of our ~~capital stock, debt or a combination of cash, stock~~hydraulic fracturing fleets. Maintenance and ~~debt.~~

repair costs are expensed as incurred.

The ~~issuance~~following table presents our cost of ~~additional shares of our stock~~ services for the three and six months ended June 30, 2019 and 2018 (in ~~a business combination:~~

●

may significantly dilute the equity interest of investors in the Public Offering, which dilution would increase if the anti-dilution provisions in the Class F common stock resulted in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class F common stock;

●

~~may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock;~~

	●	could cause a change in control if a substantial number of shares of our common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;

	●	~~may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and~~

●

~~may adversely affect prevailing market prices for our units, common stock and/or warrants.~~

~~Similarly, if we issue debt securities, it could result in:~~

●

~~default and foreclosure on our assets if our operating revenues after an Initial Business Combination are insufficient to repay our debt obligations;~~

thousands):

Cost of Services

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Materials	$	24,547	$	55,212	$	45,590	$	106,227
Transportation		12,534		26,268		27,338		47,873
Labor		35,633		24,154		67,697		48,545
Maintenance		14,535		19,643		33,887		36,663
Other		20,120		26,086		42,536		50,483
Cost of services	$	107,369	$	151,363	$	217,048	$	289,791

●

acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

	●	~~our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;~~
	●	~~our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;~~

●

~~our inability to pay dividends on our common stock;~~

●

using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;

●

~~limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;~~

●

~~increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and~~

●

limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and other purposes and other disadvantages compared to our competitors who have less debt.

As indicated in the accompanying financial statements, at September 30, 2017, we had $853,555 in cash outside of the Trust Account. We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete our Initial Business Combination will be successful.

Results of Operations

~~For~~Three months ended June 30, 2019, compared to three months ended June 30, 2018

(in thousands, except percentages)
	Three Months Ended June 30,
	2019			%			2018			%
Revenues	$	151,419			100.0	%	$	192,632			100.0	%
Costs and expenses:
Cost of services (excluding depreciation and amortization)		107,369			70.9	%		151,363			78.6	%
Depreciation and amortization		40,322			26.6	%		24,862			12.9	%
Selling, general and administrative expenses		7,638			5.0	%		5,278			2.7	%
Loss on disposal of assets		4,003			2.6	%		5,187			2.7	%
Income (loss) from operations		(7,913	)		(5.2	)%		5,942			3.1	%
Interest expense, net		(7,820	)		(5.2	)%		(6,884	)		(3.6	)%
Loss on extinguishment of debt		(12,558	)		(8.3	)%		-			-
Other income		1,686			1.1	%		5			0.0	%
Income tax expense		(306	)		(0.2	)%		-			-
Net loss	$	(26,911	)		(17.8	)%	$	(937	)		(0.5	)%

Revenues. Revenues decreased by $41.2 million, or 21.4%, to $151.4 million for the three ~~and nine~~ months ended ~~September~~June 30, ~~2017, we had a net income~~2019 from $192.6 in the prior corresponding period. The decrease was primarily attributable to more customers self-sourcing lower-margin consumables such as sand, chemicals, and sand transportation, which was partially offset by an increase in higher-margin service and equipment revenue due to an increase in our active fleet count.

Cost of ~~$285,327~~services, excluding depreciation and ~~$382,570, respectively. Our entire activity through September 30, 2017, consisted~~amortization. Cost of ~~formation~~services, excluding depreciation and ~~preparation~~amortization, decreased by $44.0 million, or 29.1%, to $107.4 million for the ~~Public Offering~~three months ended June 30, 2019 from $151.4 million in the prior corresponding period. The decrease was primarily attributable to revenue mix as discussed above. Cost of services, excluding depreciation and ~~since~~amortization, as a percentage of revenues decreased from 78.6% to 70.9% over this period.

Depreciation and amortization. Depreciation and amortization increased by $15.4 million, or 61.8%, to $40.3 million for the ~~Public Offering,~~three months ended June 30, 2019 from $24.9 million in the ~~search~~prior corresponding period. The increase was primarily due to depreciation related to the four hydraulic fracturing fleets added after the second quarter of 2018.

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $2.3 million, or 43.4%, to $7.6 million for the three months ended June 30, 2019 from $5.3 million in the prior corresponding period. Of this amount, $0.4 million was mainly due to head count and salary increases associated with the Company becoming a publicly traded company, and $1.1 million was due to share based compensation expense associated with awards granted in March 2019. In addition, $0.2 million was mainly due to public company reporting expenses, and $0.3 million was due to higher travel and lodging costs to support our growth and increased activity. In June 2019, we provided for a ~~target business with~~bad debts reserve amounting to $0.3 million related to a specific customer.

Loss on disposal of assets. Loss on disposal of assets decreased by $1.2 million, or 23.1%, to $4.0 million for the three months ended June 30, 2019 from $5.2 million in the prior corresponding period. The amount of loss on disposal of assets fluctuate period over period due to differences in operating conditions of our hydraulic fracturing equipment such as wellbore pressure and rate of barrels pumped per minute, that impact the timing of disposals of our hydraulic fracturing pump components and amount of gain or loss recognized.

Interest expense, net. Interest expense increased by $0.9 million, or 13.0%, to $7.8 million for the three months ended June 30, 2019 from $6.9 million in the prior corresponding period. This increase was primarily attributable to an increase in our average debt balance resulting from the new senior secured term loan, which is described further under “Debt Agreements.”

Six months ended June 30, 2019, compared to ~~consummate~~six months ended June 30, 2018

(in thousands, except percentages)
	Six Months Ended June 30,
	2019			%			2018			%
Revenues	$	291,190			100.0	%	$	364,238			100.0	%
Costs and expenses:
Cost of services (excluding depreciation and amortization)		217,048			74.5	%		289,791			79.6	%
Depreciation and amortization		78,165			26.8	%		50,782			13.9	%
Selling, general and administrative expenses		16,258			5.6	%		9,615			2.6	%
Loss on disposal of assets		10,908			3.7	%		8,116			2.2	%
Income (loss) from operations		(31,189	)		(10.7	)%		5,934			1.6	%
Interest expense, net		(12,935	)		(4.4	)%		(14,285	)		(3.9	)%
Loss on extinguishment of debt		(12,558	)		(4.3	)%		-			-
Other income		1,712			0.6	%		322			0.1	%
Income tax expense		(430	)		(0.1	)%		-			-
Net loss	$	(55,400	)		(19.0	)%	$	(8,029	)		(2.2	)%

Revenues. Revenues decreased by $73.0 million, or 20.0%, to $291.2 million for the six months ended June 30, 2019 from $364.2 in the prior corresponding period. The decrease was primarily attributable to more customers self-sourcing lower-margin consumables such as sand, chemicals, and sand transportation, which was partially offset by an ~~Initial Business Combination,~~increase in higher-margin service and equipment revenue due to an increase in our active fleet count.

Cost of services, excluding depreciation and amortization. Cost of services, excluding depreciation and amortization, decreased by $72.8 million, or 25.1%, to $217.0 million for the six months ended June 30, 2019 from $289.8 million in the prior corresponding period. The decrease was primarily attributable to revenue mix as ~~such, we had no operations~~discussed above. Cost of services, excluding depreciation and ~~no significant operating expenses. Subsequent~~amortization, as a percentage of revenues decreased from 79.6% to 74.5% over this period.

Depreciation and amortization. Depreciation and amortization increased by $27.4 million, or 53.9%, to $78.2 million for the six months ended June 30, 2019 from $50.8 million in the prior corresponding period. The increase was primarily due to depreciation related to the ~~closing~~four hydraulic fracturing fleets added after the second quarter of 2018.

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $6.7 million, or 69.8%, to $16.3 million for the ~~Public Offering on March 15, 2017, our normal operating costs included costs~~six months ended June 30, 2019 from $9.6 million in the prior corresponding period. Of this amount, $1.3 million was mainly due to head count and salary increases associated with ~~our search for~~the Company becoming a ~~target business, costs~~publicly traded company, and $1.3 million was due to share based compensation expense associated with awards granted in March 2019. In addition, $3.6 million was mainly due to higher professional and legal fees associated with the Company becoming a publicly traded company, and $0.5 million was mainly due to higher travel and lodging to support our ~~governance~~growth and ~~public reporting,~~increased activity.

Loss on disposal of assets. Loss on disposal of assets increased by $2.8 million, or 34.6%, to $10.9 million for the six months ended June 30, 2019 from $8.1 million in the prior corresponding period. The amount of loss on disposal of assets fluctuate period over period due to differences in operating conditions of our hydraulic fracturing equipment such as wellbore pressure and ~~state franchise taxes.~~rate of barrels pumped per minute, that impact the timing of disposals of our hydraulic fracturing pump components and amount of gain or loss recognized.

Interest Expense, net. Interest expense decreased by $1.4 million, or 9.8%, to $12.9 million for the six months ended June 30, 2019 from $14.3 million in the prior corresponding period. This decrease was primarily attributable to decrease in average debt balance in the first quarter of 2019 compared to the prior corresponding period resulting from paying off our previous term loan in connection with the Transaction, which was partially offset by an increase in our average debt balance in the second quarter of 2019 compared to the prior corresponding period resulting from the new senior secured term loan obtained in May 2019.

Liquidity and Capital Resources

~~Until the consummation of the Public Offering, our only~~Our primary sources of liquidity ~~were~~and capital resources are cash on the balance sheet, cash flow generated from operating activities, borrowings under bank credit agreements and availability under our revolving credit facility.

We believe that our current cash position, cash generated from operations, and borrowing capacity from the new ABL Facility (as defined below) will be sufficient to satisfy the anticipated cash requirements associated with our existing operations.

Cash Flows
(in thousands)
	Six Months Ended June 30,
	2019			2018
Net cash provided by (used in):
Operating activities	$	14,011		$	41,718
Investing activities		(144,889	)		(23,599	)
Financing activities		152,576			(15,181	)

Net Cash Provided by Operating Activities. Net cash provided by operating activities primarily represents the results of operations exclusive of non-cash expenses, including depreciation, amortization, interest, impairment losses, loss on extinguishment of debt, gains and losses on disposal of assets, and share-based compensation, and the impact of changes in operating assets and liabilities. Net cash provided by operating activities was $14.0 million for the six months ended June 30, 2019, a decrease of $27.7 million from the prior corresponding period. This decrease was primarily attributable to an ~~initial~~increase in working capital requirements driven by new fleet deployments during the first half of 2019 and diversification of our customer base with the addition of several new customers. We anticipate net cash provided by operating activities to increase moving forward from the deployment of the three new fleets in January 2019, April 2019, and June 2019, respectively, and acceleration of our cash collections.

Net Cash used in Investing Activities. Net cash used in investing activities primarily relates to the purchase of ~~Founder Shares~~property and equipment. Net cash used in investing activities was $144.9 million for ~~$25,000~~the six months ended June 30, 2019, $50.6 million of which related to maintaining and supporting our existing hydraulic fracturing equipment, $81.1 million of which related to growth and $13.2 million of which related to fleet enhancements. The investment spend for the six months ended June 30, 2019 relates to the addition of three hydraulic fracturing fleets that we placed into service in January, April, and May of 2019, and deposit payments for an expansion fleet which we plan on deploying by early 2020, maintaining and supporting the hydraulic fracturing equipment, and fleet enhancements to our existing hydraulic fracturing equipment.

Net Cash Provided by Financing Activities. Net cash provided by financing activities primarily relates to proceeds from our preferred stock offering, revolving credit facility, long-term debt, and notes payable, offset by repayments of amounts under equipment financing arrangements, notes payable, revolver, long-term debt, and principal payments under the finance lease obligations. Net cash provided by financing activities was $152.6 million for the six months ended June 30, 2019. During this period, we received proceeds of $54.5 million from our preferred stock offering, which was net of issue costs, $49.0 million from our revolving credit facility and $285.0 million from long-term debt. We also repaid $4.4 million of debt under notes payable, $63.2 million of debt under equipment financing arrangements, $8.4 million of principal under finance lease obligations, $6.6 million of fees related to debt extinguishment, and $13.5 million of deferred financing costs. We also repaid $65.0 million and $75.0 million of debt under our first lien credit facility and second lien term loan, respectively, and terminated both facilities.

Capital Expenditures. Our business requires continual investments to upgrade or enhance existing property and equipment and to ensure compliance with safety and environmental regulations. Capital expenditures primarily relate to maintenance capital expenditures, growth capital expenditures and fleet enhancement capital expenditures. Maintenance capital expenditures include expenditures needed to maintain and to support our current operations. Growth capital expenditures include expenditures to generate incremental distributable cash flow. Fleet enhancement capital expenditures include expenditures on new equipment related to existing fleets that increase the productivity of the fleet. Capital expenditures for growth and fleet enhancement initiatives are discretionary.

We classify maintenance capital expenditures as expenditures required to maintain or supplement existing hydraulic fracturing fleets. We budget maintenance capital expenditures based on historical run rates and current maintenance schedules. Growth capital expenditures relate to adding additional hydraulic fracturing fleets and are based on quotes obtained from equipment manufacturers and our estimate for the timing of placing orders, disbursing funds and receiving the equipment. Fleet enhancement capital expenditures relate to technology enhancements to existing fleets that increase their productivity and are based on quotes obtained from equipment manufacturers and our estimate for the timing of placing orders, disbursing funds and receiving the equipment.

We continuously evaluate our capital expenditures and the amount we ultimately spend will depend on a number of factors, including expected industry activity levels and company initiatives. We intend to fund the majority of our capital expenditures, contractual obligations and working capital needs with cash on hand, cash generated from operations, borrowing capacity under our ABL Facility and other financing sources.

Debt Agreements

Senior Secured Term Loan

We have a $250.0 million Senior Secured Term Loan that matures in May 2024. The Company is required to make quarterly principal payments of 1.25 million commencing on January 15, 2020, with final payment due at maturity on May 7, 2024. The Senior Secured Term Loan will bear interest at a variable rate per annum equal to the applicable LIBOR rate, subject to a 2.0% floor, plus 8.25%.

The Senior Secured Term Loan requires mandatory prepayments upon certain dispositions of property or issuance of other indebtedness, as defined, and quarterly a percentage of excess cash flow, if any, equal to 25% to 100% (depending on total debt outstanding) commencing in September 2019. Certain mandatory prepayments (excluding excess cash flows sweep) and optional prepayments are subject to a yield maintenance fee for the first two years and prepayment premium of 2% in year three and 1% in year four. Upon the final payment and termination of the Senior Secured Term Loan, the Borrower will pay an exit fee equal to 2.00% of the principal amount of loans then outstanding and the aggregate principal amount of loans repaid during the 120 days that occurred prior to such final payment.

ABL Credit Facility

We have a $75.0 million ABL Credit Agreement (the “ABL Credit Facility”) which matures on February 6, 2024. The ABL Credit Facility is subject to a borrowing base which is calculated based on a formula referencing the Loan Parties’ eligible accounts receivables. Borrowings under the ABL Credit Facility bear interest at LIBOR, plus an applicable LIBOR rate margin of 1.5% to 2.0% or base rate margin of 0.5% to 1.0% as defined in the ABL Credit Facility. The unused portion of the ABL Credit Facility is subject to an unused commitment fee of 0.250% to 0.375%.

All borrowings under the ABL Credit Facility are subject to the satisfaction of customary conditions, including the absence of a default and the accuracy of representations and warranties and certifications regarding sales of certain inventory, and to a borrowing base (described above). Borrowings under the ABL Credit Facility are fully and unconditionally guaranteed jointly and severally by the ~~Sponsor,~~Loan Parties, other than future unrestricted subsidiaries.

Series A Convertible Redeemable Preferred Stock

On May 23, 2019, the Company entered into a Purchase Agreement with certain institutional investors (collectively, the “Purchasers”) to issue and sell in a ~~total~~private placement 55,000 shares of ~~$275,000~~newly created series of ~~loans and advances by the Sponsor. The $275,000 loans and advances were non-interest bearing and were paid in full on March 15, 2017 in connection with closing~~convertible redeemable preferred stock of the ~~Public Offering.~~

~~On March 15, 2017, we consummated our Public Offering in which we sold 32,500,000 Units at a~~Company (“Series A preferred stock”), for an aggregate purchase price of ~~$10.00~~$1,000 per ~~Unit (including the partial exercise of the Underwriter’s overallotment option) generating~~share, for total gross proceeds of ~~$325,000,000 before underwriting fees~~$55.0 million. Included in the offering was 2,933,333 warrants exercisable for shares of Class A common stock, and ~~expenses. The Sponsor and~~additional 4,399,992 warrants to be issued to the ~~Underwriter~~Purchasers subject to certain conditions as described in the Purchase Agreement. At the initial closing on May 24, 2019 (“Closing Date”), the Purchasers purchased ~~an aggregate~~all of ~~15,500,000 Private Placement Warrants (14,500,000 of Private Placement Warrants by~~ the Sponsor and 1,000,000 of Private Placement Warrants by the Underwriter) at a price of $0.50 per Private Placement Warrant in a Private Placement that occurred simultaneously with the Public Offering. In connection with the Public Offering, we incurred offering costs of $16,824,469 (including an underwriting fee of $6,000,000 and deferred underwriting commissions of $10,250,000). Other incurred offering costs consisted principally of formation and preparation feesSeries A preferred stock.

For more information related to the ~~Public Offering.~~Series A ~~total of $325,000,000 of the net proceeds from the Public Offering and the Private Placement were deposited~~preferred stock, see “Note 10 – Mezzanine Equity” in the ~~Trust Account established for~~Notes to the ~~benefit~~Condensed Consolidated Financial Statements.

Contractual Obligations

We enter into certain contractual obligations in the normal course of our ~~public stockholders.~~business. The following table summarizes our known contractual commitments as of June 30, 2019 (in thousands):

	Less than 1 year		1 - 3 Years		3 - 5 Years		Thereafter		Total
Senior Secured Term Loan	$	3,750	$	10,000	$	236,250	$	-	$	250,000
ABL Credit Facility		-		-		40,000		-		40,000
Equipment financing		10,227		10,571		2,702		-		23,500
Capital lease obligations (1)		15,935		2,786		-		-		18,721
Estimated interest payments (2)		31,594		58,827		51,520		-		141,941
Operating lease obligations (3)		1,513		1,086		532		195		3,326
Purchase commitments (4)		65,695		38,310		-		-		104,005
Total	$	128,714	$	121,580	$	331,004	$	195	$	581,493

(1)	Capital lease obligations consist of our obligations on capital leases of fracturing equipment.

(2)	Estimated interest payments are based on outstanding debt balances as of June 30, 2019.

(3)	Operating lease obligations are related to our facilities and office space and are net of sublease income.

(4)

Purchase commitments primarily relate to supply agreements with vendors for sand purchases. The purchase commitments to sand suppliers represent our annual obligations to purchase a minimum amount of sand from vendors. If the minimum purchase commitments are not met, the agreements generally require the shortfalls or specified penalties to be settled in cash at the end of the year. The purchase commitments disclosed represent the aggregate amounts that the Company would be obligated to pay in the event that the Company procured no additional proppant under the contracts subsequent to June 30,2019.

Off-Balance Sheet Arrangements

~~As of September 30, 2017, we have available to us $853,555 of cash on our balance sheet. We will use these funds to identify~~The Company’s off-balance sheet arrangements include the operating leases and evaluate target businesses, perform business, legal and accounting due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination. As of September 30, 2017, we also had $829,443 in interest income available from our investmentsunconditional commitments disclosed in the ~~Trust Account~~“Contractual Obligations” section herein. For further description of such operating leases and unconditional commitments please see “Note 16 – Commitments and Contingencies” in the Notes to ~~pay for our income tax obligations.~~the Condensed Consolidated Financial Statements.

In order to fund working capital deficiencies or finance transaction costs in connection with an intended Initial Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our Initial Business Combination, we would repay such loaned amounts. In the event that our Initial Business CombinationThe Company does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants at a price of $0.50 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants, including as to exercise price, exercisability and exercise period. Other than as set forth above, the terms of such loans by our Sponsor, an affiliate of our Sponsor or our officers and directors, ifhave any have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our Sponsor, an affiliate of our Sponsor or certain of our officers and directors, if any, as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to fundsinterest in ~~our Trust Account.~~

We expect that we have sufficient resources subsequent to our Public Offering to fund our operations through March 15, 2019. We do not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an Initial Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our business combination. Moreover, we may need to obtain additional financing either to complete our business combination or because we become obligated to redeem a significant number of our public shares upon completion of our business combination, in which case we may issue additional securities or incur debt in connection with such business combination, which may include a specified future issuance. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination. If we are unable to complete our Initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our Initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

~~Off-Balance Sheet Financing Arrangements~~

~~We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated~~ entities ~~or financial partnerships, often~~ referred to as variable interest ~~entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.~~entities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risks from interest rate and commodity price fluctuations. We have not entered into any ~~off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt~~derivative financial instrument transactions to manage or ~~commitments~~reduce market risk for speculative purposes. Our operations are conducted entirely in the United States; therefore, we have no significant exposure to foreign currency exchange rate risk. The consolidated financial statements are subject to concentrations of ~~other entities, or~~credit risk consisting primarily of accounts receivable.

We are subject to interest rate risk on our Senior Secured Term Loan entered into ~~any non-financial assets.~~

~~Contractual Obligations~~

~~At September 30, 2017, we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.~~

~~The Underwriter was paid a cash underwriting fee of 2% of gross proceeds of the Public Offering, excluding any amounts raised pursuant~~on May 7, 2019. This agreement is subject to an annual interest rate that is indexed to the ~~overallotment option, or $6,000,000. In addition, the Underwriter is entitled~~London Interbank Offered Rate (“LIBOR”). Refer to ~~aggregate deferred underwriting commissions~~“Item 2. Management's Discussion and Analysis of ~~$10,250,000 consisting~~Financial Condition and Results of ~~(i) 3%~~Operations—Liquidity and Capital Resources.” The impact of ~~the gross proceeds~~a 1% increase in interest rates on this debt would result in an increase in interest expense of ~~the Public Offering, excluding any amounts raised pursuant~~approximately $2.9 million annually.

Our material and fuel purchases expose us to ~~the overallotment option,~~commodity price risk. Our material costs primarily consist of proppants and ~~(ii) 5%~~chemicals that are consumed while providing hydraulic fracturing services. Our fuel costs primarily consist of ~~the gross proceeds of the Units sold~~diesel fuel used by our trucks and other equipment. Our material and fuel costs are variable and are impacted by changes in supply and demand. We generally pass along price increases to our customers; however, we may be unable to do so in the ~~Public Offering pursuant~~future. We do not engage in commodity price hedging activities. However, we have commitments in place with certain vendors to the overallotment option. The deferred underwriting commissions will become payable to the Underwriter from the amounts held in the Trust Account solely in the event that the Company completes an Initial Business Combination, subject to the termspurchase sand. Some of ~~the underwriting agreement.~~

~~Critical Accounting Policies~~

The preparation of financial statements and related disclosures in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual resultsthese agreements have minimum purchase requirements. We could ~~materially differ from those estimates. The Company has identified the following as its critical accounting policies:~~

~~Emerging Growth Company~~

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not beingbe required to ~~comply with the auditor attestation requirements~~purchase sand and pay prices in excess of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standardmarket prices at the time ~~private companies adopt~~of purchase. Refer to “Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations” for the ~~new or revised standard. This~~contractual commitments and obligations table as of June 30, 2019.

The concentration of our customers in the oil and gas industry may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differencesimpact our overall exposure to credit risk in ~~accounting standards used.~~

~~Net Income Per Common Share~~

~~Net income per common share is computed~~that customers may be similarly affected by ~~dividing net income applicable~~changes in economic and industry conditions. We extend credit to common stockholders by the weighted average number of common shares outstanding during the period, plus, to the extent dilutive, the incremental number of shares of common stock to settle warrants, as calculated using the treasury stock method. At September 30, 2017, the Company had outstanding warrants to purchase 24,000,000 shares of common stock. These shares were excluded from the calculation of diluted income (loss) per common share because their inclusion would have been antidilutive. An aggregate of 31,132,810 shares of Class A common stock subject to possible redemption at September 30, 2017 have been excluded from the calculation of basic income (loss) per common share since such shares, if redeemed, only participate in their pro rata share of earnings from the Trust Account. Due to a loss during the period ended September 30, 2016, diluted loss per common share is the same as basic loss per common share. At September 30, 2016, the Company did not have any dilutive securitiescustomers and other ~~contracts that could, potentially, be exercised or converted into common stock and then share~~parties in the ~~earnings~~normal course of ~~the Company under the treasury stock method.~~our business. We manage our credit exposure by performing credit evaluations of our customers and maintaining an allowance for doubtful accounts.

Item 4. Controls and Procedures.

~~Financial Instruments~~

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheets.

~~Offering Costs~~

The Company complies with the requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — “Expenses of Offering.” Offering costs were $16,824,469 (including an underwriting fee of $6,000,000 and deferred underwriting commissions of $10,250,000), consisting principally of costs incurred in connection with formation and preparation for the Public Offering. These offering costs were charged to additional paid in capital upon closing of the Public Offering on March 15, 2017.

~~Income Taxes~~

~~Redeemable Class A Common Stock~~

All of the 32,500,000 shares of Class A common stock sold as parts of the Units in the Public Offering contain a redemption feature which allows for the redemption of Class A common stock under the Company’s Liquidation or Tender Offer/Stockholder Approval provisions. In accordance with FASB ASC 480, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of FASB ASC 480. Although the Company has not specified a maximum redemption threshold, its amended and restated certificate of incorporation provides that in no event will the Company redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001.

The Company will recognize changes in redemption value immediately as they occur and will adjust the carrying value of the security to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable Class A common stock shall be affected by charges against additional paid in capital. Accordingly, at September 30, 2017, 31,132,810 of the 32,500,000 shares of Class A common stock included in the Units were classified outside of permanent equity at its redemption value. There were no shares of Class A common stock outstanding at December 31, 2016.

~~Recent Accounting Pronouncements~~

The Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk~~

Through September 30, 2017, our efforts have been limited to organizational activities, activities relating to our Public Offering and since the Public Offering, the search for a target business with which to consummate an Initial Business Combination. We have neither engaged in any operations nor generated any revenues. We have not engaged in any hedging activities since our inception on March 10, 2016. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.

The net proceeds of the Public Offering and the sale of the Private Placement Warrants held in the Trust Account have been invested in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

~~Item 4.~~

~~Controls and Procedures~~

Evaluation of Disclosure Controls and Procedures

~~Disclosure~~Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures ~~are~~(as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and ~~other~~ procedures ~~that~~were effective as of such date. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in ~~our~~the reports ~~filed~~we file or ~~submitted~~submit under the ~~Securities~~ Exchange Act ~~of 1934, as amended (the “Exchange Act”)~~ is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and ~~forms. Disclosure controls~~forms and ~~procedures include, without limitation, controls and procedures designed to ensure~~ that such information ~~required to be disclosed in company reports filed or submitted under the Exchange Act~~ is accumulated and communicated to management, including ~~our~~the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2017. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.

Changes in Internal Control over Financial Reporting

~~During the most recently completed fiscal quarter, there~~The Company has been engaged in the process of the design and implementation of the Company’s internal control over financial reporting in a manner commensurate with the scale of the Company’s operations post-Transaction. Except with respect to the changes in connection with such design and implementation, there were no ~~change~~changes in ~~our~~the Company’s internal control over financial reporting that ~~has~~occurred during the period covered by this report that have materially affected, or isare reasonably likely to materially affect, ~~our~~the Company’s internal control over financial reporting.

PART II

~~PART II – PART II – OTHER INFORMATION~~Item 1. Legal Proceedings.

As described in our quarterly report filed on the Form 10-Q for the fiscal quarter ended March 31, 2019, we were named as a defendant in a case filed on January 14, 2019 in the Superior Court of the State of Delaware (Smart Sand, Inc. v. U.S. Well Services, LLC) seeking monetary damages arising out of the cancellation of a sand contract. The litigation is in the discovery stages. As such, no prediction can be made as to the outcome of the case at this time.

We are involved in various other pending or potential legal actions in the ordinary course of our business. Management is unable to predict the ultimate outcome of these actions because of the inherent uncertainty of litigation. However, management believes that the most probable, ultimate resolution of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Item 1A. Risk Factors.

No material changes have occurred from risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None during the quarterly period ended June 30, 2019, other than as reported in the Company’s Current Report on Form 8-K filed on May 24, 2019.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

~~Item 1.~~

Item 6. Exhibits

~~Legal Proceedings~~

~~None.~~ The exhibits required to be filed or furnished by Item 601 of Regulation S-K are listed below.

Exhibit No.

~~Item 1A.~~

~~Risk Factors~~

Description

As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our prospectus filed with the SEC on March 9, 2017 except we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

~~None~~

~~Item 3.~~

~~Defaults Upon Senior Securities~~

~~None~~

~~Item 4.~~

~~Mine Safety Disclosures~~

~~Not Applicable.~~

~~Item 5.~~

~~Other Information~~

~~None.~~

~~Item 6.~~

~~Exhibits~~

~~Exhibit Number~~		~~Description~~
~~31.1~~3.1		Second Amended and Restated Certificate of Incorporation of U.S. Well Services, Inc (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K (File no. 001-38025), filed with the SEC on November 16, 2018).
3.2		Certificate of Designations, dated May 24, 2019, of U.S. Well Services, Inc. (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K (File no. 001-38025), filed with the SEC on May 24, 2019.
3.3		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.4 of the Registration Statement on Form S-1 (File No. 333-216076), filed with the SEC on February 15, 2017).
4.1		Warrant Agreement, dated May 24, 2019, between U.S. Well Services, Inc. and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K (File no. 001-38025), filed with the SEC on May 24, 2019.
10.1		Senior Secured Term Loan Credit Agreement, dated as of May 7, 2019, among U.S. Well Services, LLC, as borrower, U.S. Well Services, Inc. and all the other subsidiaries of U.S. Well Services, Inc., as guarantors, CLMG Corp., as administrative and collateral agent, and certain other financial institutions (incorporated by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q (File no. 001-38025), filed with the SEC on May 9, 2019).
10.2		ABL Credit Agreement, dated as of May 7, 2019, among U.S. Well Services, LLC, as borrower, U.S. Well Services, Inc. and all the other subsidiaries of U.S. Well Services, Inc., as guarantors, the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q (File no. 001-38025), filed with the SEC on May 9, 2019).
10.3		Intercreditor Agreement, dated as of May 7, 2019, among the Borrower, CLMG Corp. and Bank of America, N.A (incorporated by reference to Exhibit 10.3 of the Quarterly Report on Form 10-Q (File no. 001-38025), filed with the SEC on May 9, 2019.
10.4		Purchase agreement, dated May 23, 2019, by and among U.S. Well Services, Inc. and the Purchasers party thereto (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K (File no. 001-38025), filed with the SEC on May 24, 2019.
10.5		Registration Rights Agreement, dated May 24, 2019, by and among U.S. Well Services, Inc. and the Purchasers party thereto (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K (File no. 001-38025), filed with the SEC on May 24, 2019.
10.6		Amendment No. 1 to Amended and Restated Limited Liability Company Agreement of USWS Holdings LLC, dated May 24, 2019 (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K (File no. 001-38025), filed with the SEC on May 24, 2019.
10.7*		First Technical Supplemental Amendment to the Senior Secured Term Loan Credit Agreement, dated June 14, 2019, by and among U.S. Well Services, LLC, as borrower, U.S. Well Services, Inc. and all the other subsidiaries of U.S. Well Services, Inc. as guarantors, CLMG Corp., as administrative and collateral agent, and certain other financial institutions.
31.1*		Certification of ~~the Principal~~Chief Executive Officer ~~required by~~pursuant to Rule ~~13a-14(a)~~13(a)-14 and ~~Rule 15d-14(a)~~15(d)-14 under the Securities Exchange Act of ~~1934, as amended, as adopted~~1934.
31.2*		Certification of Chief Financial Officer pursuant to ~~Section 302 of the Sarbanes Oxley Act of 2002.~~
~~31.2~~		~~Certification of the Principal Financial Officer required by~~ Rule ~~13a-14(a)~~13(a)-14 and ~~Rule 15d-14(a)~~15(d)-14 under the Securities Exchange Act of ~~1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002.~~1934.
32.1**		Certification of ~~the Principal~~Chief Executive Officer ~~required by~~pursuant to 18 U.S.C. Section ~~1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.~~1350.
32.2**		Certification of ~~the Principal~~Chief Financial Officer ~~required by~~pursuant to 18 U.S.C. Section ~~1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.~~1350.
~~101.INS~~ 101.INS*		XBRL Instance Document
~~101.SCH~~ 101.SCH*		XBRL Taxonomy Extension Schema ~~Document~~
~~101.CAL~~ 101.PRE*		XBRL Taxonomy Extension Presentation Linkbase
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase ~~Document~~
~~101.DEF~~ 101.DEF*		XBRL Taxonomy Extension Definition Linkbase ~~Document~~
~~101.LAB~~ 101.LAB*		XBRL Taxonomy Extension Label Linkbase ~~Document~~
~~101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase Document~~

~~In accordance with~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly ~~authorized.~~authorized on August 7, 2019.

Delaware		81-1847117
(State or other jurisdiction of		(I.R.S. Employer incorporation or
organization)		~~(I.R.S. Employer~~ Identification ~~Number)~~No.)

Large accelerated filer	☐	Accelerated filer	☐ ☒
Non-accelerated filer	☒ ~~(Do not check if a smaller reporting company)~~ ☐	Smaller reporting company	☐
		Emerging growth company	☒

		~~MATLIN & PARTNERS ACQUISITION CORPORATION~~ U.S. WELL SERVICES, INC.

~~Dated: November 3, 2017~~ By:	~~/s/ David J. Matlin~~


/s/ Joel Broussard
Name:	~~Name: David J. Matlin~~Joel Broussard
Title:	President, Chief Executive Officer, and Director ~~(Principal Executive Officer)~~

~~Dated: November 3, 2017~~	~~/s/ Rui Gao~~

/s/ Kyle O’Neill
Name: ~~Rui Gao~~	Kyle O’Neill
Title:	Chief Financial Officer ~~(Principal Financial and Accounting Officer)~~

			Page No.
PART I –	FINANCIAL ~~INFORMATION:~~INFORMATION
Item 1.	Financial ~~Statements:~~Statements (Unaudited)		2
	Condensed Consolidated Balance Sheets ~~as of September 30, 2017 (Unaudited) and December 31, 2016 (Audited)~~		2
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 (Unaudited) and Three Months Ended September 30, 2016 (Unaudited) and Period from March 10, 2016 (inception) through September 30, 2016 (Unaudited)		3
	Condensed ~~Statement of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2017 (Unaudited)~~		4
	~~Condensed~~Consolidated Statements of Cash Flows ~~for the Nine Months Ended September 30, 2017 (Unaudited) and for the Period from March 10, 2016 (inception) through September 30, 2016 (Unaudited)~~		5 4
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Notes to Condensed Consolidated Financial Statements ~~(Unaudited)~~		6 8

Item 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations		16 27
Item 3.	Quantitative and Qualitative ~~Disclosures About~~Disclosure about Market Risk		21 33
Item 4.	Controls and Procedures		21 34
~~PART II – OTHER INFORMATION:~~
~~Item 1.~~ PART II	~~Legal Proceedings~~OTHER INFORMATION		21 35
Item 1.	Legal Proceeding	35
Item 1A.	Risk Factors		22 35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		22 35
Item 3.	Defaults Upon Senior Securities		22 35
Item 4.	Mine Safety Disclosures		22 35
Item 5.	Other Information		22 35
Item 6.	Exhibits	36
SIGNATURES	22	37

	September 30, 2017		December 31, 2016
	(Unaudited)		(Audited)
ASSETS:
Current assets:
Cash	$	853,555	$	65,620
Prepaid expenses		153,639		-
Deferred offering costs		-		154,380
Total current assets		1,007,194		220,000
Investments and cash held in trust account		325,829,443		-
Total assets	$	326,836,637	$	220,000

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued expenses	$	187,502	$	-
Due to affiliate		71,034		-
Note payable		-		200,000
Total current liabilities		258,536		200,000
Deferred underwriting commissions		10,250,000		-
Total liabilities		10,508,536		200,000

Class A common stock subject to possible redemption; $0.0001 par value; 31,132,810 shares (at redemption value of $10.00 per share) as of September 30, 2017 and none issued or outstanding as of December 31, 2016		311,328,100		-

Stockholders' equity:
Preferred stock, $0.0001 par value, 1,000,000 shares authorized, none issued or outstanding		-		-
Class A common stock, $0.0001 par value, 90,000,000 shares authorized, 1,367,190 shares issued and outstanding (excluding 31,132,810 shares subject to possible redemption) as of September 30, 2017 and none issued or outstanding as of December 31, 2016		137		-
Class F common stock, $0.0001 par value, 10,000,000 shares authorized, 8,125,000 and 8,625,000 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		813		863
Additional paid-in-capital		4,621,481		24,137
Retained earnings (accumulated deficit)		377,570		(5,000	)
Total stockholders' equity		5,000,0001		20,000
Total liabilities and stockholders' equity	$	326,836,637	$	220,000

	Three Months Ended September 30,						Nine Months Ended September 30,			Period from March 10, 2016 (inception) through September 30,
	2017			2016			2017			2016
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues	$	-		$	-		$	-		$	-
General and administrative expenses		(258,729	)		-			(664,662	)		(5,000	)
Loss from operations		(258,729	)		-			(664,662	)		(5,000	)
Interest income		798,570			-			1,509,443			-
Income before income taxes		539,841			-			844,781			-
Provision for income taxes		254,514			-			462,211			-
Net income (loss)	$	285,327		$	-		$	382,570		$	(5,000	)

Weighted average number of shares outstanding:
Basic⁽¹⁾		9,520,413			8,625,000			9,285,767			8,134,146
Diluted		40,625,000			8,625,000			32,068,223			8,134,146

Net income (loss) per common share:
Basic	$	0.03		$	(0.00	)	$	0.04		$	(0.00	)
Diluted	$	0.01		$	(0.00	)	$	0.01		$	(0.00	)

	Class A Common Stock						Class F Common Stock						Additional Paid-in			Retained Earnings (Accumulated			Stockholders'
	Shares			Amount			Shares			Amount			Capital			Deficit)			Equity
Balance at December 31, 2016		-		$	-			8,625,000		$	863		$	24,137		$	(5,000	)	$	20,000
Sale of Class A common stock to public		32,500,000			3,250			-			-			324,996,750			-			325,000,000
Forfeiture of Class F common stock to Sponsor		-			-			(500,000	)		(50	)		50			-			-
Sale of 15,500,000 Private Placement Warrants		-			-			-			-			7,750,000			-			7,750,000
Offering costs		-			-			-			-			(16,824,469	)		-			(16,824,469	)
Class A common stock subject to possible redemption		(31,132,810	)		(3,113	)		-			-			(311,324,987	)		-			(311,328,100	)
Net income		-			-			-			-			-			382,570			382,570
Balance at September 30, 2017		1,367,190		$	137			8,125,000		$	813		$	4,621,481		$	377,570		$	5,000,001

	Nine Months Ended			Period from March 10, 2016 (inception) through
	September 30, 2017			September 30, 2016
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net income (loss)	$	382,570		$	(5,000	)
Changes in prepaid expenses		(153,639	)		-
Changes in accounts payable and accrued expenses		187,502			5,000
Changes in due to affiliate		71,034			-
Interest earned in Trust Account		(1,509,443	)		-
Net cash used in operating activities		(1,021,976	)		-

Cash flows from investing activities:
Cash deposited in Trust Account		(325,000,000	)		-
Interest income released from Trust Account for taxes		680,000			-
Net cash used in investing activities		(324,320,000	)		-

Cash flows from financing activities:
Proceeds from sale of Class A common stock to public		325,000,000			-
Proceeds from sale of Class F common stock to the Sponsor		-			25,000
Proceeds from sale of Private Placement Warrants		7,750,000			-
Note payable borrowings and advance		75,000			200,000
Note payable payment		(275,000	)		-
Payment of offering costs		(6,420,089	)		(151,750	)
Net cash provided by financing activities		326,129,911			73,250

Increase in cash		787,935			73,250
Cash at beginning of period		65,620			-
Cash at end of period	$	853,555		$	73,250

Supplemental disclosure of non-cash financing activities:
Deferred underwriting commissions	$	10,250,000		$	-

	September 30, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Investments in money market fund held in Trust Account	$	325,731,357	$	325,731,357	$	-	$	-
Total	$	325,731,357	$	325,731,357	$	-	$	-