Nevada | 27-3401355 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
2100 West Loop South, Suite 1601 | |
Houston, Texas | 77027 |
(Address of principal executive offices) | (Zip 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 x No o | |||
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive 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 o No o | |||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. | |||
Large accelerated filer ¨ | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). |
Yes ¨ No x |
As of May 18, 2012, the issuer had 16,404,015 shares of common stock, $.001 par value, outstanding. |
Page | ||
FINANCIAL INFORMATION | ||
FINANCIAL STATEMENTS | ||
Condensed Consolidated Balance Sheets - March 31, 2012 and December 31, 2011 | ||
Condensed Consolidated Statements of Comprehensive Loss - March 31, 2012 and March 31, 2011 | ||
Condensed Consolidated Statements of Cash Flows - March 31, 2012 and March 31, 2011 | ||
Condensed Consolidated Statements of Stockholders' Deficit - March 31, 2012 and December 31, 2011 | ||
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. | ||
CONTROLS AND PROCEDURES. | ||
OTHER INFORMATION | ||
LEGAL PROCEEDINGS | ||
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | ||
EXHIBITS | ||
• | future financial and operating performance and results; |
• | business strategy and budgets; |
• | technology; |
• | financial strategy; |
• | amount, nature and timing of capital expenditures; |
• | competition and government regulations; |
• | operating costs and other expenses; |
• | cash flow and anticipated liquidity; |
• | property acquisitions and sales; and |
• | plans, forecasts, objectives, expectations and intentions. |
• | concentration of our customer base and fulfillment of existing customer contracts; |
• | dependence on the spending and drilling activity by the onshore oil and natural gas industry; |
• | our ability to maintain pricing; |
• | the cyclical nature of the oil and natural gas industry; |
• | deterioration of the credit markets; |
• | delays in obtaining required permits; |
• | our ability to raise additional capital to fund future capital expenditures; |
• | increased vulnerability to adverse economic conditions due to indebtedness; |
• | competition within the oil and natural gas industry; |
• | asset impairment and other charges; |
• | the potential for excess capacity in the oil and natural gas industry; |
• | our limited operating history on which investors will evaluate our business and prospects; |
• | our identifying, making and integrating acquisitions; |
• | our ability to obtain raw materials and specialized equipment; |
• | technological developments or enhancements; |
• | loss of key executives; |
• | management control over stockholder voting; |
• | the ability to employ skilled and qualified workers; |
• | work stoppages and other labor matters; |
• | hazards inherent to the oil and natural gas industry; |
• | inadequacy of insurance coverage for certain losses or liabilities; |
• | regulations affecting the oil and natural gas industry; |
• | federal legislation and state legislative and regulatory initiatives relating to hydraulic fracturing; |
• | costs and liabilities associated with environmental, health and safety laws, including any changes in the interpretation or enforcement thereof; |
• | future legislative and regulatory developments; |
• | changes in trucking regulations; and |
• | effects of climate change. |
PLATINUM ENERGY SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
March 31, 2012 | December 31, 2011 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 10,998,579 | $ | 10,153,313 | |||
Available for sale investment securities | — | 4,951,361 | |||||
Accounts receivable, net of allowance for doubtful accounts of $477,019 | 25,930,485 | 29,429,194 | |||||
Inventory | 8,752,750 | 5,272,073 | |||||
Prepayments and other current assets | 11,702,993 | 7,563,820 | |||||
Deferred tax asset | 191,762 | 191,762 | |||||
Total current assets | 57,576,569 | 57,561,523 | |||||
Property and equipment, net | 193,514,494 | 165,297,477 | |||||
Other assets | 15,765,152 | 16,176,743 | |||||
TOTAL ASSETS | $ | 266,856,215 | $ | 239,035,743 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
CURRENT LIABILITIES: | |||||||
Line of credit | $ | 15,000,000 | $ | 18,958,512 | |||
Accounts payable | 58,326,265 | 18,952,366 | |||||
Accrued expenses | 13,011,853 | 19,265,030 | |||||
Deferred revenue | 6,002,068 | 9,627,129 | |||||
Total Current Liabilities | 92,340,186 | 66,803,037 | |||||
Long-term debt | 168,007,649 | 167,689,860 | |||||
Amounts due to affiliates | 10,411,871 | 11,105,056 | |||||
Deferred revenue | 2,000,000 | 3,500,000 | |||||
Deferred tax liabilities | 1,509,293 | 1,562,942 | |||||
TOTAL LIABILITIES | $ | 274,268,999 | $ | 250,660,895 | |||
STOCKHOLDERS’ DEFICIT | |||||||
Preferred stock Series A, $0.001 par value; authorized 20,000 shares; | |||||||
20,000 and 20,000 shares issued and outstanding, respectively | $ | 20 | $ | 20 | |||
Common stock, $0.001 par value; authorized 99,996,000; | |||||||
18,270,229 and 15,535,228 shares issued and outstanding, respectively | 18,270 | 15,535 | |||||
Additional paid in capital | 38,955,119 | 25,240,012 | |||||
Accumulated other comprehensive income | — | 35,434 | |||||
Accumulated deficit | (49,171,247 | ) | (39,782,294 | ) | |||
Total Platinum stockholders’ deficit | (10,197,838 | ) | (14,491,293 | ) | |||
Noncontrolling interest | 2,785,054 | 2,866,141 | |||||
Total stockholders’ deficit | (7,412,784 | ) | (11,625,152 | ) | |||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 266,856,215 | $ | 239,035,743 |
PLATINUM ENERGY SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) | |||||||
Three Months Ended | Three Months Ended | ||||||
March 31, 2012 | March 31, 2011 | ||||||
Revenue | $ | 40,135,036 | $ | 302,016 | |||
Cost of services | (32,581,617 | ) | (168,921 | ) | |||
Depreciation | (5,082,448 | ) | (289,907 | ) | |||
General and administrative expense | (4,657,954 | ) | (2,334,829 | ) | |||
Loss from operations | $ | (2,186,983 | ) | $ | (2,491,641 | ) | |
Interest expense, net | (7,327,142 | ) | (1,410,195 | ) | |||
Loss before income tax | $ | (9,514,125 | ) | $ | (3,901,836 | ) | |
Income tax benefit (expense) | 44,085 | (18,870 | ) | ||||
Net loss | $ | (9,470,040 | ) | $ | (3,920,706 | ) | |
Loss attributable to noncontrolling interests | (81,087 | ) | (44,095 | ) | |||
Net loss attributable to Platinum | $ | (9,388,953 | ) | $ | (3,876,611 | ) | |
Earnings Per Share: | |||||||
Net loss attributable to Platinum - Basic and diluted | $ | (0.68 | ) | $ | (0.76 | ) | |
Weighted average shares - Basic and diluted | 13,818,440 | 5,072,950 | |||||
Other comprehensive loss, before tax: | |||||||
Unrealized loss on investment securities, before tax | (35,434 | ) | (10,604 | ) | |||
Income tax benefit related to other comprehensive loss | — | — | |||||
Other comprehensive loss, net of tax | (35,434 | ) | (10,604 | ) | |||
Comprehensive loss, net of tax | (9,505,474 | ) | (3,931,310 | ) | |||
Less: comprehensive loss attributable to the noncontrolling interest | (81,087 | ) | (44,095 | ) | |||
Comprehensive loss attributable to Platinum | $ | (9,424,387 | ) | $ | (3,887,215 | ) |
PLATINUM ENERGY SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||
Three Months Ended | Three Months Ended | ||||||
March 31, 2012 | March 31, 2011 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net loss | $ | (9,470,040 | ) | $ | (3,920,706 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Depreciation | 5,082,448 | 289,907 | |||||
Amortization of debt issuance cost and debt discount | 1,037,326 | 260,161 | |||||
Deferred income taxes | (53,649 | ) | (29,642 | ) | |||
Stock-based compensation | 312,311 | 235,009 | |||||
Changes in assets and liabilities | 23,405,635 | 1,563,184 | |||||
Net cash provided by (used in) operating activities | 20,314,031 | (1,602,087 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchase of investment securities | — | (5,653,411 | ) | ||||
Sale of investment securities | 4,915,927 | 2,500,000 | |||||
Purchase of and deposits for property and equipment | (33,299,465 | ) | (15,746,400 | ) | |||
Other | — | 6,986 | |||||
Net cash used in investing activities | (28,383,538 | ) | (18,892,825 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Net proceeds from issuance of senior notes | — | 112,428,600 | |||||
Proceeds from issuance of preferred stock | — | 20,000,000 | |||||
Proceeds from issuance of common stock | 13,500,000 | — | |||||
Payment of debt issuance cost | — | (11,146,742 | ) | ||||
Release of restricted cash | — | 6,637,493 | |||||
Repayment of line of credit | (3,958,512 | ) | (6,743,606 | ) | |||
Payment of equity offering costs | (626,715 | ) | — | ||||
Contribution from noncontrolling interests, net | — | 73,000 | |||||
Net cash provided by financing activities | 8,914,773 | 121,248,745 | |||||
Net increase in cash and cash equivalents | 845,266 | 100,753,833 | |||||
Cash and cash equivalents—Beginning | 10,153,313 | 1,431,595 | |||||
Cash and cash equivalents—Ending | $ | 10,998,579 | $ | 102,185,428 | |||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||||
Interest paid | $ | 179,597 | $ | 44,570 | |||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES | |||||||
Purchases of property and equipment in accounts payable and accrued expenses | $ | 32,664,547 | $ | 159,524 | |||
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES | |||||||
Return of restricted cash to a customer | $ | — | $ | 10,000,000 |
PLATINUM ENERGY SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT Three Months Ended March, 31, 2012 (Unaudited) | |||||||||||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||||||||||
Additional | Other | Non- | Total | ||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-in | Comprehensive | Accumulated | Controlling | Stockholders' | |||||||||||||||||||||||||||
Shares | Par | Shares | Par | Capital | Income (Loss) | Deficit | Interest | Deficit | |||||||||||||||||||||||||
Balance at December 31, 2011 | 20,000 | $ | 20 | 15,535,228 | $ | 15,535 | $ | 25,240,012 | $ | 35,434 | $ | (39,782,294 | ) | $ | 2,866,141 | $ | (11,625,152 | ) | |||||||||||||||
Issuance of stock awards and stock-based compensation amortization | — | $ | — | 35,000 | $ | 35 | $ | 207,522 | $ | — | $ | — | $ | — | $ | 207,557 | |||||||||||||||||
Issuance of stock options and stock-based compensation amortization | — | — | — | — | 104,754 | — | — | — | 104,754 | ||||||||||||||||||||||||
Issuance of common stock and warrants | — | — | 2,700,000 | 2,700 | 13,402,831 | — | — | — | 13,405,531 | ||||||||||||||||||||||||
Unrealized loss on investment securities | — | — | — | — | — | (35,434 | ) | — | — | (35,434 | ) | ||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (9,388,953 | ) | (81,087 | ) | (9,470,040 | ) | |||||||||||||||||||||
Balance at March 31, 2012 | 20,000 | $ | 20 | 18,270,228 | $ | 18,270 | $ | 38,955,119 | $ | — | $ | (49,171,247 | ) | $ | 2,785,054 | $ | (7,412,784 | ) |
• | Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. |
• | Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. |
• | Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs |
Carrying Value | Fair Value | Quoted Prices in Active Markets for Identical Assets | |||||||||
March 31, 2012 | (Level 1) | ||||||||||
Investment securities | $ | — | $ | — | $ | — | |||||
December 31, 2011 | |||||||||||
Investment securities | $ | 4,951,361 | $ | 4,951,361 | $ | 4,951,361 |
March 31, 2012 | December 31, 2011 | |||||||
Sand | $ | 5,814,300 | $ | 3,439,221 | ||||
Consumable spare parts | 2,464,615 | 1,416,157 | ||||||
Chemicals | 473,835 | 416,695 | ||||||
Total inventory | $ | 8,752,750 | 5,272,073 |
Useful Life | March 31, 2012 | December 31, 2011 | |||||||
Furniture and fixtures | 3-5 years | $ | 551,225 | $ | 529,239 | ||||
Vehicles | 5-7 years | 23,922,073 | 20,806,245 | ||||||
Equipment | 1.5-7 years | 171,536,414 | 148,448,720 | ||||||
Leasehold improvements | 2 years | 228,324 | 151,289 | ||||||
Construction in progress | 10,475,917 | 3,478,995 | |||||||
206,713,953 | 173,414,488 | ||||||||
Accumulated depreciation | (13,199,459 | ) | (8,117,011 | ) | |||||
Property and equipment, net | $ | 193,514,494 | $ | 165,297,477 |
• | Limitation of capital expenditure; |
• | Restrictions on the payment of dividends as well as the purchase of equity for cash; |
• | Issuance of further debt or the issuance of future disqualified stock including preferred stock; and |
• | Restrictions on the sale of stock that could result in the sale or merger of the Company with another or the sale of assets and properties to another. |
March 31, 2012 | ||
Risk-free interest rate | 1.14 | % |
Dividend yield | — | % |
Expected volatility | 60.00 | % |
Expected term (in years) | 6.25 |
◦ | Risk-free interest rate. The risk-free interest rate is based on the treasury yield rate with a maturity corresponding to the expected term or option life assumed at the grant date. |
◦ | Expected Term. Since we had not previously issued any options to our employees prior to the third quarter 2011, and therefore had no historical forfeiture experience, we estimated the expected term of the option using the simplified method as permitted by SEC Topic 14. D2. Share-based payments, Expected term. The simplified method estimates the expected term of the option by calculating the mid-point between the vesting period end-date and the end of the contract term. |
◦ | Expected Volatility. As there was no trading market for our equity securities, expected volatility of our stock price is based on historical and expected volatility rates of comparable publicly traded peer companies. |
Three Months Ended | Three Months Ended | ||||||
March 31, 2012 | March 31, 2011 | ||||||
(Unaudited) | |||||||
Net loss attributable to Platinum—basic and diluted | $ | (9,388,953 | ) | $ | (3,876,611 | ) | |
Weighted average shares of common stock outstanding—basic and diluted | 13,818,440 | 5,072,950 | |||||
Net loss per share: | |||||||
Basic | $ | (0.68 | ) | $ | (0.76 | ) | |
Diluted | $ | (0.68 | ) | $ | (0.76 | ) |
a. | The aggregate of the outstanding balance of the loans from JPMorgan Chase Bank, N.A. and from WSB’s shareholder, Charles Moncla limited to $16.1 million; and |
b. | The lesser of (i) the last twelve months of revenue generated by the business of WSB or (ii) $20 million. |
Balance as of December 31, 2011 | $ | 11,105,056 | |
Lease payment due to PP, CT and MWST | (630,000 | ) | |
Other, net | (63,185 | ) | |
Balance as of March 31, 2012 | $ | 10,411,871 |
• | Hydraulic Fracturing: Hydraulic fracturing services are utilized when the formations holding oil and natural gas lack the permeability to release their hydrocarbons quickly and economically as is typical in many active unconventional oil and natural gas plays. Our fracturing services include providing technical expertise and experience to improve well completions as well as conducting technical evaluations, job design and fluid recommendations. We commenced hydraulic fracturing operations on August 29, 2011, in southern Texas. |
• | Coiled Tubing: Coiled tubing allows operators to service a well while continuing production without shutting down the well, reducing risk of formation damage. Our Coiled Tubing segment currently conducts operations in Texas and Louisiana. |
• | Other Pressure Pumping Services: Cementing service uses pressure pumping equipment to deliver a slurry of liquid cement that is pumped down a well between the casing and the borehole, among other applications. We perform routine pressure pumping services in conjunction with coiled tubing. Our Other Pressure Pumping Services segment currently conducts operations in Louisiana and Utah. |
Three Months Ended | Hydraulic Fracturing | Coil Tubing | Other Pressure Pumping | Corporate and Other(2) | Consolidated | ||||||||||||||
March 31, 2012 | |||||||||||||||||||
Revenues | $ | 35,038,200 | $ | 4,198,619 | $ | 898,217 | $ | — | $ | 40,135,036 | |||||||||
Cost of services | (26,990,110 | ) | (3,131,041 | ) | (857,098 | ) | (1,603,368 | ) | (32,581,617 | ) | |||||||||
Gross profit (loss)(1) | 8,048,090 | 1,067,578 | 41,119 | (1,603,368 | ) | 7,553,419 | |||||||||||||
Depreciation | (3,675,600 | ) | (1,107,611 | ) | (266,372 | ) | (32,865 | ) | (5,082,448 | ) | |||||||||
General and administrative expense | — | — | — | (4,657,954 | ) | (4,657,954 | ) | ||||||||||||
Operating loss | $ | 4,372,490 | $ | (40,033 | ) | $ | (225,253 | ) | $ | (6,294,187 | ) | $ | (2,186,983 | ) | |||||
Capital expenditures, including equipment deposits | 29,234,713 | 3,848,059 | 31,500 | 185,193 | 33,299,465 |
Three Months Ended | Hydraulic Fracturing | Coil Tubing | Other Pressure Pumping | Corporate and Other(2) | Consolidated | ||||||||||||||
March 31, 2011 | |||||||||||||||||||
Revenues | $ | — | $ | 197,262 | $ | 104,754 | $ | — | $ | 302,016 | |||||||||
Cost of services | — | (74,495 | ) | (94,426 | ) | — | (168,921 | ) | |||||||||||
Gross profit (loss)(1) | — | 122,767 | 10,328 | — | 133,095 | ||||||||||||||
Depreciation and amortization | — | (226,376 | ) | (59,985 | ) | (3,546 | ) | (289,907 | ) | ||||||||||
General and administrative expense | — | — | — | (2,334,829 | ) | (2,334,829 | ) | ||||||||||||
Operating loss | $ | — | $ | (103,609 | ) | $ | (49,657 | ) | $ | 2,338,375 | $ | (2,491,641 | ) | ||||||
Capital expenditures, including equipment deposits | — | 12,739,849 | 3,006,551 | — | 15,746,400 |
(1) | Gross Profit represents Revenues minus Costs of services. |
(2) | “Corporate and Other” represents items that are not directly related to a particular operating segment and eliminations. Excluding the $4.7 million and $2.3 million in corporate general and administrative expenses for the three-month periods ended March 31, 2012 and 2011, respectively, total operating segments’ income (loss) for such periods would have been $(2.5) million and $0.2 million, respectively. |
As of | Hydraulic Fracturing | Coil Tubing | Other Pressure Pumping | Corporate and Other(2) | Consolidated | ||||||||||||||
March 31, 2012 | $ | 201,459,543 | $ | 33,107,976 | $ | 8,476,642 | $ | 23,812,054 | $ | 266,856,215 | |||||||||
December 31, 2011 | $ | 173,249,544 | $ | 29,346,158 | $ | 6,933,086 | $ | 29,506,955 | $ | 239,035,743 |
March 31, 2012 | December 31, 2011 | ||||||
Prepayments for | |||||||
Materials and equipment | $ | 6,893,288 | $ | 6,420,228 | |||
Insurance | 3,868,709 | 563,494 | |||||
Rents and various leases | 825,656 | 568,097 | |||||
Security deposits and various permits | 115,340 | 12,001 | |||||
Total prepayments | $ | 11,702,993 | $ | 7,563,820 |
March 31, 2012 | December 31, 2011 | ||||||
Deferred costs related to | |||||||
Senior Notes, Original | $ | 8,681,113 | $ | 9,231,808 | |||
Senior Notes, Additional | 2,769,315 | 2,938,156 | |||||
Equity offering and line of credit | 2,405,637 | 1,873,392 | |||||
Security deposits related to operating leases | 1,909,087 | 2,133,387 | |||||
Total other assets | $ | 15,765,152 | $ | 16,176,743 |
March 31, 2012 | December 31, 2011 | ||||||
Accrued payroll | $ | 1,368,157 | $ | 1,628,170 | |||
Accrued expenses | 2,967,375 | 2,073,290 | |||||
Accrued taxes | 731,735 | 1,829,699 | |||||
Accruals related to various materials and equipment | 5,888,991 | 5,511,491 | |||||
Accrued interest on Senior Notes | 2,055,595 | 8,222,380 | |||||
Total accrued expenses | $ | 13,011,853 | $ | 19,265,030 |
March 31, 2012 | March 31, 2011 | ||||||
Account receivables | $ | 3,498,709 | $ | (45,218 | ) | ||
Inventory | (3,480,677 | ) | — | ||||
Prepaids and other current assets | (3,914,873 | ) | (1,988,924 | ) | |||
Account payables and accrued expenses | 32,427,537 | 3,597,326 | |||||
Deferred revenue | (5,125,061 | ) | — | ||||
Changes in assets and liabilities | $ | 23,405,635 | $ | 1,563,184 |
PLATINUM ENERGY SOLUTIONS, INC. CONDENSED CONSOLIDATING BALANCE SHEET March 31, 2012 (Unaudited) | |||||||||||||||||||
Parent (PES) | Guarantor (PPP) | Non-Guarantor Entities | Eliminations | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 10,525,900 | $ | 178,408 | $ | 294,271 | $ | — | $ | 10,998,579 | |||||||||
Accounts receivable, net | 200,000 | 25,719,539 | 10,946 | — | 25,930,485 | ||||||||||||||
Inventory | — | 8,752,750 | — | — | 8,752,750 | ||||||||||||||
Investment in subsidiary | 1,000 | — | — | (1,000 | ) | — | |||||||||||||
Prepayments and other current assets | 3,880,711 | 7,822,282 | — | — | 11,702,993 | ||||||||||||||
Deferred tax asset | — | — | 191,762 | — | 191,762 | ||||||||||||||
Intercompany receivables | 178,763,934 | — | — | (178,763,934 | ) | — | |||||||||||||
Total current assets | $ | 193,371,545 | $ | 42,472,979 | $ | 496,979 | $ | (178,764,934 | ) | $ | 57,576,569 | ||||||||
Property and equipment, net | — | 179,232,410 | 14,282,084 | — | 193,514,494 | ||||||||||||||
Other assets | 13,865,092 | 1,900,060 | — | — | 15,765,152 | ||||||||||||||
Total assets | $ | 207,236,637 | $ | 223,605,449 | $ | 14,779,063 | $ | (178,764,934 | ) | $ | 266,856,215 | ||||||||
Liabilities and Stockholders’ Equity (Deficit) | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Line of credit | 15,000,000 | — | — | — | 15,000,000 | ||||||||||||||
Accounts payable | 6,958,122 | 51,272,243 | 95,900 | — | 58,326,265 | ||||||||||||||
Accrued expenses | 2,620,737 | 10,391,145 | (29 | ) | — | 13,011,853 | |||||||||||||
Intercompany payables | — | 178,763,934 | — | (178,763,934 | ) | — | |||||||||||||
Deferred revenue | — | 6,002,068 | — | — | 6,002,068 | ||||||||||||||
Total current liabilities | $ | 24,578,859 | $ | 246,429,390 | $ | 95,871 | $ | (178,763,934 | ) | $ | 92,340,186 | ||||||||
Long-term debt | 168,007,649 | — | — | — | 168,007,649 | ||||||||||||||
Amounts due to affiliates | — | — | 10,411,871 | — | 10,411,871 | ||||||||||||||
Deferred revenue | — | 2,000,000 | — | — | 2,000,000 | ||||||||||||||
Deferred tax liabilities | — | 23,026 | 1,486,267 | — | 1,509,293 | ||||||||||||||
Total liabilities | $ | 192,586,508 | $ | 248,452,416 | $ | 11,994,009 | $ | (178,763,934 | ) | $ | 274,268,999 | ||||||||
Stockholders’ Equity (Deficit): | |||||||||||||||||||
Preferred Stock | 20 | — | — | — | 20 | ||||||||||||||
Common Stock | 18,270 | 1,000 | — | (1,000 | ) | 18,270 | |||||||||||||
Additional paid in capital | 38,955,119 | — | — | — | 38,955,119 | ||||||||||||||
Accumulated other comprehensive income | — | — | — | — | — | ||||||||||||||
Accumulated deficit | (24,323,280 | ) | (24,847,967 | ) | — | — | (49,171,247 | ) | |||||||||||
Total Platinum stockholders’ equity (deficit) | $ | 14,650,129 | $ | (24,846,967 | ) | $ | — | $ | (1,000 | ) | $ | (10,197,838 | ) | ||||||
Noncontrolling interest | — | — | 2,785,054 | — | 2,785,054 | ||||||||||||||
Total stockholders’ equity (deficit) | $ | 14,650,129 | $ | (24,846,967 | ) | $ | 2,785,054 | $ | (1,000 | ) | $ | (7,412,784 | ) | ||||||
Total liabilities and stockholders’ equity (deficit) | $ | 207,236,637 | $ | 223,605,449 | $ | 14,779,063 | $ | (178,764,934 | ) | $ | 266,856,215 |
PLATINUM ENERGY SOLUTIONS, INC. CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2011 | |||||||||||||||||||
Parent (PES) | Guarantor (PPP) | Non-Guarantor Entities | Eliminations | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 7,835,894 | $ | 2,018,418 | $ | 299,001 | $ | — | $ | 10,153,313 | |||||||||
Accounts receivable, net | — | 29,392,767 | 36,427 | — | 29,429,194 | ||||||||||||||
Available for sale investment securities | 4,951,361 | — | — | — | 4,951,361 | ||||||||||||||
Inventory | — | 5,272,073 | — | — | 5,272,073 | ||||||||||||||
Investment in subsidiary | 1,000 | — | — | (1,000 | ) | — | |||||||||||||
Prepayments and other current assets | 538,378 | 7,025,442 | — | — | 7,563,820 | ||||||||||||||
Deferred tax asset | — | — | 191,762 | — | 191,762 | ||||||||||||||
Intercompany receivables | 173,460,201 | — | — | (173,460,201 | ) | — | |||||||||||||
Total current assets | $ | 186,786,834 | $ | 43,708,700 | $ | 527,190 | $ | (173,461,201 | ) | $ | 57,561,523 | ||||||||
Property and equipment, net | — | 150,194,657 | 15,102,820 | — | 165,297,477 | ||||||||||||||
Other assets | 14,052,383 | 2,124,360 | — | — | 16,176,743 | ||||||||||||||
Total assets | $ | 200,839,217 | $ | 196,027,717 | $ | 15,630,010 | $ | (173,461,201 | ) | $ | 239,035,743 | ||||||||
Liabilities and Stockholders’ Equity (Deficit) | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Line of credit | 18,958,512 | — | — | — | 18,958,512 | ||||||||||||||
Accounts payable | 914,572 | 17,941,894 | 95,900 | — | 18,952,366 | ||||||||||||||
Accrued expenses | 10,675,351 | 8,589,708 | (29 | ) | — | 19,265,030 | |||||||||||||
Intercompany payables | — | 173,460,201 | — | (173,460,201 | ) | — | |||||||||||||
Deferred revenue | — | 9,627,129 | — | — | 9,627,129 | ||||||||||||||
Total current liabilities | $ | 30,548,435 | $ | 209,618,932 | $ | 95,871 | $ | (173,460,201 | ) | $ | 66,803,037 | ||||||||
Long-term debt | 167,689,860 | — | — | — | 167,689,860 | ||||||||||||||
Amounts due to affiliates | — | — | 11,105,056 | — | 11,105,056 | ||||||||||||||
Deferred revenue | — | 3,500,000 | — | — | 3,500,000 | ||||||||||||||
Deferred tax liabilities | — | — | 1,562,942 | — | 1,562,942 | ||||||||||||||
Total liabilities | $ | 198,238,295 | $ | 213,118,932 | $ | 12,763,869 | $ | (173,460,201 | ) | $ | 250,660,895 | ||||||||
Stockholders’ Equity (Deficit): | |||||||||||||||||||
Preferred Stock | 20 | — | — | — | 20 | ||||||||||||||
Common Stock | 15,535 | 1,000 | — | (1,000 | ) | 15,535 | |||||||||||||
Additional paid in capital | 25,240,012 | — | — | — | 25,240,012 | ||||||||||||||
Accumulated other comprehensive income | 35,434 | — | — | — | 35,434 | ||||||||||||||
Accumulated deficit | (22,690,079 | ) | (17,092,215 | ) | — | — | (39,782,294 | ) | |||||||||||
Total Platinum stockholders’ equity (deficit) | $ | 2,600,922 | $ | (17,091,215 | ) | — | $ | (1,000 | ) | $ | (14,491,293 | ) | |||||||
Noncontrolling interest | — | — | 2,866,141 | — | 2,866,141 | ||||||||||||||
Total stockholders’ equity (deficit) | $ | 2,600,922 | $ | (17,091,215 | ) | $ | 2,866,141 | $ | (1,000 | ) | $ | (11,625,152 | ) | ||||||
Total liabilities and stockholders’ equity (deficit) | $ | 200,839,217 | $ | 196,027,717 | $ | 15,630,010 | $ | (173,461,201 | ) | $ | 239,035,743 |
PLATINUM ENERGY SOLUTIONS, INC. CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE LOSS Three Months Ended March 31, 2012 (Unaudited) | |||||||||||||||||||
Parent (PES) | Guarantor (PPP) | Non-Guarantor Entities | Eliminations | Consolidated | |||||||||||||||
Revenue | $ | — | $ | 40,135,036 | $ | 630,000 | $ | (630,000 | ) | $ | 40,135,036 | ||||||||
Cost of services | — | (33,211,617 | ) | — | 630,000 | (32,581,617 | ) | ||||||||||||
Depreciation | — | (4,261,712 | ) | (820,736 | ) | — | (5,082,448 | ) | |||||||||||
General and administrative expenses | (2,420,235 | ) | (2,237,719 | ) | — | — | (4,657,954 | ) | |||||||||||
Loss from operations | $ | (2,420,235 | ) | $ | 423,988 | $ | (190,736 | ) | $ | — | $ | (2,186,983 | ) | ||||||
Interest income (expense), net | 787,034 | (8,147,150 | ) | 32,974 | — | (7,327,142 | ) | ||||||||||||
Loss before income tax | $ | (1,633,201 | ) | $ | (7,723,162 | ) | $ | (157,762 | ) | $ | — | $ | (9,514,125 | ) | |||||
Income tax benefit (expense) | — | (32,590 | ) | 76,675 | — | 44,085 | |||||||||||||
Net loss | $ | (1,633,201 | ) | $ | (7,755,752 | ) | $ | (81,087 | ) | $ | — | $ | (9,470,040 | ) |
PLATINUM ENERGY SOLUTIONS, INC. CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE LOSS Three Months Ended March 31, 2011 (Unaudited) | |||||||||||||||||||
Parent (PES) | Guarantor (PPP) | Non-Guarantor Entities | Eliminations | Consolidated | |||||||||||||||
Revenue | $ | — | $ | 302,016 | $ | 210,000 | $ | (210,000 | ) | $ | 302,016 | ||||||||
Cost of services | — | (369,215 | ) | (9,706 | ) | 210,000 | (168,921 | ) | |||||||||||
Depreciation | — | (64,388 | ) | (225,519 | ) | — | (289,907 | ) | |||||||||||
General and administrative expenses | (2,334,829 | ) | — | — | — | (2,334,829 | ) | ||||||||||||
Loss from operations | $ | (2,334,829 | ) | $ | (131,587 | ) | $ | (25,225 | ) | $ | — | $ | (2,491,641 | ) | |||||
Interest expense, net | (1,410,195 | ) | — | — | — | (1,410,195 | ) | ||||||||||||
Loss before income tax | $ | (3,745,024 | ) | $ | (131,587 | ) | $ | (25,225 | ) | $ | — | $ | (3,901,836 | ) | |||||
Income tax expense | — | — | (18,870 | ) | — | (18,870 | ) | ||||||||||||
Net loss | $ | (3,745,024 | ) | $ | (131,587 | ) | $ | (44,095 | ) | $ | — | $ | (3,920,706 | ) |
PLATINUM ENERGY SOLUTIONS, INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Three Months Ended March 31, 2012 (Unaudited) | |||||||||||||||||||
Parent (PES) | Guarantor (PPP) | Non-Guarantor Entities | Eliminations | Consolidated | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||
Net loss | $ | (1,633,201 | ) | $ | (7,755,752 | ) | $ | (81,087 | ) | $ | — | $ | (9,470,040 | ) | |||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||||||||||
Depreciation | — | 4,261,712 | 820,736 | — | 5,082,448 | ||||||||||||||
Amortization of debt issuance costs and debt discounts | 1,037,326 | — | — | — | 1,037,326 | ||||||||||||||
Deferred income taxes | — | 23,026 | (76,675 | ) | — | (53,649 | ) | ||||||||||||
Stock-based compensation expense | 312,311 | — | — | — | 312,311 | ||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||||
Accounts receivable | (200,000 | ) | 3,673,228 | 25,481 | — | 3,498,709 | |||||||||||||
Intercompany receivables | (5,303,733 | ) | — | — | 5,303,733 | — | |||||||||||||
Inventory | — | (3,480,677 | ) | — | — | (3,480,677 | ) | ||||||||||||
Accounts payable and accrued expenses | (2,011,064 | ) | 35,131,786 | (693,185 | ) | — | 32,427,537 | ||||||||||||
Intercompany payables | — | 5,303,733 | — | (5,303,733 | ) | — | |||||||||||||
Other current assets | (3,342,333 | ) | (572,540 | ) | — | — | (3,914,873 | ) | |||||||||||
Deferred revenue | — | (5,125,061 | ) | — | — | (5,125,061 | ) | ||||||||||||
Net cash provided by (used in) operating activities | $ | (11,140,694 | ) | $ | 31,459,455 | $ | (4,730 | ) | $ | — | $ | 20,314,031 | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||
Purchase of investment securities | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Sale of investment securities | 4,915,927 | — | — | — | 4,915,927 | ||||||||||||||
Purchase of and deposits for property and equipment | — | (33,299,465 | ) | — | — | (33,299,465 | ) | ||||||||||||
Other | — | — | — | — | — | ||||||||||||||
Net cash provided by (used in) investing activities | $ | 4,915,927 | $ | (33,299,465 | ) | $ | — | $ | — | $ | (28,383,538 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||
Proceeds from issuance of common stock | $ | 13,500,000 | $ | — | $ | — | $ | — | $ | 13,500,000 | |||||||||
Repayment of line of credit | (3,958,512 | ) | — | — | — | (3,958,512 | ) | ||||||||||||
Payment of equity offering costs | (626,715 | ) | — | — | — | (626,715 | ) | ||||||||||||
Net cash provided by financing activities | $ | 8,914,773 | $ | — | $ | — | $ | — | $ | 8,914,773 | |||||||||
Net increase (decrease) in cash and cash equivalents | $ | 2,690,006 | $ | (1,840,010 | ) | $ | (4,730 | ) | $ | — | $ | 845,266 | |||||||
Cash and cash equivalents—Beginning | 7,835,894 | 2,018,418 | 299,001 | — | 10,153,313 | ||||||||||||||
Cash and cash equivalents—Ending | $ | 10,525,900 | $ | 178,408 | $ | 294,271 | $ | — | $ | 10,998,579 |
PLATINUM ENERGY SOLUTIONS, INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Three Months Ended March 31, 2011 (Unaudited) | |||||||||||||||||||
Parent (PES) | Guarantor (PPP) | Non-Guarantor Entities | Eliminations | Consolidated | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||
Net loss | $ | (3,745,024 | ) | $ | (131,587 | ) | $ | (44,095 | ) | $ | — | $ | (3,920,706 | ) | |||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||||||||||
Depreciation | — | 64,388 | 225,519 | — | 289,907 | ||||||||||||||
Amortization of debt issuance costs and debt discounts | 260,161 | — | — | — | 260,161 | ||||||||||||||
Deferred income taxes | — | — | (29,642 | ) | — | (29,642 | ) | ||||||||||||
Stock-based compensation expense | 235,009 | — | — | — | 235,009 | ||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||||
Accounts receivable | (8,171 | ) | (293,845 | ) | 256,798 | — | (45,218 | ) | |||||||||||
Intercompany receivables | (16,107,444 | ) | — | — | 16,107,444 | — | |||||||||||||
Accounts payable and accrued expenses | 4,020,636 | — | (423,310 | ) | — | 3,597,326 | |||||||||||||
Intercompany payables | — | 16,107,444 | — | (16,107,444 | ) | — | |||||||||||||
Other current assets | (1,988,924 | ) | — | — | — | (1,988,924 | ) | ||||||||||||
Net cash provided by (used in) operating activities | $ | (17,333,757 | ) | $ | 15,746,400 | $ | (14,730 | ) | $ | — | $ | (1,602,087 | ) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||
Purchase of investment securities | (5,653,411 | ) | — | — | — | (5,653,411 | ) | ||||||||||||
Sale of investment securities | 2,500,000 | — | — | — | 2,500,000 | ||||||||||||||
Purchase of and deposits for property and equipment | — | (15,746,400 | ) | — | — | (15,746,400 | ) | ||||||||||||
Other | — | — | 6,986 | — | 6,986 | ||||||||||||||
Net cash used in investing activities | $ | (3,153,411 | ) | $ | (15,746,400 | ) | $ | 6,986 | $ | — | $ | (18,892,825 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||
Net proceeds from issuance of senior notes | $ | 112,428,600 | — | — | — | $ | 112,428,600 | ||||||||||||
Proceeds from issuance of preferred stock | 20,000,000 | — | — | — | 20,000,000 | ||||||||||||||
Payment of debt issuance costs | (11,146,742 | ) | — | — | — | (11,146,742 | ) | ||||||||||||
Release of restricted cash | 6,637,493 | — | — | — | 6,637,493 | ||||||||||||||
Repayment of line of credit | (6,743,606 | ) | — | — | — | (6,743,606 | ) | ||||||||||||
Contribution from noncontrolling interests | — | — | 73,000 | — | 73,000 | ||||||||||||||
Net cash provided by financing activities | $ | 121,175,745 | — | 73,000 | — | $ | 121,248,745 | ||||||||||||
Net increase in cash and cash equivalents | $ | 100,688,577 | $ | — | $ | 65,256 | $ | — | $ | 100,753,833 | |||||||||
Cash and cash equivalents—Beginning | 1,431,595 | — | — | — | 1,431,595 | ||||||||||||||
Cash and cash equivalents—Ending | $ | 102,120,172 | $ | — | $ | 65,256 | $ | — | $ | 102,185,428 |
Three Months Ended | Three Months Ended | ||||||
March 31, 2012 | March 31, 2011 | ||||||
Revenue | $ | 40,135,036 | $ | 302,016 | |||
Cost of services | (32,581,617 | ) | (168,921 | ) | |||
Depreciation | (5,082,448 | ) | (289,907 | ) | |||
General and administrative expense | (4,657,954 | ) | (2,334,829 | ) | |||
Loss from operations | $ | (2,186,983 | ) | $ | (2,491,641 | ) | |
Interest expense, net | (7,327,142 | ) | (1,410,195 | ) | |||
Loss before income tax | $ | (9,514,125 | ) | $ | (3,901,836 | ) | |
Income tax benefit (expense) | 44,085 | (18,870 | ) | ||||
Net loss | $ | (9,470,040 | ) | $ | (3,920,706 | ) |
Exhibit Number | Description of Document | |
3.1 | Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 1, 2012 (File No. 333-176566)). | |
10.1* | Second Amendment, dated March 6, 2012, to the Stockholders Agreement of the Company dated March 3, 2011. | |
10.2* | Memorandum of Understanding entered into on March 15, 2012. | |
10.3* | Stock Purchase Agreement, dated March 21, 2012. | |
31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32* | Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS** | XBRL Instance Document | |
101.SCH** | XBRL Taxonomy Extension Schema Document | |
101.CAL** | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB** | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE** | XBRL Taxonomy Extension Presentation Linkbase Document | |
101.DEF** | XBRL Taxonomy Extension Definition Linkbase Document |
PLATINUM ENERGY SOLUTIONS, INC. | |||
Date: | May 21, 2012 | By: | /s/ L. CHARLES MONCLA, JR. |
L. Charles Moncla, Jr. | |||
Chief Executive Officer and Director | |||
Date: | May 21, 2012 | By: | /s/ J. CLARKE LEGLER, II |
J. Clarke Legler, II | |||
Chief Financial Officer and Secretary |
Exhibit Number | Description of Document | |
3.1 | Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 1, 2012 (File No. 333-176566)). | |
10.1* | Second Amendment, dated March 6, 2012, to the Stockholders Agreement of the Company dated March 3, 2011. | |
10.2* | Memorandum of Understanding entered into on March 15, 2012. | |
10.3* | Stock Purchase Agreement, dated March 21, 2012. | |
31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32* | Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS** | XBRL Instance Document | |
101.SCH** | XBRL Taxonomy Extension Schema Document | |
101.CAL** | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB** | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE** | XBRL Taxonomy Extension Presentation Linkbase Document | |
101.DEF** | XBRL Taxonomy Extension Definition Linkbase Document |
COMPANY: | ||
Platinum Energy Solutions, Inc. | ||
By: | /s/ L. Charles Moncla, Jr. | |
Name: L. Charles Moncla, Jr. | ||
Title: Chief Executive Officer | ||
INVESTORS HOLDING A MAJORITY OF THE SHARES OF COMMON STOCK PURCHASED UNDER THE PURCHASE AGREEMENT: | ||
Clearlake Capital Partners II (Master), L.P. | ||
By: | /s/ José E. Feliciano | |
Name: José E. Feliciano | ||
Title: Partner | ||
Moncla Platinum Investment Group, LLC | ||
By: | /s/ L. Charles Moncla, Jr. | |
Name: L. Charles Moncla, Jr. | ||
Title: Manager | ||
STOCKHOLDERS HOLDING AT LEAST 70% OF THE SHARES OF COMMON STOCK OF THE COMPANY: | ||
Clearlake Capital Partners II (Master), L.P. | ||
By: | /s/ José E. Feliciano | |
Name: José E. Feliciano | ||
Title: Partner | ||
Moncla Platinum Investment Group, LLC | ||
By: | /s/ L. Charles Moncla, Jr. | |
Name: L. Charles Moncla, Jr. | ||
Title: Manager | ||
Layton Corporation | ||
By: | /s/ J. Clarke Legler, II | |
Name: J. Clarke Legler, II | ||
Title: | ||
Transaction: | $13.5 million, initially, of capital in the form of common stock of Platinum Energy Solutions, Inc. (the “Company”), which will be immediately exchangeable into convertible preferred stock (the “Shares”) of the Company, upon such convertible preferred stock being authorized by the Company's stockholders in a validly called stockholders meeting, as reflected in an amended and restated articles of incorporation for the Company in a form and substance reasonably satisfactory to CCG (the “Offering”). With the consent of the Requisite Investors (as defined below), the Company will have the right to increase the Offering by an additional $25 million on the same terms to finance scheduled capital expenditures. |
Offering: | In accordance with Section 3 of the Company's Stockholders Agreement, dated March 3, 2011, as amended (the “Stockholders Agreement”), the Company will offer the Shares on a pro rata basis to the Investors (as defined therein). Thereafter, the requisite Investors (CCG (or its affiliate) and L. Charles Moncla, Jr. (or his affiliate)) and hereafter, “Requisite Investors” and also, the “Backstop Providers”) will waive the balance of the provisions of Section 3 of the Stockholders Agreement, including time periods, such that all unsubscribed Shares will be offered to all remaining stockholders (including warrant holders) in proportion to the shares of common stock or common stock equivalents held by such stockholders. Thereafter, the Company will offer any Shares remaining to be offered in the Offering to non-stockholders and/or officers and directors as approved in all instances by the Requisite Investors. Finally, if the Offering has not been fully subscribed, the Backstop Providers shall purchase any Shares remaining in the Offering in proportion to their proportional ownership of common equity of the Company prior to the Offering. |
Closings: | The terms of the Offering will allow the Company to accept subscriptions under the Offering on a continuous basis until the full amount of the Offering has been subscribed; provided, each offering period shall be open for the lesser of (i) three business days following notice by the Company to the eligible participants in the applicable offering period and (ii) the date by which the Company has received written indications from all participants in the applicable period of either their commitment to participate in the Offering or (except for the Backstop Providers) their election not to participate in the Offering; provided further, that the Company may schedule multiple closings during any given offering period. The Company will reserve the right to extend any offering periods. |
Financing: | Initially, $13.5 million common stock immediately exchangeable into convertible preferred stock. |
Conversion Price: | $5.00 per share. |
Dividend: | 5% cumulative dividend rate; payable, at the option of the Company, in cash or additional Shares (paid at the purchase price during the 18-month period following the issuance of the Shares, and thereafter at the fair market value of the Shares as determined by the Company's Board) on a quarterly basis, all subject to the terms of the Company's Indenture. If the Company has not completed an Initial Public Offering (as such term is defined in the Company's Indenture) within 18 months of issuance of the Shares, the dividend rate will increase to 10%. |
Ranking: | 1x liquidation preference, pari passu with existing Series A Preferred Stock of the Company. |
Conversion: | Holders of the Shares shall have the right to convert, at any time, into shares of common stock of the Company. The Shares shall mandatorily convert into shares of common stock of the Company upon a closing of a Qualified IPO (as such term is defined in the Stockholders Agreement). |
Commitment Fee: | For Investors committing to invest by 12:00 p.m. New York City time on March 20, 2012, as a fee for this commitment, the Company will issue a total of 518,984 warrants to purchase shares of common stock of the Company, with each such Investor receiving a pro rata portion of the warrants based on the investment amount committed by such Investor to the total commitments of all Investors. Each holder of a warrant will have the right to purchase one share of common stock of the Company at an exercise price of $3.00 per share and each warrant will have a 10-year term. |
Backstop Fee: | The Backstop Providers will receive at closing, a fee for agreeing to fund any unfunded amounts of this Offering, payable by the issuance of 518,984 warrants to purchase shares of common stock of the Company, with each Backstop Provider receiving a pro rata portion of the warrants based on such Backstop Provider's existing ownership of common equity of the Company prior to the Offering. Each holder of a warrant will have the right to purchase one share of common stock of the Company at an exercise price of $3.00 per share and each warrant will have a 10-year term. |
Other Equity Transactions: | The holders of 60% of the Shares shall have the right to cause all holders of the Shares to convert their Shares into a new series of preferred stock (“New Preferred”), if the Company completes a transaction for the sale of such new preferred stock within 90 days of closing the Offering. |
Definitive Documentation: | The definitive documentation shall embody the transactions contemplated herein, including a Stock Purchase Agreement setting forth, among other provisions customary to transactions of this nature, (i) a covenant by the Company to hold the stockholders meeting to authorize the issuance of the convertible preferred stock within 40 days of the initial closing date and (ii) a covenant that the Company shall cause the Stockholders Agreement to be amended so that all of the Shares will be subject to, and receive all rights under, the Stockholders Agreement (including registration rights therein upon conversion), and shall be reasonably acceptable to all parties and their respective counsel. |
Clearlake Capital Partners II (Master), L.P. | ||
By: | Clearlake Capital Partners II GP, L.P. | |
Its: | General Partner | |
By: | Clearlake Capital Partners LLC | |
Its: | General Partner | |
By: | CCG Operations, LLC | |
Its: | Managing Member | |
By: | /s/ José E. Feliciano | |
Name: José E. Feliciano | ||
Title: Partner | ||
/s/ L. Charles Moncla, Jr. | ||
L. Charles Moncla, Jr. | ||
Platinum Energy Solutions, Inc. | ||
By: | /s/ Justin Brown | |
Name: Justin Brown | ||
Title: Principal Accounting Officer |
Platinum Energy Solutions, Inc. | ||
By: | /s/ J. Clarke Legler, II | |
Name:J. Clarke Legler, II | ||
Title:Chief Financial Officer |
PURCHASER | ||
CLEARLAKE CAPITAL PARTNERS II (MASTER), L.P. | ||
By: | Clearlake Capital Partners II GP L.P. | |
Its: | General Partner | |
By: | Clearlake Capital Partners LLC | |
Its: | General Partner | |
By: | CCG Operations, LLC | |
Its: | Managing Member | |
By: | /s/ José E. Feliciano | |
Name:José E. Feliciano | ||
Title:Manager |
Date: | March 22, 2012 | |
Address: | 233 Wilshire Blvd., Suite 800 | |
Santa Monica, CA 90401 |
Maximum Amount Willing to Invest in Purchase of Shares (in U.S. Dollars): $8,000,000 |
PURCHASER | ||
LUCKY CHARM RESOURCES, INC. | ||
By: | /s/ L. Charles Moncla, Jr. | |
Name: L. Charles Moncla, Jr. | ||
Title: President |
Date: | 3/21/12 | |
Address: | PO Box 131368 | |
Houston, TX 77219 |
Maximum Amount Willing to Invest in Purchase of Shares (in U.S. Dollars): $7,000,000.00 |
PURCHASER | ||
DO S1 Limited | ||
By: | /s/ Shawn Brick | |
Name: Shawn Brick | ||
Title: Head of Product Control |
Date: | 03/23/2012 | |
Address: | 5th FLOOR, | |
33 GROSVENOR PLACE | ||
LONDON, SW17HY | ||
UK |
Maximum Amount Willing to Invest in Purchase of Shares (in U.S. Dollars): $1,012,500 |
PURCHASER | ||
KNIGHT CAPITAL HOLDINGS LLC | ||
By: | /s/ Andrew M. Greenstein | |
Name: Andrew M. Greenstein | ||
Title: Managing Director and Secretary |
Date: | 3/23/2012 | |
Address: | 545 WASHINGTON BLVD. | |
JERSEY CITY, NJ 07310 |
Maximum Amount Willing to Invest in Purchase of Shares (in U.S. Dollars): $100,000 |
PURCHASER | ||
By: | /s/ William Restrepo | |
Name: William Restrepo |
Date: | 3/30/2012 | |
Address: | 3219 OAKMONT DR. | |
SUGAR LAND, TX 77479 |
Maximum Amount Willing to Invest in Purchase of Shares (in U.S. Dollars): $100,000.00 |
PURCHASER | ||
By: | /s/ Mervin Dunn | |
Name: Mervin Dunn |
Date: | 4/5/2012 | |
Address: | 4737 Yantis Drive R. | |
New Albany, OH 43054 |
Maximum Amount Willing to Invest in Purchase of Shares (in U.S. Dollars): $100,000.00 |
Series B Preferred Terms: | |
Dividends: Holders of Series B Preferred Stock (“Series B Preferred Stock”) will be entitled to receive cumulative dividends at a rate of 5% per annum of the purchase price per share in preference to dividends to the holders of any Junior Securities (as defined below), payable, at the option of the Company, in cash or additional shares of Series B Preferred Stock (paid at the purchase price of such Series B Preferred during the 18-month period following the issuance of such Series B Preferred Stock, and thereafter at the fair market value of the Series B Preferred as determined by the Company's Board) on a quarterly basis, all subject to the terms of the Company's (a) indenture dated as of March 3, 2011, as amended, with The Bank of New York Mellon Trust Company, N.A., as to its senior notes, and (b) credit facility dated as of December 28, 2011 with JPMorgan Chase Bank, N.A. If the Company has not completed an Initial Public Offering (as defined below) within 18 months of issuance of the Shares, the dividend rate will increase to 10% per annum. For purposes of this term sheet, “Junior Securities” will mean all other series of capital stock of the Company when and if authorized by the board of directors, including, but not limited to the common stock of the Company and “Initial Public Offering” will mean the Company's first firm commitment underwritten public offering of its common stock (“Common Stock”) under the Securities Act. For the purposes hereof, a Qualified IPO (as defined below) shall be deemed an Initial Public Offering. | |
Liquidation Preference and Ranking: In the event of any liquidation or winding up of the Company, any sale of all or substantially all of the assets of the Company, or a merger, or a consolidation of the Company (“Liquidity Event”), the holders of the Series B Preferred Stock will be entitled to receive, in preference to the holders of Junior Securities and pari passu with the holders of Series A Preferred Stock of the Company, an amount equal to the greater of (i) 1x the original investment amount plus any accrued or declared but unpaid dividends, if any (“Liquidation Preference”) or (ii) the amount to be received by such holders in connection with such Liquidity Event upon conversion of the Series B Preferred Stock to Common Stock. | |
Voting Rights: Series B Preferred Stock will have no voting rights. | |
Conversion: Each share of Series B Preferred Stock will be convertible at any time, at the option of the holder, into shares of common stock. The total number of shares of common stock into which Series B Preferred Stock may be converted will be determined by multiplying each share of Series B Preferred Stock to be converted by 200 (“Conversion Ratio”). | |
Automatic Conversion Upon Qualified IPO: The Series B Preferred Stock will be automatically converted to common stock at the then applicable Conversion Ratio upon consummation of an initial public offering of common stock in a nationally recognized exchange with total proceeds available to the public of $50 million or more and an implied pre-money equity market capitalization of at least $125 million (“Qualified IPO”); provided, that such automatic conversion shall be conditioned upon either (i) a price per share of common stock issued in connection with the Qualified IPO of at least $5.00 or (ii) the determination of the holders of at least 60% of the Series B Preferred Stock. |
Automatic Conversion into New Preferred: The holders of at least 60% of the Series B Preferred Stock shall have the right to cause all holders of Series B Preferred Stock to convert such shares of Series B Preferred Stock into a new series of preferred stock ("New Preferred"), if the Company consummates a transaction for the sale of such New Preferred with 90 days following the issuance of the first Share by the Company. | |
Anti-Dilution Protection: The Conversion Ratio will be subject to weighted average anti-dilution adjustments for capital reorganizations, reclassifications or other changes or equity issuances below the Conversion Ratio (other than Exempt Share issuances). “Exempt Shares” means shares issued by the Company in connection with (i) the dividends on Series B Preferred Stock described above, (ii) conversion of the Series B Preferred Stock or any Junior Securities, (iii) public offerings, (iv) joint ventures, strategic alliances or acquisitions of other companies, (v) equipment leasing arrangements or loans to the Company by banks or financial institutions and (vi) equity issuances made to employees, consultants or directors pursuant to plans or other arrangements approved by the Board in connection with authorized carve-out transactions. For purposes of the definition of “Exempt Shares”, the phrase “approved by the Board” shall mean approval by at least four-fifths of the members of the Board. | |
Shareholder Rights: | |
Preemptive Rights: Each holder of Series B Preferred Stock will have preemptive rights on all offerings of equity securities or securities convertible or exchangeable into equity securities in order to maintain its fully-diluted equity ownership at the time of such preemptive rights offer. Notwithstanding the provisions above, no preemptive rights will apply to (i) up to 1,044,816 shares of Common Stock issued, or deemed issued, pursuant to the Company's 2010 Omnibus Equity Incentive Plan, as adjusted each year pursuant to the terms thereby, (ii) except in subsection (i) above, equity compensation grants to (and exercises thereof by) employees, consultants or directors in connection with plans or other arrangements approved by the Board, (iii) the issuance of securities in connection with any joint venture, strategic alliance, acquisition or merger approved by the Board, (iv) securities issued or issuable by reason of a dividend, stock split, split-up, reclassification or reorganization or other similar event with respect to the capital stock of the Company, (v) securities issued by the Company in connection with any equipment leasing arrangement or debt financing from a bank or similar financial institution, or (vi) the issuance of shares of Common Stock issued in connection with an Qualified IPO For purposes of this section, the phrase “approved by the Board” shall mean approval by at least four-fifths of the members of the Board. The rights will terminate upon a Qualified IPO by the Company. | |
Drag Along Rights: If a majority of the Company's stockholders or at least four-fifths of the members of the Board vote to pursue a Liquidity Event, all stockholders, including the Series B Preferred Stock, will be compelled to vote in favor of such action. | |
Tag Along Rights: Each holder of Series B Preferred Stock shares will be entitled to sell their shares in a sale transaction with other selling shareholders on any sale of more than half of one percent (1/2%) of the voting equity securities of the Company by one or more of the Management Holders (as defined below). For the purpose of this term sheet, the term “Management Holder” will mean (a) any of (i) J. Clarke Legler, II; (ii) L. Charles Moncla, Jr.; and (iii) Milburn J. Duconte; and (b) any related party of any one or more of the persons listed in clause (a) above. | |
Registration Rights: At the Company's cost, each holder of Series B Preferred Stock will be entitled to “piggy-back” registration rights on registrations of the Company, subject to the right of the Company and its underwriters to reduce in view of market conditions the number of shares of Series B Preferred Stock proposed to be registered in the offering. | |
Information Rights: The holder of Series B Preferred Stock will have certain information rights with respect to the Company's finances, budget and operations, material litigation and otherwise, to be set forth in the definitive agreements. | |
Shareholder Rights of Preferred B Holders No Less Favorable Than Those of Other Holders. The preemptive rights, tag along rights, drag along rights, registration rights and information rights granted to the holder of Series B Preferred Stock will on terms no less favorable than those granted to any holder of any other previously issued class or series of capital stock. | |
For the avoidance of doubt, in the event of any conflict between this Shareholder Rights section and the terms of the Stockholders Agreement, the terms of the Stockholders Agreement shall prevail. |
1. | I have reviewed this quarterly report on Form 10-Q of Platinum Energy Solutions, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ L. CHARLES MONCLA, JR. |
1. | I have reviewed this quarterly report on Form 10-Q of Platinum Energy Solutions, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ J. CLARKE LEGLER, II |
By: | /s/ L. CHARLES MONCLA, JR. | |
L. Charles Moncla, Jr. Chairman and Chief Executive Officer (Principal Executive Officer) | ||
By: | /s/ J. CLARKE LEGLER, II | |
J. Clarke Legler, II Chief Financial Officer and Secretary (Principal Financial Officer) |
INVENTORY
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
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INVENTORY [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Text Block] | INVENTORY Inventory consisted of the following:
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