UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

~~Form~~FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Period Ended March 31, 2019

For the Period Ended September 30, 2018

¨ Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Transition Period From _____________to _____________

For the Transition Period From _____________to _____________

Commission File Number 033-92894

ALY ENERGY SERVICES, INC.

(Exact name of registrant as specified in its charter)

Delaware		75-2440201
(State or other jurisdiction of incorporation or organization)		(I.R.S. ~~Employer~~EmployerIdentification ~~Identification~~ No.)
3 Riverway, Suite 920 Houston, TX		77056
3 Riverway, Suite 920Houston, TX		77056
(Address of Principal Executive Offices)		(Zip Code)

(713) 333-4000

(Registrant’s Telephone Number, including area code.)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Names of Each Exchange on which Registered
Common Stock, $0.001 par value per share		None

Securities registered pursuant to Section 12(g) of the Act: None

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 ¨

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 x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

At ~~November~~May 1315, ~~2018~~2019, the registrant had ~~940~~3,~~918~~822,329 shares of common stock, $0.001 par value, outstanding.

Documents Incorporated by Reference: None

ALY ENERGY SERVICES, INC.

(A Delaware Corporation)

INDEX

		Page	~~Page~~
Part I—Financial Information
Item 1.	Unaudited Condensed Consolidated Financial Statements	3	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22	24
Item 4.	Controls and Procedures	22	24
Part II—Other Information
Item 5.	Other Information		27
Item 6.	Exhibits	25
Item 6.	Exhibits		27
	Signatures	24
	Signatures		26

2 ~~Table of Contents~~

PART I – FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

Item 1. Unaudited Condensed Consolidated Financial Statements

Index		Page

Condensed Consolidated Balance Sheets as of March 31, 2019 (unaudited) and December 31, 2018		4
Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2019 and 2018		5
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2019 and 2018		6
Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018		7
Notes to Unaudited Condensed Consolidated Financial Statements		8

Index		Page
Condensed Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017		4
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2018 and 2017		5
Consolidated Statement of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2018		6
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017		7
Notes to Condensed Consolidated Financial Statements		8

Table of Contents

3 Table of Contents

ALY ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
*(in thousands, except share and per share amounts)*

	March 31, 2019			December 31, 2018
	(unaudited)
ASSETS
Current assets
Cash	$	645		$	1,615
Restricted cash		30			30
Receivables, net		3,302			2,910
Prepaid expenses and other current assets		502			621
Total current assets		4,479			5,176
Property and equipment, net		26,517			25,808
Intangible assets, net		3,162			3,349
Operating right-of-use assets		293			-
Other assets		163			13
Total assets	$	34,614		$	34,346

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses	$	2,453		$	2,602
Accrued interest - related party		33			31
Current portion of long-term debt - related party		1,000			1,000
Total current liabilities		3,486			3,633
Operating lease liabilities, net		159			-
Long-term debt - related party, net		5,610			5,185
Other long-term liabilities		-			13
Total liabilities		9,255			8,831
Commitments and contingencies
Stockholders' equity
Series A convertible preferred stock of $0.001 par value,		-			6,755
liquidation preference of $0 and $17,292 as of March 31, 2019 and December 31, 2018, respectively
Authorized-20,000; issued and outstanding-none as of March 31, 2019
Authorized-20,000; issued and outstanding-17,292 as of December 31, 2018
Preferred stock of $0.001 par value		-			-
Authorized-4,980,000; issued and outstanding-none as of March 31, 2019 and December 31, 2018
Common stock of $0.001 par value		4			1
Authorized-15,000,000; issued and outstanding-3,822,329 as of March 31, 2019
Authorized-15,000,000; issued and outstanding-940,918 as of December 31, 2018
Additional paid-in-capital		61,017			54,265
Accumulated deficit		(35,662	)		(35,506	)
Total stockholders' equity		25,359			25,515
Total liabilities and stockholders' equity	$	34,614		$	34,346

~~ALY~~The ~~ENERGY~~accompanying ~~SERVICES,~~notes ~~INC.~~are ~~CONDENSED~~an ~~CONSOLIDATED~~integral ~~BALANCE~~part ~~SHEETS~~of ~~(in~~these ~~thousands,~~condensed ~~except~~consolidated ~~share~~financial ~~and per share amounts)~~statements.

	September 30, 2018			December 31, 2017
	(unaudited)
ASSETS
Current assets
Cash	$	1,988		$	203
Restricted cash		30			30
Receivables, net		3,374			3,883
Prepaid expenses and other current assets		205			390
Total current assets		5,597			4,506
Property and equipment, net		26,495			26,888
Intangible assets, net		3,537			4,099
Other assets		209			9
Total assets	$	35,838		$	35,502
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable, accrued expenses and other current liabilities	$	2,559		$	2,774
Accrued interest - related party		30			26
Current portion of long-term debt - related party		1,000			-
Total current liabilities		3,589			2,800
Long-term debt - related party, net		5,435			6,352
Other long-term liabilities		407			412
Total liabilities		9,431			9,564
Commitments and contingencies
Stockholders' equity
Series A convertible preferred stock of $0.001 par value (liquidation preference of $17,292)		6,755			6,755
Authorized-20,000; issued and outstanding-17,292 as of September 30, 2018 and December 31, 2017
Preferred stock of $0.001 par value		-			-
Authorized-4,980,000; issued and outstanding-none as of September 30, 2018
Authorized-9,980,000; issued and outstanding-none as of December 31, 2017
Common stock of $0.001 par value		1			1
Authorized-15,000,000; issued and outstanding-940,918 as of September 30, 2018
Authorized-25,000,000; issued and outstanding-690,918 as of December 31, 2017
Additional paid-in-capital		54,265			53,767
Accumulated deficit		(34,614	)		(34,583	)
Treasury stock, 11 shares at cost as of December 31, 2017		-			(2	)
Total stockholders' equity		26,407			25,938
Total liabilities and stockholders' equity	$	35,838		$	35,502

Table of Contents

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

ALY ENERGY SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
*(in thousands, except share and per share amounts)*

	For the Three Months Ended March 31,
	2019			2018
				(restated)

Revenue	$	3,919		$	4,336
Expenses:
Operating expenses		2,348			2,610
Depreciation and amortization		846			870
Selling, general and administrative expenses		781			735
Total expenses		3,975			4,215
Income (loss) from operations		(56	)		121
Other expense:
Interest expense, net		5			6
Interest expense - related party, net		91			86
Total other expense		96			92
Income (loss) before income taxes		(152	)		29
Income tax expense		10			21
Net income (loss)	$	(162	)	$	8

Basic earnings (loss) per share information:
Net income (loss) available to common stockholders	$	(0.06	)	$	0.01
Weighted-average shares - basic		2,925,890			690,907

Diluted earnings (loss) per share information:
Net income (loss) available to common stockholders	$	(0.06	)	$	0.00
Weighted-average shares - diluted		2,925,890			4,415,401

4The ~~Table~~accompanying notes are an integral part of ~~Contents~~these condensed consolidated financial statements.

ALY ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
	(unaudited)						(unaudited)
Revenue	$	4,518		$	4,122		$	13,242		$	11,134
Expenses:
Operating expenses		2,473			2,608			7,612			7,167
Depreciation and amortization		862			944			2,641			2,793
Selling, general and administrative expenses		836			519			2,726			2,353
Total expenses		4,171			4,071			12,979			12,313
Income (loss) from operations		347			51			263			(1,179	)
Other expense (income):
Interest expense, net		3			2			12			18
Interest expense - related party		92			69			270			664
Gain on extinguishment of debt and other liabilities		-			-			-			(2,387	)
Total other expense (income)		95			71			282			(1,705	)
Income (loss) from operations before income taxes		252			(20	)		(19	)		526
Income tax expense (benefit)		(30	)		6			12			18
Net income (loss)		282			(26	)		(31	)		508
Preferred stock dividends		-			-			-			63
Net income (loss) available to common stockholders	$	282		$	(26	)	$	(31	)	$	445
Basic earnings per share information:
Net income (loss) available to common stockholders	$	0.35		($0.04)			($0.04)			$	0.68
Weighted average shares - basic		802,331			690,918			728,464			650,539
Diluted earnings per share information:
Net income (loss) available to common stockholders	$	0.06		($0.04)			($0.04)			$	0.13
Weighted average shares - diluted		4,414,234			690,918			728,464			3,506,168

Table of Contents

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

ALY ENERGY SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
*(in thousands, except share amounts)*

	Series A Convertible Preferred Stock						Common Stock				Additional Paid-In-		Accumulated			Treasury
	Shares			Amount			Shares		Amount		Capital		Deficit			Stock			Total
Balance as of December 31, 2017 (restated)		17,292		$	6,755			690,907	$	1	$	53,767	$	(35,849	)	$	(2	)	$	24,672
Net income (restated)		-			-			-		-		-		8			-			8
Balance as of March 31, 2018 (restated)		17,292		$	6,755			690,907	$	1	$	53,767	$	(35,841	)	$	(2	)	$	24,680

Balance as of December 31, 2018		17,292		$	6,755			940,918	$	1	$	54,265	$	(35,506	)	$	-		$	25,515
Net loss		-			-			-		-		-		(162	)					(162	)
Issuance of common stock in connection with the Merger		-			-			2,881,411		3		6,752		-						6,755
Cancellation of Series A convertible preferred stock in connection with the Merger		(17,292	)		(6,755	)		-		-		-		-						(6,755	)
Impact of adoption of ASC 842		-			-			-		-		-		6						6
Balance as of March 31, 2019		-		$	-			3,822,329	$	4	$	61,017	$	(35,662	)	$	-		$	25,359

5The ~~Table~~accompanying notes are an integral part of ~~Contents~~these condensed consolidated financial statements.

ALY ENERGY SERVICES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018
(in thousands, except share amounts)
	Series A Convertible Preferred Stock				Common Stock				Additional Paid-In-			Accumulated			Treasury
	Shares		Amount		Shares		Amount		Capital			Deficit			Stock			Total
Balance as of January 1, 2018		17,292	$	6,755		690,907	$	1	$	53,767		$	(34,583	)	$	(2	)	$	25,938
Net loss		-		-		-		-		-			(31	)		-			(31	)
Exercise of options		-		-		250,000		-		500			-			-			500
Reissuance of treasury stock		-		-		11		-		(2	)		-			2			-
Balance as of September 30, 2018		17,292	$	6,755		940,918	$	1	$	54,265		$	(34,614	)	$	-		$	26,407

Table of Contents

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

ALY ENERGY SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
*(in thousands)*

	For the Three Months Ended March 31,
	2019			2018
				(restated)
Cash flows from operating activities:
Net income (loss)	$	(162	)	$	8
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		846			870
Non-cash operating lease expense		34			-
Bad debt expense		39			22
Changes in operating assets and liabilities:
Receivables		(431	)		371
Prepaid expenses and other assets		(31	)		36
Accounts payable, accrued expenses, and operating lease and other liabilities		(324	)		(571	)
Accrued interest - related party		2			5
Net cash provided by (used in) operating activities		(27	)		741

Cash flows from investing activities:
Purchases of property and equipment		(1,368	)		(265	)
Net cash used in investing activities		(1,368	)		(265	)

Cash flows from financing activities:
Borrowings on long-term debt - related party		675			250
Repayment of long-term debt - related party		(250	)		-
Net cash provided by financing activities		425			250

Net increase (decrease) in cash and restricted cash		(970	)		726
Cash and restricted cash, beginning of period		1,645			233
Cash and restricted cash, end of period	$	675		$	959

Supplemental disclosure of cash flow information:
Cash paid for interest - related party	$	89		$	81
Cash paid for interest		4			3
Cash received for income taxes, net		-			(20	)

Non-cash financing activities:
Cancellation of preferred stock and issuance of common stock in connection with the Merger	$	6,755		$	-

6The ~~Table~~accompanying notes are an integral part of ~~Contents~~these condensed consolidated financial statements.

ALY ENERGY SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
(in thousands)
	For the Nine Months Ended September 30,
	2018			2017
	(unaudited)
Cash flows from operating activities:
Net income (loss)	$	(31	)	$	508
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		2,641			2,793
Loss on disposal of assets		-			58
Stock-based compensation		-			625
Bad debt expense		66			56
Gain on extinguishment of debt and other liabilities		-			(2,387	)
Debt modification fee - related party		-			320
Changes in operating assets and liabilities:
Receivables, net		443			(2,657	)
Prepaid expenses and other assets		(15	)		391
Accounts payable, accrued expenses and other liabilities		(220	)		287
Accrued interest and other - related party		4			193
Net cash provided by operating activities		2,888			187
Cash flows from investing activities:
Purchases of property and equipment		(1,686	)		(1,325	)
Proceeds from disposal of property and equipment		-			15
Net cash used in investing activities		(1,686	)		(1,310	)
Cash flows from financing activities:
Proceeds from exercise of options		500			-
Borrowings on long-term debt - related party		250			600
Repayments on long-term debt - related party		(167	)		-
Repayments on long-term debt		-			(7	)
Net cash provided by financing activities		583			593
Net increase (decrease) in cash and restricted cash		1,785			(530	)
Cash and restricted cash, beginning of period		233			711
Cash and restricted cash, end of period	$	2,018		$	181
Supplemental disclosure of cash flow information:
Cash paid for interest - related party		92			152
Cash paid for interest		2			4
Cash paid (received) for income taxes, net		19			50

Table of Contents

~~The~~NOTE ~~accompanying~~1 ~~notes~~— ~~are~~NATURE anOF ~~integral~~OPERATIONS ~~part~~AND ofBASIS ~~these~~OF ~~condensed consolidated financial statements.~~PRESENTATION

7Nature ~~Table~~ of ~~Contents~~Operations

~~NOTE~~Aly 1Energy —Services, ~~NATURE~~Inc., OFtogether ~~OPERATIONS~~with ~~AND~~its ~~BASIS~~subsidiaries OF(“Aly ~~PRESENTATION~~Energy” or the “Company”), is a provider of oilfield services to leading oil and gas exploration and production (“E&P”) companies operating in unconventional plays in the United States (“U.S.”). Generally, the services we offer fall within two broad categories: surface rental and solids control. Our surface rental equipment includes a wide variety of large capacity tanks with circulating systems, associated pumps, separators, gas busters, mud mix plants and ancillary equipment. We also provide environmental containment berms to safeguard against spills from mud systems on the drilling rig site. Our solids control equipment includes large centrifuges, shakers, cuttings dryers and ancillary components that can be integrated into a closed loop mud system. We operate in the U.S., primarily in Texas, Oklahoma, and New Mexico.

~~Nature~~Throughout ofthis ~~Operations~~report, we may also refer to Aly Energy and its subsidiaries as “we”, “our” or “us”.

~~Aly~~Basis ~~Energy Services, Inc., together with its subsidiaries (“Aly Energy” or the “Company”), is a provider~~ of oilfield services to leading oil and gas exploration and production (“E&P”) companies operating in unconventional plays in the United States (“U.S.”). Generally, the services we offer fall within two broad categories: surface rental and solids control. Our surface rental equipment includes a wide variety of large capacity tanks with circulating systems, associated pumps, separators, gas busters, mud mix plants and ancillary equipment. We also provide environmental containment berms to safeguard against spills from mud systems on the drilling rig site. Our solids control equipment includes large centrifuges, shakers, cuttings dryers and ancillary components that can be integrated into a closed loop mud system. We operate in the U.S., primarily in Texas, Oklahoma, and New Mexico.Presentation

~~Throughout~~Aly ~~this~~Energy ~~report,~~has wetwo ~~refer~~wholly-owned tosubsidiaries with continuing operations: Aly ~~Energy~~Operating, Inc. and ~~its~~Aly ~~subsidiaries~~Centrifuge asInc. ~~“we”~~Aly Operating, ~~“our”~~Inc. orhas ~~“us”~~one wholly-owned subsidiary, Austin Chalk Petroleum Services Corp. We operate as one business segment which services customers within the U.S.

~~Basis~~The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of ~~Presentation~~America (“U.S. GAAP”) and include the accounts of Aly Energy and each of its subsidiaries in the condensed consolidated balance sheets as of March 31, 2019 and December 31, 2018, in the condensed consolidated statements of operations for the three months ended March 31, 2019 and 2018, in the condensed consolidated statements of changes in stockholders’ equity for the three months ended March 31, 2019 and 2018, and in the condensed consolidated statements of cash flows for the three months ended March 31, 2019 and 2018. All significant intercompany transactions and account balances have been eliminated upon consolidation.

~~Aly~~Reverse ~~Energy~~Stock has two wholly-owned subsidiaries with continuing operations: Aly Operating, Inc. and Aly Centrifuge Inc. Aly Operating, Inc. has one wholly-owned subsidiary: Austin Chalk Petroleum Services Corp. We operate as one business segment which services customers within the U.S.Split

~~The~~On ~~condensed~~August ~~consolidated~~7, ~~financial~~2018, ~~statements~~the ~~have~~Company ~~been~~effected ~~prepared~~a in1-for-20 ~~conformity~~reverse ~~with~~stock ~~accounting~~split ~~principles~~of ~~generally~~its ~~accepted~~common instock ~~the United States of America~~ (“~~U.S.~~Reverse ~~GAAP~~Split”), ~~and~~as ~~include~~approved ~~the~~by ~~accounts~~its Board of ~~Aly~~Directors ~~Energy~~ and ~~each~~stockholders. ofAll ~~its~~information ~~subsidiaries~~ in ~~the~~this ~~condensed~~Quarterly ~~consolidated~~Report ~~balance~~on ~~sheets~~Form as10-Q ofrelating ~~September~~to ~~30,~~the ~~2018~~number ~~and~~of ~~December~~common 31shares, ~~2017,~~price inper ~~the~~share ~~condensed~~and ~~consolidated~~per ~~statements~~share ofamounts, ~~operations~~including ~~for~~such ~~the~~information ~~three~~related ~~and~~to ~~nine~~options ~~months ended September 30, 2018~~ and ~~2017,~~the ~~and~~conversion infeature of the ~~condensed~~Series ~~consolidated~~A ~~statements~~convertible ofpreferred ~~cash~~stock, ~~flows~~have ~~for~~been ~~the~~retroactively ~~nine~~restated ~~months~~to ~~ended~~give ~~September~~effect ~~30,~~to ~~2018~~the ~~and~~Reverse ~~2017~~Split. ~~All~~See ~~significant~~Note ~~intercompany~~5 ~~transactions~~– ~~and~~Stockholders’ ~~account~~Equity ~~balances~~for ~~have~~further ~~been eliminated upon consolidation~~detail.

~~Reverse~~Interim ~~Stock~~Financial ~~Split~~Information

OnThe ~~August~~condensed 7consolidated balance sheet as of December 31, 2018, has been derived from our audited financial statements and the unaudited condensed consolidated financial statements of the Company ~~effected~~are aprepared 1-in conformity with U.S. GAAP for~~-20~~ ~~reverse~~interim ~~stock~~financial ~~split~~reporting. ofCertain ~~its~~information ~~common~~and ~~stock~~footnote ~~(“Reverse~~disclosures ~~Split”),~~normally asincluded ~~approved~~in byannual ~~its~~financial ~~Board~~statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of ~~Directors~~the Securities and ~~stockholders~~Exchange Commission. ~~All~~Therefore, ~~information~~these condensed consolidated financial statements should be read along with the annual audited consolidated financial statements and notes thereto included in ~~this~~the ~~Quarterly~~Company’s Annual Report on Form 10-QK ~~relating~~for to the ~~number~~year ofended ~~common~~December ~~shares~~31, ~~price~~2018. ~~per~~In ~~share~~management’s ~~and~~opinion, ~~per~~all ~~share~~adjustments ~~amounts,~~necessary ~~including~~for ~~such~~a ~~information~~fair ~~related~~statement toare ~~options~~reflected ~~and~~in the ~~conversion~~interim ~~feature~~periods ofpresented. Interim results for the ~~Series~~three Amonths ~~convertible~~ended ~~preferred~~March ~~stock~~31, ~~have~~2019 ~~been~~may ~~retroactively~~not ~~restated~~be toindicative ~~give~~of ~~effect~~results tothat ~~the~~will ~~Reverse~~be ~~Split.~~realized ~~See~~for ~~Note~~the 5full –year ~~Stockholders’~~ending ~~Equity~~December ~~for~~31, ~~further detail~~2019.

~~Interim Financial Information~~Reclassifications

~~The~~Certain ~~condensed~~reclassifications ~~consolidated~~have ~~balance sheet as of December 31, 2017 has~~ been ~~derived~~made ~~from~~to ~~our~~prior ~~audited~~period ~~financial statements and the unaudited~~ condensed consolidated financial statements ofto ~~the~~conform Company are prepared in conformity with U.S. GAAP for interim financial reporting. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the ~~rules~~current ~~and~~period ~~regulations of the Securities and Exchange Commission~~presentation. ~~Therefore,~~These ~~these~~reclassifications ~~condensed~~had ~~consolidated~~no ~~financial~~effect ~~statements~~on ~~should~~our ~~be read along with the annual audited~~ consolidated financial ~~statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31~~position, ~~2017. In management’s opinion, all adjustments necessary for a fair statement are reflected in the interim periods presented. Interim~~ results ~~for the three and nine months ended September 30, 2018 may not be indicative~~ of ~~results~~operations ~~that~~or ~~will~~cash ~~be realized for the full year ending December 31, 2018~~flows.

~~Recapitalization~~8 Table of Contents

InMerger ~~September 2016, certain of the Company’s principal stockholders formed Permian Pelican, Inc. (“Pelican”), formerly Permian Pelican, LLC,~~ with ~~the~~Related objective of consummating a recapitalization transaction (the “Recapitalization”) whereby (i) our obligations under our then existing credit facility and various capital leases would be restructured and, (ii) the Company’s then outstanding redeemable preferred stock (Aly Operating redeemable preferred stock and Aly Centrifuge redeemable preferred stock), subordinated note payable and contingent payment liability would be exchanged into common stock. The Recapitalization, completed on January 31, 2017, had a significant impact on our capital structure and on our consolidated financial statements for the years ended December 31, 2017 and 2016. Please see our Annual Report on Form 10-K for the year ended December 31, 2017 for a complete description of the Recapitalization and the impact on our consolidated financial statements.Party

8On ~~Table~~January 28, 2019, we executed an Agreement and Plan of ~~Contents~~Merger (“Merger Agreement”) with Permian Pelican Inc. (“Pelican”), a related party, pursuant to which Pelican merged with and into the Company (the “Merger”). By virtue of the Merger, each issued and outstanding share of Pelican common stock, 7,429 shares in aggregate, was converted into 387.858 shares of our common stock and each share of Series A convertible preferred stock was canceled. We issued an aggregate of 2,881,411 new shares of our common stock, representing approximately 75.4% of our outstanding common stock, with a value of approximately $14.4 million (based on a stock price of $5.00 per share on January 28, 2019) in consideration for all of the shares of Pelican common stock outstanding as of the date of the Merger. The new shares of our common stock were issued directly to the individual shareholders of Pelican and, as a result, effective January 28, 2019, we no longer have a controlling shareholder. See Note 6 – Related Party Transactions for further detail.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the balance sheet date and the amounts of revenue and expenses recognized during the reporting period. Areas where critical accounting estimates are made by management include:

·Revenue recognition,·Allowance for doubtful accounts, · Depreciation and amortization of property and equipment and intangible and other assets, · Impairment of property and equipment and intangible and other assets, · Litigation settlement accruals, · Stock-based compensation, and · Income taxes.

The Company analyzes its estimates based on historical experience and various other indicative assumptions ~~that~~ it believes to be reasonable under the circumstances. Under different assumptions or conditions, the actual results could differ, possibly materially, from those previously estimated. Many of the conditions impacting these assumptions are outside of the Company’s control.

~~Reclassifications~~NOTE 2 — RECENT ACCOUNTING PRONOUNCEMENTS

~~Certain~~Recent ~~reclassifications~~Accounting have been made to prior period condensed consolidated financial statements to conform to the current period presentations. These reclassifications had no effect on our consolidated financial position, results of operations or cash flows.Pronouncements

~~NOTE~~From 2time —to ~~LONG-LIVED~~time, ~~ASSETS~~new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”), which we adopt as of the specified effective date. 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.

~~Property~~Accounting ~~and~~Standard ~~Equipment~~Adopted in 2019

~~Major~~Leases. ~~classifications~~On ofJanuary ~~property~~1, 2019, the Company adopted accounting standards update (“ASU”) 2016-02, Leases and ~~equipment~~all ~~are~~the asrelated ~~follows~~amendments (“New Lease Standard” or “ASC 842”) and used the effective date as the date of initial application. Therefore, prior period financial information has not been adjusted and continues to be reflected in ~~thousands~~accordance with the Company’s historical accounting policy. The standard establishes a right-of-use (“ROU”): model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than twelve months.

	September 30, 2018			December 31, 2017
	(unaudited)
Machinery and equipment	$	34,472		$	33,024
Vehicles, trucks and trailers		4,234			4,288
Office furniture, fixtures and equipment		567			560
Buildings		212			212
Leasehold improvements		61			105
		39,546			38,189
Less: Accumulated depreciation and amortization		(13,297	)		(11,374	)
		26,249			26,815
Assets not yet placed in service		246			73
Property and equipment, net	$	26,495		$	26,888

The standard provides a number of optional practical expedients in transition. The Company elected the “package of practical expedients,” which, among other things, allows the Company to carry forward its historical lease classification.

~~Depreciation~~The ~~and~~adoption ~~amortization~~of ~~expense~~this ~~related~~standard toresulted ~~property~~in ~~and~~the ~~equipment~~recording ~~for~~of ~~the~~operating ~~three~~lease ~~months~~assets ~~ended~~and ~~September~~operating ~~30,~~lease ~~2018~~liabilities ~~and~~of ~~2017~~approximately ~~was~~ $0.73 million. ~~Depreciation~~as ~~and~~of ~~amortization~~January ~~expense~~1, ~~related~~2019, towith ~~property~~no ~~and~~material ~~equipment~~related ~~for~~impact on the ~~nine~~Company’s ~~months~~condensed ~~ended~~consolidated ~~September~~statement ~~30,~~of ~~2018~~equity ~~and~~or ~~2017~~condensed ~~was~~consolidated $2statement of operations.1 ~~million~~Short-term ~~and~~leases ~~$2.2~~have ~~million,~~not ~~respectively~~been recorded on the balance sheet.

9Accounting ~~Table~~Policy offor ~~Contents~~Leases

~~Intangible~~The ~~Assets~~Company determines if an arrangement is a lease with a term longer than twelve months at inception. All existing arrangements identified by the Company as leases are operating and are included in operating ROU assets, accounts payable and accrued expenses and operating lease liabilities in the condensed consolidated balance sheet as of March 31, 2019.

~~Intangible~~9 ~~assets~~Table ~~consist~~ of ~~the following (in thousands):~~ Contents

	Customer Relationships			Tradename			Total
As of September 30, 2018 (unaudited):
Cost	$	5,323		$	2,174		$	7,497
Less: Accumulated amortization		(2,831	)		(1,129	)		(3,960	)
Net book value	$	2,492		$	1,045		$	3,537
As of December 31, 2017:
Cost	$	5,323		$	2,174		$	7,497
Less: Accumulated amortization		(2,432	)		(966	)		(3,398	)
Net book value	$	2,891		$	1,208		$	4,099

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligations to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease.

Total amortization expense for the three months ended September 30, 2018 and 2017 was approximately $0.2 million. Total amortization expense for the nine months ended September 30, 2018 and 2017 was approximately $0.6 million.Overview

~~NOTE~~The 3Company’s —operating ~~LONG-TERM~~leases ~~DEBT~~are –primarily ~~RELATED~~for ~~PARTY~~real estate and office equipment. The terms and conditions for these leases vary by the type of underlying asset. Total operating lease expense for the three months ended March 31, 2019 and 2018 was (in thousands):

Long-term debt – related party consists of the following (in thousands):

	For the Three Months Ended March 31,
	2019		2018
	(unaudited)
Operating lease expense:
Operating right-of-use assets	$	34	$	-
Long-term operating leases		-		14
Month-to month operating leases		10		14
Operating leases maturing within twelve months and other		8		15
Total operating lease expense	$	52	$	43

	September 30, 2018				December 31, 2017
	Current		Long-Term		Current		Long-Term
	(unaudited)
Credit facility
Term loan	$	1,000	$	4,435	$	-	$	5,027
Revolving credit facility		-		1,000		-		750
Delayed draw term loan		-		-		-		575
Total	$	1,000	$	5,435	$	-	$	6,352

Supplemental Balance Sheet Information

AsOperating ofleases ~~December~~as ~~31, 2017, subsequent to multiple amendments, the Company’s credit facility with Pelican (“Related Party Credit Facility”) consisted~~ of aMarch ~~term loan~~31, a2019 revolving credit facility and a delayed draw term loan. The obligations under the credit facility are guaranteed by all of our subsidiaries and secured by substantially all of our assets. The credit facility contains customary events of default and covenants including restrictions on our ability to incur additional indebtedness, pay dividends or make other distributions, grant liens and sell assets. Borrowings under the credit facility are subject to monthly interest payments at an annual base rate of the six-month LIBOR rate on the last day of the calendar month plus a margin of 3.0%. The credit facility does not include any financial covenants. We were ~~in full compliance with the credit facility~~ as offollows ~~September~~(in ~~30, 2018.~~thousands):

On June 30, 2018, the Company entered into the Third Amended and Restated Credit Agreement which, among other things, (i) combined the outstanding balances on the delayed draw term loan and the term loan and initiated a required monthly principal payment of approximately $83,000 on the aggregate outstanding balance of the term loan, (ii) expanded availability on the revolving credit facility by $0.7 million while simultaneously reducing the aggregate availability under the other lines of the facility by the same amount, and (iii) extended the maturity date of the facility to June 30, 2021. In addition, effective June 30, 2018, Pelican assigned and transferred its rights under the credit agreement to an affiliated entity, Permian Pelican Financial, LLC (“PPF”). The members and membership interests of PPF are the same as Pelican and PPF is a related party.

	March 31, 2019
	(unaudited)

Operating right-of-use assets	$	293

Operating lease liabilities
Accounts payable and accrued expenses		139
Operating lease liabilities, net		159
Total operating lease liabilities	$	298


Weighted average remaining lease term	2 years
Weighted average discount rate		5.5	%

~~Under~~Maturities ~~the revolving credit facility, the Company has the ability to borrow the lesser~~ of ~~80%~~operating oflease ~~eligible~~liabilities ~~receivables,~~ as ~~defined in the credit agreement, and $1.7 million. As~~ of ~~September~~March 3031, ~~2018,~~2019 ~~there~~are ~~was~~as ~~$1.0~~follows ~~million~~(in ~~outstanding under the revolving credit facility and the Company had the ability to borrow an incremental $0.7 million.~~thousands):

10 Table of Contents

Remainder of 2019	$	120
2020		106
2021		68
2022		26
Total lease payments		320
Less: imputed interest		(22	)
Total	$	298

~~NOTE~~Stranded 4Tax —Effects ~~STOCK~~from the Tax Cuts and Jobs Act. In February 2018, the FASB issued ASU No. 2018-~~BASED~~02 ~~COMPENSATION~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. U.S. GAAP requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax laws or rates, with the effect included in income from continuing operations in the reporting period that includes the enactment date, even in situations in which the related income tax effects of items in accumulated other comprehensive income were originally recognized in other comprehensive income (referred to as “stranded tax effects”). The amendments in this ASU allow a specific exception for reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. In addition, the amendments in this update also require certain disclosures about stranded tax effects. The standard will take effect for public companies with fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The adoption of this guidance had no impact on our consolidated financial statements.

As10 ofTable ~~September 30, 2018 and December 31, 2017, we had two stock-based compensation plans with outstanding options. Only one~~ of ~~our plans is currently available to grant incentive stock options, non-qualified stock options and restricted stock to employees and non-employee members of the board of directors.~~Contents

~~2017~~Accounting ~~Stock~~Standards ~~Option~~Adopted ~~Plan~~in 2018

~~Effective~~Revenue ~~April 4, 2017, the 2017 Stock Option Plan (the “2017 Plan”) was approved by the board of directors~~recognition. On ~~May~~January 301, ~~2017~~2018, we ~~granted~~adopted ~~options~~accounting tostandards ~~purchase~~update ~~approximately~~(“ASU”) ~~843~~2014-09,~~094~~ ~~shares~~Revenue offrom ~~common~~Contracts ~~stock~~with ~~under~~Customers ~~the~~and ~~2017~~all ~~Plan which was~~ the ~~maximum~~related ~~amount~~amendments ~~authorized.~~(“new ~~The~~revenue ~~option~~standard” ~~contract~~or ~~term~~“ASC is606”) 10to ~~years~~all ~~and~~contracts ~~the~~using ~~exercise price is $2.00. The options vested and became exercisable immediately upon grant. The fair value of~~ the ~~award~~full ~~was~~retrospective ~~estimated using a Black-Scholes fair value model~~method. ~~The~~Revenues ~~valuation~~are ofrecognized ~~stock~~when ~~options~~performance ~~requires~~obligations usare tosatisfied ~~estimate~~in ~~the~~accordance ~~expected~~with ~~term~~contractual ~~of award~~terms, ~~which~~in ~~was~~an ~~estimated~~amount ~~using~~that reflects the ~~simplified~~consideration ~~method, as~~ the Company ~~does~~expects ~~not~~to ~~have~~be ~~sufficient~~entitled ~~historical~~to ~~exercise~~in ~~information.~~exchange ~~The~~for ~~valuation~~services ofrendered ~~stock~~or ~~option~~rentals ~~awards is also dependent on historical stock price volatility~~provided. InTaxes ~~view~~collected offrom ~~our~~customers ~~limited~~and ~~trading~~remitted ~~volume,~~to ~~volatility~~governmental ~~was~~authorities ~~calculated~~are ~~based~~not onincluded ~~historical~~in ~~stock~~revenues ~~price~~in ~~volatility of~~ the Company’s ~~peer~~financial ~~group~~statements.

OnPerformance August 20, 2018, our former chief executive officer, Shauvik Kundagrami, exercised options to purchase 250,000 shares of common stock under the 2017 Plan at an exercise price of $2.00 per share resulting in aggregate proceeds to the Company of $0.5 million. In accordance with the terms of the 2017 Plan, effective August 24, 2018, Mr. Kundagrami’s remaining options to purchase 2,928 shares of common stock under the 2017 Plan were forfeited.Obligations

~~Options~~A performance obligation arises under contracts with customers to ~~purchase~~render ~~590,166~~services ~~common~~or ~~shares~~provide rentals and is the unit of account under Topic 606. The Company accounts for services rendered and rentals provided separately if they are distinct and the ~~2017~~service ~~Plan~~or ~~were~~rental ~~outstanding~~is separately identifiable from other items provided to a customer and ~~fully~~if ~~vested~~a ascustomer ofcan ~~September~~benefit ~~30,~~from ~~2018~~the services rendered or rentals provided on its own or with other resources that are readily available to the customer. A contract’s transaction price is allocated to each distinct performance obligation and ~~December~~recognized 31as revenue when, ~~2017~~or as, the performance obligation is satisfied. WeA ~~expensed~~contract’s ~~stock-~~standalone selling prices are determined based ~~compensation~~on ofthe ~~$0.6~~prices ~~million~~that the Company charges for ~~the~~its ~~full~~services ~~fair~~rendered ~~value~~and rentals provided. The majority of the ~~award~~Company’s performance obligations are satisfied over time, generally over a period measured in ~~May~~days ~~2017~~or months. The Company’s payment terms vary by the type of products or services offered. The term between invoicing and when the payment is due is typically 30 days. We invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our revenue contracts do not give rise to contract assets or liabilities under ASC 606.

~~Omnibus~~Rentals ~~Incentive~~revenue, ~~Plan~~primarily priced on a per day, per man hour or similar basis, consists of fees charged to customers for use of the Company’s rental equipment over the term of the rental period, which is generally less than twelve months.

~~Subsequent~~Services torevenue, ~~the~~including ~~adoption~~transportation of ~~the~~equipment ~~2017~~and ~~Plan~~rig-up/rig-down charges, ~~options~~primarily ~~are~~represents noamounts ~~longer~~charged ~~permitted~~ to becustomers ~~granted~~for ~~under~~ the ~~previous~~completion ~~Omnibus~~of ~~Incentive~~services ~~Plan~~rendered, ~~(the~~including ~~“2013 Plan”). Options to purchase 11~~labor,~~706~~ ~~common~~products ~~shares under the 2013 Plan were outstanding~~ and ~~none~~supplies ofnecessary ~~these~~to ~~options~~perform ~~were~~the ~~vested as of September 30, 2018 and December 31, 2017~~service. ~~The~~Rates ~~option~~for ~~contract~~these ~~term~~services isvary 10depending ~~years~~on ~~and~~ the ~~exercise~~type ~~price~~of isservices ~~$80.00.~~provided ~~The options vest~~ and ~~are~~can ~~exercisable~~be ifbased on a ~~liquidity~~per ~~event~~job, asper ~~defined~~hour inor ~~the~~per ~~2013~~day ~~Plan, occurs and certain conditions are met~~basis.

The ~~aggregate~~Company ~~unrecognized~~expenses ~~compensation~~sales ~~cost~~commissions ~~related~~when toincurred ~~these~~because ~~non-vested~~the ~~stock~~amortization ~~option~~period ~~awards~~would ishave ~~approximately~~been ~~$0.3~~one ~~million (see Note 13 – Stock-Based Compensation in our Annual Report on Form 10-K for the~~ year ~~ended~~or ~~December 31, 2017 for additional detail)~~less. Such amount will be recognized in the future upon occurrence of an event that results in a vesting of the options. During the three and nine months ended September 30, 2018 and the three months ended September 30, 2017, there were no forfeited options. Options to purchase 418 shares of common stock were forfeited during the nine months ended September 30, 2017.

~~NOTE~~The 5following –table ~~STOCKHOLDERS’~~presents ~~EQUITY~~our revenue disaggregated by revenue source (in thousands):

On August 7, 2018, the Company effected the Reverse Split, a 1-for-20 reverse stock split of its common stock, as approved by its Board of Directors and stockholders. Under the terms of the Reverse Split, each 20 shares of common stock issued and outstanding as of such effective date was automatically reclassified and changed into one share of common stock without further action by the stockholder. In lieu of issuing fractional shares in connection with the Reverse Split, holders received the proportionate fraction of $7.00 per share in cash. The aggregate payment made was $231.35. Shares of common stock previously issued and held as treasury shares were escheated to applicable governmental authorities and, in connection with the Reverse Split, were reinstated as outstanding shares of common stock. All share and per share amounts on this Quarterly Report on Form 10-Q, including such amounts related to options and the conversion feature of the Series A convertible preferred stock, have been retroactively restated to reflect the Reverse Split.

	For the Three Months Ended March 31,
	2019		2018
	(unaudited)
Rental services	$	2,573	$	3,005
Transportation services		737		691
Rig-up/rig-down services		585		626
Other		24		14
Total	$	3,919	$	4,336

WeAccounting ~~filed~~Standards anIssued ~~amendment~~But toNot ~~our~~Yet certificate of formation, effective August 7, 2018, reducing our authorized common stock from 25 million to 15 million shares and reducing our authorized preferred stock from 10 million to 5 million shares.Adopted

~~Previously,~~Fair inValue ~~connection~~Measurement ~~with~~Disclosure. ~~the~~In ~~Recapitalization~~August 2018, the ~~Company~~FASB ~~allocated~~issued ~~20,000~~ASU ofNo. ~~the~~2018-13 ~~authorized~~Fair ~~preferred~~Value ~~shares~~Measurement (topic 820) – Disclosure Framework - Changes to bethe ~~authorized~~Disclosure ~~Series~~Requirement Afor ~~convertible~~Fair ~~preferred~~Value ~~shares~~Measurement. ~~Each~~This ~~share~~new ofguidance ~~Series~~eliminated, Amodified ~~convertible~~and ~~preferred~~added ~~stock~~certain ~~may~~disclosure berequirements ~~converted~~related ~~into~~to ~~166.632~~fair ~~(3,332~~value measurements.64 ~~pre-Reverse~~The ~~Split)~~amended ~~shares~~disclosure ofrequirements ~~the~~are ~~Company’s~~effective ~~common~~for ~~stock~~all atentities ~~any~~for ~~time~~fiscal atyears, ~~the~~and ~~option~~for ofinterim ~~the~~periods ~~shareholder~~within ~~and~~those ~~has~~fiscal ayears, ~~liquidation~~beginning ~~preference~~after ofDecember $115,~~000~~ ~~per share~~2019. ~~All~~We ~~shares~~are ofevaluating the ~~Series~~impact Aof ~~convertible~~adopting ~~preferred~~this ~~stock~~guidance. ~~vote~~However, onwe ancurrently ~~as-if-converted~~expect ~~basis.~~that ~~See~~the ~~Note~~adoption 6of –this ~~Controlling~~guidance ~~Shareholder~~will ~~and~~not ~~Related~~have ~~Party~~a ~~Lender~~material ~~for~~impact ~~further~~on ~~details~~our consolidated financial statements.

OnFinancial ~~August~~Instruments—Credit ~~20,~~Losses. ~~2018~~In June 2016, ~~our~~the ~~former~~FASB ~~chief~~issued ~~executive~~ASU ~~officer,~~No. ~~Shauvik~~2016-13 ~~Kundagrami~~Financial Instruments—Credit Losses (Topic 326), ~~exercised~~which ~~options~~introduced toan ~~purchase~~expected ~~250,000~~credit ~~shares~~loss methodology for the impairment of ~~common~~financial ~~stock~~assets ~~for~~measured at amortized cost basis. It requires an ~~exercise~~entity ~~price~~to estimate credit losses expected over the life of $2an exposure based on historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments.00 ~~per~~The ~~share~~amendments affect loans, ordebt ~~$500~~securities,~~000~~ trade receivables, net investments in ~~aggregate~~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. This guidance will take effect for public companies with fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We are currently evaluating the impact of adopting this guidance.

~~NOTE~~11 6Table —of ~~CONTROLLING SHAREHOLDER AND RELATED PARTY LENDER~~Contents

~~Controlling~~NOTE ~~Shareholder~~3 –— ~~Pelican~~DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS

OnProperty January 31, 2017 upon completion of the Recapitalization, Pelican had the power to vote the substantial majority of the Company’s outstanding common stock. As of September 30, 2018, six of our seven board members, including two of our executive officers, and ~~our chief financial officer hold an ownership interest in Pelican.~~Equipment

AsMajor classifications of ~~September~~property ~~30, 2018~~ and ~~December~~equipment ~~31,~~are ~~2017, Pelican owned 17,292 shares of Series A convertible preferred stock which is convertible into 2,881,400 common shares. On an~~ as~~-if-converted~~ ~~basis,~~follows ~~Pelican owned approximately 75.4% and 80.7% of our common stock~~ (~~excluding~~in ~~the impact of options~~thousands) ~~as of September 30, 2018 and December 30, 2017, respectively. The shares of Series A convertible preferred stock carry a liquidation preference of $1,000 per share or $17.3 million.~~:

11 Table of Contents

	March 31, 2019			December 31, 2018
	(unaudited)
Machinery and equipment	$	35,428		$	33,503
Vehicles, trucks and trailers		4,257			4,242
Office furniture, fixtures and equipment		567			567
Leasehold improvements		63			63
Buildings		212			212
		40,527			38,587
Less: Accumulated depreciation and amortization		(14,149	)		(13,490	)
		26,378			25,097
Assets not yet placed in service		139			711
Property and equipment, net	$	26,517		$	25,808

~~Related~~Depreciation ~~Party~~and ~~Lender~~amortization –expense ~~PPF~~related to property and equipment for the three months ended March 31, 2019 and 2018 was $0.7 million and $0.6 million (restated), respectively.

InAccounts ~~January~~Payable ~~2017, we entered into the Related Party Credit Facility with Pelican. Effective June 30, 2018, Pelican assigned~~ and ~~transferred~~Accrued its rights under the Related Party Credit Facility to PPF. The members and membership interests of PPF are the same as Pelican and PPF is a related party. See Note 3 – Long-Term Debt – Related Party for further detail on the Related Party Credit Facility.Expenses

InAccounts ~~connection~~payable ~~with our Related Party Credit Facility, during the three~~ and ~~nine~~accrued ~~months~~expenses ended September 30, 2018, we recorded interest expense of approximately $92,000 and $0.3 million, respectively. During the three and nine months ended September 30, 2017, we recorded interest expense on the Related Party Credit Facility of approximately $69,000 and $0.7 million, respectively. Approximately $0.3 million of the aggregate expense recorded during the nine months ended September 30, 2017 related to a debt modification fee in connection with Amendment No. 2 to the credit facility which was entered into on May 23, 2017. The fee consisted of ~~1,200 shares of our Series A convertible preferred stock. Approximately $0.2 million of~~ the ~~aggregate~~following ~~interest expense on the Related Party Credit Facility recorded during the nine months ended September 30, 2017 was included~~ (in the obligations exchanged as part of the Recapitalization. Please see our Annual Report on Form 10-K for the year ended December 31, 2017 for a complete description of the Recapitalization, including related party transactions.thousands):

Our condensed consolidated balance sheet includes accrued interest under the Related Party Credit Facility of approximately $30,000 and $26,000 as of September 30, 2018 and December 31, 2017, respectively.

	March 31, 2019		December 31, 2018
	(unaudited)
Accounts payable	$	1,317	$	1,098
Insurance payable		211		366
Sales tax payable		206		211
Accrued compensation		187		384
Current portion of operating lease liabilities		139		-
Accrued severance		34		281
Other accrued expenses		359		262
Total accrued expenses	$	2,453	$	2,602

NOTE 74 — ~~REVENUE~~LONG-TERM ~~FROM~~DEBT ~~CONTRACTS~~– ~~WITH~~RELATED ~~CUSTOMERS~~PARTY

~~Adoption of New Accounting Standards~~ Long-term ~~ASU~~debt ~~2014-09,~~– ~~Revenue~~related -party ~~Revenue~~consists ~~from~~of ~~Contracts~~the ~~with~~following ~~Customers~~(in thousands):

On January 1, 2018, we adopted accounting standards update (“ASU”) 2014-09, Revenue from Contracts with Customers and all the related amendments (“new revenue standard” or “ASC 606”) to all contracts using the full retrospective method. The Company does not incur significant contract costs. The Company’s services and rental contracts are primarily short-term in nature, and therefore, based on management’s assessment, the impact of the adoption of the new revenue standard was not significant.

	March 31, 2019				December 31, 2018
	Current		Long-Term		Current		Long-Term
	(unaudited)
Credit facility
Term loan	$	1,000	$	3,935	$	1,000	$	4,185
Revolving credit facility		-		1,675		-		1,000
Total	$	1,000	$	5,610	$	1,000	$	5,185

~~Revenue~~On ~~Recognition~~June 30, 2018, the Company entered into the Third Amended and Restated Credit Agreement with Pelican (“Related Party Credit Facility”) which, among other things, (i) combined the outstanding balances on the delayed draw term loan and the term loan and initiated a required monthly principal payment of approximately $83,000 on the aggregate outstanding balance of the term loan, (ii) expanded availability on the revolving credit facility by $0.7 million while simultaneously reducing the aggregate availability under the other lines of the facility by the same amount, and (iii) extended the maturity date of the facility to June 30, 2021. Borrowings under the Related Party Credit Facility are subject to monthly interest payments at an annual base rate of the six-month LIBOR rate on the last day of the calendar month plus a margin of 3.0%. The obligations under the Related Party Credit Facility are guaranteed by all our subsidiaries and secured by substantially all of our assets. The Related Party Credit Facility contains customary events of default and covenants including restrictions on our ability to incur additional indebtedness, pay dividends or make other distributions, grant liens and sell assets. The Related Party Credit Facility does not include any financial covenants.

~~Under~~12 ~~our~~Table ~~contracts, we generally have performance obligations to provide equipment rental, rig-up/rig-down and transportation services which constitute a series~~ of distinct goods or services that are substantially the same and that have the same pattern of transfer to our customer. The activities included in the “other revenue” stream are not distinct as our customers would not benefit from these activities separately.Contents

~~Rental~~Effective ~~Services~~June ~~– We are a provider of solids control systems and surface rental equipment~~30, ~~including centrifuges and auxiliary solids control equipment~~2018, ~~mud~~Pelican ~~circulating~~assigned ~~tanks (400~~ and ~~500~~transferred ~~barrel~~its ~~capacity)~~rights ~~and~~under ~~auxiliary~~the ~~surface~~Related ~~rental~~Party ~~equipment~~Credit ~~(e.g.~~Facility ~~portable~~to ~~mud~~an ~~mixing~~affiliated ~~plants~~entity, ~~containment~~Permian ~~systems~~Pelican Financial, ~~etc.~~LLC (“PPF”). WeThe ~~generate~~members ~~revenue~~and ~~primarily~~membership ~~from~~interests ~~renting~~of ~~this~~PPF ~~equipment~~are ~~at per-day rates. In addition, we may provide personnel to operate our equipment at~~ the ~~customer’s~~same ~~location~~as atPelican ~~per-day~~and ~~rates.~~PPF Weis ~~recognize~~a ~~revenue~~related ~~on rental services upon completion of each day of services~~party.

~~Transportation~~Under ofthe ~~Equipment~~revolving ~~and~~credit ~~Rig-Up/Rig-Down~~facility, ~~Services~~the –Company Wehas ~~offer~~the ~~transportation~~ability ~~of our rental equipment~~ to ~~the~~borrow ~~well site and~~ the ~~rig-up/rig-down~~lesser of ~~such~~80% ~~equipment.~~of ~~These~~eligible ~~services~~receivables, ~~are~~as ~~charged~~defined toin the ~~client~~credit atagreement, ~~flat~~and ~~rates~~$1.7 ~~per job or at an hourly rate~~million. WeAs ~~recognize~~of ~~revenue~~March on31, ~~transportation~~2019, ~~and rig-up/rig-down services at~~ the ~~point~~Company inhad ~~time~~no ~~when~~further ~~such~~borrowing ~~services~~availability ~~have~~under ~~been~~the ~~completed~~facility.

~~Other~~NOTE 5 – ~~Upon~~STOCKHOLDERS’ ~~request, we may sell chemicals, supplies and other consumables to our customers. We recognize revenue from the sale of consumables when they are used on site.~~EQUITY

~~Chargeable~~Common Sales of Damaged Assets – Customer charges for equipment damaged beyond repair for which there is a recovery under the contract are considered asset sales and are reported within selling, general and administrative expenses net of the associated net book value for the damaged asset.Shares

~~Sales~~On August 7, 2018, the Company effected the Reverse Split, a 1-for-20 reverse stock split of its common stock, as approved by its Board of Directors and ~~Other~~stockholders. ~~Related~~Under ~~Taxes~~the –terms ~~Taxes~~of ~~assessed~~the onReverse ~~sales~~Split, ~~transactions~~each ~~are~~20 ~~not~~shares ~~included~~of common stock issued and outstanding as of such effective date was automatically reclassified and changed into one share of common stock without further action by the stockholder. In lieu of issuing fractional shares in ~~revenue~~connection with the Reverse Split, holders received the proportionate fraction of $7.00 per share in cash. The aggregate payment for all fractional shares was $231.35. Shares of common stock previously issued and held as treasury shares were escheated to applicable governmental authorities and, in connection with the Reverse Split, were reinstated as outstanding shares of common stock. All share and per share amounts in these unaudited condensed consolidated financial statements, including such amounts related to options and the conversion feature of the Series A convertible preferred stock, have been retroactively restated to reflect the Reverse Split.

~~The~~On ~~primary~~August ~~method~~7, ~~used~~2018, towe ~~determine~~filed ~~standalone~~an ~~selling~~amendment ~~prices~~to ~~for~~ our ~~services~~certificate ~~is a “cost plus margin” approach under which we forecast the aggregate cost~~ of ~~satisfying~~formation areducing ~~performance~~our ~~obligation~~authorized ~~and~~common ~~then~~shares ~~add~~from ~~an appropriate margin for that distinct good or service. Our contracts with customers may include multiple performance obligations. For such arrangements~~25,000,000 ~~we allocate revenue~~ to ~~each performance obligation based on its relative standalone selling price~~15,000,000.

12On ~~Table~~August 20, 2018, our former Chief Executive Officer, Shauvik Kundagrami, exercised options to purchase 250,000 shares of ~~Contents~~common stock for an exercise price of $2.00 per share, or $500,000 in aggregate.

WeOn ~~generally~~January ~~expense~~28, ~~sales~~2019, ~~commissions~~in ~~when~~connection ~~incurred~~with ~~because~~the Merger, we issued an aggregate of 2,881,411 new shares of our common stock, representing approximately 75.4% of our outstanding common stock, in consideration for all of the ~~amortization~~shares ~~period~~of ~~would~~Pelican ~~have~~common ~~been~~stock ~~one~~outstanding ~~year~~as orof ~~less~~the effective date of the Merger. ~~These~~Please ~~costs~~see ~~are~~Note ~~recorded~~1 ~~within~~– ~~selling,~~Nature ~~general~~of Operations and ~~administrative~~Basis ~~expenses.~~of Presentation and Note 6 – Related Party Transactions for additional detail.

WePreferred do not incur any incremental costs to obtain or fulfill our customer contracts which require capitalization under ASC 606 and have elected the practical expedient afforded to expense such costs if incurred.Shares

~~The~~On ~~following~~August ~~table~~7, ~~presents~~2018, we filed an amendment to our ~~service~~certificate ~~revenue~~of ~~disaggregated~~formation byreducing ~~revenue~~our ~~source~~aggregate ~~(in~~authorized ~~thousands):~~preferred stock from 10,000,000 to 5,000,000 shares. Previously, the Company allocated 20,000 of the authorized preferred shares to be authorized Series A convertible preferred shares. Authorized preferred shares, with a par value of $0.001 per share, total 4,980,000 as of March 31, 2019 and December 31, 2018, of which, none were issued and outstanding as of March 31, 2019 and December 31, 2018.

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2018		2017		2018		2017
	(unaudited)				(unaudited)
Rental services	$	3,160	$	3,046	$	9,408	$	8,023
Rig-up/rig-down services		618		449		1,771		1,405
Transportation services		702		595		1,982		1,615
Other		38		32		81		91
Total revenue	$	4,518	$	4,122	$	13,242	$	11,134

On January 28, 2019, by virtue of the Merger, each issued and outstanding share of our Series A convertible preferred stock was canceled. Please see Note 6 – Related Party Transactions for additional detail on the Merger.

WeNOTE ~~maintain~~6 an— ~~allowance~~RELATED ~~for~~PARTY doubtful accounts to reflect estimated losses resulting from the failure of customers to make required payments. On an ongoing basis, the collectability of accounts receivable is assessed based upon historical collection trends, current economic factors and the assessment of the collectability of specific accounts. We evaluate the collectability of specific accounts and determine when to grant credit to our customers using a combination of factors, including the age of the outstanding balances, evaluation of customers’ current and past financial condition, recent payment history, current economic environment, and discussions with our personnel and with the customers directly. Accounts are written off when it is determined the receivable will not be collected. If circumstances change, our estimates of the collectability of amounts could change by a material amount.TRANSACTIONS

~~Adjustments~~Former toControlling ~~Previously~~Shareholder ~~Reported~~– ~~Financial Statements from the Adoption of ASC 606~~Pelican

InBeginning ~~accordance~~on ~~with~~January ~~the~~31, ~~new~~2017, ~~revenue~~Pelican ~~standard~~had ~~requirements,~~the ~~there~~power ~~was~~to novote ~~impact~~the ofsubstantial ~~adoption~~majority onof ~~our~~the ~~condensed~~Company’s ~~consolidated~~outstanding ~~balance~~common ~~sheet~~stock. ~~The~~Six ~~impact~~ of ~~adoption~~our onseven ~~our~~board ~~condensed~~members, ~~consolidated~~including ~~statement~~two of ~~operations~~our isexecutive ~~reflected~~officers, ~~below~~and (our chief financial officer held an ownership interest in ~~thousands):~~Pelican.

	For The Three Months Ended September 30, 2017							For The Nine Months Ended September 30, 2017
`	As Reported		Adoption of ASC 606			As Adjusted		As Reported			Adoption of ASC 606			As Adjusted
	(unaudited)					(unaudited)		(unaudited)						(unaudited)
Rental services	$	3,046	$	-		$	3,046	$	8,023		$	-		$	8,023
Rig-up/rig-down services		449		-			449		1,405			-			1,405
Transportation services		595		-			595		1,615			-			1,615
Other		53		(21	)		32		136			(45	)		91
Total revenue		4,143		(21	)		4,122		11,179			(45	)		11,134
Operating expenses		2,608		-			2,608		7,167			-			7,167
Depreciation and amortization		944		-			944		2,793			-			2,793
Selling, general and administrative expenses		540		(21	)		519		2,398			(45	)		2,353
Total expenses		4,092		(21	)		4,071		12,358			(45	)		12,313
Loss from operations	$	51	$	-		$	51	$	(1,179	)	$	-		$	(1,179	)

As of December 31, 2018, Pelican owned 17,292 shares of Series A convertible preferred stock which was convertible into 2,881,400 common shares. On an as-if-converted basis, Pelican owned approximately 75.4% of our common stock (excluding the impact of options) as of December 31, 2018. The shares of Series A convertible preferred stock carried a liquidation preference of $1,000 per share or $17.3 million.

~~NOTE~~On 8January 28, 2019, we executed the Merger with Pelican pursuant to which Pelican merged with and into the Company and, as a result, effective January 28, 2019, we no longer have a controlling shareholder. See Note 1 – ~~EARNINGS~~Nature ~~PER~~of ~~SHARE~~Operations and Basis of Presentation for further detail.

~~Basic~~13 ~~earnings~~Table ~~per share is computed by dividing income available to common stockholders by the weighted average number~~ of shares of common stock outstanding during the period. Diluted earnings per share is computed in the same manner as basic earnings per share except that the denominator is increased to include the number of additional shares of common stock that could have been outstanding assuming the exercise of outstanding stock options and restricted stock or other convertible instruments, as appropriate.Contents

13Related ~~Table~~Party ofLender ~~Contents~~– PPF

~~Due~~In toJanuary ~~our~~2017, ~~net~~we ~~loss~~entered ~~for~~ into the ~~nine~~Related ~~months~~Party ~~ended~~Credit ~~September~~Facility ~~30,~~with ~~2018~~Pelican. ~~and~~Effective ~~the~~June ~~three months ended September~~ 30, ~~2017~~2018, ~~the~~Pelican ~~effect~~assigned ofand ~~incremental~~transferred ~~shares~~its isrights ~~antidilutive~~under so the ~~diluted~~Related ~~earnings~~Party ~~per~~Credit ~~share~~Facility ~~will~~to bePPF. ~~the~~Because ~~same as~~ the ~~basic~~members ~~earnings~~and ~~per~~membership ~~share.~~interests ~~The calculations~~ of ~~basic~~PPF ~~and~~are ~~diluted~~the ~~earnings~~same ~~per~~as ~~share~~Pelican, ~~for~~PPF ~~the~~is ~~three~~a ~~months~~related ~~ended~~party. ~~September~~See ~~30,~~Note ~~2018~~4 ~~and~~– ~~the~~Long-Term ~~nine~~Debt ~~months~~– ~~ended~~Related ~~September~~Party ~~30,~~for ~~2017~~further ~~are~~detail ~~shown~~on ~~below~~the ~~(in~~Related ~~thousands,~~Party ~~except~~Credit ~~for shares):~~Facility.

	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2018		2017
	(unaudited)		(unaudited)
Numerator:
Net income	$	282	$	508
Less: Aly Operating redeemable preferred stock dividends		-		(21	)
Numerator for diluted earnings per share		282		487
Less: Aly Centrifuge redeemable preferred stock dividends		-		(42	)
Numerator for basic earnings per share	$	282	$	445
Denominator: (1)
Weighted average shares used in basic earnings per share		802,331		650,539
Effect of dilutive shares:
Aly Centrifuge redeemable preferred stock (2)		-		3,600
Series A convertible preferred stock		2,881,400		2,472,174
Stock options (2017 Plan)		730,503		379,856
Weighted average shares used in diluted earnings per share		4,414,234		3,506,168
Basic earnings per share	$	0.35	$	0.68
Diluted earnings per share	$	0.06	$	0.13

In connection with our Related Party Credit Facility, during the three months ended March 31, 2019 and 2018, we recorded principal payments of $0.3 million and we recorded interest expense of approximately $91,000 and $86, 000, respectively. In addition, during the three months ended March 31, 2019, we borrowed an additional $0.7 million under the revolving credit facility thereby reducing availability under the facility to zero.

~~(1)~~Our ~~The~~consolidated ~~exchange~~balance ofsheet ~~Aly~~includes ~~Operating~~accrued ~~redeemable~~interest ~~preferred~~under ~~stock~~the ~~into~~Related ~~common~~Party ~~shares~~Credit ~~and~~Facility ~~the exercise~~ of ~~unvested~~approximately ~~stock~~$33,000 ~~options~~and ~~under~~$31,000 ~~the~~as ~~2013 Plan are not considered in the calculation~~ of ~~the~~March ~~numerator~~31, or2019 ~~denominator~~and inDecember ~~the~~31, ~~table~~2018, ~~above~~respectively.

~~The~~Related ~~exchange~~Party ofVendor ~~Aly~~– ~~Operating~~Permian ~~redeemable~~Pelican ~~preferred stock into common shares is not considered within the calculation of the numerator or denominator of diluted earnings per share because~~Rentals, during the month ended January 31, 2017, the Aly Operating redeemable preferred stock was not exchangeable into common shares. Effective February 1, 2017, the Aly Operating preferred stock was converted into common shares in connection with the Recapitalization and is included in our weighted average shares used for basic earnings per share. Please see our Annual Report on Form 10-K for the year ended December 31, 2017 for a complete description of the Recapitalization, including the exchange of the Aly Operating redeemable preferred stock.LLC

~~Unvested~~Permian ~~stock~~Pelican ~~options~~Rentals, ~~under~~LLC ~~the~~(“PPR”) ~~2013~~is ~~Plan~~a ~~are~~wholly-owned ~~not~~subsidiary ~~considered~~of ~~within~~PPF, ~~the~~a ~~calculation~~related ofparty. ~~the~~On ~~denominator~~April of30, ~~diluted~~2019, ~~earnings~~PPR ~~per~~executed ~~share~~a ~~because~~bill ~~they~~of ~~vest~~sale ~~upon~~to ~~the~~purchase ~~occurrence~~40 oftanks ~~certain~~with ~~events~~the ~~which~~intent ~~may~~to orsub-rent ~~may~~the ~~not~~tanks ~~occur~~to Aly Energy.

~~(2)~~NOTE ~~During~~7 ~~the~~– ~~month~~EARNINGS ~~ended~~PER January 31, 2017, the Aly Centrifuge redeemable preferred stock was convertible into 31,699 shares. Effective February 1, 2017, in connection with the Recapitalization, the Aly Centrifuge redeemable preferred stock was converted into common shares and is included in our weighted average shares used for basic earnings per share. Please see our Annual Report on Form 10-K for the year ended December 31, 2017 for a complete description of the Recapitalization, including the exchange of the Aly Centrifuge redeemable preferred stock.SHARE

~~Securities~~Basic ~~excluded~~earnings ~~from~~per share is computed by dividing income available to common stockholders by the ~~computation~~weighted average number of ~~basic~~shares ~~and~~of ~~diluted~~common stock outstanding during the period. Diluted earnings per share ~~are~~is ~~shown~~computed ~~below:~~in the same manner as basic earnings per share except that the denominator is increased to include the number of additional shares of common stock that could have been outstanding assuming the exercise of outstanding stock options and restricted stock or other convertible instruments, as appropriate.

	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
	2018		2017
Unvested stock options (2013 Plan) (1)		11,706		11,753
Exchange of Aly Operating redeemable preferred stock (2)	NA			-

Due to the net loss incurred by the Company for the three months ended March 31, 2019, the effect of incremental shares is antidilutive so the diluted earnings per share will be the same as the basic earnings per share. The calculations of basic and diluted earnings per share for the three months ended March 31, 2018 are shown below (unaudited and in thousands, except for shares and per share data):

_________

	For the Three Months Ended
	March 31, 2018
	(restated)
Numerator:
Net income available to common stockholders	$	8
Denominator:
Weighted average shares used in basic earnings per share		690,907
Series A convertible preferred stock		2,881,400
Stock options*		843,094
Weighted average shares used in diluted earnings per share		4,415,401

Basic earnings per share	$	0.01
Diluted earnings per share	$	0.00	**

~~(1) The stock options under the 2013 Plan vest upon the occurrence of certain events as defined in the 2013 Plan. As of September 30, 2018 and 2017, the stock options were unvested.~~___________

~~(2)~~*The InCompany ~~connection~~had ~~with~~stock ~~the~~options ~~Recapitalization,~~outstanding ~~the~~under ~~Aly~~two ~~Operating~~plans ~~redeemable~~as ~~preferred~~of ~~stock~~March ~~was~~31, ~~converted~~2018. ~~into~~There ~~common~~were ~~shares.~~11,706 ~~Please~~unvested ~~see~~options ~~our~~as ~~Annual~~of ~~Report~~March on31, ~~Form~~2018 ~~10-K~~that ~~for~~are ~~the~~excluded ~~year~~from ~~ended~~the ~~December~~calculation ~~31,~~above ~~2017~~because ~~for~~they avest ~~complete~~upon ~~description~~the occurrence of ~~the~~certain ~~Recapitalization,~~events ~~including~~which ~~the~~may ~~exchange~~or ofmay ~~the~~not ~~Aly~~occur ~~Operating~~in ~~redeemable~~the ~~preferred stock~~future.

~~Prior~~**Diluted toearnings ~~January~~per ~~31,~~share ~~2017,~~is ~~the Aly Operating redeemable preferred stock was exchangeable only upon the occurrence of certain events, as defined in the Aly Operating redeemable preferred stock agreement~~$0. ~~Upon occurrence of such events, the Aly Operating redeemable preferred stock could have been, at the holder's option, converted into common shares~~0018. The conversion ratio, determined by a calculation defined in the agreement of which the components included trailing twelve-month financial performance and magnitude of investment in new equipment, remained undeterminable until an event would cause the Aly Operating redeemable preferred stock to become exchangeable. Effective February 1, 2017, the Aly Operating redeemable preferred stock was converted into common shares and is included in our weighted average shares used for basic earnings per share.

Table of Contents

NOTE 98 – ~~NEW~~RESTATEMENT ~~ACCOUNTING~~OF ~~STANDARDS~~PRIOR YEAR FINANCIAL STATEMENTS

~~Effective~~Prior ~~January~~to 1,the ~~2018,~~issuance weof ~~adopted~~ the ~~Financial~~Company’s ~~Accounting~~consolidated ~~Standards~~financial ~~Board~~statements (for the ~~“FASB”)~~year ~~Accounting~~ended ~~Standards~~December ~~Update~~31, ~~(“ASU”) No. 2016-15~~2018, ~~“Statement~~the ofCompany ~~Cash~~concluded ~~Flows~~that -its ~~Classification~~previously ofissued ~~Certain~~consolidated ~~Cash~~financial ~~Receipts~~statements ~~and~~for ~~Cash~~the ~~Payments”~~years ~~(“ASU~~ended ~~2016-15”)~~December 31, ~~which~~2017 ~~addresses~~and ~~specific~~2016 ~~classification issues~~ and isfor ~~intended~~the toquarters ~~reduce~~ending ~~diversity~~March in31, ~~current~~2018 ~~practice~~and ~~regarding~~2017, ~~the~~June ~~manner~~30, in2018 ~~which~~and ~~certain~~2017 ~~cash receipts~~ and ~~cash~~September ~~payments~~30, ~~are~~2018 ~~presented~~ and ~~classified~~2017 inshould ~~the~~be ~~consolidated~~restated ~~statements~~due ofto ~~cash~~accounting ~~flows.~~errors ~~The~~discovered ~~adoption~~in ofconjunction ~~ASU~~with ~~2016-15~~certain ~~did~~remediation ~~not~~activities ~~have~~for ~~a material effect on~~ our ~~consolidated~~internal ~~statements~~controls ofover ~~cash~~financial ~~flows or disclosures~~reporting.

~~Effective~~During ~~January~~the 1,first ~~2018~~quarter of 2019, we ~~adopted~~reviewed ~~the~~our ~~FASB~~existing ~~ASU~~fixed ~~No.~~asset ~~2014-09~~inventory, ~~“Revenue~~our ~~from~~current ~~Contracts~~and ~~with~~historical ~~Customers~~fixed ~~(Topic~~asset ~~606)” (“Topic 606”)~~records, ~~which~~and ~~provides~~the ~~guidance~~accounting for ~~revenue~~a ~~recognition.~~significant ~~Topic~~transaction ~~606~~in ~~affects~~2016 ~~any~~in ~~entity~~which ~~that~~we ~~either~~sold ~~enters~~assets ~~into contracts~~ with ~~customers~~a tonet ~~transfer~~book ~~goods~~value ~~or services or enters into contracts for the transfer~~ of ~~nonfinancial~~$18.6 ~~assets~~million ~~and~~to ~~supersedes~~Tiger ~~the revenue recognition requirements in Topic 605~~Finance, ~~“Revenue~~LLC ~~Recognition”~~ (“~~Topic 605~~Tiger”) ~~and most industry-specific guidance~~. ~~Topic~~As ~~606’s core principle is that~~ a ~~company~~result ~~will~~of ~~recognize~~this ~~revenue~~review, ~~when~~we it(i) ~~transfers~~identified ~~promised~~certain ~~goods~~assets ~~or services to customers in an amount that reflects the consideration to~~ which awere ~~company~~included ~~expects to be entitled~~ in ~~exchange for those goods or services. We adopted Topic 606 using~~ the ~~modified~~asset ~~retrospective~~purchase ~~transition~~agreement ~~method only~~ with ~~respect~~Tiger toand ~~contracts~~had not ~~completed~~been atwritten ~~the~~off ~~date~~in ofconnection ~~adoption.~~with ~~We have developed~~ the ~~additional expanded disclosures required; however~~sale, ~~the~~and ~~adoption~~(ii) ofidentified ~~Topic~~certain ~~606~~other ~~did~~assets ~~not~~which ~~have~~had abeen ~~material~~disposed ~~effect~~of on ~~our~~or ~~consolidated~~prior ~~statements~~to ofDecember ~~operations~~31, ~~balance~~2016 ~~sheets~~which orhad ~~cash~~not ~~flows.~~been ~~See~~written ~~Note~~off 7at –the ~~Revenue~~time ~~from~~of ~~Contracts with Customers for further details~~disposal.

InWe ~~August~~determined ~~2018~~it would be necessary to restate the financial statements for the years ended December 31, 2017 and 2016 and the ~~FASB~~quarters ~~issued~~ended ~~ASU~~March ~~No.~~31, 2018~~-13~~ and 2017, ~~“Fair~~June ~~Value~~30, ~~Measurement~~2018 ~~(Topic~~and ~~820)~~2017 ~~Disclosure~~and ~~Framework~~September -30, ~~Changes~~2018 and 2017. The adjustments to the ~~Disclosure~~consolidated ~~Requirements~~statements ~~for~~of ~~Fair~~operations ~~Value~~consist ~~Measurement”~~of ~~(“ASU~~an ~~2018-13”)~~increased impairment and increased loss on disposal of assets in 2016 and a reduction in depreciation expense during all periods from November 1, ~~which~~2016 ~~modifies~~through September 30, 2018. The adjustments to the ~~disclosure~~consolidated ~~requirements~~balance sheets consist of ~~fair~~a ~~value~~reduction ~~measurements.~~of ~~ASU~~property ~~2018~~and equipment, net in all periods to reflect the write-13off isof ~~effective~~certain ~~for~~assets usin ~~beginning~~2016. ~~January~~The 1Company’s consolidated statements of cash flows had no changes to net cash flows from operating, ~~2020~~investing or financing activities as a result of the restatement. ~~Certain~~The ~~disclosures~~impact ~~are~~of ~~required~~the restatement to bethe ~~applied.~~unaudited condensed consolidated balance sheet as of March 31, 2018 and to the unaudited condensed consolidated statement of operations for the quarter ended March 31, 2018 was as follows (in thousands):

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets. Under ASU 2016-02, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than twelve months. Lessor accounting remains substantially similar to current GAAP. In addition, disclosures of leasing activities will be expanded to include qualitative and specific quantitative information. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018, and early adoption is permitted. ASU 2016-02 requires a modified retrospective transition approach. As part of our assessment work to-date, we are in the process of analyzing our contracts and reviewing our policies. We have engaged external resources to assist us in our efforts to complete the analysis of potential changes to current accounting practices. We have not yet determined the effect of the ASU on our internal control over financial reporting or other changes.

	Condensed Consolidated Balance Sheet
	As of March 31, 2018 (unaudited)
	As Reported			Adjustment			As Restated
Assets
Property and equipment, net	$	26,449		$	(1,245	)	$	25,204
Total assets		35,173			(1,245	)		33,928
Liabilities and stockholders' equity
Accumulated deficit		(34,596	)		(1,245	)		(35,841	)
Total stockholders' equity		25,925			(1,245	)		24,680
Total liabilities and stockholders' equity	$	35,173		$	(1,245	)	$	33,928

15 Table of Contents

	Condensed Consolidated Statement of Operations
	For the Three Months Ended
	March 31, 2018 (unaudited)
	As Reported			Adjustment			As Restated
Depreciation and amortization	$	891		$	(21	)	$	870
Total expenses		4,236			(21	)		4,215
Income from operations		100			21			121
Income before income taxes		8			21			29
Net income (loss)	$	(13	)	$	21		$	8
Earnings per common share - basic	$	(0.02	)	$	0.03		$	0.01
Earnings per common share - diluted	$	(0.02	)	$	0.00		$	0.00

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations is intended to assist you in understanding our business and results of operations together with our present financial condition. This section should be read in conjunction with the condensed consolidated financial statements and the related notes thereto included elsewhere in “Item 1. Condensed Consolidated Financial Statements” in this Form 10-Q.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains certain statements and information that may constitute "“forward-looking statements"” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements which are not historical in nature, including the words “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” “may,” “project,” “plan” or “continue,” and similar expressions are intended to identify forward-looking statements.

Forward-looking statements are not assurances of future performance and actual results could differ materially from our historical experience and our present expectations or projections. Forward-looking statements involve risks and uncertainties, some of which are not currently known to us, that may cause our actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial condition we express or imply in any forward-looking statements. These forward-looking statements are based on our current plans and expectations and are subject to a number of uncertainties and risks that could significantly affect current plans and expectations, and our future financial condition and results. Known material factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, volatility in the price of oil, fluctuations in the domestic rig count, intense competition in our industry and the other risk factors described in our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Quarterly Report on Form 10-Q might not occur. We qualify any and all of our forward-looking statements entirely by these cautionary factors. You are cautioned not to place undue reliance on these statements which speak only as of the date of this Quarterly Report on Form 10-Q.

Overview of Our Business

Aly Energy Services, Inc., together with its subsidiaries (“Aly Energy”, or the “Company”), ~~or “we”)~~ is a provider of oilfield services to leading oil and gas exploration and production (“E&P”) companies operating in unconventional plays in the United States (“U.S.”). Generally, the services we offer fall within two broad categories: surface rental and solids control. Our surface rental equipment includes a wide variety of large capacity tanks with ~~internal~~ circulating systems, associated pumps, separators, gas busters, mud mix plants and ancillary equipment ~~necessary to manage the flow of mud in and out of the well bore during drilling operations~~. We also provide environmental containment berms to safeguard against spills from ~~the~~ mud ~~system. Our solids control equipment and services remove low gravity formation particulates that accumulate in mud~~ systems ~~during~~on the drilling ~~process.~~rig ~~Once processed, the mud can be reused which eliminates unnecessary waste and disposal~~site. ~~Solids~~Our solids control equipment includes large centrifuges, shakers, cuttings dryers and ancillary components that can be integrated into a closed loop mud system. We operate in the U.S., primarily in Texas, Oklahoma, and New Mexico.

We operate in the U.S., primarily in Texas, Oklahoma, and New Mexico. Within these states, we have a very strong footprint in the Permian Basin, one of the largest and most prolific shale plays in the U.S., and we also provide services in the Scoop/Stack region and the Eagle Ford shale.

We cultivate and maintain strong relationships with our customers which include some of the largest independent oil and gas E&P companies operating in the U.S. shale basins. Our major customers include leading companies such as EOG Resources, Inc., Pioneer Natural Resources, XTO Energy Inc., Sanchez Oil and Gas Corporation and Devon Energy Corporation.

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General Trends and Outlook

Our business depends to a significant extent on the level of unconventional resource development activity and corresponding capital spending of E&P companies onshore in the U.S. These activity and spending levels are strongly influenced by the current and expected oil price. Commodity prices have increased significantly over the past two years stimulating an increase in onshore drilling and completion activity and a consequent increase in demand for our services. The average U.S. land-based drilling rig count was approximately 635 rigs in January 2017 and increased approximately 60.0% to more than 1,030 rigs by September 2018. The favorable impact of the recent increase in the rig count on demand for our services has been bolstered by a consistently high proportion of rigs drilling directional and horizontal wells. Rigs drilling directional and horizontal wells typically utilize oil-based or other sophisticated mud systems which creates demand for our specialized mud circulating tanks, pumps, containment systems, solids control and associated equipment. The proportion of rigs drilling directional and horizontal wells as a percentage of total U.S. land-based drilling rigs was approximately 92.6% and 95.8% in January 2017 and September 2018, respectively.

Looking forward to 2019, we believe that the existing commodity price environment will remain stable and the U.S. land-based drilling rig count will remain flat resulting in continued strong demand for our services. In addition, we believe that there is potential for the demand for our products and services to increase as the industry continues to invest in drilling techniques which drive efficiencies and require our products and services. Although activity increases may be marginal in the near-term, due to the tight supply of equipment that we offer, we anticipate that we will be able to continue to increase the prices we charge to our customers. Greater margins and increased margins as a percent of revenue resulting from incremental work and higher pricing will be partially offset to the extent we are required to use third-party providers of equipment and personnel. We have been operating at full utilization of our owned tanks and pumps, our anchor products, and our solids control personnel since early 2017 and we have relied on third-party providers of equipment and personnel to meet increases in demand. In order to minimize the use of third-party providers, we have initiated a capital expenditure program to invest in equipment which will meet increased demand and/or replace existing sub-rented equipment. We have committed to purchasing, new or refurbished, or fabricating telehandlers, open top tanks, 500bbl mud circulating tanks, diesel mud pumps and diesel transfer pumps for an aggregate cost of approximately $2.0 million of which approximately $1.3 million has been paid for as of September 30, 2018. Once completed, these investments should result in cost savings of approximately $0.9 million annually of which less than $0.1 million has been realized during the nine months ended September 30, 2018. We plan to continue a robust capital expenditure plan to replace sub-rented equipment throughout 2019. We believe our cash-on-hand, our positive operating cash flow, and our availability under our credit facility will be sufficient to fund the capital expenditure program.

How We Generate Revenue and the Costs of Conducting Our Business

We generate our revenue by providing drilling-related support services to E&P companies operating in some of the major onshore unconventional basins in the U.S. Our revenue streams include: (i) rental services - revenue derived from the rental of equipment and on-site operators of such equipment, (ii) rig-up/rig down services – revenue derived from the rig-up/rig-down of our equipment at the customer site, (iii) transportation services – revenue derived from the hauling of our equipment to and from the customer site, and (iv) other - revenue derived from the sale of consumable items, including chemicals. Fluctuations in the mix of services are driven primarily by the timing of and frequency with which our respective customers move their rigs from well to well and by the number of mobilizations and demobilizations of our equipment. The contribution of each revenue stream to total revenue is shown in the table below:

	For the Three Month Ended September 30,						For the Nine Months Ended September 30,
	For the Three MonthsEnded March 31,
	2018			2017			2018			2017
	2019			2018
	(unaudited)							~~(unaudited)~~
Rental services		6965.97	%		7369.93	%		~~71.0~~	%		~~72.1~~	%
Rig-up/rig-down services		13.68	%		10.89	%		13.37	%		12.62	%
Transportation services		18.8	%		15.9	%
Transportation services		15.54	%		14.43	%		14.97	%		14.51	%
Rig-up/rig-down services		14.9	%		14.4	%
Other		0.846	%		0.784	%		~~0.61~~	%		~~0.82~~	%
Total		100.000	%		100.000	%		~~100.00~~	%		~~100.00~~	%

Our total ~~revenues~~revenue fluctuates with the utilization of and the prices we charge for our equipment and services. Utilization of our equipment is ~~primarily~~generally determined by the U.S. land-based drilling rig count (“Rig Count”) as it is typically representative of the level of activity of E&P companies. The prices we charge for our products and services depend on the relationship between the level of activity of E&P companies, or the demand of our potential and existing customers, and the supply of equipment and services available to such E&P companies from us and our competitors.

In order to mitigate increases in third-party expenses and our overall reliance on third-party vendors, we initiated a capital expenditure plan in early 2018 to invest in new rental and transportation equipment, some of which was fabricated in-house. During the year ended December 31, 2018, we took delivery of forklifts, completed the fabrication of open top tanks and diesel transfer pumps and refurbished diesel mud pumps. All the incremental equipment purchased in 2018 had been placed in service by the end of the first quarter of 2019 to replace similar equipment which was previously sub-rented. We will recognize the full benefit of these cost savings in the second quarter of 2019.

To date, we have purchased or committed to purchase 50 new 500bbl round-bottom mud circulating tanks ("500bbl MCTs") of which 25 were in service as of March 31, 2019. Due to strong demand, the purchased tanks are being deployed on new jobs as soon as they are ready to go into service. As such, the financial impact of the equipment purchased during the first quarter of 2019 will be in the form of an increase in revenue (and associated costs of a job) as opposed to a reduction in sub-rental expense. We believe that the incremental margin from a new job exceeds the savings to be obtained by returning a piece of sub-rented equipment.

During the remainder of 2019, we will continue our focus on investing in equipment which, if incremental demand is not present, could be used to replace sub-rented equipment resulting in additional cost savings and reduced reliance on third-party vendors. The capital expenditure plan for the remainder of the year includes 500bbl MCTs, pumps and open top tanks, among other items.

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Our operating expenses consist primarily of variable costs, such as labor and third-party expenses. Labor-related expenses typically fluctuate with the utilization of our equipment and services. Expenses associated with services provided by third-parties typically increase with activity as well. Demand for our equipment has increased so significantly over the past two years that most of our available owned equipment has been fully utilized since early 2017 and we have been required to increase our available equipment fleet and our available labor resources to meet the demand from our customers. To date, we have primarily increased our available resources by sub-renting surface rental equipment and by using sub-contractors to operate our solids control equipment. To the extent we have the opportunity to generate additional revenue from increased activity, we will require the use of third-party equipment and services and third-party expenses will increase as a percent of revenue. In addition, with increased demand for oilfield services, the demand for sub-rental equipment and labor will also increase and we may experience increases in costs for third-party equipment and personnel which would further increase third-party expenses as a percent of revenue.

In order to mitigate the potential increase in third-party expenses and our overall reliance on third-party vendors, we initiated a capital expenditure plan in early 2018 to invest in new rental and transportation equipment, some of which will be fabricated in-house. During the nine months ended September 30, 2018, we took delivery of forklifts, completed the fabrication of open top tanks, and refurbished diesel mud pumps. We will see the full cost savings resulting from these investments in the fourth quarter of 2018. Throughout the remainder of 2018, we will focus on refurbishing 500bbl mud circulating tanks and fabricating diesel transfer pumps which will result in incremental cost savings beginning during the first quarter of 2019. Once all of this equipment is in service, most likely beginning in the second quarter of 2019, we project that the aggregate annual cost savings from the 2018 capital expenditure program will be approximately $0.9 million. In 2019, we plan to continue to focus on investing in equipment which will replace sub-rented equipment resulting in cost savings and reduced reliance on third-party vendors.

How We Evaluate Our Operations

We utilize multiple metrics to evaluate the results of our operations and efficiently allocate personnel, equipment and capital resources, including, but not limited to, the following:

·	Revenue: We monitor our revenue monthly to analyze trends in the business as it relates to historical revenue drivers and prevailing market metrics. We are particularly interested in understanding the underlying utilization and pricing metrics that drive the positive or negative revenue trends.
	When comparing the three and nine months ended September 30, 2018 to the three and nine months ended September 30, 2017, we experienced an increase in demand for most of our products and services. The centrifuge refurbishment program enabled us to increase our available fleet of centrifuges and add jobs in response to the increased demand. The short supply of surface rental equipment available from third-party providers limited our ability to increase the count of revenue-generating days for surface rental equipment; however, it enabled us to initiate significant price increases to our customers on our surface rental equipment and related services.
	When comparing the three months ended March 31, 2019 to the three months ended March 31, 2018, we experienced an overall decline in demand for auxiliary surface rental equipment and for our solids control equipment and personnel. The impact of the decrease in activity was only partially offset by price increases on tanks, our lead surface rental product, of more than 20%.
·	~~Gross~~EBITDA ~~profit:~~and ~~Gross~~Adjusted ~~profit~~EBITDA: isEBITDA ~~a key metric that we use to evaluate our profitability~~ and ~~determine~~Adjusted ~~allocation~~EBITDA ofare ~~equipment~~financial ~~and~~metrics ~~personnel~~used ~~resources.~~by Wemanagement ~~define gross profit~~ as ~~our~~(i) ~~revenue~~supplemental ~~less~~internal ~~operating~~measures ~~expenses.~~for ~~Operating~~planning ~~expenses~~and ~~include~~forecasting ~~direct~~ and ~~indirect~~for ~~labor~~evaluating ~~costs,~~actual ~~the~~results ~~cost~~against ofsuch ~~third-party~~expectations; ~~services,~~(ii) ~~including~~significant ~~the~~criteria ~~sub-rental of equipment and the use of sub-contractors, costs~~ for ~~repairs~~incentive ~~and~~compensation ~~maintenance~~paid ofto our ~~equipment~~executive officers and ~~other~~management; ~~miscellaneous~~(iii) ~~costs.~~reference Wepoints ~~continually~~to ~~evaluate~~compare ~~our gross profit margin~~ to ~~assist~~the usEBITDA inand ~~making~~Adjusted ~~decisions~~EBITDA ~~regarding~~of ~~bidding~~other ~~new~~companies ~~jobs,~~when ~~allocating~~evaluating ~~resources~~potential ~~among~~acquisitions; ~~various jobs~~ and, ~~managing~~(iv) ~~our~~assessments ~~overall~~of ~~cost structure. The table below shows~~ our ~~gross~~ability ~~margin~~to ~~for~~service ~~the~~existing ~~three~~fixed ~~and~~charges ~~nine months ended September 30, 2018~~ and ~~2017~~incur ~~(in~~additional ~~thousands):~~indebtedness.
	We disclose and discuss EBITDA as a non-GAAP financial measure in our filings with the Securities and Exchange Commission. We define EBITDA as earnings (net income) before interest, income taxes, and depreciation and amortization. Our measure of EBITDA may not be comparable to similarly titled measures presented by other companies, which may limit its usefulness as a comparative measure.
	We also make certain adjustments to EBITDA for (i) non-cash charges and (ii) certain expenses, such as severance, legal settlements, and professional fees and other expenses related to transactions outside the ordinary course of business, to derive a normalized EBITDA run-rate (“Adjusted EBITDA”), which we believe is a useful measure of operating results and the underlying cash generating capability of our business.
	Because EBITDA and Adjusted EBITDA are not measures of financial performance calculated in accordance with GAAP, these metrics should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP.
	EBITDA and Adjusted EBITDA are widely used by investors and other users of our financial statements as supplemental financial measures that, when viewed with our GAAP results and the accompanying reconciliation, we believe provide additional information that is useful to gain an understanding of our ability to service debt, pay income taxes and fund growth and maintenance capital expenditures. We also believe the disclosure of EBITDA and Adjusted EBITDA helps investors meaningfully evaluate and compare our cash flow generating capacity and performance from quarter-to-quarter and year-to-year.
	Set forth below are the material limitations associated with using EBITDA and Adjusted EBITDA as non-GAAP financial measures compared to cash flows provided by and used in operating, investing and financing activities:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
	(unaudited)						(unaudited)
Revenue	$	4,518		$	4,122		$	13,242		$	11,134
Operating expenses		2,473			2,608			7,612			7,167
Gross margin	$	2,045		$	1,514		$	5,630		$	3,967
% of revenue		45.26	%		36.73	%		42.52	%		35.63	%

	·	EBITDA and Adjusted EBITDA do not reflect growth and maintenance capital expenditures,
	·	EBITDA and Adjusted EBITDA do not reflect the interest, principal payments and other financing-related charges necessary to service our debt,
	·	EBITDA and Adjusted EBITDA do not reflect the payment of income taxes, and
	·	EBITDA and Adjusted EBITDA do not reflect changes in our net working capital position.

Our gross margin increased to 45.3% of revenue from 36.7 % of revenue when comparing the three months ended September 30, 2018 to the three months ended September 30, 2017 and increased to 42.5% of revenue from 35.6% of revenue when comparing the nine months ended September 30, 2018 to the nine months ended September 30, 2017. The substantial increase in gross margin as a percentage of revenue reflects the price increases implemented in early 2018 and a strong focus on maintaining a lean and efficient cost structure. · EBITDA and Adjusted EBITDA: EBITDA and Adjusted EBITDA are financial metrics used by management as (i) supplemental internal measures for planning and forecasting and for evaluating actual results against such expectations; (ii) significant criteria for incentive compensation paid to our executive officers and management; (iii) reference points to compare to the EBITDA and Adjusted EBITDA of other companies when evaluating potential acquisitions; and, (iv) assessments of our ability to service existing fixed charges and incur additional indebtedness.

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We disclose and discuss EBITDA as a non-GAAP financial measure in our filings with the Securities and Exchange Commission. We define EBITDA as earnings (net income) before interest, income taxes, and depreciation and amortization. Our measure of EBITDA may not be comparable to similarly titled measures presented by other companies, which may limit its usefulness as a comparative measure.

We also make certain adjustments to EBITDA for (i) non-cash charges and (ii) certain expenses, such as severance, legal settlements, and professional fees and other expenses related to transactions outside the ordinary course of business, to derive a normalized EBITDA run-rate ("Adjusted EBITDA"), which we believe is a useful measure of operating results and the underlying cash generating capability of our business.

Because EBITDA and Adjusted EBITDA are not measures of financial performance calculated in accordance with GAAP, these metrics should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP.

EBITDA and Adjusted EBITDA are widely used by investors and other users of our financial statements as supplemental financial measures that, when viewed with our GAAP results and the accompanying reconciliation, we believe provide additional information that is useful to gain an understanding of our ability to service debt, pay income taxes and fund growth and maintenance capital expenditures. We also believe the disclosure of EBITDA and Adjusted EBITDA helps investors meaningfully evaluate and compare our cash flow generating capacity and performance from quarter-to-quarter and year-to-year.

Set forth below are the material limitations associated with using EBITDA and Adjusted EBITDA as non-GAAP financial measures compared to cash flows provided by and used in operating, investing and financing activities:

· EBITDA and Adjusted EBITDA do not reflect growth and maintenance capital expenditures, · EBITDA and Adjusted EBITDA do not reflect the interest, principal payments and other financing-related charges necessary to service our debt, · EBITDA and Adjusted EBITDA do not reflect the payment of income taxes, and · EBITDA and Adjusted EBITDA do not reflect changes in our net working capital position.

Management compensates for the above-described limitations in using EBITDA and Adjusted EBITDA as non-GAAP financial measures by only using EBITDA and Adjusted EBITDA to supplement our GAAP results.

~~The~~18 ~~following~~Table ~~table provides the detailed components~~ of ~~EBITDA and Adjusted EBITDA as we define that term for each of the three months and nine months ended September 30, 2018 and 2017 (in thousands):~~Contents

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
	(unaudited)						(unaudited)
Components of EBITDA:
Net income (loss)	$	282		$	(26	)	$	(31	)	$	508
Non-GAAP adjustments:
Depreciation and amortization		862			944			2,641			2,793
Interest expense, net		3			2			12			18
Interest expense - related party		92			69			270			664
Income tax expense (benefit)		(30	)		6			12			18
EBITDA		1,209			995			2,904			4,001
Adjustments to EBITDA:
Severance, settlements, and other losses		12			(98	)		353			(68	)
Transaction costs		41			-			91			-
Bad debt expense		22			21			66			56
Stock-based compensation		-			-			-			625
Expenses in connection with lender negotiations and Recapitalization		-			47			-			112
Loss on disposal of assets		-			18			-			58
Gain on extinguishment of debt and other liabilities		-			-			-			(2,387	)
Adjusted EBITDA	$	1,284		$	983		$	3,414		$	2,397

The following table provides the detailed components of EBITDA and Adjusted EBITDA as we define that term for the three months ended March 31, 2019 and 2018 (in thousands):

Adjusted EBITDA increased by approximately $0.3 million for the three months ended September 30, 2018 from $1.0 million for the three months ended September 30, 2017 to $1.3 million for the three months ended September 30, 2017 and increased by $1.0 million to $3.4 million for the nine months ended September 30, 2018 from $2.4 million for the nine months ended September 30, 2017. The improved performance was driven primarily by increases in gross margin resulting from price increases and minimal increases in variable expenses partially offset by increases in selling, general and administrative expenses resulting from incremental headcount to strengthen internal controls and processes.

	For the Three Months Ended March 31,
	2019			2018
				(restated)
Components of EBITDA:
Net income (loss)	$	(162	)	$	8
Non-GAAP adjustments:
Depreciation and amortization		846			870
Interest expense - related party, net		91			86
Interest expense, net		5			6
Income tax expense		10			21
EBITDA		790			991
Adjustments to EBITDA:
Settlements and other losses		-			24
Bad debt expense		39			22
Adjusted EBITDA	$	829		$	1,037

Adjusted EBITDA decreased by approximately $0.2 million to $0.8 million for the three months ended March 31, 2019 from approximately $1.0 million for the three months ended March 31, 2018. The decrease was driven primarily by a decline in activity which was only partially offset by increases in pricing.

General Trends and Outlook

Our business depends to a significant extent on the level of unconventional resource development activity and corresponding capital spending of E&P companies onshore in the U.S. These activity and spending levels are strongly influenced by the current and expected oil price. Oil prices have been and will continue to be volatile as major drivers determining the price of oil, including the rate of GDP growth in consuming nations and the political stability of oil-producing countries, are unpredictable. From 2016 throughout most of 2018, oil prices steadily increased from a low of approximately $26.00 in February 2016 to a high of approximately $75.00 in October 2018. The consistent improvement in oil price stimulated an increase in onshore drilling and completion activity: the Rig Count increased from a low of approximately 375 rigs in May 2016 to a high of approximately 1,060 rigs in November 2018.

Although oil prices declined almost 40.0% during the fourth quarter of 2018, they have rebounded during the first four months of 2019, increasing by more than 30.0% since January. However, despite stronger oil prices, the Rig Count has decreased from approximately 1,050 rigs in early January 2019 to approximately 970 rigs at the end of April 2019. Looking forward into the remainder of 2019, we believe oil prices will remain fairly stable at current levels, but we anticipate a potential further decline in the Rig Count of up to 10% as E&P companies cut back on capital expenditures for drilling programs.

In order to mitigate the impact of a declining Rig Count, we will focus on (i) maintaining current pricing levels and increasing activity and utilization of our equipment, particularly with existing customers who are not reducing the number of rigs they operate and (ii) replacing sub-rented equipment if our purchased or owned equipment is not needed for new jobs. During the first four months of 2019, we have increased the number of rigs on which we service our largest existing surface rental customers and we anticipate that demand from these customers will continue to increase. Although our owned equipment is fully utilized and we are reluctant to increase our dependence on third-parties, we will be able to satisfy the new demand with purchases under our 2019 capital expenditure plan. To date, we have placed 25 new tanks into service in 2019 and we expect to place another 25 tanks in service during the second quarter. In addition, Permian Pelican Rentals, LLC (“PPR”), a related party, has committed to purchasing an additional 40 tanks. PPR will sub-rent these tanks to us at day rates which are more favorable than our existing vendors and PPR will guarantee the availability of the tanks for our use at fixed rates for several years. To the extent our newly purchased tanks and/or the tanks sub-rented from PPR are not used to satisfy new customer demand, they will be used to replace equipment which is currently sub-rented from third parties. As such, we believe we will see a significant improvement in our margins beginning in the second quarter resulting from a combination of increased activity using less costly equipment and decreased costs as sub-rented equipment is returned.

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Results for the Three Months Ended ~~September~~March 3031, ~~2018~~2019 Compared to the Three Months Ended ~~September~~March 3031, ~~2017~~2018

The condensed consolidated financial statements for the three months ended March 31, 2018 have been restated due to an accounting error in conjunction with assets sold in 2016. (See further discussion in “Note 8 – Restatement of Prior Year Financial Statements” in the notes to our consolidated financial statements included elsewhere in this document). The following table summarizes the change in our results of operations for the three months ended ~~September~~March 3031, ~~2018~~2019 ~~from~~when compared to the three months ended ~~September~~March 3031, ~~2017~~2018 (unaudited and in thousands):.

	For the Three Months Ended September 30,												Change
	For the Three Months Ended March 31,												Change
	2018			% of Revenue			2017			% of Revenue			$			%
	2019			% of Revenue			2018			% of Revenue			$			%
Revenue	$	4,518			100.00	%	$	4,122			100.00	%	$	396			9.61	%
							(restated)
Revenue	$	3,919			100.0	%	$	4,336			100.0	%	$	(417	)		-9.6	%
Expenses:
Operating expenses		2,~~473~~348			5459.749	%		2,~~608~~610			6360.272	%		(~~135~~262	)		-510.180	%
Depreciation and amortization		~~862~~846			1921.086	%		~~944~~870			2220.901	%		(8224	)		-82.698	%
Selling, general and administrative expenses		~~836~~781			1819.509	%		~~519~~735			1217.590	%		~~317~~46			616.083	%
Total expenses		43,~~171~~975			92101.324	%		4,~~071~~215			9897.762	%		~~100~~(240	)		2-5.467	%
Income from operations		347			7.68	%		51			1.24	%		296			580.39	%
Income (loss) from operations		(56	)	NA				121			2.8	%		(177	)	NA
Other expense:
Interest expense, net		35			0.071	%		26			0.051	%		(1	)		50-16.007	%
Interest expense - related party		92			2.04	%		69			1.67	%		23			33.33	%
Interest expense - related party, net		91			2.3	%		86			2.0	%		5			5.8	%
Total other expense		9596			2.104	%		7192			12.721	%		244			334.803	%
Income (loss) from operations before income taxes		252			5.58	%		(20	)	NA				272		NA
Income (loss) before income taxes		(152	)	NA				29			0.7	%		(181	)	NA
Income tax expense (benefit)		(30	)	NA				6			0.15	%		(36	)	NA
Income tax expense		10			0.3	%		21			0.5	%		(11	)		-52.4	%
Net income (loss) available to common stockholders		282			6.24	%		(26	)	NA				308		NA
Net income (loss)	$	(162	)	NA			$	8			0.2	%	$	(170	)	NA

Overview. ~~Our~~When ~~results of operations improved significantly when~~ comparing the three months ended ~~September~~March 3031, ~~2018~~2019 to the three months ended ~~September~~March 3031, ~~2017~~2018, ~~due~~our ~~primarily~~results ~~to revenue increasing at a faster rate than expenses. Two~~ of ~~the~~operations ~~most~~weakened ~~significant~~slightly ~~drivers~~due ofto ~~demand~~declines ~~for~~in ~~our services~~activity, ~~the~~primarily ~~price~~in ofour ~~oil~~solids ~~and~~control ~~the~~product Uline.S. ~~land-based~~Our ~~drilling~~variable ~~rig~~costs ~~count,~~declined ~~increased~~with ~~when~~activity ~~comparing the two periods: the price of oil increased approximately 45.0%~~ and ~~the~~remained ~~U.S.~~fairly ~~land-based~~flat ~~drilling~~as ~~rig~~a ~~count~~percentage ~~increased~~of ~~approximately~~revenue; ~~10.0%. As a result~~however, ~~demand for~~ our ~~products~~fixed ~~and~~costs ~~services~~ remained ~~strong~~flat ~~period-over-period.~~and Weincreased ~~maintained~~as ~~full~~a ~~utilization~~percentage of ~~our~~revenue ~~fleet and,~~ due to ~~an increasingly tight supply of equipment in 2018, we were able to significantly raise~~ the ~~prices~~costs webeing ~~charge~~spread toover ~~our~~a ~~new~~smaller ~~and~~revenue ~~existing customers~~base.

Revenue. Our revenue for the three months ended ~~September~~March 3031, ~~2018~~2019 was $43.59 million, ana ~~increase~~decrease of 9.6%, compared to $4.13 million for the three months ended ~~September~~March 3031, ~~2017~~2018. ~~resulting~~The ~~primarily~~key ~~from~~drivers ~~increased~~of ~~pricing~~revenue onare ~~tanks~~pricing and ~~non-rental~~utilization ~~services~~or ~~such as rig-up/rig-down and hauling~~activity. ~~When~~Although ~~comparing~~pricing ~~the~~on ~~three~~our ~~months ended September 30~~tanks, ~~2018~~our tolead ~~the~~surface ~~three~~rental ~~months ended September 30~~product, ~~2017, the pricing on tanks and non-rental services~~ increased by more than 3020% ~~on relatively flat activity. Although robust demand for our tanks and non~~period-~~rental~~over-period, ~~services enabled us to increase~~ pricing toon ~~our~~most ~~customers,~~other ~~activity~~products remained ~~fairly~~relatively flat. ~~period-over-period~~The ~~because~~impact ~~our~~of ~~tanks~~the ~~were~~increased ~~fully~~pricing ~~utilized~~on ~~and,~~tanks ~~in certain circumstances, we determined that it~~ was not ~~cost~~sufficient ~~effective~~ to ~~sub-rent~~offset ~~additional~~the ~~tanks~~overall decline in ~~order~~activity towhen ~~take~~comparing ~~advantage of~~ the ~~increased~~two ~~demand~~periods. ~~The~~Demand ~~significant~~for ~~pricing increases on~~ tanks and ~~non-rental~~pumps ~~services~~did ~~were~~not ~~partially~~vary ~~offset~~significantly; byhowever, due to a ~~decrease~~change in ~~revenue~~customer ~~generated~~mix, ~~from~~the ~~other~~demand for auxiliary surface rental ~~products~~equipment ~~and~~declined asubstantially. ~~change~~In inaddition, ~~the~~revenue ~~mix~~from of our solids control ~~jobs.~~products ~~Revenue~~and ~~generated~~services ~~by our solids control product line~~ declined bymore ~~almost~~than 1030% due primarily to aloss ~~decline in the utilization~~ of ~~operators.~~revenue ~~Certain~~from ~~major~~a ~~customers~~significant customer which ~~require~~laid ~~full-time~~down ~~solids~~rigs ~~control~~beginning ~~operators typically slow activity at year-end and resume activity~~ in the ~~first~~fourth quarter. Asof ~~certain~~2018. ~~centrifuges~~Most ~~were~~of ~~released~~the ~~from~~revenue ~~jobs~~loss ~~requiring~~has ~~personnel,~~been werecovered ~~were able to redeploy them~~ with a new ~~and~~customer ~~existing~~as ~~customers~~of ~~resulting~~April ~~in flat period-over-period activity for our centrifuges~~2019.

Operating Expenses. Our operating expenses for the three months ended ~~September~~March 3031, ~~2018~~2019 decreased ~~5.2%~~slightly to $2.53 million, or 5459.79% of revenue, from $2.6 million, or 6360.32% of revenue, for the three months ended ~~September~~March 3031, ~~2017~~2018. ~~The~~Operating ~~slight~~expenses ~~decrease~~include inprimarily variable costs, ~~was~~such ~~due~~as ~~primarily~~payroll toand ~~the~~related ~~reduction~~costs, in third-party ~~expense~~expenses ~~for~~(sub-rental of equipment, sub-contractors, hauling of equipment, washout of equipment), and ~~other~~repair and maintenance expenses. Payroll and related costs, including third-party ~~services~~sub-contractors, ~~related~~declined tosignificantly with the ~~change~~decrease in ~~our~~activity. ~~mix~~Sub-rental expense for surface rental equipment increased due primarily to vendor day rate increases of ~~solids~~more ~~control~~than ~~revenue~~60% ~~away~~which ~~from~~were ~~rigs~~only ~~requiring~~partially ~~operators~~offset ~~and~~by ~~auxiliary~~the decline in the quantity of sub-rented ~~equipment~~pumps ~~towards~~and ~~rigs~~open ~~requiring~~top ~~centrifuges~~tanks ~~only.~~as ~~Most~~our ~~other~~newly ~~operating~~fabricated ~~expenses~~equipment ~~remained~~went ~~stable~~into asservice ~~there~~and ~~was~~replaced ~~little~~equipment ~~change~~which inwas ~~overall~~previously ~~activity period~~sub-~~over-period;~~rented. ~~however,~~Aggregate operating expenses remained fairly flat as a ~~percent~~percentage of revenue ~~declined~~as ~~significantly~~the asbenefits weof increased pricing toon ~~our~~certain ~~customers~~rental ~~more~~equipment ~~quickly~~was ~~than~~offset by increased day rates charged by our ~~costs~~sub-rental ~~increased~~vendors.

Depreciation and Amortization. Depreciation and amortization ~~remained~~decreased ~~fairly~~slightly ~~flat~~to at $0.98 million for the three months ended ~~September~~March 3031, ~~2018~~2019 ~~and~~from ~~2017~~$0.9 asmillion for the ~~decline~~three inmonths ~~depreciation~~ended ~~and~~March ~~amortization~~31, ~~from~~2018 due primarily to the impact of certain assets becoming fully depreciated and amortized ~~was~~ partially offset by the ~~impact~~purchase and fabrication of ~~capital~~new ~~investments~~assets.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to $0.8 million, or 19.9% of revenue, for the three months ended March 31, 2019 compared to $0.7 million, or 17.0% of revenue, for the three months ended March 31, 2018. Selling, general and administrative expenses consist of overhead costs which we generally consider to be fixed. The year-over-year increase of approximately $46,000, or 6.3%, is primarily due to increases in franchise taxes and insurance premiums.

Interest Expense, Net. Interest expense, net, consisting primarily of interest on insurance financing and other miscellaneous interest expense, was approximately $5,000 and $6,000 for the three months ended March 31, 2019 and 2018, respectively.

Interest Expense – Related Party. During the three months ended March 31, 2019 and 2018, we recorded approximately $91,000 and $86,000, respectively, of interest expense on borrowings under the credit facility (“Related Party Credit Facility”) with Permian Pelican Financial, LLC (“PPF”), a related party.

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~~Selling,~~Income ~~General and Administrative Expenses~~Taxes. ~~Selling,~~From ~~general~~our ~~and~~evaluation ~~administrative~~as ~~expenses~~of ~~increased~~March ~~to $0.8 million~~31, or2019 ~~18.5%~~and ofDecember ~~revenue~~31, ~~for~~2018, the ~~three~~Company ~~months~~has ~~ended~~concluded ~~September~~that ~~30,~~based ~~2018~~on ~~compared~~the toweight ~~$0.5 million, or 12.6%~~ of ~~revenue~~available evidence, ~~for~~it ~~the~~is ~~three~~more ~~months~~likely ~~ended~~than ~~September~~not ~~30,~~that ~~2017.~~the ~~Selling,~~Company ~~general~~will ~~and~~not ~~administrative~~realize ~~expenses~~the ~~consist~~benefit of ~~overhead~~its ~~costs~~deferred ~~which~~tax weassets. ~~generally~~As ~~consider~~such, toa bevaluation ~~fixed.~~allowance ~~The year-over-year increase~~ of $02.30 million, orand ~~61.~~$1%,.9 million is ~~primarily~~included ~~due~~on tothe ~~increases~~condensed inconsolidated ~~compensation~~balance tosheet ~~existing~~as ~~employees and by an increase in headcount~~ of ~~selling~~March 31, ~~general~~2019 and ~~administrative~~December ~~employees to an average of 15 employees during the three months ended September 30~~31, 2018 ~~from 11 employees during the three months ended September 30~~, ~~2017~~respectively. ~~With~~Income ~~the~~tax ~~improved~~expense ~~financial~~was results we are experiencing, we have increased headcount in order to facilitate the segregation of duties and to strengthen our internal controls. In addition, non-recurring and non-cash items increased by approximately $9710,000 toand ~~an aggregate expense of approximately~~ $7521,000 for the three months ended ~~September~~March 3031, ~~2018~~2019 ~~from~~and an2018, ~~aggregate benefit of $12~~respectively,~~000~~ ~~for~~which ~~the~~primarily ~~three~~reflects ~~months~~Texas ~~ended~~Franchise ~~September~~Tax. ~~30,~~The ~~2017~~difference ~~(see further discussion~~ in ~~“How~~the Weeffective ~~Evaluate~~tax ~~Our~~rate ~~Operations”~~from ~~section~~the ~~above).~~statutory ~~These~~rate ~~increases~~is ~~were~~due ~~partially~~to ~~offset~~our bycontinued afull ~~decline~~valuation inallowance ~~third-party~~on ~~audit~~net ~~and~~deferred ~~accounting~~tax ~~fees~~assets. asThe ~~the~~Company ~~expenses~~has ~~incurred~~sufficient inNOL ~~2017~~carryforwards to ~~catch~~offset upfederal onincome ~~prior~~tax ~~year~~and ~~filings~~other ~~did~~state ~~not~~income ~~recur in 2018~~taxes.

Interest Expense, Net. Interest expense, net, consisting of interest on insurance financing and other miscellaneous interest expense, was approximately $3,000 for the three months ended September 30, 2018 and approximately $2,000 for the three months ended September 30, 2017.

Interest Expense – Related Party. During the three months ended September 30, 2018 and 2017, we recorded approximately $92,000 and $69,000, respectively, of interest expense on borrowings under the Related Party Credit Facility. The period-over-period increase is primarily due to an increase in borrowings under the facility.

Income Taxes. The difference in the effective tax rate from the statutory rate is due to our continued full valuation allowance on net deferred tax assets. Income tax expense and benefit is related to the Texas Margin Tax. The Company has sufficient NOL carryforwards to offset federal income tax and other state income taxes.

Results for the Nine Months Ended June 30, 2018 Compared to the Nine Months Ended June 30, 2017

The following table summarizes the change in our results of operations for the nine months ended September 30, 2018 from the nine months ended September 30, 2017 (in thousands):

	For the Nine Months Ended September 30,												Change
	2018			% of Revenue			2017			% of Revenue			$			%
Revenue	$	13,242			100.00	%	$	11,134			100.00	%	$	2,108			18.93	%
Expenses:
Operating expenses		7,612			57.48	%		7,167			64.37	%		445			6.21	%
Depreciation and amortization		2,641			19.94	%		2,793			25.09	%		(152	)		-5.44	%
Selling, general and administrative expenses		2,726			20.59	%		2,353			21.13	%		373			15.85	%
Total expenses		12,979			98.01	%		12,313			110.59	%		666			5.41	%
Income (loss) from operations		263			1.99	%		(1,179	)	NA				1,442		NA
Other expense (income):
Interest expense, net		12			0.09	%		18			0.16	%		(6	)		-33.33	%
Interest expense - related party		270			2.04	%		664			5.96	%		(394	)		-59.34	%
Gain on extinguishment of debt and other liabilities		-			0.00	%		(2,387	)	NA				2,387		NA
Total other expense (income)		282			2.13	%		(1,705	)	NA				1,987		NA
Income (loss) from operations before income taxes		(19	)	NA				526			4.72	%		(545	)	NA
Income tax expense		12			0.09	%		18			0.16	%		(6	)		-33.33	%
Net income (loss)		(31	)	NA				508			4.56	%		(539	)	NA
Preferred stock dividends		-			0.00	%		63			0.57	%		(63	)		-100.00	%
Net income (loss) available to common stockholders	$	(31	)	NA			$	445			4.00	%	$	(476	)	NA

Overview. Our results of operations, excluding the one-time gain on extinguishment of debt and other liabilities, improved significantly when comparing the nine months ended September 30, 2018 to the nine months ended September 30, 2017 due to significant price increases on the products and services we offer and effective management of variable and fixed costs. Two of the most significant drivers of demand for our services, the price of oil and the U.S. land-based drilling rig count, increased substantially when comparing the two periods: the price of oil increased over 35.0% and the U.S. land-based drilling rig count increased approximately 20.0%. The robust demand enabled us to increase utilization of our centrifuges and we accelerated our refurbishment program to ensure we had available centrifuges to meet demand. There was also incremental demand for our surface rental equipment; however, it became more difficult for us, and other competitors, to service this demand as access to third-party surface rental equipment at reasonable costs began to diminish. Although our surface rental activity remained fairly flat, the incremental demand combined with the tight supply of equipment provided us the ability to increase prices substantially. Excluding the impact of one-time items related to the Recapitalization in January 2017, we maintained a lean cost structure and were able to improve operating margins as a result of pricing to our customers increasing more quickly than costs from our vendors. Please see our Annual Report on Form 10-K for the year ended December 31, 2017 for a complete description of the Recapitalization and the impact on our consolidated financial statements for the year ended December 31, 2017.

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Revenue. Our revenue for the nine months ended September 30, 2018 was $13.2 million, an increase of 18.9%, compared to $11.1 million for the nine months ended September 30, 2017. Increased pricing on our tanks, pumps and non-rental services and increased activity for our solids control equipment were the primary drivers of the increase. When comparing the nine months ended September 30, 2018 to the nine months ended September 30, 2017, pricing on our lead surface rental products, tanks and pumps, and pricing on our non-rental services, rig-up/rig down and hauling, increased more than 20%. Although robust demand for our tanks and non-rental services enabled us to increase pricing to our customers, activity remained fairly flat period-over-period because our tanks and pumps were fully utilized and, in certain circumstances, we determined that it was not cost effective to sub-rent additional equipment in order to take advantage of the increased demand. The increase in revenue generated by solids control products was driven by a greater than 20% increase in the count of revenue-generating days for centrifuges as we were able to satisfy increasing demand due to our refurbishment program which expanded our available fleet by 12 centrifuges during the first nine months of 2018. In addition, our average day rate for centrifuges increased 5-10% as we were able to price new work significantly higher than existing work. Revenue generated by solids control operators remained flat as most of the jobs which were added did not require us to provide personnel to operate our centrifuges. The increases in revenue from pricing of lead surface rental products and non-rental services and from increased utilization of centrifuges were partially offset by a decrease in revenue generated from other surface rental products. Rental of auxiliary equipment is customer specific and fluctuates as our customers’ needs vary.

Operating Expenses. Our operating expenses for the nine months ended September 30, 2018 increased 6.2% to $7.6 million, or 57.5% of revenue, from $7.2 million, or 64.4% of revenue, for the nine months ended September 30, 2017. Although activity remained fairly flat when comparing the nine months ended September 30, 2018 to the nine months ended September 30, 2017, we experienced increases in operating expenses due to (i) increased headcount as we strengthened our employee base, specifically middle management, (ii) cost increases from sub-rental vendors of approximately 10%, and (iii) increased repair and maintenance activity as we maximized the amount of available equipment in our fleet in order to meet demand. Although operating expenses increased, the benefit of increased pricing on most products and services resulted in operating expenses decreasing significantly as a percentage of revenue.

Depreciation and Amortization. Depreciation and amortization decreased to $2.6 million for the nine months ended September 30, 2018 from $2.8 million for the nine months ended September 30, 2017 due primarily to the impact of certain assets becoming fully depreciated and amortized partially offset by the impact of capital investments in assets with shorter than average useful lives.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased slightly to $2.7 million, or 20.6% of revenue, for the nine months ended September 30, 2018 compared to $2.4 million, or 21.1% of revenue, for the nine months ended September 30, 2017. Selling, general and administrative expenses consist of overhead costs which we generally consider to be fixed. The year-over-year increase of approximately $0.4 million, or 15.9%, is primarily due to increases in compensation to executive management to return to contractual levels and by an increase in headcount of selling, general and administrative employees to an average of 15 employees during the nine months ended September 30, 2018 from 11 employees during the nine months ended September 30, 2017. With the improved financial results we are experiencing, we have increased headcount in order to improve our ability to segregate duties and strengthen our internal controls as well as to manage the increased activity levels. These increases were partially offset by a decrease in non-recurring and non-cash expenses to $0.5 million from $0.8 million for the nine months ended September 30, 2018 and 2017, respectively (see further discussion in “How We Evaluate Our Operations” section above).

Interest Expense, Net. Interest expense, net, consisting primarily of interest on insurance financing and other miscellaneous interest expense, was approximately $12,000 for the nine months ended September 30, 2018. Interest expense, net was slightly higher during the nine months ended September 30, 2017, approximately $18,000, due to interest expense of $13,000 during the first quarter of 2017 which was eliminated in the Recapitalization. Please see our Annual Report on Form 10-K for the year ended December 31, 2017 for a complete description of the Recapitalization and the impact on interest expense.

Interest Expense – Related Party. During the nine months ended September 30, 2018, we recorded $0.3 million of interest expense on borrowings under the Related Party Credit Facility. Interest expense on the facility for the nine months ended September 30, 2017 was $0.7 million and included an amendment fee of $0.3 million.

Income Taxes. The difference in the effective tax rate from the statutory rate is due to our continued full valuation allowance on net deferred tax assets. Income tax expense is related to the Texas Margin Tax. The Company has sufficient NOL carryforwards to offset federal income tax and other state income taxes.

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Liquidity and Capital Resources

Net Cash Provided by (Used in) Operating Activities. During the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018, operating activities ~~generated~~used approximately $~~2.9~~27,000 ~~million~~ and generated approximately $0.27 million in cash, respectively. The ~~increase~~decrease in cash flows from operating activities is partially due to ana ~~improvement~~weakening in operating results when comparing the two periods. In addition, changes in operating assets and liabilities ~~provided~~used $0.28 million of cash during the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 compared to using $10.82 million during the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018. The primary driver of the increase in cash ~~provided~~used by operating activities is the change in receivables which ~~provided~~used $0.4 million in cash during the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 compared to ~~using~~generating $20.74 million in cash during the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018. ~~The~~During ~~significant~~the ~~use~~three months ended March 31, 2019, days of ~~cash~~receivables inoutstanding ~~2017~~increased ~~was~~from ~~due~~68 ~~primarily~~days to a76 ~~rapid~~days ~~increase~~resulting in ~~revenue~~a ~~during~~use ~~the~~of ~~period~~cash. asIn ~~monthly~~April ~~revenue~~2019, ~~increased~~we inreceived ~~excess~~catch-up ofcollections ~~90%~~and ~~from~~we anticipate the ~~beginning~~days of ~~the~~receivables ~~period~~outstanding to decrease significantly during the ~~end~~three ofmonths ended June 30, 2019. The same measure for the prior year period ~~compared~~decreased from 102 days as of December 31, 2017 to 72 days as of March 31, 2018 resulting in a significant source of cash during the ~~nine~~three months ended ~~September~~March 3031, 2018 ~~when~~as ~~monthly~~we ~~revenue~~billed ~~remained~~and ~~fairly~~collected ~~flat~~receivables which had been delayed during the fourth quarter of 2017. We anticipate generating positive cash flow from operations during the remainder of 2019 as results from operations strengthen and we reduce our days of receivables outstanding.

Capital Expenditures. Capital expenditures are the main component of our investing activities. Cash capital expenditures for the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019 and ~~2017~~2018 were $1.74 million and $10.3 million, respectively. ~~Although~~Our ~~we spent approximately $0.3 million to refurbish centrifuges, rotating assemblies and related auxiliary equipment in order to grow our available fleet of solids control equipment to meet demand, our~~ primary ~~spending~~investing focus ~~was~~in on2019 is purchasing and fabricating equipment which ~~would~~could replace equipment we are currently sub-renting from third-party vendors if there is no incremental demand to be satisfied. During the ~~nine~~three months ended ~~September~~March 3031, ~~2018~~2019, weaggregate ~~paid~~expenditures on 500bbl MCTs were approximately $1.3 million toand ~~purchase~~we orplaced ~~fabricate~~25 ~~forklifts,~~new ~~open~~500bbl ~~top~~MCTs ~~tanks,~~in ~~diesel~~service. ~~mud~~To ~~pumps~~date, ~~diesel~~virtually ~~transfer~~all ~~pumps~~of ~~and~~these ~~500bbl round-bottom-frac-on-wheels~~ tanks. ~~In addition, we~~ have ~~committed~~been used to ~~spending~~satisfy anincremental ~~additional~~demand ~~$0.7 million on forklifts~~ and ~~diesel~~we ~~transfer~~will ~~pumps~~see ~~during~~ the ~~remainder~~full ofbeneficial ~~2018.~~impact Inon ~~aggregate,~~operating ~~once~~results in the ~~new~~second ~~equipment~~quarter isof in2019. ~~service~~We ~~and~~believe the ~~sub-rental~~positive ~~equipment~~impact ~~has~~on ~~been~~net ~~returned,~~income ~~these investments~~ will ~~result~~be in ~~cost~~excess ~~savings~~ of ~~approximately~~ $0.93 million annually,. ofWe ~~which~~anticipate ~~less~~purchasing ~~than~~and ~~$0.1~~placing ~~million~~another ~~has~~25 ~~been~~new ~~recognized~~500bbl MCTs into service during the ~~first~~second ~~nine~~and ~~months~~third quarter of ~~2018~~2019. WeOur ~~anticipate~~remaining ~~continuing~~2019 ~~our~~ capital expenditure ~~program~~plan ~~during~~also includes the ~~remainder~~fabrication of ~~2018~~pumps and ~~throughout~~open ~~2019~~top ~~with~~tanks awhich ~~focus~~will onbe ~~purchasing~~used ~~and~~for ~~fabricating~~new ~~equipment~~work or to replace ~~items which we are currently~~ sub-~~renting~~rented equipment. ~~Other~~At ~~capital~~a ~~expenditures~~minimum, in the ~~fourth~~incremental ~~quarter~~tanks ~~of 2018~~ and ~~throughout~~pumps ~~2019~~purchased ~~will~~or ~~likely~~fabricated ~~consist~~during ~~of liners, hoses, vehicles and similar assets which are required to support~~ the ~~ongoing~~remainder ~~operations. The successful implementation~~ of ~~our~~2019 ~~capital~~will ~~expenditure~~save ~~plan~~approximately ~~will~~$0.6 ~~enable~~million usper toyear ~~service~~in ~~additional~~sub-rental ~~customers~~expense; ~~and~~however, ~~rigs~~the ifpositive ~~demand~~impact ~~continues~~will tobe ~~grow~~much ~~and,~~greater ~~even~~ if ~~there~~the equipment is noused ~~incremental~~on ~~demand~~new ~~for~~jobs ~~our~~instead ~~services,~~of ~~our~~to ~~investment~~replace ~~in items which we~~ sub-~~rent,~~rented ~~such as tanks and pumps, will reduce our expenses and reduce our reliance on third-party vendors~~equipment.

Although we do not budget acquisitions, mergers or similar transactions in the normal course of business, we are currently engaged in multiple discussions related to potential ~~acquisitions of companies which provide oilfield services~~transactions. We ~~are~~would ~~actively~~anticipate ~~seeking~~requiring ~~opportunities~~additional todebt ~~acquire companies which will add new products~~ and/or ~~services,~~equity ~~expand~~financing ~~our~~in ~~geographic~~order ~~reach,~~to ~~diversify~~complete ~~our~~some ~~customer~~of ~~base~~the ~~and/or~~transactions ~~increase~~being ~~our available fleet of equipment~~evaluated.

Liquidity and Credit Facility. As of ~~September~~March 3031, ~~2018~~2019, we had a cash balance of approximately $2.0.6 million (excluding restricted cash) and aggregate related party debt of $6.46 million. Because the lender under our credit facility is a related party, we benefit from a credit facility which is structured with no financial covenants and we have significant flexibility to modify our credit facility, if, and when, needed.

OnIn ~~June~~February 302019, ~~2018,~~we ~~the~~borrowed ~~Company entered into~~ the ~~Third~~remaining ~~Amended~~$0.7 ~~and~~million ~~Restated~~available ~~Credit~~under ~~Agreement~~the ~~which,~~revolving ~~among~~credit ~~other~~facility ~~things,~~to ~~(i)~~partially ~~combined~~fund the ~~outstanding~~purchase ~~balances~~of onnew ~~the~~500bbl ~~delayed~~MCTs. ~~draw~~Our ~~term~~existing ~~loan~~capital ~~and~~expenditure ~~the~~plan ~~term~~for ~~loan~~2019 ~~and~~focuses ~~initiated~~primarily aon ~~required~~purchasing ~~monthly~~and ~~principal~~fabricating ~~payment~~equipment ofwhich ~~approximately~~could ~~$83,000~~be onused ~~the~~to ~~aggregate~~reduce ~~outstanding~~sub-rental ~~balance~~expense; ~~of the term loan~~however, ~~(ii)~~if ~~expanded~~demand ~~availability~~continues onto ~~the~~increase ~~revolving~~as ~~credit~~it ~~facility~~has byduring ~~$0.7~~the ~~million~~first ~~while~~quarter ~~simultaneously~~of ~~reducing~~2019, ~~the~~new ~~aggregate~~equipment ~~availability~~may ~~under~~be ~~the~~used ~~other~~to ~~lines~~service ofincremental ~~the~~jobs ~~facility~~for bywhich the ~~same~~gross ~~amount,~~margin ~~and~~generated ~~(iii)~~will ~~extended~~exceed the ~~maturity~~projected ~~date~~cost savings of ~~the~~replacing ~~facility~~sub-rented toequipment ~~June~~on ~~30,~~existing ~~2021~~jobs. InAs ~~addition,~~of ~~effective~~April ~~June~~ 30, ~~2018~~2019, ~~Pelican~~we ~~assigned~~have ~~and~~purchased ~~transferred~~37 ~~its~~new ~~rights~~500bbl ~~under~~MCTs ~~the~~for ~~credit~~which ~~agreement~~the toremaining anpayments ~~affiliated~~aggregate ~~entity,~~to ~~Permian~~approximately ~~Pelican~~$0.6 ~~Financial, LLC (“PPF”)~~million. ~~The~~Expenditures ~~members~~planned ~~and~~for ~~membership~~the ~~interests~~remainder of ~~PPF~~the ~~are~~year ~~the~~will ~~same~~be ascommitted ~~Pelican~~to and ~~PPF~~funded isas awe ~~related~~generate ~~party.~~cash flow from operations.

~~The~~As ~~table~~of ~~below~~April ~~reflects~~30, ~~our~~2019, ~~liquidity~~we ashad approximately $0.8 million of ~~September~~cash 30on hand. We believe that this cash combined with our cash flow from operations will be sufficient to fund our working capital needs, ~~2018~~the ~~(in~~2019 ~~thousands):~~capital expenditure plan, principal and interest payments, and other contractual obligations for the next twelve months.

	September 30, 2018
	(unaudited)
Cash	$	1,988
Revolving facility availability (1)		675
Total liquidity	$	2,663

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~~_____________~~Merger with a Related-Party

On January 28, 2019, we executed an Agreement and Plan of Merger (1“Merger Agreement”) ~~With~~with Permian Pelican ~~LLC~~Inc. (“Pelican”), ~~our~~a ~~controlling~~related ~~shareholder~~party, ~~through~~pursuant ~~June~~to ~~30,~~which ~~2018~~Pelican merged with and into the Company (the “Merger”) in a non-cash transaction. ~~With~~By ~~Permian~~virtue of the Merger, each issued and outstanding share of Pelican ~~Financial~~common stock, ~~LLC~~7,429 shares in aggregate, was converted into 387.858 shares of our common stock and each share of Series A convertible preferred stock was canceled. We issued an aggregate of 2,881,411 new shares of our common stock, representing approximately 75.4% of our outstanding common stock, with a ~~related~~value ~~party~~of approximately $14.4 million (based on a stock price of $5.00 per share on January 28, 2019) in consideration for all the shares of Pelican common stock outstanding as of the date of the Merger. The new shares of our common stock were issued directly to the individual shareholders of Pelican and, as a result, effective ~~July~~January 128, ~~2018~~2019, we no longer have a controlling shareholder.

We believe that our cash flow from operations combined with access to capital through our lender, PPF, and our controlling shareholder, Pelican, will be sufficient to fund our working capital needs, contractual obligations and capital expenditure plan for the next twelve months. Our existing capital expenditure plan focuses primarily on reducing sub-rental expense at current activity levels. We believe that the U.S. land-based rig count and price of oil may continue to increase, but these metrics are more likely to remain stable at their current levels. We will continue to have opportunities to gain market share; however, we believe that the most meaningful growth will come from the acquisition of one or more companies which provide complementary products and services. As such, we are actively seeking attractive acquisition candidates and we are currently in early discussions with several potential targets. We would anticipate requiring additional debt and/or equity financing in order to complete any such acquisitions.

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Off-Balance Sheet Arrangements

As of ~~September~~March 3031, ~~2018~~2019, we did not, and we currently do not, have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources ~~notwithstanding any impact of ASU 2016-02, Leases (Topic 842)~~. See further discussion contained within Item 1. Financial Statements under the caption "Recent Accounting Developments" in Note 4 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2017.

Net Operating Losses

As of December 31, ~~2017~~2018, we had approximately $3132.58 million of federal net operating loss carryforwards. Based on the weight of all available evidence including the future reversal of existing U.S. taxable temporary differences as of ~~September~~March 3031, ~~2018~~2019 and December 31, ~~2017~~2018, we believe that it is more likely than not that the benefit from certain federal and state net operating loss carryforwards and other deductible temporary differences will not be realized. In recognition of this risk, we have ~~provided~~ a valuation allowance of approximately $2.0. and $1.9 million as of March 31, 2019 and December 31, 2018, respectively, on the net deferred tax asset as a result of the Company being in a cumulative three-year pre-tax book loss position and ~~the~~ absence of other objectively verifiable positive evidence including reversal of existing taxable temporary differences in ~~these~~ certain state tax jurisdictions.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, under supervision and with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e). Based upon this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of December 31, ~~2017~~2018, ~~due~~as a result of the conditions that led to athe ~~combination~~restatement of ~~deficiencies~~prior year financial statements, a material weakness in our internal controls over financial reporting (“ICFR”), ~~a material weakness in ICFR~~ existed and our disclosure controls and procedures were not effective as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that required information to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that required information to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

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Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate Internal Control over Financial Reporting (“ICFR”), as defined under Exchange Act Rules 13a-15(f) and 14d-14(f). All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability and financial statement preparation and presentation. In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Management updated ~~the~~our assessment of the effectiveness of our ICFR as of ~~September~~March 3031, ~~2018.~~2019 Inusing ~~making~~ the ~~assessment, management used the~~ criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework 2013. As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements” established by the Public Company Accounting Oversight Board (“PCAOB”), a material weakness is a deficiency or combination of deficiencies that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. ~~Based~~We ondetermined ~~its~~that ~~assessment,~~we ~~management~~did ~~concluded~~not ~~that,~~maintain aseffective ofinternal ~~September~~controls ~~30,~~over ~~2018~~financial reporting. Specifically, awe ~~combination~~identified ofmaterial ~~deficiencies~~weaknesses inover ~~ICFR~~management’s ~~resulted~~review incontrols aover ~~material~~significant ~~weakness~~accounting estimates and review controls over accounting for non-routine and complex accounting transactions.

24A ~~Table~~material weakness was identified relating to the write-off of ~~Contents~~assets that were disposed of during the year ended December 31, 2016 as part of the Recapitalization. We have identified certain deficiencies associated with the design, implementation and operating effectiveness of internal controls related to the disposition of fixed assets and we did not effectively operate controls over management’s review over the non-routine and complex transactions due to the lack of segregation of duties over these types of transactions. We have an ongoing remediation plan that includes our continuing use of an accounting consultant with expertise in U.S. GAAP as well as implementing full equipment inventory procedures on an annual basis and implementing additional internal controls related to the disposition of fixed assets. Our annual fixed asset count will take place during the second quarter of 2019 and we expect our material weakness to be remediated in conjunction with such count and the further implementation of internal controls, specifically surrounding the disposition of fixed assets and non-routine or complex accounting transactions.

Based on our evaluation, ~~management~~we ~~believes~~believe this weakness did not have ana significant effect on our financial results for the three months ended March 31, 2019 and we did not discover any fraud involving management or any other personnel who play a significant role in our disclosure controls and procedures or internal controls over financial reporting. Management believes that the material weakness in ICFR was a direct result of our significant reduction in headcount in 2015 and 2016 in response to the downturn in the industry as well as the overall scale of our operations.

In connection with the assessment described above, management identified the following combination of control deficiencies that result in a material weakness as of September 30, 2018. These deficiencies are in various stages of remediation as described below:

Material Weakness	Remediation Actions
Insufficient written policies and procedures, and personnel, for accounting and financial reporting with respect to the requirements and application of U.S. GAAP and SEC disclosure requirements, specifically to address technical accounting around complex transactions.	During the second quarter of 2017, we engaged an accounting consultant with expertise in U.S. GAAP to address technical accounting for complex transactions and financial reporting requirements and disclosures. During the second quarter of 2018, we engaged a consultant to assist management in documenting and strengthening existing controls and processes using the COSO framework. Documentation will be completed and new and updated controls will become effective prior to the end of 2018.
Lack of control over information technology applications and the processing of transactions, specifically segregation of duties and elevated access to our accounting information systems.	During 2018, management has hired additional personnel which will enable us to segregate duties more effectively and minimize elevated access privileges. We have retained a consultant to assess our information technology general control environment and develop appropriate controls and processes which will become effective prior to the end of 2018.

We will implement further controls as circumstances, cash flows, and working capital permits. Notwithstanding the assessment that there was a material weakness in our ICFR resulting from a combination of deficiencies identified above, we believe that our financial statements contained in our Quarterly Report on Form 10-Q for the period ended September 30, 2018 fairly present our financial position, results of operations, and cash flows for the periods covered in all material respects.

Changes in Internal Control over Financial Reporting

During the ~~beginning~~period ofcovered ~~2017~~by this report, ~~controls~~there were ~~not~~no ~~designed~~changes ~~and in place~~ to ~~ensure all disclosures required were originally addressed in~~ our ~~financial~~ICFR ~~statements~~that oroccurred ~~other~~that ~~required~~have ~~reports~~materially ~~filed~~affected, or ~~submitted~~are ~~under~~reasonably ~~the~~likely ~~Securities Exchange Act. We later implemented a review process with an accounting consultant with expertise in U.S. GAAP~~ to ~~ensure~~materially ~~financial statements disclosures comply with the Securities Exchange Act and~~affect, ~~simultaneous with the filing of~~ our ~~10-Q for the period ended September 30, 2017, we returned to being a timely filer under SEC guidelines~~ICFR.

During the period covered by this report, we strengthened the governance of our board by identifying and bringing on a financial expert that now serves as our independent audit committee chair. See Item 10 in our Annual Report on Form 10-K for the year ended December 31, 2017 for further background on James Hennessy.

There were no other changes in our ICFR during the period, other than the changes implemented as detailed in our remediation plan above, that occurred that have materially affected, or are reasonably likely to materially affect, our ICFR.

This Quarterly Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting due to an exemption provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) enacted into law in July 2010. The Dodd-Frank Act provides smaller public companies and debt-only issuers with a permanent exemption from the requirement to obtain an external audit on the effectiveness of internal financial reporting controls provided in Section 404(b) of the Sarbanes-Oxley Act. Aly Energy is a smaller reporting company and is eligible for this exemption under the Dodd-Frank Act.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ALY ENERGY SERVICES, INC.
Date: November 13, 2018	By:	/s/ Munawar H. Hidayatallah
Date: May 15, 2019	By:	/s/ Munawar H. Hidayatallah
		Munawar H. Hidayatallah
		Chairman and Chief Executive Officer
		(Principal Executive Officer)

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PART II – OTHER INFORMATION

Item 5. Other Information

In October 2018, our Board of Directors determined that Micki Hidayatallah, our then Interim Chief Executive Officer, should be elected as Chief Executive Officer. The board approved an annual salary of $150,000 for Mr. Hidayatallah with an effective date of May 26, 2018.

Item 6. Exhibits

Exhibit Number		Exhibit Description
ExhibitNumber		Exhibit Description
31.1		Certification of Chief Executive Officer
31.2		Certification of Chief Financial Officer
32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted 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.DEF **		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB **		XBRL Taxonomy Extension Label Linkbase Document

101.PRE **		XBRL Taxonomy Extension Presentation Linkbase Document

_____________

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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