☒ ~~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)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑Yes☒☐ No☐

Indicate by check mark whether the registrant has submitted electronically ~~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☒☐ 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 [✓]No☐

As of ~~November 3, 2017, there were 32,500,000~~July 30, 2021, the registrant had 93,377,516 shares of ~~the Company’s~~ Class A ~~common stock, par value $0.0001 (the “Class A common stock”)~~Common Stock and ~~8,125,000~~0 shares of ~~the Company’s~~ Class ~~F common stock, par value $0.0001 (the “Class F common stock”) issued and~~B Common Stock outstanding.

			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’ Deficit	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 28
Item 3.	Quantitative and Qualitative ~~Disclosures About~~Disclosure about Market Risk		21 34
Item 4.	Controls and Procedures		21 34
~~PART II – OTHER INFORMATION:~~
~~Item 1.~~ PART II	~~Legal Proceedings~~OTHER INFORMATION		21 36
Item ~~1A.~~1.	~~Risk Factors~~Legal Proceeding		22 36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		22 36
Item 3.	Defaults Upon Senior Securities		22 36
Item 4.	Mine Safety Disclosures		22 36
Item 5.	Other Information		22 36
Item 6.	Exhibits	37
SIGNATURES	22	39

~~PART I – FINANCIAL INFORMATION~~

~~Item 1. Financial Statements~~

U.S. WELL SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(unaudited)

	June 30, 2021			December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	57,544		$	3,693
Restricted cash		519			1,569
Accounts receivable (net of allowance for doubtful accounts of $0 and $12,000 as of June 30, 2021 and December 31, 2020, respectively)		54,890			44,393
Inventory, net		7,531			7,965
Assets held for sale		14,744			-
Prepaids and other current assets		12,400			10,707
Total current assets		147,628			68,327
Property and equipment, net		213,301			235,332
Intangible assets, net		12,983			13,466
Goodwill		4,971			4,971
Deferred financing costs, net		747			1,127
TOTAL ASSETS	$	379,630		$	323,223
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	35,353		$	36,362
Accrued expenses and other current liabilities		12,210			14,781
Notes payable		6,440			998
Current portion of long-term debt		12,000			10,000
Current portion of equipment financing		3,611			3,519
Current portion of capital lease obligations		325			54
Total current liabilities		69,939			65,714
Warrant liabilities		8,914			1,619
Long-term debt		281,052			274,555
Convertible senior notes		85,677			-
Long-term equipment financing		7,517			9,347
Long-term capital lease obligations		909			-
Other long-term liabilities		4,006			3,539
Total liabilities		458,014			354,774
Commitments and contingencies (NOTE 17)
Mezzanine equity:
Series A Redeemable Convertible Preferred Stock, par value $0.0001 per share; 55,000 shares authorized; 19,610 shares and 50,000 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively; aggregate liquidation preference of $25,228 and $60,418 as of June 30, 2021 and December 31, 2020, respectively		21,820			50,975
Series B Redeemable Convertible Preferred Stock, par value $0.0001 per share; 22,050 shares authorized; 21,038 shares and 22,050 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively; aggregate liquidation preference of $24,490 and $24,100 as of June 30, 2021 and December 31, 2020, respectively		23,141			22,686
Stockholders' deficit:
Class A Common Stock, par value of $0.0001 per share; 400,000,000 shares authorized; 93,377,516 shares and 72,515,342 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		9			7
Class B Common Stock, par value of $0.0001 per share; 20,000,000 shares authorized; 0 shares and 2,302,936 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		-			-
Additional paid in capital		237,359			217,212
Accumulated deficit		(360,713	)		(322,431	)
Total Stockholders' deficit		(123,345	)		(105,212	)
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' DEFICIT	$	379,630		$	323,223

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,
	2021			2020			2021			2020
Revenue	$	78,799		$	39,837		$	155,057		$	151,872
Costs and expenses:
Cost of services (excluding depreciation and amortization)		59,252			29,011			121,883			114,165
Depreciation and amortization		9,836			17,358			20,942			49,366
Selling, general and administrative expenses		7,214			5,220			14,604			24,277
Impairment of long-lived assets		-			-			-			147,543
Litigation settlement		35,000			-			35,000			-
Loss (gain) on disposal of assets		(545	)		853			1,891			5,097
Loss from operations		(31,958	)		(12,605	)		(39,263	)		(188,576	)
Interest expense, net		(7,333	)		(5,665	)		(13,516	)		(13,621	)
Change in fair value of warrant liabilities		(136	)		(1,364	)		(7,287	)		5,189
Patent license sales		22,500			-			22,500			-
Loss on extinguishment of debt		(839	)		-			(839	)		-
Other income		23			45			52			51
Loss before income taxes		(17,743	)		(19,589	)		(38,353	)		(196,957	)
Income tax expense (benefit)		(27	)		13			(27	)		(737	)
Net loss		(17,716	)		(19,602	)		(38,326	)		(196,220	)
Net loss attributable to noncontrolling interest		-			(97	)		(44	)		(10,897	)
Net loss attributable to U.S. Well Services, Inc.		(17,716	)		(19,505	)		(38,282	)		(185,323	)
Dividends accrued on Series A preferred stock		(1,998	)		(1,845	)		(3,811	)		(3,596	)
Dividends accrued on Series B preferred stock		(811	)		(666	)		(1,522	)		(666	)
Deemed and imputed dividends on Series A preferred stock		(286	)		(5,142	)		(750	)		(12,114	)
Deemed dividends on Series B preferred stock		(1,501	)		-			(5,669	)		-
Exchange of Series A preferred stock for convertible senior notes		8,936			-			8,936			-
Net loss attributable to U.S. Well Services, Inc. common stockholders	$	(13,376	)	$	(27,158	)	$	(41,098	)	$	(201,699	)
Loss per common share (See Note 14):
Basic and diluted	$	(0.15	)	$	(0.41	)	$	(0.48	)	$	(3.19	)
Weighted average common shares outstanding:
Basic and diluted		88,593			65,011			83,810			61,815

~~MATLIN & PARTNERS ACQUISITION CORPORATION~~

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

U.S. WELL SERVICES, INC.

CONDENSED ~~BALANCE SHEETS~~CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(38,326	)	$	(196,220	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization		20,942			49,366
Change in fair value of warrant liabilities		7,287			(5,189	)
Impairment of long-lived assets		-			147,543
Provision for losses on accounts receivable		9			9,031
Provision for losses on inventory obsolescence		1,398			448
Loss on disposal of assets		1,891			5,097
Convertible senior notes converted into sales of patent licenses		(22,500	)		-
Amortization of debt discount, premium and issuance costs		3,606			1,883
Paid-in-kind interest on convertible senior notes		258			-
Loss on extinguishment of debt		839			-
Share-based compensation expense		3,661			3,481
Changes in assets and liabilities:
Accounts receivable		(10,506	)		32,053
Inventory		(964	)		826
Prepaids and other current assets		(7,708	)		3,743
Accounts payable		6,427			(8,332	)
Accrued liabilities		(2,641	)		(7,902	)
Accrued interest		7,956			(14,315	)
Net cash provided by (used in) operating activities		(28,371	)		21,513
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(24,841	)		(40,756	)
Proceeds from sale of property and equipment and insurance proceeds from damaged property and equipment		8,553			15,036
Net cash used in investing activities		(16,288	)		(25,720	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility		24,722			11,250
Repayments of revolving credit facility		(14,750	)		(33,381	)
Proceeds from issuance of long-term debt		3,004			-
Repayments of long-term debt		(12,563	)		(2,500	)
Payment of fees related to debt extinguishment		(41	)		-
Proceeds from issuance of convertible senior notes		86,500			-
Proceeds from issuance of notes payable		9,139			-
Repayments of notes payable		(3,697	)		(4,109	)
Repayments of amounts under equipment financing		(1,738	)		(1,513	)
Principal payments under capital lease obligations		(109	)		(2,816	)
Proceeds from issuance of common stock, net		13,562			19,875
Deferred financing costs		(6,569	)		(20,061	)
Net cash provided by (used in) financing activities		97,460			(33,255	)
Net increase (decrease) in cash and cash equivalents and restricted cash		52,801			(37,462	)
Cash and cash equivalents and restricted cash, beginning of period		5,262			41,404
Cash and cash equivalents and restricted cash, end of period	$	58,063		$	3,942

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)

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

	Six Months Ended June 30,
	2021		2020
Supplemental cash flow disclosure:
Interest paid	$	1,276	$	25,492
Non-cash investing and financing activities:
Issuance of Class A common stock to senior secured term loan lenders		-		1,438
Issuance of Series B preferred stock to senior secured term loan lenders		-		1,050
Exchange of Series A preferred stock for convertible senior notes		24,780		-
Conversion of Series B preferred stock to Class A common stock		1,067		-
Deemed and imputed dividends on Series A preferred stock		750		12,114
Accrued Series A preferred stock dividends		3,811		3,596
Accrued Series B preferred stock dividends		1,522		666
Changes in accrued and unpaid capital expenditures		7,543		13,790
Assets under capital lease obligations		1,113		-

~~See~~The accompanying notes toare an integral part of these condensed consolidated financial statements.

U.S. WELL SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(in thousands, except share amounts)

(unaudited)

	Three Months Ended June 30, 2021
	Class A Common Stock					Class B Common Stock						Additional Paid in			Accumulated			Noncontrolling			Total
	Shares			Amount		Shares			Amount			Capital			Deficit			Interest			Deficit
Balance, March 31, 2021		90,068,356		$	9		-		$	-		$	226,740		$	(342,997	)	$	-		$	(116,248	)
Class A common stock issuance		2,381,660			-		-			-			2,891			-			-			2,891
Conversion of Series B preferred stock to Class A common stock		927,500			-		-			-			270			-			-			270
Exchange of Series A preferred stock for convertible senior notes		-			-		-			-			8,936			-			-			8,936
Share-based compensation		-			-		-			-			1,617			-			-			1,617
Deemed and imputed dividends on Series A preferred stock		-			-		-			-			(286	)		-			-			(286	)
Accrued Series A preferred stock dividends		-			-		-			-			(1,998	)		-			-			(1,998	)
Accrued Series B preferred stock dividends		-			-		-			-			(811	)		-			-			(811	)
Net loss		-			-		-			-			-			(17,716	)		-			(17,716	)
Balance, June 30, 2021		93,377,516		$	9		-		$	-		$	237,359		$	(360,713	)	$	-		$	(123,345	)


	Three Months Ended June 30, 2020
	Class A Common Stock					Class B Common Stock						Additional Paid in			Accumulated			Noncontrolling			Total
	Shares			Amount		Shares			Amount			Capital			Deficit			Interest			Deficit
Balance, March 31, 2020		62,355,657		$	5		5,500,692		$	1		$	218,500		$	(258,909	)	$	-		$	(40,403	)
Class A common stock issuance		5,529,622			1		-			-			1,437			-			-			1,438
Conversion of Class B common stock to Class A common stock		485,795			1		(485,795	)		(1	)		-			-			-			-
Share-based compensation		-			-		-			-			1,307			-			97			1,404
Restricted stock forfeitures		(9,861	)		-		-			-			-			-			-			-
Deemed and imputed dividends on Series A preferred stock		-			-		-			-			(5,142	)		-			-			(5,142	)
Accrued Series A preferred stock dividends		-			-		-			-			(1,845	)		-			-			(1,845	)
Accrued Series B preferred stock dividends		-			-		-			-			(666	)		-			-			(666	)
Net loss		-			-		-			-			-			(19,505	)		(97	)		(19,602	)
Balance, June 30, 2020		68,361,213		$	7		5,014,897		$	-		$	213,591		$	(278,414	)	$	-		$	(64,816	)

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

U.S. WELL SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (continued)

(in thousands, except share amounts)

(unaudited)

	Six Months Ended June 30, 2021
	Class A Common Stock					Class B Common Stock						Additional Paid in			Accumulated			Noncontrolling			Total
	Shares			Amount		Shares			Amount			Capital			Deficit			Interest			Deficit
Balance, December 31, 2020		72,515,342		$	7		2,302,936		$	-		$	217,212		$	(322,431	)	$	-		$	(105,212	)
Class A common stock issuance		15,006,317			1		-			-			13,241			-			-			13,242
Conversion of Class B common stock to Class A common stock		2,302,936			-		(2,302,936	)		-			-			-			-			-
Conversion of Series B preferred stock to Class A common stock		3,673,278			1		-			-			1,067			-			-			1,068
Exchange of Series A preferred stock for convertible senior notes		-			-		-			-			8,936			-			-			8,936
Share-based compensation		-			-		-			-			3,136			-			44			3,180
Tax withholding related to vesting of share-based compensation		(103,697	)		-		-			-			(150	)		-			-			(150	)
Restricted stock forfeitures		(16,660	)		-		-			-			-			-			-			-
Deemed and imputed dividends on Series A preferred stock		-			-		-			-			(750	)		-			-			(750	)
Accrued Series A preferred stock dividends		-			-		-			-			(3,811	)		-			-			(3,811	)
Accrued Series B preferred stock dividends		-			-		-			-			(1,522	)		-			-			(1,522	)
Net loss		-			-		-			-			-			(38,282	)		(44	)		(38,326	)
Balance, June 30, 2021		93,377,516		$	9		-		$	-		$	237,359		$	(360,713	)	$	-		$	(123,345	)


	Six Months Ended June 30, 2020
	Class A Common Stock					Class B Common Stock						Additional Paid in			Accumulated			Noncontrolling			Total Equity
	Shares			Amount		Shares			Amount			Capital			Deficit			Interest			(Deficit)
Balance, December 31, 2019		62,857,624		$	5		5,500,692		$	1		$	225,382		$	(93,091	)	$	10,633		$	142,930
Class A common stock issuance		5,529,622			1		-			-			1,437			-			-			1,438
Conversion of Class B common stock to Class A common stock		485,795			1		(485,795	)		(1	)		-			-			-			-
Share-based compensation		-			-		-			-			3,218			-			264			3,482
Tax withholding related to vesting of share-based compensation		(154,253	)		-		-			-			(70	)		-			-			(70	)
Restricted stock forfeitures		(357,575	)		-		-			-			-			-			-			-
Deemed and imputed dividends on Series A preferred stock		-			-		-			-			(12,114	)		-			-			(12,114	)
Accrued Series A preferred stock dividends		-			-		-			-			(3,596	)		-			-			(3,596	)
Accrued Series B preferred stock dividends		-			-		-			-			(666	)		-			-			(666	)
Net loss		-			-		-			-			-			(185,323	)		(10,897	)		(196,220	)
Balance, June 30, 2020		68,361,213		$	7		5,014,897		$	-		$	213,591		$	(278,414	)	$	-		$	(64,816	)

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

U.S. WELL SERVICES, INC.

~~MATLIN & PARTNERS ACQUISITION CORPORATION~~
~~CONDENSED STATEMENTS OF OPERATIONS~~ Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or where otherwise noted)

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~~NOTE 1 – DESCRIPTION OF ~~CHANGES IN STOCKHOLDERS’ EQUITY~~
~~Nine Months Ended September 30, 2017~~BUSINESS

~~(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 FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~Note 1 — Description of Organization and Business Operations~~

~~Organization and General~~

U.S. Well Services, Inc. (the “Company,” “we,” “us” or “our”), f/k/a Matlin & Partners Acquisition ~~Corporation (the “we”, “us”, “our” or “Company”~~Corp (“MPAC”), ~~was incorporated as~~is a ~~blank check~~Houston, Texas-based technology-focused oilfield service company focused on hydraulic fracturing for oil and natural gas exploration and production (“E&P”) companies in ~~Delaware on March 10, 2016.~~the United States. The ~~Company was formed~~process of hydraulic fracturing involves pumping a pressurized stream of fracturing fluid—typically a mixture of water, chemicals, and proppant—into a well casing or tubing to cause the underground mineral formation to fracture or crack. Fractures release trapped hydrocarbon particles and provide a conductive channel for the ~~purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization~~oil or ~~other similar business combination with one~~natural gas to flow freely to the wellbore for collection. The propping agent or ~~more operating businesses or assets that the Company has not yet identified (the “Initial Business Combination”).~~

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 incomeproppant becomes lodged in the ~~form~~cracks created by the hydraulic fracturing process, “propping” them open to facilitate the flow of ~~interest income on cash~~hydrocarbons from the ~~proceeds derived from~~reservoir to the ~~Public Offering and investment securities purchased with such proceeds.~~

~~Sponsor and Financing~~

well.

The Company’s ~~sponsor is MP Acquisition Sponsor LLC,~~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 are powered by diesel fuel and utilize traditional internal combustion engines, transmissions, and radiators and (2) Clean Fleet^®, which replaces 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 ~~Delaware limited liability company (the “Sponsor”)~~typical fracturing job as a “fleet” and the personnel assigned to each fleet as a “crew”. ~~The registration statement for~~In May 2021, the ~~Company’s Public Offering was declared effective~~Company announced its commitment to becoming an all-electric hydraulic fracturing service provider and that it expects to fully exit the diesel frac market by the ~~United States Securities and Exchange Commission (the “SEC”) on March 9, 2017. On March 15, 2017, the Company consummated the Public Offering~~end 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 3.2021.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Simultaneously 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, 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~~

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 substantially all of the net proceeds are intended to be applied generally toward consummating the Initial Business Combination. Nasdaq Capital Market (“NASDAQ”) rules provide that 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% of the balance in the Trust Account (less any deferred underwriting commissions 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 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 SEC 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 its stockholders with the opportunity to redeem all 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 the completion of the Initial Business Combination, 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 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.

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 GAAP for annual financial statements and should be read in conjunction with the ~~accounting and disclosure rules and regulations of~~annual financial statements included in the Amendment No. 1 to Annual Report on Form 10-K/A for the year ended December 31, 2020 (the “Amended Annual Report”), filed with the Securities and Exchange Commission (“SEC”), on May 17, 2021.

The accompanying unaudited condensed consolidated financial statements and ~~reflect~~accompanying notes present the consolidated financial position, results of operations, cash flows, and stockholders’ deficit of the Company as of June 30, 2021 and December 31, 2020, and for the three and six months ended June 30, 2021 and 2020. 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 periods. 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, 2021 are not necessarily indicative of the results of operations expected for ~~a full year.~~the entire fiscal year ended December 31, 2021.

Principles of Consolidation

The ~~unaudited interim~~ condensed consolidated financial statements ~~should be read in conjunction with~~comprise the ~~audited~~ financial statements and notes thereto included in the final prospectus filed by the Company with the SEC dated March 9, 2017 and with the audited balance sheet included in the Form 8-K filed by the Company with the SEC on March 21, 2017.

~~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 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 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 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.

~~Net Income Per Common Share~~

Net income per common share is computed by dividing net income applicable 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 securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company ~~under~~and its wholly owned subsidiaries. Subsidiaries are fully consolidated from the ~~treasury stock method.~~

~~Concentration~~date of ~~Credit Risk~~

~~Financial instruments that potentially subject~~acquisition, being the date on which the Company obtains control, and continue to ~~concentration of credit risk consist of cash accounts in a~~be consolidated until the date when such control ceases. The 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 value~~statements of the ~~Company’s assets~~subsidiaries are prepared for the same reporting period as the Company. All significant intercompany balances 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.~~transactions are eliminated upon consolidation.

Use of Estimates

The preparation of ~~the balance sheets~~financial statements in conformity with GAAP requires ~~the Company’s~~ management to make estimates and assumptions that affect the amounts reported ~~amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of~~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 long-lived assets, impairment assessments of goodwill and other long-lived assets, estimates of fair value of warrant liabilities, term loan, and convertible senior notes, and the ~~reported amounts~~valuation of ~~expenses during the reporting period.~~share-based compensation and certain equity instruments. Actual results could differ from those estimates.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or where otherwise noted)

~~Offering Costs~~

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 specific purpose, and 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 approved capital expenditures of $513 and $6, respectively, as of June 30, 2021, and $513 and $1,056, respectively, as of December 31, 2020.

The following table provides a reconciliation of the amount of cash and cash equivalents and restricted cash reported on the condensed consolidated balance sheets that sum to the total of the same amounts shown on the condensed consolidated statements of cash flows:

	June 30,
	2021		2020
Cash and cash equivalents	$	57,544	$	3,423
Restricted cash		519		519
Cash and cash equivalents and restricted cash	$	58,063	$	3,942

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 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 inventory item demand in the near future. During the three months ended June 30, 2021, the Company recorded a write-down of $1.4 million related to obsolete inventory parts. As of June 30, 2021 and December 31, 2020, the Company had established inventory reserves of $0.2 million and $0.3 million, respectively, for obsolete and slow-moving inventory.

Property and Equipment

Property and equipment are carried at cost, with depreciation provided on a straight-line basis over their estimated useful lives. Expenditures for renewals and betterments that extend the lives of the assets are capitalized. Amounts spent for maintenance and repairs, which do not improve or extend the life of the related asset, are charged to expense as incurred.

The Company ~~complies~~separately identifies and accounts for certain critical components of its hydraulic fracturing units including the engine, transmission, and pump, which requires us to separately estimate the useful lives of these components. For our other service equipment, we do not separately identify and track depreciation of specific original components. When we replace components of these assets, we typically estimate the net book values of the components that are retired, which are based primarily upon their replacement costs, their ages and their original estimated useful lives.

In the first quarter of 2020, our review of impairment of long-lived assets necessitated a review of the useful lives of our property and equipment. Current trends in hydraulic fracturing equipment operating conditions, such as increasing treating pressures and higher pumping rates, along with the ~~requirements~~increase in daily pumping time are shortening the useful life of ~~FASB~~certain critical components we use. We determined that the average useful life of fluid ends and fuel injectors was less than one year, which resulted in our determination that costs associated with the replacement of these components would no longer be capitalized, but instead expensed as they are used in operations. This change in accounting estimate was made effective in March 2020 and accounted for prospectively.

Assets Held for Sale

Assets that are classified as held for sale are measured at the lower of their carrying amount or fair value less expected selling costs (“estimated selling price”) with a loss recognized to the extent that the carrying amount exceeds the estimated selling price. The classification is applicable at the date upon which the sale of assets is probable and the assets are available for immediate sale in their present condition. Upon determining that an asset meets the criteria to be classified as held for sale, the Company ceases depreciation and reports the assets, if material, in assets held for sale in its condensed consolidated balance sheets.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or where otherwise noted)

When the net carrying value of an asset designated as held for sale exceeds its estimated fair value, which we estimate based on the estimated selling price, we recognize the difference as an impairment charge. When an impairment charge is recorded, subsequent changes to the estimated selling price of assetsheldforsale are recorded as gains or losses to the condensed consolidated statements of operations wherein the recognition of subsequent gains is limited to the cumulative loss previously recognized. During the six months ended June 30, 2021, the Company recorded 0 impairment charges on its held for sale assets.

Goodwill

Goodwill is not amortized, but is reviewed for impairment annually, or more frequently when events or changes in circumstances indicate that the carrying value may not be recoverable. Judgements regarding indicators of potential impairment are based on market conditions and operational performance of the business.

As of December 31 of each year, or as required, the Company performs an impairment analysis of goodwill. The Company may assess its goodwill for impairment initially using a qualitative approach to determine whether conditions exist that indicate it is more likely than not that a reporting unit’s carrying value is greater than its fair value, and if such conditions are identified, then a quantitative analysis will be performed to determine if there is any impairment. The Company may also elect to perform a single step quantitative analysis in which the carrying amount of the reporting unit is compared to its fair value, which the Company estimates using a guideline public company method, a form of the market approach. The guideline public company method utilizes the trading multiples of similarly traded public companies as they relate to the Company’s operating metrics. An impairment charge would be recognized for the amount by which the carrying amount of the reporting unit exceeds the reporting unit’s fair value, and only limited to the total amount of goodwill allocated to the reporting unit.

Warrant Liabilities

The Company evaluates all its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity and ASC ~~340-10-S99-1~~815-15, Derivatives and ~~SEC Staff Accounting Bulletin Topic 5A — “Expenses~~Hedging—Embedded Derivatives. The classification of ~~Offering.” Offering costs were $16,824,469 (including an underwriting fee of $6,000,000~~derivative instruments, including whether such instruments should be recorded as liabilities or equity is evaluated pursuant to ASC 815-40,Derivatives and ~~deferred underwriting commissions of $10,250,000), consisting principally of costs incurred~~Hedging—Contracts in Entity’s Own Equity.

The Company issued public warrants and private placement warrants (collectively, the “public and private placement warrants”) in connection with ~~formation and preparation for~~its initial public offering in November 2018. Additionally, the ~~Public Offering. These offering costs were charged~~Company issued warrants to ~~additional paid~~certain institutional investors in ~~capital upon closing of the Public Offering on March 15, 2017.~~

~~Redeemable Class A Common Stock~~

As discussed in Note 1, 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 underconnection with the Company’s ~~Liquidation or Tender Offer/Stockholder Approval provisions. In accordance~~private placement of Series A Preferred Stock on May 24, 2019 (“Series A warrants,” and together with ~~FASB ASC 480, redemption provisions not solely within~~ the ~~control of~~public and private placement warrants, the ~~Company require~~“warrants”). All our outstanding warrants are recognized as liabilities. Accordingly, we recognize the ~~security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption~~warrant instruments as liabilities at fair value upon issuance 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~~instruments to ~~equal the redemption~~fair value at the end of each reporting period. ~~Increases~~Any change in fair value is recognized in our condensed consolidated statements of operations. The public warrants are valued using their quoted market price since they are publicly traded and thus had an observable market price. The private placement warrants are valued using a Monte Carlo simulation model. The Series A warrants are valued using the Black-Scholes option pricing model.

Convertible Notes and Convertible Preferred Stock

When the Company issues convertible notes or ~~decreases~~convertible preferred stock, it first evaluates the balance sheet classification of the convertible instrument in its entirety to determine whether the instrument should be classified as a liability under ASC 480 and second whether the conversion feature should be accounted for separately from the host instrument. A conversion feature of a convertible note instrument or certain convertible preferred stock would be separated from the convertible instrument and classified as a derivative liability if the conversion feature, were it a standalone instrument, meets the definition of an “embedded derivative” in ASC 815-15. Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, as defined in ASC 815-40, or when it must be settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it would be separated from the host instrument and classified as a derivative liability carried on the condensed consolidated balance sheet at fair value, with any changes in its fair value recognized in the ~~carrying~~condensed consolidated statements of operations.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or where otherwise noted)

If a conversion feature does not meet the conditions to be separated and accounted for as an embedded derivative liability, the Company then determines whether the conversion feature is “beneficial”. A conversion feature would be considered beneficial if the conversion feature is “in the money” when the host instrument is issued or, under certain circumstances, at a later time. The beneficial conversion feature (“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.

If the convertible note contains a BCF, the amount of ~~redeemable Class~~the proceeds allocated to the BCF reduces the balance of the convertible note, creating a discount which is amortized over the note’s term to interest expense in the condensed consolidated statements of operations.

When a convertible preferred stock contains a BCF, after allocating the proceeds to the BCF, the resulting discount is either amortized as deemed dividends over the period beginning when the convertible preferred stock is issued up to the earliest date the conversion feature may be exercised, or if the conversion feature is immediately exercisable, the discount is fully amortized at the date of issuance.

Fair Value of Financial Instruments

Fair value is defined under 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, 2021 and December 31, 2020:

Senior Secured Term Loan. The fair value of the Senior Secured Term Loan is $193.2 million and $198.0 million as of June 30, 2021 and December 31, 2020, respectively, based on the market price quoted from external sources. If the Senior Secured Term Loan was measured at fair value in the financial statements, it would be classified as Level 2 in the fair value hierarchy.

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, 2021 and December 31, 2020, respectively.

Warrants. The Company’s warrants are accounted for as liabilities and measured at fair value. See “Note 8 – Warrant Liabilities” for fair value measurements associated with the Company’s warrants.

Convertible Senior Notes. As of June 30, 2021, the fair value of the Convertible Senior Notes is $91.2 million, based on an option pricing framework using a lattice model. If the Convertible Senior Notes were measured at fair value in the financial statements, they would be classified as Level 2 in the fair value hierarchy.

Revenue Recognition

The Company recognizes revenue based on 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.

The Company’s performance obligations are satisfied over time, typically measured by the number of stages completed or the number of pumping days a fleet is available to pump for a customer in a month. 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. A ~~common stock shall~~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.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or where otherwise noted)

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.

Patent License Sales. On June 24, 2021, the Company issued a Convertible Senior Note (See “Note 11 – Convertible Senior Notes”) convertible into a patent license agreement. On June 29, 2021, the holder exercised its right to convert the Convertible Senior Note in full and the Company entered into a Patent License Agreement (the “License Agreement”), which provides the licensee afive-year option to purchase up to 20 licenses to build and operate electric hydraulic fracturing fleets using the Company’s patented Clean Fleet^® technology (the “licenses”). Upon entry into the License Agreement, the Company sold 3 licenses to build and operate 3 electric frac fleets, each valued at $7.5 million.

The sales of the right to use the Company’s patented Clean Fleet^® technology is a single performance obligation. The Company recognizes the income associated with the patent license sales at the point in time when the Company satisfies its performance obligation by granting the purchaser the right to use the patented Clean Fleet^® technology and transfer of control has occurred. The patent license sales are recognized as other income in our condensed consolidated statement of operations.

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 customer. Receivable balances are charged off when they are considered uncollectible by management. Recoveries of receivables previously charged off are recorded as income when received.

During the six months ended June 30, 2021, the Company entered into an Assignment of Claim Agreement (the “Assignment”) with a third-party, whereby the Company transferred to the third-party all right, title, and interest in the Company’s claim in the amount of $14.5 million in connection with a customer’s bankruptcy. The Assignment was for consideration of $2.5 million, which the Company received on April 26, 2021. During the first quarter of 2021, the Company wrote-off the related receivables of $12.0 million, which was the unrealized amount of the claim assigned and was previously reserved for in full as of December 31, 2020. As of June 30, 2021, the Company did 0t record an allowance for doubtful accounts.

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 ~~charges against additional paid~~changes in ~~capital. Accordingly, at September 30, 2017, 31,132,810~~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 tables show the ~~32,500,000~~percentage of revenues from our significant customers for the periods indicated:

	Three Months Ended June 30,
	2021	2020
Customer B	12.9%	19.0%
Customer C	10.6%	24.1%
Customer E	19.6%	26.5%
Customer F	17.8%	30.4%
Customer H	12.1%	*
Customer I	11.4%	*

	Six Months Ended June 30,
	2021	2020
Customer A	*	17.2%
Customer B	12.9%	15.2%
Customer C	11.6%	16.4%
Customer E	18.1%	12.5%
Customer F	19.0%	14.6%
Customer H	15.2%	*

An asterisk indicates that revenue is less than 10 percent.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except 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.~~and per share amounts, or where otherwise noted)

~~Income Taxes~~

The following table shows the percentage of trade receivables from our significant customers:

	June 30, 2021	December 31, 2020
Customer B	12.8%	32.2%
Customer C	*	17.0%
Customer D	10.6%	*
Customer E	27.3%	*
Customer F	13.1%	12.7%
Customer G	*	12.5%
Customer H	*	13.5%
Customer I	16.4%	*

An asterisk indicates that trade receivable is less than 10 percent.

Income Taxes

The Company, ~~follows~~under ASC 740, Accounting for Income Taxes, uses the asset and liability method of accounting for income taxes, under ~~FASB ASC 740, “Income Taxes.” Deferred~~which deferred tax assets and liabilities are recognized for the ~~estimated~~ future tax consequences ~~attributable to~~of (i) temporary differences between the financial ~~statements~~statement carrying amounts and the tax bases of existing assets and liabilities and ~~their respective~~(ii) operating loss and tax ~~bases.~~credit carryforwards. Deferred income tax assets and liabilities are ~~measured using~~based on enacted tax rates ~~expected~~applicable to ~~apply to taxable income in~~ the ~~years in which~~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 ~~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~~rate change is enacted. A valuation allowance is provided for deferred tax assets towhen it is more likely than not the ~~amount expected to~~deferred tax assets will not 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~~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. NoNaN amounts were accrued for the payment of interest and penalties at ~~September~~June 30, ~~2017.~~2021. 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~~

NOTE 3 – ACCOUNTING STANDARDS

Except as discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, ~~2017 and December 31, 2016,~~2021, as compared to the ~~Company had no material deferred tax assets.~~

~~Marketable Securities Held in Trust Account~~

~~The amounts held~~recent accounting pronouncements described in the ~~Trust Account represent proceeds from~~Amended Annual Report, that are of significance, or potential significance to the ~~Public Offering~~Company.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, requiring a customer in a cloud computing arrangement that is a service contract to follow the guidance in ASC 350-40 in determining the requirements for capitalizing implementation costs incurred to develop or obtain internal-use-software. The new guidance will be effective for emerging growth companies for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. Early adoption is permitted. The Company adopted ASU 2018-15 on January 1, 2021, and the ~~Private Placement~~adoption 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~~this standard did not ~~believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would~~ have a material ~~effect~~impact on the Company’s consolidated financial statements.

NOTE 4 – PREPAIDS AND OTHER CURRENT ASSETS

~~Note 3 — Public Offering~~Prepaids and other current assets consisted of the following:

	June 30, 2021		December 31, 2020
Prepaid insurance	$	9,519	$	3,162
Recoverable costs from insurance		-		4,635
Income tax receivable		757		1,567
Other current assets		2,124		1,343
Total prepaid expenses and other current assets	$	12,400	$	10,707

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or where otherwise noted)

~~Pursuant to~~

During the ~~Public Offering,~~six months ended June 30, 2021, the Company ~~sold 32,500,000 Units, including a partial exercise~~prepaid $11.7 million in insurance premiums related to renewals of various insurance policies.

The $4.6 million of recoverable costs from insurance, recorded as of December 31, 2020, was collected in full during the first quarter of 2021.

NOTE 5 – INTANGIBLE ASSETS

A summary of intangible assets consisted of the ~~Underwriter’s over-allotment option~~following:

	Estimated Useful Life (in years)	Gross Carrying Value		Accumulated Amortization		Net Book Value
As of June 30, 2021
Trademarks	10	$	1,415	$	260	$	1,155
Patents	20		12,775		947		11,828
		$	14,190	$	1,207	$	12,983
As of December 31, 2020
Trademarks	10	$	1,415	$	156	$	1,259
Patents	20		12,775		568		12,207
		$	14,190	$	724	$	13,466

The intangible assets are amortized over the period the Company expects to receive the related economic benefit. Amortization expense related to amortizable intangible assets was $0.3 million and $0.2 million for the three months ended June 30, 2021 and 2020, respectively, and $0.5 million and $0.6 million for the six months ended June 30, 2021 and 2020, respectively, which was included as part of ~~2,500,000 Units.~~ depreciation and amortization in the condensed consolidated statements of operations.

As of June 30, 2021, the estimated amortization expense for future periods is as follows:

Fiscal Year	Estimated Amortization Expense
Remainder of 2021	$	483
2022		966
2023		966
2024		966
2025		966
Thereafter		8,636
Total	$	12,983

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or where otherwise noted)

NOTE 6 – PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following:

	Estimated Useful Life (in years)	June 30, 2021			December 31, 2020
Fracturing equipment	1.5 to 25	$	235,095		$	263,869
Light duty vehicles ⁽¹⁾	5		3,943			2,483
Furniture and fixtures	5		67			67
IT equipment	3		2,306			1,676
Auxiliary equipment	2 to 20		12,686			11,058
Leasehold improvements	Term of lease		287			287
			254,384			279,440
Less: Accumulated depreciation and amortization			(41,083	)		(44,108	)
Property and equipment, net		$	213,301		$	235,332

(1)	As of June 30, 2021 and December 31, 2020, the Company had capitalized $1.5 million and $0.3 million, respectively, related to capital leases and the accumulated depreciation was $127 and $31, respectively.

Depreciation and amortization expense related to property and equipment was $9.6 million and $17.4 million for the three months ended June 30, 2021 and 2020, respectively, and $20.5 million and $49.4 million for the six months ended June 30, 2021 and 2020, respectively.

The ~~Units were sold at~~Company recognized a gain of $0.5 million and a loss of $0.9 million from the disposal of assets for the three months ended June 30, 2021 and 2020, respectively, and a loss of $1.9 million and $5.1 million for the six months ended June 30, 2021 and 2020, respectively.

Assets Held for Sale

In May 2021, the Company announced its commitment to becoming an ~~offering price~~all-electric hydraulic fracturing services provider and that it expects to fully exit the diesel frac market by the end of ~~$10 per Unit, generating gross proceeds of $325,000,000.~~2021. As a result, the Company has been executing a plan to sell its diesel fracturing equipment. As of June 30, 2021, the Company has classified $14.7 million in net book value of diesel fracturing equipment, that is anticipated to be sold in the next 12 months, as assets held for sale on the condensed consolidated balance sheet.

NOTE 7 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the ~~Underwriter’s partial exercise~~following:

	June 30, 2021		December 31, 2020
Accrued payroll and benefits	$	6,636	$	7,208
Accrued taxes		3,335		5,380
Accrued interest		638		317
Other current liabilities		1,601		1,876
Accrued expenses and other current liabilities	$	12,210	$	14,781

NOTE 8 – WARRANT LIABILITIES

Warrants

As of ~~the over-allotment option, the Sponsor forfeited 500,000~~June 30, 2021, a total of 19,167,417 public warrants and private placement warrants were outstanding, and exercisable for an aggregate of 9,583,709 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,~~stock. Each public warrant and ~~one~~private placement warrant ~~(“Warrant”). Each Warrant~~ entitles ~~the~~its holder to purchase ~~one-half~~one half of one share of Class A common stock at an exercise price of $5.75 per half share ($11.50 ~~per~~for full share equivalent), to be exercised only for a whole ~~share). Each Warrant will become exercisable~~number of shares of Class A common stock. The public warrants and private placement warrants expire 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 CombinationNovember 9, 2023 or earlier upon ~~redemption or liquidation. Once~~redemption.

During the ~~Warrants become exercisable,~~three and six months ended June 30, 2021, the Company ~~may redeem~~issued 444,444 and 888,888 additional Series A warrants to the purchasers of Series A preferred stock, respectively, in accordance with the Series A preferred stock purchase agreement. As of June 30, 2021, 5,733,329 Series A warrants were outstanding pursuant to the Series A preferred stock purchase agreement, and exercisable for 5,733,329 shares of Class A common stock. The Series A warrants have an exercise price of $7.66 per share and expire on November 25, 2025.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or where otherwise noted)

Fair Value Measurement

The Company’s warrants are accounted for as liabilities measured at fair value upon issuance, with subsequent changes in fair value reported in the Company’s condensed consolidated statements of operations each reporting period.

The following tables present the Company's fair value hierarchy for liabilities measured at fair value on a recurring basis:

	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Total
As of June 30, 2021
Public warrants	$	1,809	$	-	$	-	$	1,809
Private placement warrants		-		1,880		-		1,880
Series A warrants		-		5,225		-		5,225
	$	1,809	$	7,105	$	-	$	8,914
As of December 31, 2020
Public warrants	$	254	$	-	$	-	$	254
Private placement warrants		-		248		-		248
Series A warrants		-		1,117		-		1,117
	$	254	$	1,365	$	-	$	1,619

Public warrants. The fair value of the public warrants are classified as Level 1 in the fair value hierarchy and valued using quoted market prices, as they are traded in active markets.

Private placement warrants. The fair value of the private placement warrants are classified as Level 2 in the fair value hierarchy and determined using a Monte Carlo simulation model.

Series A warrants. The fair value of the Series A warrants are classified as Level 2 in the fair value hierarchy and determined using the Black-Scholes valuation method.

The following assumptions were used to calculate the fair value for the private placement warrants and Series A warrants:

	Private Placement Warrants	Series A Warrants
As of June 30, 2021
Expected remaining life	2.4 years	4.4 years
Volatility rate	153.0%	153.0%
Risk-free interest rate	0.3%	0.7%
Expected dividend rate	0%	0%

As of December 30, 2020
Expected remaining life	2.86 years	4.9 years
Volatility rate	115.8%	115.8%
Risk-free interest rate	0.2%	0.4%
Expected dividend rate	0%	0%

NOTE 9 – NOTES PAYABLE

During the six months ended June 30, 2021, the Company entered into various insurance premium finance agreements amounting to $9.1 million, payable in equal monthly installments at a weighted average interest rate of 5.4%. These premium finance agreements are due within one year and are recorded as notes payable under current liabilities in the condensed consolidated balance sheets. As of June 30, 2021, the Company had a remaining balance of $6.4 million related to the notes payable.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or where otherwise noted)

NOTE 10 – DEBT

Long-term debt consisted of the following:

	June 30, 2021			December 31, 2020
Senior Secured Term Loan	$	233,687		$	246,250
ABL Credit Facility		33,682			23,710
PPP Loan		10,000			10,000
USDA Loan		25,000			21,996
Equipment financing		11,128			12,866
Capital leases		1,234			229
Total debt principal balance		314,731			315,051
Unamortized debt discount and issuance costs		(9,317	)		(17,576	)
Current maturities		(15,936	)		(13,573	)
Net Long-term debt	$	289,478		$	283,902

Senior Secured Term Loan

On June 24, 2021, the Company, USWS LLC, as the borrower, and all other subsidiaries of the Company entered into a Fifth Amendment (the “Fifth Term Loan Amendment”) to the Senior Secured Term Loan Credit Agreement (as amended, the “Senior Secured Term Loan”) with CLMG Corp., as administrative and collateral agent, and the lenders party thereto. The Senior Secured Term Loan matures on December 5, 2025.

Pursuant to the Fifth Term Loan Amendment, the agent and lenders agreed to make certain modifications and amendments to the Senior Secured Term Loan to, among other things, permit the incurrence of debt and liens in connection with the Convertible Senior Notes as described in “Note 11 – Convertible Senior Notes”. Additionally, pursuant to the Fifth Term Loan Amendment, other covenants were amended including, but not limited to, certain covenants relating to collateral, asset dispositions, and special purpose entities used for stand-alone equipment financings. In the Fifth Term Loan Amendment, the Company also agreed to a mandatory prepayment of $7.0 million, which is payable within 30 days of the Fifth Term Loan Amendment as long as certain requirements in the ABL Credit Facility agreement are met.

The deferral period for interest on the Senior Secured Term Loan was shortened by three months, to January 1, 2022, in accordance with the Fifth Term Loan Amendment, and the Senior Secured Term Loan will resume incurring interest at that date at the applicable benchmark rate, subject to a 2.0% floor, plus the applicable margin of 8.25% per annum, subject to the following exceptions. If on December 31, 2021, either:

•

the outstanding principal amount of the Senior Secured Term Loan is equal to or less than $132.0 million but greater than $110.0 million then the interest rate shall be 0.0% per annum from January 1, 2022 through March 31, 2022; and

•

the outstanding principal amount of the Senior Secured Term Loan is equal to or less than $110.0 million then the interest rate shall be 0.0% per annum from January 1, 2022 through March 31, 2022 and 2.0% per annum from April 1, 2022 through December 31, 2022, provided, that if on April 1, 2022, the outstanding principal amount of the Senior Secured Term Loan is equal to or less than $103.0 million then the interest rate shall be 1.0% per annum from April 1, 2022 through December 31, 2022.

Since April 2020, the Company has accounted for the Senior Secured Term Loan as a troubled debt restructuring under ASC 470-60, Troubled Debt Restructurings by Debtors. The subsequent amendments, including the Fifth Term Loan Amendment, did not result in a significant modification or extinguishment resulting in no change in accounting for the Senior Secured Term Loan. In connection with the Fifth Term Loan Amendment, the Company paid $3.0 million to the lenders under the Senior Secured Term Loan, which was accounted for as a debt discount and is amortized to interest expense using the effective interest method over the remaining term of the Senior Secured Term Loan.

During the six months ended June 30, 2021, the Company made principal payments of $12.6 million, which included prepayments of $7.6 million. The early repayment of debt resulted in a write-off of $798 of unamortized debt discount and issuance costs and prepayment fees of $41, all of which were presented as loss on extinguishment of debt in the condensed consolidated statements of operations.

As of June 30, 2021, the outstanding ~~warrants~~ principal balance of the Senior Secured Term Loan was $233.7 million, of which $12.0 million was due within one year from the balance sheet date.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in ~~whole~~thousands, except shares and per share amounts, or where otherwise noted)

ABL Credit Facility

On June 24, 2021, the Company, USWS LLC, and all other subsidiaries of the Company entered into a Fourth Amendment (the “Fourth ABL Amendment”) to the ABL Credit Agreement (as amended, the “ABL Credit Facility”) with the lenders party thereto and Bank of America, N.A., as the administrative agent, swing line lender and letter of credit issuer. The ABL Credit Facility matures on April 1, 2025.

Pursuant to the Fourth ABL Amendment, the lenders agreed to make certain modifications and amendments to the ABL Credit Facility to, among other things, permit the incurrence of debt and liens in connection with the Convertible Senior Notes.

The ABL Credit Facility is subject to a borrowing base which is calculated based on a formula referencing the Company’s eligible accounts receivables. As of June 30, 2021, the borrowing base was $46.3 million and the outstanding revolver loan balance was $33.7 million, classified as long-term debt in the condensed consolidated balance sheets.

USDA Loan

In November 2020, we entered into a Business Loan Agreement (the “USDA Loan”) with a commercial bank pursuant to the United States Department of Agriculture, Business & Industry Coronavirus Aid, Relief, and Economic Security Act Guaranteed Loan Program, in the aggregate principal amount of up to $25.0 million for the purpose of providing long-term financing for eligible working capital. Interest payments are due monthly at the interest rate of 5.75% per annum beginning on December 12, 2020 but principal payments are not required until December 12, 2023. During the fourth quarter of 2020, we received proceeds amounting to $22.0 million under the USDA Loan. In January 2021, we received the remaining proceeds amounting to $3.0 million.

Payments of Debt Obligations due by Period

As of June 30, 2021, the schedule of the repayment requirements of long-term debt is as follows:

	Principal Amount
Fiscal Year	of Long-term Debt
Remainder of 2021	$	11,442
2022		9,042
2023		9,517
2024		10,054
2025		256,098
Thereafter		18,578
Total	$	314,731

NOTE 11 – CONVERTIBLE SENIOR NOTES

On June 24, 2021, the Company entered into a Note Purchase Agreement (as amended, the “Note Purchase Agreement”). As of June 30, 2021, pursuant to the Note Purchase Agreement, the Company issued $125.5 million in ~~part~~aggregate principal amount of 16.0% Convertible Senior Secured (Third Lien) PIK Notes due June 5, 2026 (the “Convertible Senior Notes”), in a private placement to institutional investors (the “Private Placement”), comprised of Cash Notes, Exchange Notes (collectively with the Cash Notes, the “Equity Linked Notes”) and a License Linked Note, as described below, which mature on June 5, 2026. The Convertible Senior Notes are secured by a third priority security interest in the collateral that secures the Company’s obligations under the Senior Secured Term Loan.

Cash Notes. On June 24, 2021, in connection with the Private Placement, the Company issued and sold $45.0 million in principal amount of Convertible Senior Notes that are convertible at ~~a price of $0.01 per Warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if~~any time at the ~~last sale price~~holder’s option, into shares of the Company’s Class A common stock ~~equals or exceeds $24.00 per share~~ for ~~any 20 trading days within a 30-trading day period ending on the third trading day prior~~cash (the “Cash Notes”) with an applicable initial conversion price of $0.98 subject to ~~the date on which~~adjustment. On June 25, 2021, the Company ~~sent~~issued and sold an additional $19.0 million in principal amount of Cash Notes with an applicable initial conversion price of $1.25 subject to adjustment.

Exchange Notes. On June 24, 2021, in connection with the ~~notice of redemption to the Warrant holders.~~

~~Note 4 — Related Party Transactions~~

Private Placement, ~~Warrants~~

~~Simultaneously with~~ the ~~Public Offering,~~Company issued and sold $20.0 million in principal amount of Convertible Senior Notes that are convertible at any time at 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 shareholder’s option, into shares of the Company’s Class A common stock in exchange for 15,588 shares of the Company’s Series A preferred stock (the “Exchange Notes”). On June 25, 2021, the Company issued and sold an additional $19.0 million in principal amount of Exchange Notes for 14,802 shares of Series A preferred stock. The Exchange Notes are convertible at aan initial conversion price of ~~$5.75~~$2.00 subject to adjustment.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per ~~half~~ share ~~($11.50 per whole share). A portion of the purchase price of~~amounts, or where otherwise noted)

License Linked Note. On June 24, 2021, in connection with the Private Placement, ~~Warrants~~the Company issued and sold $22.5 million in principal amount of a Convertible Senior Note that was ~~added~~convertible into a patent license agreement (the “License Linked Note”). On June 29, 2021, the holder exercised its right to convert the License Linked Note in full and the Company entered into the License Agreement, which provides the licensee a five-year option to purchase up to 20 licenses to build and operate electric hydraulic fracturing fleets using the Company’s patented Clean Fleet^® technology (the “licenses”). Upon entry into the License Agreement, the holder purchased 3 licenses to build and operate 3 electric frac fleets, each valued at $7.5 million. The Company recognized the $22.5 million as other income from patent license sales in its condensed consolidated statement of operations. The debt issuance costs associated with the License Linked Note were fully amortized.

The carrying value of the Convertible Senior Notes is as follows:

	June 30, 2021
Principal	$	103,000
PIK interest		258
Unamortized debt premium		1,898
Unamortized debt discount and issuance costs		(19,479	)
Net Convertible Senior Notes	$	85,677

In June 2021, the Company received $86.5 million in cash proceeds from the issuance of the Convertible Senior Notes. The Company used a portion of the proceeds from the ~~Public Offering held in the Trust Account pending completion~~issuance of the ~~Initial Business Combination~~Convertible Senior Notes to pay the cash settlement amount in accordance with the Settlement Agreement (as described in “Note 17 – Commitments and Contingencies”) and expects to use the remainder for general corporate purposes, including growth capital.

The Convertible Senior Notes bear interest at a rate of 16.0% per annum. Accrued and unpaid interest is calculated on the last day of each quarter, commencing September 30, 2021, and will be paid in kind (“PIK”) on such ~~that at~~date by increasing the ~~closing~~principal amount of the ~~Public Offering $325~~outstanding Convertible Senior Notes. The Company has accrued PIK interest of $0.3 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 (subjectrelated to the ~~requirements of applicable law) and~~Convertible Senior Notes for the ~~Private Placement Warrants issued to the Sponsor and the Underwriter will expire worthless.~~three months ended June 30, 2021.

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 sharesEach Equity Linked Note, subject to ~~forfeiture by the Sponsor to the extent that the Underwriter’s over-allotment was not exercised~~earlier conversion, is due and payable on June 5, 2026 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 to~~exercise 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 upon conversion thereof. The Founder Shares are identical~~equal to the ~~Class A common stock included in~~entire outstanding and unpaid principal balance, plus any PIK interest, subject to certain limitations on the ~~Units sold in the Public Offering except that the Founder Shares automatically convert into~~number of shares of Class A common stock atthat may be issued and which would require the ~~time~~Company to settle the conversion in payment partially in cash. The number of ~~the Company’s Initial Business Combination and are subject to certain transfer restrictions, as described in more detail below.Holders~~shares of ~~the~~ Class FA common stock ~~and holders~~will be based on the twenty-day volume weighted average trading price of the Class A common stock ~~will vote together~~immediately preceding the maturity date. The Equity Linked Notes are convertible at any time at the option of the holder into a number of shares of Class A common stock equal to the principal amount of such notes then outstanding plus PIK interest through the conversion date divided by the then applicable conversion price as described above. If the Company experiences an event of default (as defined in the Note Purchase Agreement), which is continuing on the maturity date, then payment of principal and PIK interest shall be made in cash on any outstanding Equity Linked Notes.

Additionally, following the first anniversary of the Note Purchase Agreement, and at any time in which there are 0 issued and outstanding shares of Series A preferred stock or Series B preferred stock, if the twenty-day volume weighted average trading price of the Class A common stock is greater than $2.00 for 10 trading days during any 20 consecutive trading day period, the Company may deliver a ~~single class on all matters submitted~~notice to the holder of an Equity Linked Note to convert such Equity Linked Notes at the conversion prices set forth above.

In accordance with ASC 480,the Company evaluated the Equity Linked Notes and determined they should be classified as liabilities due to the unconditional obligation to settle the notes in a ~~vote~~variable number of shares of the Company’s ~~stockholders, except~~Class A common stock based on a fixed monetary amount known at inception. Certain of the Equity Linked Notes issued were initially measured at fair value as ~~required by law.~~they were considered new instruments issued concurrently to extinguish the Series A preferred stock. See “Note 12 – Mezzanine Equity” for the discussion of Series A preferred stock exchange.

The initial measurement at fair value of those certain Equity Linked Notes resulted in the Company recording a premium of $1.9 million and a total discount of $16.1 million. The Company amortizes such premium and discount as an adjustment to interest expense using the effective interest method over the term of the Equity Linked Notes.

We incurred transaction costs related to the issuance of the Convertible Senior Notes of $4.0 million which were recorded as debt issuance costs and are presented as a direct deduction from the carrying amount of the Convertible Senior Notes on our condensed consolidated balance sheet. The debt issuance costs are being amortized under the effective interest method over the term of the Convertible Senior Notes. Amortization expense is included in interest expense and was $0.7 million related to the Convertible Senior Notes for the three months ended June 30, 2021.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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;(in thousands, except shares 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 Warrantsamounts, 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.where otherwise noted)

~~Related Party Transactions~~

NOTE 12 – MEZZANINE EQUITY

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~~

Series A Redeemable Convertible Preferred Stock

The following table ~~presents information about~~summarizes the Company’s ~~assets that are measured~~Series A Redeemable Convertible Preferred Stock, par value $0.0001 per share (“Series A preferred stock”) activities for the six months ended June 30, 2021:

	Shares			Amount
Series A preferred stock as of December 31, 2020		50,000		$	50,975
Exchange of Series A preferred stock for Convertible Senior Notes		(30,390	)		(33,716	)
Deemed and imputed dividends on Series A preferred stock		-			750
Accrued Series A preferred stock dividends		-			3,811
Series A preferred stock as of June 30, 2021		19,610		$	21,820

At the initial closing of the Series A preferred stock purchase agreement on May 24, 2019, the Company issued Series A warrants exercisable for shares of Class A common stock. See “Note 8 – Warrant Liabilities” for the discussion of the Series A warrants issued pursuant to the Series A preferred stock purchase agreement.

During the three months ended June 30, 2021, the Company exchanged 30,390 shares of Series A preferred stock for $39.0 million in principal amount of Convertible Senior Notes. Accordingly, the Company recorded a ~~recurring basis as~~reduction of ~~September~~$33.7 million in the carrying value of the Series A preferred stock during the three months ended June 30, ~~2017 and indicates~~2021. Concurrent with such exchange, the Company also received, from such holders of the Series A preferred stock total cash proceeds of $39.0 million in consideration for an additional $39.0 million in principal amount of Convertible Senior Notes. In connection with the extinguishment of the Series A preferred stock, the Company initially recorded the Convertible Senior Notes issued to such holders at a total fair value of $63.8 million. The difference of $8.9 millionbetween the fair value ~~hierarchy~~ of the ~~valuation techniques that~~Convertible Senior Notes issued and the ~~Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted)~~carrying amount of $72.7 million of consideration received was recorded in ~~active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable, such~~additional paid in capital as ~~quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points~~a return from the Series A preferred holders for the ~~asset or liability,~~three months ended June 30, 2021.

As of June 30, 2021, 19,610 shares of Series A preferred stock were outstanding and ~~includes situations where there is little, if any, market activity~~convertible into 3,782,285 shares of Class A common stock, and dividends accrued and outstanding with respect to the Series A preferred stock were $5.6 million and reflected in the carrying value of Series A preferred stock.

Series B Redeemable Convertible Preferred Stock

The following table summarizes the Company’s Series B Redeemable Convertible Preferred Stock, par value $0.0001 per share (“Series B preferred stock”) activities for the ~~asset or liability.~~six months ended June 30, 2021:

	Shares			Amount
Series B preferred stock as of December 31, 2020		22,050		$	22,686
Conversion of Series B preferred stock to Class A common stock		(1,012	)		(1,067	)
Accrued Series B preferred stock dividends		-			1,522
Series B preferred stock as of June 30, 2021		21,038		$	23,141

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~~In February 2021 and May 2021, 762 and 250 shares of ~~two percent (2.0%)~~Series B preferred stock and related accrued dividends were converted into 2,745,778 and 927,500 shares of ~~the gross proceeds of the Public Offering, excluding any amounts raised~~Class A common stock, respectively, pursuant to the ~~overallotment option, or $6,000,000. In addition,~~certificate of designations authorizing and establishing the ~~Underwriter is entitled to aggregate deferred underwriting commissions of $10,250,000 consisting of (i) three percent (3.0%)~~rights, preferences, and privileges of the ~~gross proceeds~~Series B preferred stock. Accordingly, the Company recorded a reduction of $0.3 million and $1.1 million in the carrying value of the ~~Public Offering, excluding any amounts raised pursuant~~Series B preferred stock during the three and six months ended June 30, 2021, respectively.

As of June 30, 2021, 21,038 shares of Series B preferred stock were outstanding and convertible into 79,512,587 shares of Class A common stock, and dividends accrued and outstanding with respect to the ~~overallotment option,~~Series B preferred stock was $3.5 million and ~~(ii) five percent (5.0%) of the gross proceeds of the Units sold~~reflected 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 termscarrying value of ~~the underwriting agreement.~~Series B preferred stock.

NOTE 13 – STOCKHOLDERS’ EQUITY

~~Note 8 — Stockholders’ Equity~~Shares Authorized and Outstanding

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 30, 2017 and December 31, 2016, there were no shares~~See “Note 12 – Mezzanine Equity” for the discussion of preferred stock issued and outstanding.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or ~~outstanding.~~where otherwise noted)

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. As of June 30, 2021 and ~~10,000,000~~December 31, 2020, there were 93,377,516 and 72,515,342 shares of Class FA common stock issued and outstanding, respectively. As of June 30, 2021, 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.

On June 26, 2020, the Company entered into an Equity Distribution Agreement (the “ATM Agreement”) with Piper Sandler & Co. relating to the Company’s shares of Class A common stock. In accordance with the terms of the ATM Agreement, the Company may offer and sell shares of our Class A common stock over a period of time. The ATM Agreement relates to an “at-the-market” offering program. Under the ATM Agreement, the Company will pay Piper Sandler an aggregate commission of up to 3% of the gross sales price per share of Class A common stock sold under the ATM Agreement. On March 19, 2021, the Company increased the number of shares of Class A common stock that it may offer in accordance with the terms of the ATM Agreement by an additional $39.7 million in excess of the original amount of $10.3 million.

During the three and six months ended June 30, 2021, the Company sold 2,381,660 and 15,006,317 shares of Class A common stock for total net proceeds of $2.9 million and $13.6 million and paid $0.1 million and $0.4 million in commissions under the ATM Agreement, respectively. The Company did 0t sell any shares of Class A common stock under the ATM Agreement during the three months ended June 30, 2020. Since inception on June 26, 2020 through June 30, 2021, the Company has sold a total of 15,798,575 shares of Class A common stock under the ATM Agreement for total net proceeds of $14.0 million and paid $0.4 million in commissions.

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.

As of December 31, 2020, there were 2,302,936 shares of Class B common stock issued and outstanding, which were all 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 ~~which~~during the Company is authorized to issue at the same time as the Company’s stockholders vote on the business combination to the extent the Company seeks stockholder approval in connection with the Initial Business Combination. Holderssix months ended June 30, 2021. As of ~~the Company’s common stock are entitled to one vote for each common share. At September~~June 30, ~~2017,~~2021, there were ~~32,500,000~~0 shares of Class ~~A common stock (of which 31,132,810 were classified outside of permanent equity) and 8,125,000 shares of Class F~~B common stock issued and outstanding. ~~At December 31, 2016, there were no~~

Noncontrolling Interest

During the first quarter of 2021, the remaining noncontrolling interest holders of USWS Holdings exchanged all of their respective shares of Class A common stock issued and outstanding and 8,625,000 shares of Class F common stock were issued and outstanding. 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 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 warrants 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, iffor 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 or earlier upon redemption or liquidation.

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) 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 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 day prior to the date on which the Company send the notice of redemption to the warrants holders.

If the Company calls the warrants for redemption, management will have the option to require all holders that wish to exercise the warrants to do so on a “cashless basis”. The exercise price and number of shares of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete an Initial Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution fromstock. Accordingly, USWS Holdings became the Company’s ~~assets held outside~~wholly owned subsidiary as of ~~the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.~~March 31, 2021.

~~Item 2.~~

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

NOTE 14 – EARNINGS (LOSS) PER SHARE

References to the "Company," "us," “our” or "we" refer Matlin & Partners Acquisition Corporation. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and related notes included herein.

~~Cautionary Note Regarding Forward-Looking Statements~~

All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding 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 or the Company's management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company's management. Actual results could differ materially from those contemplated by the forward- looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company's behalf are qualified in their entirety by this paragraph.

~~Overview~~

We are a blank check company incorporated as a Delaware corporation on March 10, 2016 and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We intend to effectuate our Initial Business Combination using cash from the proceeds of our Public Offering and the Private Placement of warrants that occurred simultaneously with the consummation of the Public Offering, our capital stock, debt or a combination of cash, stock and debt.

~~The issuance of additional shares of our stock 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;~~

●

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 the three and nine months ended September 30, 2017, we had a net income of $285,327 and $382,570, respectively. Our entire activity through September 30, 2017, consisted of formation and preparation for the Public Offering and since the Public Offering, the search for a target business with which to consummate an Initial Business Combination, and as such, we had no operations and no significant operating expenses. Subsequent to the closing of the Public Offering on March 15, 2017, our normal operating costs included costs associated with our search for a target business, costs associated with our governance and public reporting, and state franchise taxes.

~~Liquidity and Capital Resources~~

Until the consummation of the Public Offering, our only sources of liquidity were an initial purchase of Founder Shares for $25,000 by the Sponsor, and a total of $275,000 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 of the Public Offering.

~~On March 15, 2017, we consummated our Public Offering in which we sold 32,500,000 Units at a price of $10.00~~Basic earnings (loss) per Unit (including the partial exercise of the Underwriter’s overallotment option) generating gross proceeds of $325,000,000 before underwriting fees and expenses. The Sponsor and the Underwriter purchased an aggregate 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 fees related to the Public Offering. A total of $325,000,000 of the net proceeds from the Public Offering and the Private Placement were deposited in the Trust Account established for the benefit of our public stockholders.

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 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 investments in the Trust Account to pay for our income tax obligations.

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 Combination 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, if 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 funds 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.

We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or 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 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) 3% of the gross proceeds of the Public Offering, excluding any amounts raised pursuant to the overallotment option, and (ii) 5% 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 an Initial Business Combination, subject to the terms 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 results could materially differ from those estimates. The Company has identified the following as its critical accounting policies:

~~Emerging Growth Company~~

~~Net Income Per Common Share~~

~~Net income per common~~ share is computed by dividing ~~net~~ income ~~applicable~~(loss) available to common stockholders by the weighted average number of common shares outstanding during the ~~period, plus,~~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 ~~extent dilutive, the incremental~~ number of additional Class A common shares that could have been outstanding assuming the exercise of stock options and warrants, conversion of Series A and Series B preferred stock, conversion of Class B 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~~vesting 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~~restricted shares of Class A common stock, ~~subject to possible redemption at September 30, 2017 have been excluded from~~conversion of Convertible Senior Notes and issuance of Class A common stock associated with the ~~calculation of basic~~deferred stock units and certain performance awards.

Basic and diluted net income (loss) per ~~common~~ share ~~since such~~excludes the income (loss) attributable to and 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.

~~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~~associated 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~~

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.

~~Redeemable Class A Common Stock~~

~~All of the 32,500,000~~1,609,677 shares of Class A common stock ~~sold as parts~~that are subject to cancellation on November 9, 2024 if certain market conditions have not been met. The Company has included in the calculation accrued dividends on Series A and Series B preferred stock and related deemed and imputed dividends.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or where otherwise noted)

The following table sets forth the calculation of basic and diluted earnings (loss) per share for the periods indicated based on the weighted average number of shares of Class A common stock outstanding:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Basic net income (loss) per share
Numerator:
Net loss attributable to U.S. Well Services, Inc.	$	(17,716	)	$	(19,505	)	$	(38,282	)	$	(185,323	)
Net loss attributable to cancellable Class A common stock		316			471			721			4,703
Basic net loss attributable to U.S. Well Services, Inc. shareholders		(17,400	)		(19,034	)		(37,561	)		(180,620	)
Dividends accrued on Series A preferred stock		(1,998	)		(1,845	)		(3,811	)		(3,596	)
Dividends accrued on Series B preferred stock		(811	)		(666	)		(1,522	)		(666	)
Deemed and imputed dividends on Series A preferred stock		(286	)		(5,142	)		(750	)		(12,114	)
Deemed and imputed dividends on Series B preferred stock		(1,501	)		-			(5,669	)		-
Exchange of Series A preferred stock for Convertible Senior Notes		8,936			-			8,936			-
Basic net loss attributable to U.S. Well Services, Inc. Class A common shareholders	$	(13,060	)	$	(26,687	)	$	(40,377	)	$	(196,996	)

Denominator:
Weighted average shares outstanding		90,202,949			66,620,619			85,419,935			63,424,948
Cancellable Class A common stock		(1,609,677	)		(1,609,677	)		(1,609,677	)		(1,609,677	)
Basic and diluted weighted average shares outstanding		88,593,272			65,010,942			83,810,258			61,815,271
Basic and diluted net income (loss) per share attributable to Class A common shareholders	$	(0.15	)	$	(0.41	)	$	(0.48	)	$	(3.19	)

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,
	2021		2020		2021		2020
Dilutive earnings per share:
Anti-dilutive stock options		877,266		877,266		877,266		877,266
Anti-dilutive warrants		15,317,038		16,658,427		15,317,038		16,658,427
Anti-dilutive restricted stock		1,079,249		1,675,825		1,079,249		1,675,825
Anti-dilutive deferred stock units		8,911,858		-		8,911,858		-
Anti-dilutive shares from Pool B awards		10,124,725		-		10,124,725		-
Anti-dilutive Class B common stock convertible into Class A common stock		-		5,014,897		-		5,014,897
Anti-dilutive Series A preferred stock convertible into Class A common stock		3,782,285		9,392,230		3,782,285		9,392,230
Anti-dilutive Series B preferred stock convertible into Class A common stock		79,512,587		73,754,101		79,512,587		73,754,101
Anti-dilutive Convertible Senior Notes convertible into Class A common stock		80,822,372		-		80,822,372		-
Potentially dilutive securities excluded as anti-dilutive		200,427,380		107,372,746		200,427,380		107,372,746

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or where otherwise noted)

NOTE 15 – SHARE-BASED COMPENSATION

Share-based compensation expense consisted of the following:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Restricted stock	$	876		$	1,188		$	1,701		$	3,012
Stock options		216			215			430			469
DSUs		246			-			492			-
Pool A Awards		395			-			481			-
Pool B Awards		277			-			557			-
Total	$	2,010	⁽¹⁾	$	1,403	⁽²⁾	$	3,661	⁽³⁾	$	3,481	⁽⁴⁾

(1)	$276 was presented as cost of services and $1,734 was presented as selling, general and administrative expenses in the condensed consolidated statement of operations.

(2)	$284was presented as cost of services and $1,119 was presented as selling, general and administrative expenses in the condensed consolidated statement of operations.

(3)	$474 was presented as cost of services and $3,187 was presented as selling, general and administrative expenses in the condensed consolidated statement of operations.

(4)	$1,202 was presented as cost of services and $2,279 was presented as selling, general and administrative expenses in the condensed consolidated statement of operations.

Restricted Stock

The following table summarizes the restricted stock activity for the six months ended June 30, 2021:

	Shares			Weighted- Average Grant-Date Fair Value per Share
Non-vested restricted stock as of December 31, 2020		1,449,287		$	8.85
Granted		-			-
Vested		(353,378	)		8.91
Forfeited		(16,660	)		8.91
Non-vested restricted stock as of June 30, 2021		1,079,249		$	8.83

As of June 30, 2021, the total unrecognized compensation cost related to restricted stock was $5.5 million which is expected to be recognized over a weighted-average period of 1.68 years.

Stock Options

The following table summarizes the stock option activity for the six months ended June 30, 2021:

	Shares		Weighted- Average Exercise Price per Share		Weighted-Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2020		877,266	$	8.91		5.21
Exercised		-		-		-
Forfeited/Expired		-		-		-
Outstanding as of June 30, 2021		877,266	$	8.91		4.71
Exercisable as of June 30, 2021		438,633	$	8.91		4.71

As of June 30, 2021, the total unrecognized compensation cost related to stock options was $1.5 million which is expected to be recognized over a weighted average period of 1.71 years.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or where otherwise noted)

Deferred Stock Units (“DSUs”)

The following table summarizes the DSUs activity for the six months ended June 30, 2021:

	Units			Weighted- Average Grant Date Fair Value per Unit
Non-vested DSUs as of December 31, 2020		8,911,858		$	0.33
Granted		-			-
Vested		(2,970,619	)		0.33
Forfeited		-			-
Non-vested DSUs as of June 30, 2021		5,941,239		$	0.33

As of June 30, 2021, the total unrecognized compensation cost related to DSUs was $1.5 million which is expected to be recognized over a weighted average period of 1.5 years.

Pool A Performance Awards

In the fourth quarter of 2020, the Company made grants of Pool A Performance Awards (“Pool A Awards”) to certain key employees of the Company. The Company accounted for the Pool A Awards under liability accounting as a result of the fixed monetary amount that could be settled either in cash or a variable number of shares of the Company’s Class A common stock. The Pool A Awards became fully vested as of January 1, 2021. Since the settlement will not occur until the fifth anniversary of the grant date, the Company considered the delayed settlement as a post-vesting restriction which impacted the determination of grant-date fair value of the award.

As of June 30, 2021, the fair value of the Pool A Awards liability was remeasured to $2.8 million, which was estimated using a risk-adjusted discount rate reflecting the weighted-average cost of capital of similarly traded public companies.

During the three and six months ended June 30, 2021, the Company recorded additional compensation cost of $0.1 million and $0.2 million, respectively, attributable to the change in fair value of the Pool A Awards liability.

Pool B Performance Awards

In the fourth quarter of 2020, the Company made grants of Pool B Performance Awards (“Pool B Awards”) to certain key employees of the Company. The Pool B Awards vest over three years in equal installments each year on the anniversary of the vesting effective date, subject to the grantee’s continuous services through each vesting period.

On January 1, 2021, one-third of the fair value of the Pool B Awards vested in the ~~Public Offering contain~~amount of $1.1 million. As of June 30, 2021, the unvested fair value of the Pool B Awards was $2.2 million.

As of June 30, 2021, the total unrecognized compensation cost related to Pool B Awards was $1.7 million, which is expected to be recognized over a ~~redemption feature~~weighted average period of 1.5 years.

NOTE 16 – INCOME TAXES

On March 27, 2020, the President signed the CARES Act into law. The CARES Act contains several corporate income tax provisions, including, among other things, providing a 5-year carryback of net operating loss (“NOL”) tax carryforwards generated in tax years 2018, 2019, and 2020, removing the 80% taxable income limitation on utilization of those NOLs if carried back to prior tax years or utilized in tax years beginning before 2021, temporarily liberalizing the interest deductions rules under Section 163(j) of the Tax Cuts and Jobs Act of 2017, and making corporate alternative minimum tax credits immediately refundable. During the second quarter of 2020, the Company filed an application to carry back its 2018 NOLs, claiming a refund of approximately $0.8 million, which ~~allows~~was received during the three months ended June 30, 2021.

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 ~~redemption~~six months ended June 30, 2021 was (0.07)%.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or where otherwise noted)

We follow guidance issued by the 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 condensed 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 condensed 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 0t record any liabilities for uncertain tax positions as of June 30, 2021 or December 31, 2020. 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 more likely than not that the Company will not utilize its net deferred tax assets.

NOTE 17 – 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.

The Company was named a defendant in a case filed on January 14, 2019 in the Superior Court of the State of Delaware styled Smart Sand, Inc. v. U.S. Well Services LLC, C.A. 19C-01-144 PRW. Smart Sand, Inc. (“Smart Sand”) alleged that the Company breached a multi-year contract under which Smart Sand supplied frac sand to the Company. Smart Sand claimed damages of approximately $54.0 million. The Company denied that it breached the contract, alleged that Smart Sand breached the contract first, and asserted counterclaims for the misuse of the Company’s confidential information. The Company also asserted that the contract contained unenforceable penalty provisions. On June 1, 2021, the court ruled against the Company in the case on the breach of contract claim and subsequently, on June 17, 2021, entered judgement in favor of Smart Sand in the amount of approximately $51.0 million.

On June 28, 2021, the Company entered into a Settlement Agreement and Release (the “Settlement Agreement”) with Smart Sand, pursuant to which the Company and Smart Sand reached a settlement of all matters in dispute. Pursuant to the Settlement Agreement, the Company agreed to pay $35.0 million in cash and to provide Smart Sand certain rights of first refusal related to the supply of frac sand for a period of two years (the “Settlement”). The parties to the Settlement Agreement also released each other from claims arising from or related to the Smart Sand litigation or the final judgment of the court. As of June 30, 2021, the Company paid $35.0 million to Smart Sand and the settlement expense was reflected as litigation settlement on the condensed consolidated statement of operations.

Equipment Purchase Agreement

On June 29, 2021, the Company entered into an Equipment Purchase and Sale Agreement to purchase equipment for $61.5 million. The Company made an initial deposit of $12.3 million in July 2021 and anticipates the remaining $49.2 million to be paid over the next two years, with $32.8 million in 2022 and $16.4 million in 2023.

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 pay penalties in the event of any shortfall.

As of June 30, 2021, the Company’s contracted volumes in dollars was $8.3 million. The Company’s minimum commitments was $6.1 million, which represents the aggregate amounts that we would be obligated to pay if we procured no additional proppant under the contracts after June 30, 2021.

Lease Agreements

The Company has various operating leases for facilities with terms ranging from 36 to 76 months.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or where otherwise noted)

Rent expense was $333 and $525 for the three months ended June 30, 2021 and 2020, respectively, of which $271 and $330, respectively, are recorded as cost of services and $62 and $195, respectively, are recorded as selling, general and administrative expenses in the condensed consolidated statements of operations. Rent expense was $629 and $1,187 for the six months ended June 30, 2021 and 2020, respectively, of which $496 and $803, respectively, are recorded as cost of services and $133 and $384, respectively, are recorded as selling, general and administrative expenses in the condensed consolidated statements of operations.

The following is a schedule of minimum future payments on non-cancellable operating leases and capital leases as of June 30, 2021:

Fiscal Year	Operating Leases		Capital Leases
Remainder of 2021	$	471	$	182
2022		828		364
2023		308		364
2024		258		358
2025		67		50
Total minimum future rentals	$	1,932	$	1,318

The total capital leases payments include a nominal amount of imputed interest.

Self-insurance

The Company established a self-insured plan for employees’ healthcare benefits except for losses in excess of varying threshold amounts. The Company charges to 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 $0.2 million as of June 30, 2021 and December 31, 2020, respectively, and was reported as accrued expenses in the condensed consolidated balance sheets. The Company believes that the liabilities recorded are appropriate based on the known facts and circumstances and does not expect further losses materially in excess of the amounts already accrued for existing claims.

NOTE 18 – RELATED PARTY TRANSACTIONS

On June 24, 2021, Crestview Partners (“Crestview”) purchased $40.0 million of Convertible Senior Notes that are convertible into shares of the Company’s Class A common stock for consideration of $20.0 million in cash and in exchange for 15,588 shares of the Company’s Series A preferred stock.

On April 1, 2020, Crestview purchased 11,500 shares of Series B preferred stock for a total payment of $11.5 million. The TCW Group, Inc. purchased 6,500 shares of Series B preferred stock for a total payment of $6.5 million and David Matlin, a member of the Company’s Board of Directors, purchased 1,878 shares of Series B preferred stock for a total payment of $1.9 million.

NOTE 19 – SUBSEQUENT EVENTS

Convertible Senior Notes

On July 12, 2021 and July 13, 2021, the Company issued an additional $6.0 million in aggregate principal amount of Convertible Senior Notes under the Note Purchase Agreement to certain investors for cash, which mature on June 5, 2026. The additional Convertible Senior Notes are convertible into shares of the Company’s Class A common stock with an applicable initial conversion price of $1.25 subject to adjustment.

On July 27, 2021, the Company issued an additional $5.0 million in aggregate principal amount of Convertible Senior Notes under the Note Purchase Agreement to a certain investor for cash, which mature on June 5, 2026. The additional Convertible Senior Notes are convertible into shares of the Company’s Class A common stock with an applicable initial conversion price of $0.98 subject to adjustment.

U.S. WELL SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except shares and per share amounts, or where otherwise noted)

The interest and settlement terms for the Convertible Senior Notes issued in July 2021 are the same as the Equity Linked Notes previously issued in June 2021. See “Note 11 – Convertible Senior Notes” for additional information.

Assets Held for Sale

Subsequent to June 30, 2021, the Company classified an additional $8.1 million in net book value of diesel fracturing equipment, that is anticipated to be sold in the next 12 months, as assets held for sale.

During July 2021, we received $18.0 million in proceeds from the sale of various assets that were classified as held for sale.

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

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes in Item 1. "Financial Statements" contained herein and our audited consolidated financial statements as of December 31, 2020, included in our Amendment No. 1 to Annual Report on Form 10-K/A for the year ended December 31, 2020 (our "Amended Annual Report"), as filed with the Securities and Exchange Commission (the "SEC") on May 17, 2021. The information provided below supplements, but does not form part of, our unaudited condensed consolidated financial statements.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this "Report") contains “forward-looking statements” as defined in Section 27A of the United States Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements usually relate to future events, conditions and anticipated revenues, earnings, cash flows or other aspects of our operations or operating results. Forward-looking statements are often identified by words such as “believes,” “expects,” “intends,” “estimates,” “projects,” “anticipates,” “will,” “plans,” “may,” “should,” “would,” “foresee,” or the negative thereof. The absence of these words, however, does not mean that these statements are not forward-looking. These statements are based on our current expectations, beliefs and assumptions concerning future developments and business conditions and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All of our forward-looking statements involve risks and uncertainties (some of which are significant or beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. These factors include geological, operating and economic factors 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; the effectiveness of management's strategies and decisions; our ability to obtain financing, raise capital and continue as a going concern; our ability to implement our internal growth and acquisition growth strategies; our ability to convert to an all electric hydraulic fracturing service provider and to exit the diesel frac market; general economic and business conditions specific to our primary customers; our ability to collect accounts receivable; compliance with our debt agreements and equity-related securities; volatility in market prices; our ability to satisfy the continued listing requirements of Nasdaq with respect to our Class A common stock and warrants or to cure any continued listing standard deficiency with respect thereto; changes in government regulations; our ability to effectively integrate businesses we may acquire; new or modified statutory or regulatory requirements; availability of 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 natural disasters, catastrophes and severe weather conditions, including floods, hurricanes and earthquakes; public health crises, such as a pandemic, including the COVID-19 pandemic and new and potentially more contagious variants of COVID-19, such as the delta variant; acts of war or terrorist acts and the governmental or military response thereto; and cyber-attacks adversely affecting our operation. This Report identifies other factors that could cause such differences. There can be no assurance 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, including under "Risk Factors" in this Report and in our Amended Annual Report. We caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We assume no obligation and do not intend to update these forward-looking statements. Unless the context otherwise requires, references in this Report to the “Company”, “USWS”, “we”, or “our” shall mean U.S. Well Services, Inc. and its subsidiaries.

Overview

We provide high-pressure, hydraulic fracturing services in oil and natural gas basins. Both our conventional and Clean Fleet^® 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. 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 high utilization rates, which results in more efficient operations. Our senior management team has extensive industry experience providing pressure pumping services to exploration and production companies across North America. In May 2021, we announced our commitment to becoming an all-electric hydraulic fracturing service provider and that we expect to fully exit the diesel frac market by the end of 2021. As a result of this strategic transition, we expect to become the first publicly-traded, pure-play electric completions services provider.

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 seek to enter into contractual arrangements with our customers or fleet dedications, which establish pricing terms for a fixed duration. Under the terms of these agreements, we charge our customers base monthly rates, adjusted for activity and provision of materials such as proppant and chemicals, or we charge a variable rate based on the nature of the job including pumping time, well pressure, sand and chemical volumes and transportation.

Our Costs of Conducting Business

The principal costs involved in conducting our hydraulic fracturing services are labor, maintenance, materials, and transportation 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 expected demand for our services.

Materials include the cost of 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. Most of our employees are paid on an hourly basis. Maintenance costs include preventative and other repair costs that do not require the replacement of major components of our hydraulic fracturing fleets. Maintenance and repair costs are expensed as incurred.

The following table presents our cost of services for the periods indicated (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Materials	$	6,737	$	2,490	$	15,453	$	12,938
Transportation		3,220		1,427		6,259		10,970
Labor		24,003		10,172		47,689		43,281
Maintenance		14,916		6,746		31,511		22,617
Other ⁽¹⁾		10,376		8,176		20,971		24,359
Cost of services	$	59,252	$	29,011	$	121,883	$	114,165

(1)	Other consists of fuel, lubes, equipment rentals, travel and lodging costs for our crews, site safety costs and other costs incurred in performing our operating activities.

Significant Trends

The global health and economic crisis sparked by the COVID-19 pandemic and the associated decrease in commodity prices has significantly impacted industry activity since late in the first quarter of 2020. Weaker economic activity and lower demand for crude oil, driven by the persistence of the COVID-19 pandemic, adversely impacted our business, resulting in a reduction in our active fleet count and fleet utilization levels throughout much of 2020. During the fourth quarter of 2020, crude oil prices averaged $42 per barrel and since then have been increasing, averaging approximately $66 per barrel during the second quarter of 2021. As commodity prices have continued to improve demand for hydraulic fracturing services and the number of working fracturing fleets have also increased significantly.

In May 2021, we announced our plan to exit the diesel frac market by the end of 2021 pursuant to our strategy of becoming an all-electric hydraulic fracturing services provider. As a result, we have been executing on our plan to sell our diesel fracturing equipment. We plan on using proceeds from these sales to reduce outstanding indebtedness and for general corporate purposes, including the buildout of our next-generation all-electric fracturing fleets. Additionally, we expect the corresponding reduction of average active fleets to have a short-term significant impact on our results of operations starting in the third quarter of 2021 as we end our remaining contracts which utilize diesel frac equipment. Specifically, we expect revenues, cost of services, and depreciation to start declining in the third quarter of 2021, until such time we are able to generate business activity from the new buildout of next-generation all-electric fracturing fleets.

Results of Operations

Three months ended June 30, 2021, compared to the three months ended June 30, 2020

(in thousands, except percentages)

	Three Months Ended June 30,
	2021			% ⁽¹⁾	2020			% ⁽¹⁾	Variance			% Variance
Revenue	$	78,799		100.0%	$	39,837		100.0%	$	38,962		97.8%
Costs and expenses:
Cost of services (excluding depreciation and amortization)		59,252		75.2%		29,011		72.8%		30,241		104.2%
Depreciation and amortization		9,836		12.5%		17,358		43.6%		(7,522	)	(43.3)%
Selling, general and administrative expenses		7,214		9.2%		5,220		13.1%		1,994		38.2%
Litigation settlement		35,000		44.4%		-		0.0%		35,000		100.0%
Loss (gain) on disposal of assets		(545	)	(0.7)%		853		2.1%		(1,398	)	(163.9)%
Loss from operations		(31,958	)	(40.6)%		(12,605	)	(31.6)%		(19,353	)	*⁽²⁾
Interest expense, net		(7,333	)	(9.3)%		(5,665	)	(14.2)%		(1,668	)	29.4%
Change in fair value of warrant liabilities		(136	)	(0.2)%		(1,364	)	(3.4)%		1,228		*⁽²⁾
Patent license sales		22,500		28.6%		-		0.0%		22,500		100.0%
Loss on extinguishment of debt		(839	)	(1.1)%		-		0.0%		(839	)	*⁽²⁾
Other income		23		0.0%		45		0.1%		(22	)	*⁽²⁾
Income tax expense (benefit)		(27	)	(0.0)%		13		0.0%		(40	)	*⁽²⁾
Net loss	$	(17,716	)	(22.5)%	$	(19,602	)	(49.2)%	$	1,886		(9.6)%

(1)	As a percentage of revenues. Percentage totals or differences in the above table may not equal the sum or difference of the components due to rounding.

(2)	Not meaningful.

Revenue. The increase in revenue was primarily attributable to an increase in business activity due to economic recovery from the COVID-19 pandemic and depressed oil prices in the prior period. Our average active fleet count during the period increased to 9 fleets compared to 4 fleets in the prior comparable period. However, we expect revenue to decline in future quarters as we end our remaining diesel fracturing equipment-related contracts in the third quarter of 2021.

Cost of services, excluding depreciation and amortization. The increase in cost of services, excluding depreciation and amortization, was attributable to the increase in business activity due to economic recovery from the COVID-19 pandemic and depressed oil prices in the prior period. Similar to revenue, we expect cost of services, excluding depreciation and amortization, to decline in future quarters as we end our remaining diesel fracturing equipment-related contracts in the third quarter of 2021.

Depreciation and amortization. The decrease in depreciation and amortization was primarily due to the lower cost basis of depreciating long-lived assets because of impairment losses recorded in the first quarter of 2020. We expect depreciation and amortization to decline in future quarters as we execute on our plan to sell our diesel fracturing equipment.

Litigation settlement. The Company was named as a defendant in a lawsuit filed in January 2019 by a vendor alleging that the Company breached a multi-year contract. In June 2021, following entry of the final judgement by the court in favor of the vendor, the Company entered into a settlement agreement whereby it paid $35.0 million in cash.

Selling, general and administrative expenses. The increase in selling, general, and administrative expenses was primarily attributable to reinstatement of salary levels during the second quarter of 2021 due to improved economic conditions as compared to the prior period. Additionally, there was an increase in share-based compensation expense during the second quarter of 2021 as compared to the prior period due to the equity awards issued in the fourth quarter of 2020.

Loss (gain) on disposal of assets. The amount of loss on disposal of assets fluctuates period over period due to differences in the 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 the amount of gain or loss recognized. In May 2021, the Company announced its plan to exit the diesel frac market and began selling its diesel fracturing equipment. As a result, we recognized a gain on disposal of assets during the second quarter of 2021 as compared to a loss on disposal of assets in the prior period.

Interest expense, net. The increase was primarily attributable to the interest expense associated with the Convertible Senior Notes issued during the second quarter of 2021.

Patent license sales.On June 24, 2021, the Company issued $22.5 million in principal amount of a Convertible Senior Note that was convertible into a patent license agreement (the “License Agreement”). On June 29, 2021, the holder exercised its right to convert the Convertible Senior Note in full and the Company entered into the License Agreement, which provides the licensee a five-year option to purchase up to 20 licenses to build and operate electric hydraulic fracturing fleets using the Company’s patented Clean Fleet^® technology. Upon entry into the License Agreement, the Company sold three licenses to build and operate three electric frac fleets, each valued at $7.5 million.

Six months ended June 30, 2021, compared to the six months ended June 30, 2020

(in thousands, except percentages)

	Six Months Ended June 30,
	2021			% ⁽¹⁾	2020			% ⁽¹⁾	Variance			% Variance
Revenue	$	155,057		100.0%	$	151,872		381.2%	$	3,185		2.1%
Costs and expenses:
Cost of services (excluding depreciation and amortization)		121,883		78.6%		114,165		286.6%		7,718		6.8%
Depreciation and amortization		20,942		13.5%		49,366		123.9%		(28,424	)	(57.6)%
Selling, general and administrative expenses		14,604		9.4%		24,277		60.9%		(9,673	)	(39.8)%
Impairment of long-lived assets		-		0.0%		147,543		370.4%		(147,543	)	100.0%
Litigation settlement		35,000		22.6%		-		0.0%		35,000		100.0%
Loss on disposal of assets		1,891		1.2%		5,097		12.8%		(3,206	)	(62.9)%
Loss from operations		(39,263	)	(25.3)%		(188,576	)	(473.4)%		149,313		* ⁽²⁾
Interest expense, net		(13,516	)	(8.7)%		(13,621	)	(34.2)%		105		(0.8)%
Change in fair value of warrant liabilities		(7,287	)	(4.7)%		5,189		13.0%		(12,476	)	*⁽²⁾
Patent license sales		22,500		14.5%		-		0.0%		22,500		100.0%
Loss on extinguishment of debt		(839	)	(0.5)%		-		0.0%		(839	)	*⁽²⁾
Other income		52		0.0%		51		0.1%		1		* ⁽²⁾
Income tax expense (benefit)		(27	)	(0.0)%		(737	)	(1.9)%		710		* ⁽²⁾
Net loss	$	(38,326	)	(24.7)%	$	(196,220	)	(492.6)%	$	157,894		* ⁽²⁾

(1)	As a percentage of revenues. Percentage totals or differences in the above table may not equal the sum or difference of the components due to rounding.

(2)	Not meaningful.

Revenue. The increase in revenue was primarily attributable to an increase in business activity due to economic recovery from the COVID-19 pandemic and depressed oil prices in the second quarter of 2020. Our average active fleet count during the period increased to 10 fleets compared to 8 fleets in the prior comparable period. However, we expect revenue to decline in future quarters as we end our remaining diesel fracturing equipment-related contracts in the third quarter of 2021.

Cost of services, excluding depreciation and amortization. The increase in cost of services, excluding depreciation and amortization, was attributable to the increase in business activity due to economic recovery from the COVID-19 pandemic and depressed oil prices in the prior comparable period. Similar to revenue, we expect cost of services, excluding depreciation and amortization, to decline in future quarters as we end our remaining diesel fracturing equipment-related contracts in the third quarter of 2021.

Selling, general and administrative expenses. The decrease in selling, general, and administrative expenses was primarily attributable to our recording of a bad debt reserve of $9.0 million in the first quarter of 2020 due to the economic downturn at the end of that prior period.

Impairment of long-lived assets. As a result of impairment tests that we performed in the first quarter of 2020, we determined that the carrying value of long-lived assets exceeded their fair value. Therefore, we recorded an impairment charge of $147.5 million in the first quarter of 2020 to reduce the carrying value of property and equipment and finite-lived intangible assets to fair value. No such impairment charge was recorded during the six months end June 30, 2021.

Loss on disposal of assets. The amount of loss on disposal of assets fluctuates period over period due to differences in the 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 the amount of gain or loss recognized. The decrease in the loss on disposal of assets was primarily attributable to the assets sold during the second quarter of 2021 and the significant decrease in loss on disposal of assets related to fluid ends, due to a change in accounting estimate related to their useful life during the second quarter of 2020. Beginning in the second quarter of 2020, fluid ends are expensed as they were used in operations, due to their shortened useful life estimate.

Patent license sales.On June 24, 2021, the Company issued $22.5 million in principal amount of a Convertible Senior Note that was convertible into the License Agreement. On June 29, 2021, the holder exercised its right to convert the Convertible Senior Note in full and the Company entered into the License Agreement, which provides the licensee a five-year option to purchase up to 20 licenses to build and operate electric hydraulic fracturing fleets using the Company’s patented Clean Fleet^® technology. Upon entry into the License Agreement, the Company sold three licenses to build and operate three electric frac fleets, each valued at $7.5 million.

Liquidity and Capital Resources

Our primary sources of liquidity and capital resources are cash on the balance sheet, cash flow generated from operating activities, proceeds from the issuance of equity, proceeds from the issuance of Convertible Senior Notes, and borrowings and borrowing capacity under our ABL Credit Facility.

We believe that our current cash position, working capital balance, favorable payment terms under our Senior Secured Term Loan, borrowing capacity under our ABL Credit Facility, and amounts raised from the issuance of Convertible Senior Notes and shares of Class A common stock under the ATM Agreement will be sufficient to satisfy the anticipated cash requirements associated with our existing operations for at least the next twelve months.

Senior Secured Term Loan and ABL Credit Facility

As of June 30, 2021, our 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, asset dispositions, paying dividends, transactions with affiliates, mergers, consolidations and special purpose entities used for stand-alone equipment financings. In addition, all borrowings under our 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. As of June 30, 2021, the borrowing base was $46.3 million and the outstanding revolver loan balance was $33.7 million. As of June 30, 2021, we were in compliance with all of the covenants under our Senior Secured Term Loan and our ABL Credit Facility.

USDA Loan

The USDA Loan is subject to certain financial covenants. The Company is required to maintain a Debt Service Coverage Ratio (as defined in the USDA Loan) of not less than 1.25:1, to be monitored annually, beginning in calendar year 2021. Additionally, the Company is required to maintain a ratio of debt to net worth of not more than 9:1, to be monitored annually based upon year-end financial statements beginning in calendar year 2022.

Convertible Senior Notes

In June 2021, we issued an aggregate of $125.5 million in principal amount of 16.0% Convertible Senior Secured (Third Lien) PIK Notes due June 2026 (the “Convertible Senior Notes”) in exchange for cash and shares of Series A preferred stock. In June 2021, we received cash proceeds of $86.5 million. We used a portion of the proceeds to pay a litigation settlement of $35.0 million and expect that the remaining proceeds will be used for general corporate purposes, including capital growth. As of June 30, 2021, we had $103.0 million of principal outstanding of the Convertible Senior Notes, which are convertible into the shares of the Company’s ~~Liquidation or Tender Offer/Stockholder Approval provisions.~~Class A common stock. In July 2021, we issued an additional $11.0 million in aggregate principal amount of Convertible Senior Notes under the Note Purchase Agreement to certain investors for cash.

ATM Agreement

On June 26, 2020, the Company entered into an Equity Distribution Agreement (the “ATM Agreement”) with Piper Sandler & Co. relating to the Company’s Class A common stock. In accordance with ~~FASB ASC 480, redemption provisions not solely within~~ the ~~control~~terms 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. AlthoughATM Agreement, the Company ~~has not specified a maximum redemption threshold,~~may offer and sell shares of 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~~over a period of time. The ATM Agreement relates to an “at-the-market” offering program. Under the ATM Agreement, the Company will pay Piper Sandler an aggregate commission of up to 3% of the ~~32,500,000~~gross sales price per share of Class A common stock sold under the ATM Agreement. On March 19, 2021, the Company increased the number of shares of Class A common stock ~~included~~that it may offer in accordance with the ~~Units were classified outside~~terms of ~~permanent equity at its redemption value. There were no~~the ATM Agreement by an additional $39.7 million in excess of the original amount of $10.3 million. During the six months ended June 30, 2021, the Company sold 15,006,317 shares of Class A common stock ~~outstanding~~for total net proceeds of $13.6 million and paid $0.4 million in commissions under the ATM Agreement. Since inception on June 26, 2020 through June 30, 2021, the Company has sold a total of 15,798,575 shares of Class A common stock under the ATM Agreement for total net proceeds of $14.0 million and paid $0.4 million in commissions.

Cash Flows

(in thousands)

	Six Months Ended June 30,
	2021			2020
Net cash provided by (used in):
Operating activities	$	(28,371	)	$	21,513
Investing activities		(16,288	)		(25,720	)
Financing activities		97,460			(33,255	)

Operating Activities. Net cash provided by (used in) operating activities primarily represents the results of operations exclusive of non-cash expenses, including depreciation, amortization, provision for losses on accounts receivable and inventory, interest, impairment losses, losses on disposal of assets, changes in fair value of warrant liabilities and share-based compensation and the impact of changes in operating assets and liabilities. Net cash used in operating activities was $28.4 million for the six months ended June 30, 2021 primarily due to a litigation settlement of $35.0 million and $3.0 million of working capital payments from proceeds under our USDA Loan.

Net cash provided by operating activities was $21.5 million for the six months ended June 30, 2020, primarily attributable to accelerated collections of accounts receivables, which was offset in part by interest payments of $24.3 million related to our Senior Secured Term Loan.

Investing Activities. Net cash used in investing activities decreased by $9.4 million from the prior corresponding period, primarily due to reduced growth and maintenance capital expenditures due to the decline in business activity that occurred at ~~December 31, 2016.~~the end of the first quarter of 2020 and continued into the second quarter of 2020. Net cash used in investing activities was $16.3 million for the six months ended June 30, 2021, primarily due to $24.8 million in purchases of property and equipment, which related to maintaining and supporting our existing hydraulic fracturing equipment and payments made to replace damaged property and equipment. This was offset in part by $6.4 million of insurance proceeds related to the damaged property and equipment and $2.1 million of proceeds from the sale of property and equipment.

Net cash used in investing activities was $25.7 million for the six months ended June 30, 2020, primarily due to $40.8 million in purchases of property and equipment, consisting of $16.0 million related to maintaining and supporting our existing hydraulic fracturing equipment and $24.8 million related to growth. This was offset in part by proceeds of $15.0 million from the sale of certain property and equipment.

Financing Activities. During the six months ended June 30, 2021, cash provided by financing activities reflected proceeds of $24.7 million under our ABL Credit Facility, $3.0 million of proceeds from issuance of long-term debt, $86.5 million of proceeds from the issuance of Convertible Senior Notes, $9.1 million of proceeds of notes payable and proceeds of $13.6 million from the issuance of common stock, offset in part by payments related to our ABL Credit Facility of $14.8 million, long-term debt of $12.6 million, notes payable of $3.7 million, equipment financing arrangements of $1.7 million and debt issuance costs of $6.6 million.

During the six months ended June 30, 2020, cash used in financing activities reflected repayments related to our ABL Credit Facility of $33.4 million, repayment of long-term debt of $2.5 million, repayment of notes payable of $4.1 million, repayments of equipment financing agreements of $1.5 million, repayments of finance leases of $2.8 million and debt issuance costs of $20.1 million. This was offset by $19.9 million in net proceeds from the issuance of Series B preferred stock and $11.2 million of proceeds under our ABL Credit Facility.

~~Recent Accounting Pronouncements~~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.

~~The Company’s management does not believe~~We continuously evaluate our capital expenditures and the amount we ultimately spend will depend on several factors, including expected industry activity levels and company initiatives. We intend to fund most of our capital expenditures, contractual obligations and working capital needs with cash on hand, cash generated from operations, borrowing capacity under our ABL Credit Facility and other financing sources.

Off-Balance Sheet Arrangements

We are a party to transactions, agreements or other contractual arrangements defined as “off-balance sheet arrangements” that ~~any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would~~could have a material future effect on our financial position, results of operations, liquidity, and capital resources. The most significant of these off-balance sheet arrangements include equipment and sand purchase commitments disclosed in “Note 17 – Commitments and Contingencies” in the ~~Company’s financial statements.~~Notes to Condensed Consolidated 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~~have a retained or contingent interest in assets transferred to ~~engage~~an unconsolidated entity, we do not have any obligation under a contract that would be accounted for as a derivative instrument, and we do not have any interest in ~~any hedging activities with respect~~entities referred to ~~the market risk to which~~as variable interest entities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a smaller reporting company, we are ~~exposed.~~not required to provide the information required by this item.

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~~Procedures.

~~Disclosure~~Our disclosure controls and procedures ~~are controls and other procedures that~~ 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.

Evaluation of Disclosure Controls and Procedures

~~As required by Rules 13a-15~~Under the supervision and ~~15d-15 under~~with the ~~Exchange Act,~~participation of our management, including the Chief Executive Officer and Chief Financial Officer, ~~carried out~~we conducted an evaluation of the effectiveness of ~~the design and operation of~~ our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~September~~the end of the quarter ended June 30, ~~2017.~~2021. Based ~~upon their~~on this 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~~were not effective as of the ~~Exchange Act) were effective.~~

~~Changes in Internal Control over Financial Reporting~~

~~During~~quarter ended June 30, 2021, due solely to the ~~most recently completed fiscal quarter, there has been no change~~material weakness in our internal control over financial reporting with respect to the classification of the Company’s warrants as components of equity instead of as liabilities as more fully described in our Amended Annual Report. Notwithstanding the material weakness, management believes that ~~has~~the financial statements included in this Quarterly Report on Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows as of the dates and for the periods presented in accordance with GAAP.

Remediation Plan for Material Weakness in Internal Control over Financial Reporting and Status

Management implemented remediation steps to address the material weakness, described above and to improve our internal control over financial reporting. Specifically, we expanded and improved our review process for complex securities and related accounting standards. We further plan to improve this process by enhancing access to accounting literature, research materials and documents and increasing communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications.

Changes in Internal Control over Financial Reporting

Other than the changes described above, there were no changes made in our internal control over financial reporting during the quarter ended June 30, 2021 that have materially affected, or isare reasonably likely to materially affect, ~~our~~the Company’s internal control over financial reporting.

PART II

Item 1. Legal Proceedings.

See “Note 17 – Commitments and Contingencies” in the Notes to Condensed Consolidated Financial Statements for further information.

~~PART II – PART II – OTHER INFORMATION~~Item 1A. Risk Factors.

~~Item 1.~~

~~Legal Proceedings~~

~~None.~~

~~Item 1A.~~

~~Risk Factors~~

~~As of~~Except as set forth below, no material changes have occurred from the ~~date~~risk factors previously disclosed in the Company’s Amended Annual Report. See also Part I, Item 2 “Disclosure Regarding Forward-Looking Statements” of this Quarterly Report on Form ~~10-Q, there~~10-Q.

Our planned exit from the diesel frac market may negatively impact our liquidity and our ability to generate revenues and service our outstanding indebtedness for a period of time.

In May 2021, we announced our commitment to becoming an all-electric hydraulic fracturing service provider and that we expect to fully exit the diesel frac market by the end of 2021. We have ~~been no material changes~~sold a portion of our diesel frac equipment and expect to continue to sell off the ~~risk factors disclosed~~remainder of our diesel frac equipment, which has and will result in a reduction in the number of fleets we have available to provide hydraulic fracturing services until we are able to build out our ~~prospectus filed with~~all-electric hydraulic fracturing equipment. Until we are able to complete the ~~SEC on March 9, 2017 except~~build out of the electric equipment, we expect to generate less revenue, which may ~~disclose changes~~adversely impact our ability to ~~such factors or disclose additional factors from time to time~~service our outstanding indebtedness. Additionally, the decrease in revenue will result in a reduction in the borrowing base available under our ~~future filings with the SEC.~~ABL Credit Facility, which may adversely impact our liquidity.

~~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~~

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

None.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits

The exhibits required to be filed or furnished by Item 601 of Regulation S-K are listed below.

~~Item 6.~~

Exhibit No.

~~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		Certificate of Designations, dated March 31, 2020, 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 April 2, 2020.
3.4		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		Registration Rights Agreement, dated June 24, 2021, by and among U.S. Well Services, Inc. and the Purchasers party thereto (incorporated by reference to Exhibit 4.4 of the Current Report on Form 8-K (File No. 001-38025), filed with the SEC on June 28, 2021).
4.2		First Amendment to Registration Rights Agreement, dated June 25, 2021, by and among U.S. Well Services, Inc. and the Purchasers party thereto (incorporated by reference to Exhibit 4.5 to the Current Report on Form 8-K (File No. 001-38025) filed with the SEC on June 28, 2021).
4.3		Form of Cash Note (included as Exhibit B-1 to the Note Purchase Agreement filed as Exhibit 10.2 to this Quarterly Report on Form 10-Q).
4.4		Form of Exchange Note (included as Exhibit B-2 to the Note Purchase Agreement filed as Exhibit 10.2 to this Quarterly Report on Form 10-Q).
4.5		Form of License Linked Notes (included as Exhibit B-3 to the Note Purchase Agreement filed as Exhibit 10.2 to this Quarterly Report on Form 10-Q).
10.1*		Equipment Purchase Agreement, dated May 21, 2021, between U.S. Well Services, LLC and Alamo Pump Holdings, LLC.
10.2		Note Purchase Agreement, dated June 24, 2021, by and among U.S. Well Services, Inc. and the Purchasers party thereto and Wilmington Savings Fund Society, FSB, as collateral agent for the Purchasers (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-38025) filed with the SEC on June 28, 2021).
10.3		First Amendment to Note Purchase Agreement, dated June 25, 2021, by and among U.S. Well Services, Inc. and the Purchasers party thereto and Wilmington Savings Fund Society, FSB, as collateral agent for the Purchasers (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-38025) filed with the SEC on June 28, 2021).
10.4		Settlement Agreement and Release by and among Smart Sand, Inc., U.S. Well Services, LLC and U.S. Well Services, Inc., dated June 28, 2021 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K (File No. 001-38025) filed with the SEC on June 28, 2021).
10.5		Consent and Fifth Amendment to the Senior Secured Term Loan Credit Agreement dated June 24, 2021, among U.S. Well Services, LLC, U.S. Well Services, Inc., USWS Fleet 10, LLC, USWS Fleet 11, LLC, USWS Holdings LLC, CLMG Corp., as administrative agent and collateral agent, and the lenders party thereto (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K (File No. 001-38025) filed with the SEC on June 28, 2021).
10.6		Fourth Amendment and Limited Consent to ABL Credit Agreement dated as of June 24, 2021, by and among U.S. Well Services, LLC, U.S. Well Services, Inc., USWS Fleet 10, LLC, USWS Fleet 11, LLC, USWS Holdings LLC, the lenders party thereto, and Bank of America, N.A., as administrative agent, lender, swing line lender and letter of credit lender (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K (File No. 001-38025) filed with the SEC on June 28, 2021).
10.7		Guarantee and Third Lien Collateral Agreement, dated as of June 24, 2021, among U.S. Well Services, Inc., U.S. Well Services, LLC, USWS Holdings LLC, and the other grantors referred to therein, in favor of Wilmington Savings Fund Society, FSB, as notes agent (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K (File No. 001-38025) filed with the SEC on June 28, 2021).
10.8		Amended and Restated Intercreditor Agreement by and among Bank of America, N.A., CLMG Corp., Wilmington Savings Fund Society, FSB, and U.S. Well Services, LLC, dated June 24, 2021 (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K (File No. 001-38025) filed with the SEC on June 28, 2021).
10.9*		Patent License Agreement, effective as of June 29, 2021, by and between U.S. Well Services, LLC and ProFrac Holdings LLC.
10.10*		Equipment Purchase and Sale Agreement, dated June 29, 2021, between AmeriMex Motor & Controls, LLC and U.S. Well Services, LLC

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~~.
32.1**		Certification of Chief Executive Officer pursuant to ~~Section 302 of the Sarbanes Oxley Act of 2002.~~
32.1*		~~Certification of the Principal Executive Officer required by~~ 18 U.S.C. Section 1350 ~~as adopted~~.
32.2**		Certification of Chief Financial Officer pursuant to ~~Section 906 of the Sarbanes Oxley Act of 2002.~~
32.2*		~~Certification of the Principal Financial Officer required by~~ 18 U.S.C. Section 1350 ~~as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.~~.
~~101.INS~~ 101.INS*		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
~~101.SCH~~ 101.SCH*		Inline XBRL Taxonomy Extension Schema Document
~~101.CAL~~ 101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
~~101.DEF~~ 101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
~~101.LAB~~ 101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
~~101.PRE~~ 104*		Cover Page Interactive Data File (embedded within the Inline XBRL ~~Taxonomy Extension Presentation Linkbase Document~~document)

*Furnished herewith.

Filed herewith.

**
Furnished herewith.

SIGNATURES

~~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 12, 2021.

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

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


	/s/ Joel Broussard
	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)~~

Delaware		81-1847117
(State or other jurisdiction of ~~incorporation or organization)~~		(I.R.S. Employer
organization)		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	☒ ☑

	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	$	-	$	-