Benzinga | May 12, 2021 06:33AM EDT

US Well Services Announces Response To SEC Guidance Issued On April 12, 2021 Applicable To Warrants Issued By Special Purpose Acquisition Companies; Consistent With Statements, Co. To Restate Financial Statements

U.S. Well Services, Inc. (NASDAQ:USWS) (the "Company") announced today in a Current Report on Form 8-K, that as a result of the recent guidance issued by the Securities and Exchange Commission (the "SEC") on April 12, 20211 for all SPAC-related companies regarding the accounting and reporting for their warrants (the "SEC Statement"), it will restate its previously issued consolidated financial statements as of and for the years ended December 31, 2018, 2019 and 2020, as well as for the quarterly periods in the years ended December 31, 2019 and December 31, 2020. Any corrections in the accounting for the Company's warrants described below are expected to be non--operational and non-cash, and thus are not expected to have any impact on the Company's Revenue, Operating Income, or non-GAAP financial measures, including EBITDA, Adjusted EBITDA and Adjusted EBITDA margin in prior periods or moving forward.

While the Company is actively working to correct its financial statements in accordance with the SEC Statement, there has been no adverse change to its operations, liquidity or business prospects as a result of this correction. Demand remains strong for the Company's services, and it believe it continues to possess the highest spec fracturing fleet in the industry with its proprietary Clean Fleet(r) suite of technologies.

The Company became a publicly traded company through a business combination with a SPAC in November 2018 and the public and private placement warrants previously issued by the SPAC remained outstanding following the business combination transaction. The restatement also relates to the warrants ("Series A warrants," and together with the public and private placement warrants, the "warrants") issued in connection with the private placement of the Company's Series A Preferred Stock in May 2019. Since the times of the transactions, the Company has been accounting for all outstanding warrants using the methodology utilized by other SPACs, treating them as equity.

Consistent with the SEC Statement, the Company intends to restate its historical financial statements as described above such that the warrants are accounted for as liabilities and marked-to-market each reporting period. In general, under the mark-to-market accounting model, as the stock price increases, the fair value of the warrant liability increases, and the Company recognizes additional non-operating expense in its income statement, with the opposite effect when the Company's stock price declines.

As of today, approximately 24 million warrants remain outstanding.