What changed in this filing

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Item 1. Financial Statements

2021-05-07 compared with 2020-11-06 · 134 added, 262 removed, 336 unchanged (54% of the section changed)

3 unchanged sentences

Condensed Consolidated Statements of Comprehensive Loss

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands, except per share information) 2021 2020

4 unchanged sentences

Selling, general and administrative expenses 41,474 60,161

Transaction expenses 665 254 852 972

Impairments of goodwill, intangible assets, property and equipment 2,962 532,336 20,394 532,336

Contingent consideration benefit — — — ( 4,629 )

Impairments of intangible assets, property and equipment — 17,320

Loss (gain) on disposal of assets and other ( 909 ) 16

Total operating expenses 40,565 77,497

Loss from equity investment — ( 39 ) — ( 318 )

Operating loss ( 14,380 ) ( 55,407 )

2 unchanged sentences

Foreign exchange and other losses (gains), net 3,470 ( 5,007 )

Gain realized on previously held equity investment — ( 1,567 ) — ( 1,567 )

Gain on extinguishment of debt ( 28,734 ) — ( 72,478 ) —

Loss (gain) on extinguishment of debt 933 ( 7,459 )

Deferred loan costs written off — 1,829

13 unchanged sentences

3,152 ( 8,846 )

Loss on pension liability ( 55 ) ( 17 ) ( 56 ) ( 21 )

Gain on pension liability 77 21

Comprehensive loss $ ( 26,434 ) $ ( 45,969 )

3 unchanged sentences

Condensed Consolidated Balance Sheets

(in thousands, except share information) September 30, 2020 December 31, 2019

(in thousands, except share information) March 31, 2021 December 31, 2020

Current assets

30 unchanged sentences

Additional paid-in capital 1,244,477 1,242,720

Treasury stock at cost, 8,217,553 and 8,211,919 shares

Treasury stock at cost, 410,877 shares

( 134,499 ) ( 134,499 )

7 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2021 2020

1 unchanged sentence

Net loss $ ( 29,663 ) $ ( 37,144 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation expense 4,953 7,355

Amortization of intangible assets 6,357 6,838

Impairments of goodwill, intangible assets, property and equipment 20,394 532,336

Impairments of intangible assets, property and equipment — 17,320

Impairments of operating lease assets — 9,483

1 unchanged sentence

Stock-based compensation expense 1,896 3,223

Loss from unconsolidated subsidiary — 317

Contingent consideration benefit — ( 4,629 )

Gain on extinguishment of debt ( 72,478 ) —

Gain realized on previously held equity investment — ( 1,567 )

Loss (gain) on extinguishment of debt 933 ( 7,459 )

Deferred loan costs written off — 1,829

Deferred income taxes 265 1,152

Noncash losses and other, net 3,417 3,751

Noncash losses (gains) and other, net 2,065 ( 734 )

Changes in operating assets and liabilities

5 unchanged sentences

Billings in excess of costs and estimated profits earned 766 ( 757 )

Net cash provided by operating activities $ 1,701 $ 75,651

Net cash provided by (used in) operating activities $ ( 1,338 ) $ 1,567

Cash flows from investing activities

Capital expenditures for property and equipment ( 389 ) ( 958 )

Proceeds from sale of business, property and equipment 4,187 39,805

Net cash provided by investing activities $ 2,019 $ 27,198

Proceeds from sale of property and equipment 1,499 37

Net cash provided by (used in) investing activities $ 1,110 $ ( 921 )

Cash flows from financing activities

Borrowings of debt 85,000 97,000

Repayments of debt ( 113,441 ) ( 217,333 )

Bond exchange early participation payment ( 3,500 ) —

Borrowings on revolving Credit Facility — 55,000

Repayments on revolving Credit Facility ( 13,126 ) —

Cash paid to repurchase 2025 Notes and 2021 Notes ( 13,711 ) ( 3,362 )

Payment of capital lease obligations ( 482 ) ( 101 )

Repurchases of stock ( 139 ) ( 179 )

Deferred financing costs — ( 254 )

Net cash used in financing activities $ ( 41,481 ) $ ( 121,383 )

Net cash provided by (used in) financing activities $ ( 27,458 ) $ 51,104

Effect of exchange rate changes on cash ( 121 ) ( 712 )

Net decrease in cash, cash equivalents and restricted cash ( 37,891 ) ( 18,344 )

Net increase (decrease) in cash, cash equivalents and restricted cash ( 27,807 ) 51,038

Cash, cash equivalents and restricted cash at beginning of period 128,617 57,911

3 unchanged sentences

Finance lease right of use assets obtained in exchange for lease obligations 47 931

Note receivable related to equity method investment transaction — 4,725

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

2 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

(in thousands) Common stock Additional paid-in capital Treasury stock Retained

5 unchanged sentences

Restricted stock issuance, net of forfeitures — ( 139 ) — — — ( 139 )

Shares issued in employee stock purchase plan 2 344 — — — 346

Adjustment for adoption of ASU 2016-13

— — — ( 1,398 ) — ( 1,398 )

Treasury stock — — ( 6 ) — — ( 6 )

Currency translation adjustment — — — — 3,152 3,152

2 unchanged sentences

Balance at March 31, 2021 $ 60 $ 1,244,477 $ ( 134,499 ) $ ( 631,319 ) $ ( 97,160 ) $ 381,559

Stock-based compensation expense — 2,537 — — — 2,537

Restricted stock issuance, net of forfeitures — ( 2 ) — — — ( 2 )

Currency translation adjustment — — — — 1,900 1,900

Change in pension liability — — — — ( 22 ) ( 22 )

Net loss — — — ( 5,494 ) — ( 5,494 )

Balance at June 30, 2020 $ 1,196 $ 1,237,574 $ ( 134,499 ) $ ( 547,405 ) $ ( 115,885 ) $ 440,981

Stock-based compensation expense $ — $ 1,966 $ — $ — $ — $ 1,966

Restricted stock issuance, net of forfeitures $ — $ ( 1 ) $ — $ — $ — $ ( 1 )

Currency translation adjustment $ — $ — $ — $ — $ 5,942 $ 5,942

Change in pension liability $ — $ — $ — $ — $ ( 55 ) $ ( 55 )

Net loss $ — $ — $ — $ ( 21,551 ) $ — $ ( 21,551 )

Balance at September 30, 2020 $ 1,196 $ 1,239,539 $ ( 134,499 ) $ ( 568,956 ) $ ( 109,998 ) $ 427,282

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

2 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

(in thousands) Common stock Additional paid-in capital Treasury stock Retained

earnings (deficit) Accumulated

deficit Accumulated

comprehensive

4 unchanged sentences

Shares issued in employee stock purchase plan 2 344 — — — 346

Contingent shares issued for acquisition of Cooper Valves 1 374 — — — 375

Adjustment for adoption of ASU 2016-13

— — — ( 1,398 ) — ( 1,398 )

Treasury stock — — ( 6 ) — — ( 6 )

3 unchanged sentences

Balance at March 31, 2020 $ 1,196 $ 1,235,039 $ ( 134,499 ) $ ( 541,911 ) $ ( 117,763 ) $ 442,062

Stock-based compensation expense — 4,352 — — — 4,352

Restricted stock issuance, net of forfeitures — ( 64 ) — — — ( 64 )

Currency translation adjustment — — — — ( 1,407 ) ( 1,407 )

Change in pension liability — — — — 5 5

Net loss — — — ( 13,734 ) — ( 13,734 )

Balance at June 30, 2019 $ 1,183 $ 1,223,251 $ ( 134,482 ) $ 42,066 $ ( 111,807 ) $ 1,020,211

Stock-based compensation expense $ — $ 3,661 $ — $ — $ — $ 3,661

Restricted stock issuance, net of forfeitures $ — $ ( 8 ) $ — $ — $ — $ ( 8 )

Shares issued in employee stock purchase plan $ 3 $ 864 $ — $ — $ — $ 867

Treasury stock $ — $ — $ ( 5 ) $ — $ — $ ( 5 )

Currency translation adjustment $ — $ — $ — $ — $ ( 6,260 ) $ ( 6,260 )

Change in pension liability $ — $ — $ — $ — $ ( 17 ) $ ( 17 )

Net loss — — — ( 532,987 ) — ( 532,987 )

Balance at September 30, 2019 $ 1,186 $ 1,227,768 $ ( 134,487 ) $ ( 490,921 ) $ ( 118,084 ) $ 485,462

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

4 unchanged sentences

Forum Energy Technologies, Inc.

(the “Company,” “we,” “our,” or “us”), a Delaware corporation, is a global oilfield products company, serving the drilling, downhole, subsea, completions and production sectors of the oil and natural gas industry.

The Company's products include highly engineered capital equipment as well as products that are consumed in the drilling, well construction, production and transportation of oil and natural gas.

Forum is headquartered in Houston, TX with manufacturing and distribution facilities strategically located around the globe.

(the “Company,” "Forum," “we,” “our,” or “us”), a Delaware corporation, is a global products company, serving the oil, natural gas, industrial and renewable energy industries.

The Company designs, manufactures and distributes value added solutions that increase the safety and efficiency of energy exploration and production.

We also engage in aftermarket parts supply and services that complement our product offering.

Forum is headquartered in Houston, Texas with manufacturing and distribution facilities strategically located around the globe.

Basis of Presentation

2 unchanged sentences

Certain reclassifications have been made to prior year amounts to conform with the current year presentation.

Prior to the sale of our aggregate 40 % interest in the third quarter of 2019, our investment in Ashtead Technology (”Ashtead”) was accounted for using the equity method of accounting as we had the ability to exert significant influence, but did not control operating and financial policies.

Prior to the sale, our share of the net income (loss) from Ashtead was reported in “Loss from equity investment” in the condensed consolidated statements of comprehensive loss and the investment was included in “Investment in unconsolidated subsidiary” in the condensed consolidated balance sheets.

Our share of equity earnings were reported within operating loss, as the investee’s operations were integral to the operations of the Company.

See Note 4 Dispositions for further information related to the sale of our aggregate 40 % interest in Ashtead.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of the Company’s financial position, results of operations and cash flows have been included.

Operating results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or any other interim period.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or any other interim period.

These interim financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting.

Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2019, which are included in the Company’s 2019 Annual Report on Form 10-K filed with the SEC on February 25, 2020.

Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2020, which are included in the Company’s 2020 Annual Report on Form 10-K filed with the SEC on March 2, 2021.

COVID-19 Impacts

On March 11, 2020, the World Health Organization declared the current COVID-19 outbreak to be a global pandemic, and on March 13, 2020, the United States declared a national emergency.

In response to these declarations and the continued spread of COVID-19, federal, state and local governments imposed varying degrees of restrictions on business and social activities, including quarantine and “stay-at-home” orders.

As a result of the imposition of these government orders, there was an adverse impact on the level of oil and natural gas demand and many companies have sought protection under Chapter 11 of the U.S.

The outbreak of COVID-19 in 2020 has continued to cause significant disruptions in the U.S.

and world economies.

In response, federal, state and local governments have continued, to varying degrees, the imposition of restrictions on business and social activities, including quarantine and “stay-at-home” orders.

As a result of these government orders, there has been an adverse impact on the level of oil and natural gas demand and many companies in these industries have sought protection under Chapter 11 of the U.S.

Bankruptcy Code.

The full impacts of the COVID-19 outbreak will ultimately depend on future developments, including the consequences of governmental and other measures designed to prevent the spread of the virus, the establishment of effective treatments, the duration of the outbreak, actions taken by governmental authorities, customers, suppliers and other third parties, workforce availability, and the timing and extent to which economic and operating conditions resume.

We have experienced resulting disruptions to our business operations, as these restrictions have significantly impacted many sectors of the economy, with businesses curtailing or ceasing normal operations.

While we cannot estimate with any degree of certainty the full impact of the COVID-19 outbreak on our liquidity, financial condition and future results of operations, the adverse impacts on our financial results from COVID-19 will continue in future quarters.

The timing and extent to which economic and operating conditions recover from the impacts of the COVID-19 outbreak will ultimately depend on the number of vaccinations administered worldwide and actions taken by governmental authorities, customers, suppliers and other third parties, and the level of demand created by a return to a historically normal way of life and business operations.

We anticipate that our liquidity, financial condition and future results of operations will continue to be impacted by ongoing developments from the COVID-19 pandemic.

Recent Accounting Pronouncements

1 unchanged sentence

Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on our consolidated financial statements upon adoption.

Forum Energy Technologies, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

Accounting Standards Adopted in 2021

Financial Instruments—Credit Losses.

In June 2016, the FASB issued ASU No.

2016-13 Financial Instruments—Credit Losses (Topic 326), which introduced an expected credit loss methodology for the impairment of financial assets measured at amortized cost basis.

It requires an entity to estimate credit losses expected over the life of an exposure based on historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments.

The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash.

We adopted this new standard as of January 1, 2020.

The adoption of this standard resulted in a noncash cumulative effect adjustment to increase our allowance for doubtful accounts and increase our retained deficit by $ 1.4 million.

The new standard did not materially affect our unaudited Condensed Consolidated Statement of Comprehensive Loss for the nine months ended September 30, 2020.

Accounting for Implementation Costs Related to a Cloud Computing Arrangement .

In August 2018, the FASB issued ASU No.

2018-15 Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.

This new guidance aligns the requirements for capitalizing implementation costs incurred by an entity related to a cloud computing arrangement with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

Accordingly, this guidance requires an entity to capitalize certain implementation costs incurred and then amortize them over the term of the cloud hosting arrangement.

Furthermore, this guidance also requires an entity to present the expense, cash flows, and capitalized implementation costs in the same financial statement line items as the associated hosting service.

In December 2019, the FASB issued ASU No.

2019-12 Income Taxes (Topic 740) - Disclosure Framework - Simplifying the Accounting for Income Taxes, which simplified the accounting for income taxes by removing certain exceptions to the general principles of Topic 740 and clarifying and amending existing guidance.

We adopted this new standard as of January 1, 2021.

The adoption of this new standard did not have a material impact on our unaudited condensed consolidated financial statements.

Fair Value Measurement Disclosure .

In August 2018, the FASB issued ASU No.

2018-13 Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirement for Fair Value Measurement.

This new guidance eliminated, modified and added certain disclosure requirements related to fair value measurements.

We adopted this new standard as of January 1, 2020.

This new standard did not have a material impact on our unaudited condensed consolidated financial statements.

Subsidiary Guarantees.

In March 2020, the SEC adopted amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees, in Rule 3-10 of Regulation S-X.

The amended rule focuses on providing material, relevant and decision-useful information regarding guarantees and other credit enhancements, while eliminating certain prescriptive requirements.

We adopted these amendments as of June 30, 2020.

Accordingly, combined summarized financial information has been presented only for the issuers and guarantors of our registered securities for the most recent fiscal year and the year-to-date interim period.

In addition, the previous disclosures have been removed from the Notes to Condensed Consolidated Financial Statements and the new required disclosures are included in Item 2.

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

Accounting Standards Issued But Not Yet Adopted

In December 2019, the FASB issued ASU No.

This guidance will take effect for public companies with fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

We are currently evaluating the impact of this new guidance.

However, we currently expect that the adoption of this guidance will not have a material impact on our consolidated financial statements.

Convertible Debt.

2 unchanged sentences

This update reduces the number of accounting models for convertible debt instruments resulting in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP.

Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in-capital.

In addition, this update also makes targeted changes to the disclosures for convertible instruments and earnings-per-

Convertible instruments that continue to be subject to separation models are (1)

Forum Energy Technologies, Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Continued)

share guidance.

those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in-capital.

In addition, this update also makes targeted changes to the disclosures for convertible instruments and earnings-per-share guidance.

This guidance may be adopted through either a modified retrospective or fully retrospective method of transition and will take effect for public companies with fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021.

11 unchanged sentences

Such contract liabilities typically result from billings in excess of costs incurred on construction contracts and advance payments received on product sales.

The following table reflects the changes in our contract assets and contract liabilities balances for the nine months ended September 30, 2020 (in thousands):

September 30, 2020 December 31, 2019 Increase / (Decrease)

The following table reflects the changes in our contract assets and contract liabilities balances for the three months ended March 31, 2021 (in thousands):

March 31, 2021 December 31, 2020 Increase

Accrued revenue $ 1,132 $ 1,687

4 unchanged sentences

Contract liabilities $ 10,861 $ 9,680 $ 1,181 12 %

During the nine months ended September 30, 2020, our contract assets increased by $ 2.6 million and our contract liabilities decreased by $ 5.1 million due to the timing of billings for significant projects within our Subsea product line.

During the nine months ended September 30, 2020, we recognized revenue of $ 9.5 million that was included in the contract liability balance at the beginning of the period.

As all of our contracts are less than one year in duration, we have elected to apply the practical expedient which allows an entity to exclude disclosures about its remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

2019 Disposition of Cooper Alloy®

On December 4, 2019, we sold certain assets of our Cooper Alloy® brand of valve products for total consideration of $ 4.0 million and recognized a gain on disposition totaling $ 2.3 million.

Pro forma results of operations for this disposition have not been presented because the effects were not material to the unaudited condensed consolidated financial statements.

During the three months ended March 31, 2021, our contract assets increased by $ 0.3 million and our contract liabilities increased by $ 1.2 million due to the timing of billings for significant projects within our Subsea and Production Equipment product lines.

During the three months ended March 31, 2021, we recognized $ 3.9 million of revenue that was included in the contract liability balance at the beginning of the period.

As substantially all of our contracts are less than one year in duration, we have elected to apply the practical expedient which allows an entity to exclude disclosures about its remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

Forum Energy Technologies, Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Continued)

2019 Disposition of Equity Interest in Ashtead Technology

On September 3, 2019, we sold our aggregate 40 % interest in Ashtead to the majority owners of Ashtead.

Total consideration for Forum’s 40 % interest and the settlement of a £ 3.0 million British Pounds note receivable from Ashtead was $ 47.7 million.

Forum received $ 39.3 million in cash proceeds and a new £ 6.9 million British Pounds note receivable with a three year maturity.

In the third quarter of 2019, we recognized a gain of $ 1.6 million as a result of this transaction.

Pro forma results of operations for this transaction have not been presented because the effects were not material to the unaudited condensed consolidated financial statements.

Our significant components of inventory at September 30, 2020 and December 31, 2019 were as follows (in thousands):

September 30, 2020 December 31, 2019

2020 Disposition of ABZ and Quadrant Valves

On December 31, 2020, we sold certain assets of our ABZ and Quadrant valve brands for cash consideration of $ 104.6 million.

This transaction was accounted for as a disposition of a business.

We recognized a gain on disposition of $ 88.4 million based on the difference in cash received less $ 15.0 million of net book value of assets sold and a $ 1.2 million accrued liability for an estimated working capital settlement.

Pro forma results of operations for this disposition have not been presented because the effects were not material to the consolidated financial statements.

Our significant components of inventory at March 31, 2021 and December 31, 2020 were as follows (in thousands):

March 31, 2021 December 31, 2020

Raw materials and parts $ 124,343 $ 151,531

5 unchanged sentences

Intangible Assets

Intangible assets consisted of the following as of September 30, 2020 and December 31, 2019, respectively (in thousands):

September 30, 2020

Intangible assets consisted of the following as of March 31, 2021 and December 31, 2020, respectively (in thousands):

March 31, 2021

Gross Carrying Amount Accumulated Amortization Net Intangibles Amortization Period (In Years)

3 unchanged sentences

Trade names 42,915 ( 23,545 ) 19,370 7 - 19

Distributor relationships 14,120 ( 12,625 ) 1,495 15 - 22

Trademarks 5,089 ( 1,187 ) 3,902 15

6 unchanged sentences

Trade names 42,984 ( 22,941 ) 20,043 7 - 19

Distributor relationships 22,160 ( 18,866 ) 3,294 15 - 22

Trademarks 5,089 ( 1,103 ) 3,986 15

3 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Continued)

Impairments of Goodwill and Long-Lived Assets

During the third quarter of 2019, there was a significant decline in the quoted market prices of our common stock and a continued decline in U.S.

onshore drilling and completions activity, which led us to evaluate all of our reporting units for a triggering event as of September 30, 2019.

Upon evaluation, we considered these developments to be a triggering event that required us to update our goodwill impairment evaluation and review long-lived assets for all reporting units as of September 30, 2019.

As a result, and in connection with the preparation of our financial statements, we determined that certain long-lived assets were impaired as their carrying values exceeded their fair values.

The amount of the impairment charges were measured as the difference between the carrying value and the estimated fair value of the assets.

In addition, we determined that the remaining carrying value of our goodwill was fully impaired in the third quarter of 2019.

The fair values used in each goodwill impairment analysis were determined using the net present value of the expected future cash flows for each reporting unit (classified within level 3 of the fair value hierarchy).

We determined the fair value of each reporting unit using a combination of discounted cash flow and guideline public company methodologies, which required significant assumptions and estimates about the future operations of each reporting unit.

The assumptions about future cash flows and growth rates were based on our strategic plans and management’s estimates for future activity levels.

Forecasted cash flows in future periods were estimated using a terminal value calculation, which considered long-term earnings growth rates.

During the nine months ended September 30, 2020, the COVID-19 pandemic and associated preventative actions taken around the world to mitigate its spread caused oil demand to deteriorate and economic activity to decrease.

Impairments of Long-Lived Assets

During the three months ended March 31, 2021, there were no impairments of long-lived assets.

During the three months ended March 31, 2020, the COVID-19 pandemic and associated preventative actions taken around the world to mitigate its spread caused oil demand to deteriorate and economic activity to decrease.

As a result, oil prices declined significantly during the period and created an extremely challenging market for all sub-sectors of the oil and natural gas industry.

In addition, responses to the spread of COVID-19, including significant government restrictions on movement, have driven sharp declines in global economic activity.

As a result, during the nine months ended September 30, 2020, we determined that certain long-lived assets were impaired as their carrying values exceeded their fair values.

In addition, responses to the spread of COVID-19, including significant government restrictions on movement, resulted in sharp declines in global economic activity.

As a result, during the three months ended March 31, 2020, we determined that certain long-lived assets were impaired as their carrying values exceeded their fair values.

The amount of the impairment charges were measured as the difference between the carrying value and the estimated fair value of the assets.

The fair value was determined either through analysis of discounted future cash flows or, for certain real estate, based on a third party's sales price estimate (classified within level 3 of the fair value hierarchy).

Following is a summary of impairment charges recognized (in thousands) in our Drilling & Downhole (“D&D”), Completions (“C”), Production (“P”), and Corporate (“Corp”) segments:

Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

Following is a summary of impairment charges recognized in our segments during the three months ended March 31, 2020 (in thousands):

Three Months Ended March 31, 2020

Impairments of:

D&D C P Corp Total D&D C P Total

$ — $ — $ — $ — $ — $ 191,485 $ 260,238 $ 19,287 $ 471,010

Intangible assets (1)

5,257 — — — 5,257 — 48,241 5,230 53,471

Drilling & Downhole Completions Production Total Impairments

Property and equipment (1)

1,076 9,608 1,378 12,062

Operating lease right of use assets (2)

4,544 6,140 1,914 1,498 14,096 1,450 582 155 2,187

Total impairments $ 10,870 $ 15,748 $ 6,374 $ 1,498 $ 34,490 $ 198,135 $ 311,716 $ 24,672 $ 534,523

Three Months Ended September 30, 2020 Three Months Ended September 30, 2019

Impairments of:

D&D C P Corp Total D&D C P Total

$ — $ — $ — $ — $ — $ 191,485 $ 260,238 $ 19,287 $ 471,010

Intangible assets (2)

5,258 — — 5,258

Property and equipment (1)

— — 2,962 — 2,962 5,200 2,655 — 7,855

Operating lease right of use assets (3)

1 unchanged sentence

Total impairments $ 7,763 $ 15,747 $ 3,293 $ 26,803

(1) These charges are included in Impairments of goodwill, intangible assets, property and equipment in the condensed consolidated statements of comprehensive loss.

Forum Energy Technologies, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(2) For the nine months ended September 30, 2020 and 2019, $ 10.4 million and $ 1.3 million, respectively, of these charges are included in Cost of sales, while $ 3.7 million and $ 0.9 million, respectively, are included in Selling, general and administrative expenses in the condensed consolidated statements of comprehensive loss.

For the three months ended September 30, 2020 and 2019, $ 1.8 million and zero , respectively, of these charges are included in Cost of sales, while $ 2.9 million and $ 0.2 million, respectively, are included in Selling, general and administrative expenses in the condensed consolidated statements of comprehensive loss.

Notes payable and lines of credit as of September 30, 2020 and December 31, 2019 consisted of the following (in thousands):

September 30, 2020 December 31, 2019

2021 Notes $ 12,655 $ 400,000

(1) These charges are included in Impairments of intangible assets, property and equipment in the condensed consolidated statements of comprehensive loss.

(2) These charges are included in Impairments of intangible assets, property and equipment in the condensed consolidated statements of comprehensive loss and include primarily customer relationships, technology and distributor relationships.

(3) $ 8.6 million of these charges are included in Cost of sales and $ 0.9 million are included in Selling, general and administrative expenses in the condensed consolidated statements of comprehensive loss.

Notes payable and lines of credit as of March 31, 2021 and December 31, 2020 consisted of the following (in thousands):

March 31, 2021 December 31, 2020

2025 Notes 300,341 316,863

Unamortized debt premium (discount) ( 31,856 ) 770

Unamortized debt discount ( 27,132 ) ( 30,248 )

Debt issuance cost ( 6,660 ) ( 7,318 )

Senior secured revolving credit facility — —

Credit Facility — 13,126

Other debt 1,835 2,272

2 unchanged sentences

Long-term debt $ 267,330 $ 293,373

In October 2013, we issued $ 300.0 million of 6.25 % unsecured notes due 2021 at par, and in November 2013, we issued an additional $ 100.0 million aggregate principal amount of the notes at a price of 103.25 % of par (the “2021 Notes”).

The 2021 Notes bear interest at a rate of 6.25 % per annum, payable on April 1 and October 1 of each year, and mature on October 1, 2021.

The 2021 Notes are unsecured obligations, and are guaranteed on an unsecured basis by our U.S.

subsidiaries that guarantee our senior secured revolving credit facility ("Credit Facility") .

During the first half of 2020, we repurchased an aggregate $ 71.9 million principal amount of our 2021 Notes for $ 27.7 million and recognized a net gain of $ 43.8 million, reflecting the difference in the amount paid and the net carrying value of the extinguished debt, including debt issuance costs and unamortized debt premium.

In the third quarter of 2020, we exchanged $ 315.5 million principal amount of the remaining 2021 Notes for new 2025 Notes as discussed further below.

Following these transactions, $ 12.7 million principal amount of 2021 Notes remained outstanding as of September 30, 2020.

In October 2020, we provided notice of redemption relating to the $ 12.7 million principal amount of 2021 Notes outstanding and intend to redeem such notes in full in November 2020 at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, to the redemption date (the “Redemption”).

This information does not constitute a notice of redemption with respect to the 2021 Notes, nor does it constitute an offer to tender for, or purchase any, 2021 Notes or any other security.

In August 2020, we exchanged $ 315.5 million principal amount of the 2021 Notes for new 9.00 % convertible secured notes due August 2025 (the “2025 Notes”).

This transaction was accounted for as an extinguishment of the 2021 Notes with the new 2025 Notes recorded at fair value on the transaction date.

We estimated the fair value of the 2025 Notes to be $ 282.6 million at the issuance date, resulting in a $ 32.9 million discount (“Debt Discount”) at issuance.

As a result, we recognized a $ 28.7 million gain on extinguishment of debt that reflects the difference in the $ 314.8 million net carrying value of the 2021 Notes exchanged, including debt issuance costs and unamortized debt premium, less the $ 282.6 million estimated fair value of 2025 Notes and a $ 3.5 million early participation fee paid to

In August 2020, we exchanged $ 315.5 million principal amount of our previous 6.25 % unsecured notes due 2021 (“2021 Notes”) for new 9.00 % convertible secured notes due August 2025 (the “2025 Notes”).

This transaction was

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Notes to Condensed Consolidated Financial Statements (Continued)

bondholders that participated in the exchange.

accounted for as an extinguishment of the 2021 Notes with the new 2025 Notes recorded at fair value on the transaction date.

We estimated the fair value of the 2025 Notes to be $ 282.6 million at the issuance date, resulting in a $ 32.9 million discount (“Debt Discount”) at issuance.

The Debt Discount is being amortized as non-cash interest expense over the term of the 2025 Notes using the effective interest method.

The 2025 Notes pay interest at the rate of 9.00 %, of which 6.25 % will be payable in cash and 2.75 % will be payable in cash or additional notes, at the Company’s option.

The 2025 Notes pay interest at the rate of 9.00 %, of which 6.25 % is payable in cash and 2.75 % is payable in cash or additional notes, at the Company’s option.

The 2025 Notes are secured by a first lien on substantially all of the Company’s assets, except for Credit Facility priority collateral, which secures the 2025 Notes on a second lien basis.

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Any interest that the Company elects to pay in additional notes are also subject to the mandatory and optional conversion rights.

During the three months ended March 31, 2021, we repurchased an aggregate $ 16.5 million of principal amount of our 2025 Notes for $ 15.6 million.

The repurchase amount of $ 15.6 million includes $ 13.7 million paid in cash and $ 1.9 million payable for bonds repurchased but not yet settled as of March 31, 2021.

The net carrying value of the extinguished debt, including unamortized debt discount and debt issuance costs, was $ 14.7 million, resulting in a $ 0.9 million loss on extinguishment of debt.

Credit Facility

In connection with the issuance of the 2025 Notes, we amended our Credit Facility.

In connection with the issuance of the 2025 Notes, we amended our senior secured revolving credit facility ("Credit Facility").

Following such amendment, our Credit Facility provides revolving credit commitments of $ 250.0 million (with a sublimit of up to $ 45.0 million available for the issuance of letters of credit for the account of the Company and certain of its domestic subsidiaries) (the “U.S.

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Our borrowing capacity under the Credit Facility could be reduced or eliminated, depending on future fluctuations in our receivables and inventory.

As of September 30, 2020, our total borrowing base was $ 140.5 million, of which zero was drawn and $ 31.9 million was used for security of outstanding letters of credit, resulting in remaining availability of $ 108.6 million.

As of March 31, 2021, our total borrowing base was $ 156.8 million, of which no amounts were drawn and $ 15.3 million was used for security of outstanding letters of credit, resulting in remaining availability of $ 141.5 million.

Borrowings under the U.S.

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The Canadian line base rate is determined by reference to the greater of (i) the one-month CDOR rate plus 1.00 % and (ii) the prime rate for Canadian dollar commercial loans made in Canada as reported by Thomson Reuters, subject to a floor of 0.75 %.

The weighted average interest rate under the Credit Facility was approximately 2.40 % for the nine months ended September 30, 2020.

The Credit Facility also provides for a commitment fee in the amount of (a) 0.375 % on the unused portion of commitments if average usage of the Credit Facility is greater than 50 % and (b) 0.500 % on the unused portion of commitments if average usage of the Credit Facility is less than or equal to 50 %.

The Credit Facility is currently scheduled to mature on July 1, 2021, subject to extension to October 30, 2022 if, on or before July 1, 2021, the 2021 Notes are repaid or refinanced in their entirety with indebtedness maturing on or after January 31, 2023.

Upon completion of the Redemption in the fourth quarter 2020, the maturity of our Credit Facility will be October 30, 2022.

If excess availability under the Credit Facility falls below the greater of 12.5 % of the borrowing base and $ 31.25 million, we will be required to maintain a fixed charge coverage ratio of at least 1.00 :1.00 as of the end of each fiscal quarter until excess availability under the Credit Facility exceeds such

Forum Energy Technologies, Inc.

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Notes to Condensed Consolidated Financial Statements (Continued)

thresholds for at least 60 consecutive days.

The Credit Facility is currently scheduled to mature on October 30, 2022.

If excess availability under the Credit Facility falls below the greater of 12.5 % of the borrowing base and $ 31.3 million, we will be required to maintain a fixed charge coverage ratio of at least 1.00 :1.00 as of the end of each fiscal quarter until excess availability under the Credit Facility exceeds such thresholds for at least 60 consecutive days.

Furthermore, the Credit Facility includes an obligation to prepay outstanding loans with cash on hand in excess of certain thresholds and includes a cross-default to the 2025 Notes.

Deferred Loan Costs

We have incurred loan costs that have been deferred and are amortized to interest expense over the term of the 2025 Notes, 2021 Notes and the Credit Facility.

During the nine months ended September 30, 2020, we capitalized a total of $ 9.7 million of deferred loan costs related to the exchange of the 2021 Notes.

We have incurred loan costs that have been deferred and are amortized to interest expense over the term of the 2025 Notes and the Credit Facility.

In the first quarter of 2020, we wrote-off $ 1.8 million of deferred loan costs for the termination of previous discussions related to a potential exchange offer for our 2021 Notes.

In the third quarter of 2020, we wrote off $ 0.3 million of deferred loan costs related to amending our Credit Facility to, among other things, reduce the size of the commitments from $ 300.0 million to $ 250.0 million.

Other debt consists primarily of various capital leases.

Other debt consists primarily of various finance leases of equipment.

Letters of Credit and Guarantees

We execute letters of credit in the normal course of business to secure the delivery of product from specific vendors and also to guarantee our fulfillment of performance obligations relating to certain large contracts.

We had $ 31.9 million and $ 24.5 million in total outstanding letters of credit as of September 30, 2020 and December 31, 2019, respectively.

We had $ 15.3 million and $ 15.6 million in total outstanding letters of credit as of March 31, 2021 and December 31, 2020, respectively.

For interim periods, our income tax expense or benefit is computed based on our estimated annual effective tax rate and any discrete items that impact the interim periods.

For the three and nine months ended September 30, 2020, we recorded a tax expense of $ 1.0 million and tax benefit of $ 13.8 million, respectively, compared to a tax benefit of $ 3.4 million and tax expense of $ 6.7 million for the three and nine months ended September 30, 2019, respectively.

On March 27, 2020, President Trump signed the U.S.

Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") in response to the COVID-19 pandemic.

The CARES Act provides relief to corporate taxpayers by permitting a five-year carryback of 2018-2020 NOLs, increasing the 30% limitation on interest expense deductibility to 50% of adjusted taxable income for 2019 and 2020, and accelerating refunds for minimum tax credit carryforwards, among other provisions.

We recorded a tax expense of $ 1.7 million for the three months ended March 31, 2021, compared to a tax benefit of $ 14.4 million for the three months ended March 31, 2020.

The estimated annual effective tax rates for the three months ended March 31, 2021 and 2020 were impacted by losses in jurisdictions where the recording of a tax benefit is not available.

Furthermore, the tax expense or benefit recorded can vary from period to period depending on the Company’s relative mix of earnings and losses by jurisdiction.

The tax benefit for the three months ended March 31, 2020 includes a $ 16.6 million benefit related to a carryback claim for U.S.

federal tax losses based on provisions in the U.S.

Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which was signed into law on March 27, 2020.

The CARES Act provided relief to corporate taxpayers by permitting a five-year carryback of 2018-2020 NOLs, increased the 30% limitation on interest expense deductibility to 50% of adjusted taxable income for 2019 and 2020, and accelerated refunds for minimum tax credit carryforwards, among other provisions.

The tax effects of changes in tax laws are recognized in the period in which the law is enacted.

As such, the tax benefit for the nine months ended September 30, 2020 includes a $ 16.6 million benefit related to a carryback claim for U.S.

federal tax losses based on new provisions in the CARES Act.

These losses had previously been offset by a valuation allowance.

The provisions in the CARES Act enabled the company to realize these losses and the related valuation allowance was released.

The estimated annual effective tax rates for the nine months ended September 30, 2020 and 2019 were also impacted by losses in jurisdictions where the recording of a tax benefit is not available.

For the nine months ended September 30, 2019, tax expense includes an increase in our valuation allowance of $ 5.9 million to write down our deferred tax assets in the U.S.

and Saudi Arabia to what, in our judgment, is more likely than not realizable.

Furthermore, the tax expense or benefit recorded can vary from period to period depending on the Company's relative mix of U.S.

earnings and losses by jurisdiction.

We have deferred tax assets related to net operating loss carryforwards in the U.S.

We have deferred tax assets related to net operating loss and other tax carryforwards in the U.S.

and in certain states and foreign jurisdictions.

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In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning and recent operating results.

As of September 30, 2020, we do not anticipate being able to fully utilize all of the losses prior to their expiration in the following jurisdictions:

the U.S., the U.K., Germany, Singapore, Saudi Arabia and China.

As a result, we have certain valuation allowances against our deferred tax assets as of September 30, 2020.

As of March 31, 2021, we do not anticipate being able to fully utilize all of the losses prior to their expiration in the following jurisdictions:

the U.S., the U.K., Germany, Singapore, China and Saudi Arabia.

As a result, we have certain valuation allowances against our deferred tax assets as of March 31, 2021.

Forum Energy Technologies, Inc.

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Fair Value Measurements

The Company had no borrowings outstanding under the Credit Facility at both September 30, 2020 and December 31, 2019.

The Company had zero and $ 13.1 million of borrowings outstanding under the Credit Facility as of March 31, 2021 and December 31, 2020, respectively.

The Credit Facility incurs interest at a variable interest rate, and therefore, the carrying amount approximates fair value.

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The fair value of our 2025 Notes is estimated using Level 2 inputs in the fair value hierarchy and is based on quoted prices for those or similar instruments.

At September 30, 2020, the fair value and the carrying value of our 2021 Notes approximated $ 11.8 million and $ 12.7 million, respectively.

At March 31, 2021, the fair value and the carrying value of our 2025 Notes approximated $ 282.4 million and $ 266.5 million, respectively.

At December 31, 2020, the fair value and the carrying value of our 2025 Notes approximated $ 200.3 million and $ 279.3 million, respectively.

The fair value of our 2025 Notes is estimated using Level 2 inputs in the fair value hierarchy and is based on quoted prices for those or similar instruments.

At September 30, 2020, the fair value and the carrying value of our 2025 Notes approximated $ 255.5 million and $ 276.1 million, respectively.

There were no other outstanding financial assets as of September 30, 2020 and December 31, 2019 that required measuring the amounts at fair value.

We did not change our valuation techniques associated with recurring fair value measurements from prior periods, and there were no transfers between levels of the fair value hierarchy during the nine months ended September 30, 2020.

There were no other outstanding financial assets as of March 31, 2021 and December 31, 2020 that required measuring the amounts at fair value.

Business Segments

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Summary financial data by segment follows (in thousands):

Three Months Ended

September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Drilling & Downhole 48,656 76,643

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Corporate ( 7,010 ) ( 8,429 )

Segment operating income (loss) ( 32,879 ) ( 876 ) ( 106,410 ) 282

Transaction expenses 665 254 852 972

Impairments of goodwill, intangible assets, property and equipment 2,962 532,336 20,394 532,336

Contingent consideration benefit — — — ( 4,629 )

Segment operating loss ( 15,289 ) ( 38,071 )

Impairments of intangible assets, property and equipment — 17,320

Loss (gain) on disposal of assets and other ( 909 ) 16

Operating loss $ ( 14,380 ) $ ( 55,407 )

Forum Energy Technologies, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

A summary of consolidated assets by reportable segment is as follows (in thousands):

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Drilling & Downhole $ 305,409 $ 314,375

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Total assets $ 843,959 $ 889,926

Corporate assets primarily include cash, certain prepaid assets and deferred loan costs.

Forum Energy Technologies, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

Corporate assets primarily include cash and certain prepaid assets.

The following table presents our revenues disaggregated by product line (in thousands):

Three Months Ended

September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Drilling Technologies $ 18,520 $ 36,638

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Three Months Ended

September 30, Nine Months Ended September 30,

2020 2019 2020 2019

United States $ 68,314 $ 123,890

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Commitments and Contingencies

In the ordinary course of business, the Company is, and in the future could be, involved in various pending or threatened legal actions that may or may not be covered by insurance.

Management reviewed such pending judicial and legal proceedings and the availability and limits of insurance coverage, and has established reserves that are believed to be appropriate in light of those outcomes that are considered to be probable and can be reasonably estimated.

The reserves accrued at September 30, 2020 and December 31, 2019, respectively, are immaterial.

It is management’s opinion that the Company’s ultimate liability, if any, with respect to these actions is not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

In the ordinary course of business, the Company is, and in the future could be, involved in various pending or threatened legal actions, some of which may or may not be covered by insurance.

Management reviewed such pending judicial and legal proceedings, the reasonably anticipated costs and expenses in connection with such proceedings, and the availability and limits of insurance coverage, and has established reserves that are believed to be appropriate in light of those outcomes that are believed to be probable and can be estimated.

The reserves accrued at March 31, 2021 and December 31, 2020, respectively, are immaterial.

In the opinion of management, the Company’s ultimate liability, if any, with respect to these actions is not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

For further disclosure regarding certain litigation matters, refer to Note 13 of the notes to the consolidated financial statements included in Item 8 of the Company’s 2020 Annual Report on Form 10-K filed with the SEC on March 2, 2021.

There have been no material changes related to these matters during the three months ended March 31, 2021.

Forum Energy Technologies, Inc.

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Three Months Ended

September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Net loss $ ( 29,663 ) $ ( 37,144 )

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Diluted $ ( 5.28 ) $ ( 6.68 )

For all periods presented, we excluded all potentially dilutive stock options and restricted stock and the assumed conversion of the 2025 Notes in calculating diluted earnings per share as the effect was anti-dilutive due to the net losses incurred for these periods.

For all periods presented, we excluded all potentially dilutive restricted shares, stock options and the assumed conversion of the 2025 Notes in calculating diluted earnings per share as the effect was anti-dilutive due to net losses incurred for these periods.

Stockholders' Equity

Stock-based compensation

During the nine months ended September 30, 2020, the Company granted 2,250,360 shares of restricted stock units that vest ratably over three years .

The Company also granted 3,265,000 shares of contingent restricted stock units that vest ratably over three years dependent upon achieving a minimum stock price of $ 0.71 for 20 trading days in each performance period.

In addition, the Company granted 489,750 shares of restricted stock units that cliff vest at the end of three years dependent upon achieving a minimum stock price of $ 1.50 for 20 consecutive trading days during the performance period.

During the nine months ended September 30, 2020, the Company granted performance awards with a market condition that are payable in either cash or shares of the Company's common stock.

The performance awards granted may settle for between zero and three times the award's cash target amount.

The award amount issued pursuant to the performance award agreements will be determined based on the total shareholder return of the Company’s common stock as compared to a group of peer companies measured over a three year performance period.

As our intention is to settle the awards in cash, we will account for these as liability classified awards.

As such, compensation expense will be recognized over the requisite three-year service period with subsequent changes in the estimated fair value of the award recognized as a cumulative adjustment to compensation cost in the period in which the change in estimate occurs.

During the three months ended March 31, 2021, the Company granted 73,839 restricted stock units that vest ratably over three years .

The Company also granted 66,524 contingent restricted stock units that vest ratably over three years dependent upon achieving a minimum stock price of $ 23.49 for 20 trading days during each performance period.

Liability-classified awards

During the three months ended March 31, 2021, the Company granted 66,524 cash-settled phantom stock units that vest ratably over three years .

These awards have a maximum payout that is calculated based on five times the stock price on the date of grant.

The Company also granted 73,839 cash-settled contingent phantom stock units that vest ratably over three years dependent upon achieving a minimum stock price of $ 23.49 for 20 trading days during each performance period.

These awards also have a maximum payout that is calculated based on five times the stock price on the date of grant.

Reverse stock split

In October 2020, our Board of Directors approved a 1-for-20 reverse stock split (the “Reverse Stock Split”) of the Company’s issued and outstanding shares of common stock, par value $ 0.01 per share, accompanied by a corresponding decrease in the Company’s authorized shares of common stock, such that, following the consummation of the Reverse Stock Split, the number of authorized shares of common stock will be reduced from 296,000,000 to 14,800,000 .

In order to bring the Company into compliance with the listing requirements of the New York Stock Exchange, our Board of Directors approved a 1-for-20 reverse stock split (the “Reverse Stock Split”) of the Company’s issued and outstanding shares of common stock, par value $ 0.01 per share, accompanied by a corresponding decrease in the Company’s authorized shares of common stock.

The Company's stockholders previously approved the Reverse Stock Split at the annual meeting of stockholders on May 12, 2020.

The Company anticipates that the effective time of the Reverse Stock Split will be after market close on November 9, 2020, with the common stock trading on a post-split basis under the Company’s existing trading symbol, “FET,” at the market open on November 10, 2020.

The Reverse Stock Split will increase the market price per share of the

The effective time of the Reverse Stock Split was after market close on November 9, 2020, with the common stock trading on a post-split basis under the Company’s existing trading symbol, “FET,” at the market open on November 10, 2020.

No fractional shares of common stock were issued as a result of the Reverse Stock Split.

Instead, any stockholder who would have been entitled to a fractional share received a cash payment in lieu of such fractional shares.

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Notes to Condensed Consolidated Financial Statements (Continued)

Company’s common stock, and is expected to bring the Company into compliance with the listing requirements of the New York Stock Exchange.

Following the completion of the Reverse Stock Split, the number of authorized shares of common stock was reduced from 296,000,000 to 14,800,000 .

Unless otherwise indicated, the number of shares of common stock outstanding and per-share amounts in these consolidated financial statements and accompanying notes have been retroactively adjusted to reflect the effect of the Reverse Stock Split.

The par value of our common stock remains at $ 0.01 per share.

Related Party Transactions

The Company has sold and purchased equipment to and from certain affiliates of our directors.

The dollar amounts related to these related party activities are not material to the Company’s unaudited condensed consolidated financial statements.

The Company has sold and purchased inventory, services and fixed assets to and from certain affiliates of certain directors.

The dollar amounts of these related party activities are not significant to the Company’s unaudited condensed consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements