UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018September 30, 2019

Or

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to

Commission file number: 001-38271

SENTINEL ENERGY SERVICES INC.

(Exact name of registrant as specified in its charter)

Registrant’s Telephone Number:700 Louisiana Street, Suite 2700

Houston, Texas 77002

(281) 407-0686

Securities registered pursuant to Section 12(b)(Address (including zip code) and telephone number (including area code) of the Act:

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒principal executive offices

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate 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 ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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, a 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.

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 ☐

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

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

As of May 11, 2018,November 12, 2019, 34,500,000 shares of Class A common stock, par value $0.0001 per share (“Class A Common Stock”) and 8,625,000 shares of Class B ordinary shares,common stock, par value $0.0001 per share (“Class B ordinary shares”) and 34,500,000 shares of Class A ordinary shares (“Class A ordinary shares”Common Stock”) were issued and outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Sentinel Energy Services Inc.

CONDENSED BALANCE SHEETS

See accompanying notes to unaudited condensed interim financial statements

Sentinel Energy Services Inc.
CONDENSED Interim StatementS of Operations
(unaudited)

CONDENSED Interim Statement of Operations

See accompanying notes to unaudited condensedinterim financial statements

Sentinel Energy Services Inc.

CONDENSEDInterim Statement of Changes in Shareholders’ Equity

For the Three Months Ended March 31, 2018

(unaudited)

See accompanying notes to unaudited condensed interim financial statements

Sentinel Energy Services Inc.

CONDENSEDInterim StatementStatementS of Cash FlowsChanges in STOCKHOLDERS’ Equity

(unaudited)

For the Three Months Ended March 31,three months ended September 30, 2019 

For the three months ended September 30, 2018

See accompanying notes to unaudited condensed interim financial statements

Sentinel Energy Services Inc.

CONDENSED Interim StatementS of Changes in STOCKHOLDERS’ Equity

(unaudited)

For the nine months ended September 30, 2019 

For the nine months ended September 30, 2018

 See accompanying notes to unaudited condensed financial statements.

Sentinel Energy Services Inc.

CONDENSED Interim StatementS of Cash Flows

(unaudited)

See accompanying notes to unaudited condensed interim financial statements

SENTINEL ENERGY SERVICES INC.

NOTES TO CONDENSEDInterim FINANICALFINANCIAL STATEMENTS

(unaudited)

1. Description of Organization and Business Operations

Organization and General

Sentinel Energy Services Inc. (the ‘‘Company’’“Company”) was incorporated in the Cayman Islands on June 5, 2017.2017 (date of inception). The Company was formed for the purpose of effecting a merger, amalgamation, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the ‘‘Initial Business Combination’’).businesses. The Company is an ‘‘emerging“emerging growth company,’’” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the ‘‘Securities“Securities Act,,’’” as modified by the Jumpstart Our Business Startups Act of 2012 (the ‘‘JOBS Act’’“JOBS Act”).

On December 28, 2018, the Company changed its jurisdiction of incorporation from the Cayman Islands (“Sentinel Cayman”) to the State of Delaware (“Sentinel Delaware”), as described further below (the “Domestication”) and continued to be named Sentinel Energy Services Inc. As a result of the Domestication, each of Sentinel Cayman’s issued and outstanding Class A ordinary shares (the “Class A ordinary shares”) and Class B ordinary shares (the “Class B ordinary shares”) automatically converted by operation of law into one share of Class A common stock (“Class A common stock”) and Class B common stock (“Class B common stock”), of Sentinel Delaware, respectively. Similarly, each of Sentinel Cayman’s outstanding units and warrants automatically converted by operation of law, on a one-for-one basis, into units of Sentinel Delaware and warrants to acquire the corresponding number of shares of Class A common stock, respectively. Accordingly, all references to the Company’s capital stock both before and after the Domestication are referred to as shares of “common stock” in this Quarterly Report on Form 10-Q.

At March 31, 2018,September 30, 2019, the Company had not yet commenced operations. All activity through March 31, 2018September 30, 2019 relates to the Company’s formation and the initial public offering (the ‘‘Public Offering’’“Public Offering”) described below, and since the closing of the Public Offering, a search for a business combination candidate.candidate, including activities in connection with the announced and subsequently terminated proposed business combination with Strike Capital, LLC (“Strike”) (as described in Note 5). The Company will not generate any operating revenues until after completion of its Initial Business Combination,initial business combination, at the earliest. The Company generates non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Public Offering. The Company has selected December 31st as its fiscal year end.

The Company intends to finance its Initial Business Combinationinitial business combination with proceeds from the Public Offering (Note 3) and sale of the Private Placement Warrants (Note(as defined in Note 3), the Company’s capital stock, debt or a combination of the foregoing. Upon the closings of the Public Offering and the sale of the Private Placement Warrants, approximately $345,000,000 was placed in a trust account (the “Trust Account”“Trust Account”) (discussed below).

The registration statement for the Company’s Public Offering (as described in Note(Note 3) was declared effective by the U.S. Securities and Exchange Commission (the “SEC”“SEC”) on November 2, 2017.

Trust Account

The proceeds held in the Trust Account will beare invested only in U.S. government treasury bills with a maturity of one hundred eighty (180) days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act of 1940 and that invest only in direct U.S. government obligations. Funds will remain in the Trust Account until the earlier of (i) the consummation of the Initial Business Combinationan initial business combination or (ii) the distribution of the Trust Account proceeds as described below. The remaining proceeds outside the Trust Account may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses.

The Company’s amended and restated Memorandum and ArticlesIn accordance with the terms of Association will provide that,the Investment Management Trust Agreement entered into by the Company in connection with the Public Offering, other than the withdrawal of interest to pay income taxes, if any, none of the funds held in the Trust Account will be released until the earlier of: (i) the completion of the Initial Business Combination;an initial business combination; (ii) the redemption of any shares of Class A ordinary sharescommon stock included in the Units (the “Public Shares”)(as defined in Note 3) sold in the Public Offering (the “Public Shares”) that have been properly tendered in connection with a shareholderstockholder vote to amend the Company’s amended and restated Memorandum and Articlescertificate of Associationincorporation (the “Charter”) to modify the substance or timing of its obligation to redeem 100% of such shares of Class A ordinary sharescommon stock if it does not complete the Initial Business Combination within 24 months from the closing of the Public Offering;an initial business combination by November 7, 2019; and (iii) the redemption of 100% of the Class A ordinary sharescommon stock included in the Units sold in the Public Offering if the Company is unable to complete an Initial Business Combination within 24 months from the closing of the Public Offering,initial business combination by November 7, 2019 (subject to the requirements of law). The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s public shareholders.stockholders. The Company was unable to complete an initial business combination by the November 7, 2019 deadline under its Charter and so it commenced the liquidation of the assets in the Trust Account on November 8, 2019 (See note 8).

SENTINEL ENERGY SERVICES INC.

NOTES TO CONDENSED Interim FINANCIAL STATEMENTS

(unaudited)

Initial Business Combination

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating an Initial Business Combination.initial business combination. The Initial Business Combinationinitial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at the time of the agreement to enter into the Initial Business Combination.an initial business combination. Furthermore, there is no assurance that the Company will be able to successfully effect an Initial Business Combination.initial business combination.

The Company, after signing a definitive agreement for an Initial Business Combination,initial business combination, will either (i) seek shareholderstockholder approval of the Initial Business Combinationan initial business combination at a meeting called for such purpose in connection with which shareholdersstockholders may seek to redeem their shares, regardless of whether they vote for or against the Initial Business Combination,an initial business combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination,an initial business combination, including interest but less taxes payable, or (ii) provide shareholdersstockholders with the opportunity to sell their Public Shares to the Company by means of a tender offer (and thereby avoid the need for a shareholderstockholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination,an initial business combination, including interest but less taxes payable. The decision as to whether the Company will seek shareholderstockholder approval of the Initial Business Combinationan initial business combination or will allow shareholdersstockholders to sell their Public Shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek shareholderstockholder approval, unless a vote is required by law or under NASDAQThe Nasdaq Stock Market (“Nasdaq”) rules. If the Company seeks shareholderstockholder approval, it will complete its Initial Business Combinationinitial business combination only if a majority of the outstanding ordinary shares of common stock of the Company voted are voted in favor of the Initial Business Combination.an initial business combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its Public Shares and the related Initial Business Combination,initial business combination, and instead may search for an alternate Initial Business Combination.initial business combination.

If the Company holds a shareholderstockholder vote or there is a tender offer for shares in connection with an Initial Business Combination,initial business combination, a public shareholderstockholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination,an initial business combination, including interest but less taxes payable. As a result, such shares of Class A ordinary sharescommon stock are recorded at redemption amount and classified as temporary equity upon the completion of the Public Offering, in accordance with the Financial Accounting Standards Board (‘‘FASB’’(“FASB”) Accounting Standards Codification (‘‘ASC’’(“ASC”) 480, ‘‘“Distinguishing Liabilities from Equity.’’”

PursuantIn the event of a liquidation, dissolution or winding up of the Company after an initial business combination, the Company’s stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of common stock, if any, having preference over the common stock. The Company’s stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the Company’s amendedshares of common stock, except that the Company will provide its stockholders with the opportunity to redeem their Public Shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, upon the completion of an initial business combination, subject to the limitations described herein.

Mandatory Liquidation, Going Concern and restated Memorandum and ArticlesLiquidity:

In accordance with the terms of Association,its Charter, if the Company is unable to complete the Initial Business Combination within 24 months from the closing of the Public Offering, the Companyan initial business combination by November 7, 2019, it will (i) cease all operations except for the purpose of winding up,up; (ii) as promptly as reasonably possible, but nonot more than ten business days thereafter, subject to lawfully available funds therefor, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay the Company’s income taxes if any (less up to $100,000 of such net interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public shareholders’stockholders’ rights as shareholdersstockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholdersstockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Islands’Delaware law to provide for claims of creditors and the requirements of other applicable law. The Sponsor and the Company’s officers and directors will enterhave entered into a letter agreementagreements with the Company, pursuant to which they will agreehave agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares (as defined below) held by them if the Company fails to complete the Initial Business Combination within 24 months of the closing of the Public Offering.initial business combination by November 7, 2019. However, if the Sponsor or any of the Company’s directors, officers or affiliates acquiresacquire shares of Class A ordinary sharescommon stock in or after the Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete the Initial Business Combinationinitial business combination within the prescribed time period. The Company was unable to complete an initial business combination by the November 7, 2019 deadline under its Charter and so it commenced the liquidation of the assets in the Trust Account on November 8, 2019 (See note 8).

In the event of a liquidation, dissolution or winding upit is possible that the per share value of the Company after an Initial Business Combination, the Company’s shareholders are entitled to share ratably in allresidual assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of ordinary shares, if any, having preference over(including Trust Account assets) will be less than the ordinary shares. The Company’s shareholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable toinitial public offering price per Unit in the ordinary shares, except thatPublic Offering. For example, even though the Company will provide its shareholdersseek to have all third parties with which the opportunityCompany does business (except their independent registered accounting firm) execute agreements with it waiving any right, title, interest or claim of any kind in or to redeem their Public Shares for cash equal to their pro rata share of the aggregate amount then on depositany monies held in the Trust Account, uponsuch parties may not execute such agreements, or even if they execute such agreements, they may not be prevented from bringing claims against the completionTrust Account.

SENTINEL ENERGY SERVICES INC.

NOTES TO CONDENSED Interim FINANCIAL STATEMENTS

(unaudited)

In connection with the Company’s assessment of going concern considerations in accordance with FASB’s Accounting Standards Update (“ASU”) 2014-15,“Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company determined that the mandatory liquidation and subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after the end of business on November 7, 2019 (See note 8).

As of September 30, 2019, the Company did not have sufficient liquidity to meet its future obligations. As of September 30, 2019, the Company had a working capital deficit of approximately $5.8 million, current liabilities of $6.0 million and had cash of approximately $180,000.

In addition to the convertible promissory note payable issued on March 1, 2019 (see Note 4), the Company will need to raise additional capital through loans or additional investments from its stockholders, officers, directors, or third parties. The Sponsor will financially support the Company sufficient for the Company to satisfy its obligations as they come due until the earlier of the Initial Business Combination, subjectconsummation of an initial business combination or up to the limitations described herein.mandatory liquidation as stipulated in the Company’s Charter (See note 8).

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed interim condensed financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the accounting and disclosure rules and regulations of the SEC, and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position as of March 31, 2018September 30, 2019 and the results of operations and cash flows for the periodperiods presented. Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. Interim results are not necessarily indicative of results for a full year.

The accompanying unaudited condensed interim condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2018 filed by the Company with the SEC on March 27, 2018.18, 2019.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, of 1933, as amended, (the “Securities Act”), as modified by the JOBS Act, and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholderstockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act)Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.periods. Actual results could differ from those estimates.

SENTINEL ENERGY SERVICES INC.

NOTES TO CONDENSED Interim FINANCIAL STATEMENTS

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. At March 31, 2018September 30, 2019 and December 31, 2017,2018, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheets.

Redeemable Ordinary SharesCash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.

Redeemable Common Stock

As discussed in Note 1, all of the 34,500,000 Public Shares contain a redemption feature which allows for the redemption of such shares under the Company’s amended and restated memorandum and articles of association.Charter. In accordance with FASB ASC Topic 480, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’sCompany’s equity instruments, are excluded from the provisions of FASB ASC Topic 480. Although the Company has not specified a maximum redemption threshold, its amended and restated memorandum and articles of associationCharter provides that in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001.

The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable shares of Class A ordinary sharescommon stock shall be affected by charges against additional paid in capital.

At March 31, 2018September 30, 2019 and December 31, 2017, 32,981,9402018, 33,340,301 and 32,898,039,33,046,570, respectively, of the 34,500,000 shares of Class A ordinary shares included in the Unitscommon stock were classified outside of permanent equity.

Net Income (Loss) Per Ordinary Share of Common Stock

Net income (loss) per ordinary share of common stock is computed by dividing net income (loss) applicable to ordinarythe shares of common stock by the weighted average number of shares outstanding for the period. The Company has not considered the effect of the warrants sold in the initial public offeringPublic Offering and Private Placementprivate placement to purchase an aggregate of 17,433,333 shares of Class A ordinary sharescommon stock in the calculation of diluted income (loss) per share, since their inclusion would be anti-dilutive.anti-dilutive under the Treasury Stock method. As a result, diluted net income (loss) per ordinary share of common stock is the same as basic net income per ordinary share of common stock for the period.periods as presented.

The Company’s statementcondensed interim statements of operations includes a presentation of net income (loss) per share for ordinary sharescommon stock subject to redemption in a manner similar to the two-class method. Net income per ordinary share of common stock, basic and diluted for shares of Class A ordinary sharescommon stock is calculated by dividing the interest income earned on the Trust Account,trust account, less applicable income tax expense, by the weighted average number of shares of Class A ordinary sharescommon stock outstanding for the period.periods. Net loss per ordinary share,common stock, basic and diluted for shares of Class B ordinary sharescommon stock is calculated by dividing net income, less income attributable to the shares of Class A ordinary shares,B common stock, by the weighted average number of shares of Class B ordinary sharescommon stock outstanding for the period.periods.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes under FASB ASC Topic 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

FASB Topic ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-notmore likely than not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s only majorThere were no unrecognized tax jurisdiction.benefits as of September 30, 2019 and December 31, 2018. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. ThereNo amounts were no unrecognized tax benefits and no amounts accrued for the payment of interest and penalties as of Marchat September 30, 2019 and December 31, 2018. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

SENTINEL ENERGY SERVICES INC.

NOTES TO CONDENSED Interim FINANCIAL STATEMENTS

(unaudited)

There is currently no taxation imposed onThe Company may be subject to potential examination by federal, state, and city taxing authorities in the areas of income bytaxes. These potential examinations may include questioning the Governmenttiming and amount of deductions, the nexus of income among various tax jurisdictions, and compliance with federal, state, and city tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

As a result of the Cayman Islands. In accordance with CaymanDomestication that took place on December 28, 2018 (as discussed in Note 1), the Company became subject to federal and state income tax regulations,purposes starting with the 2018 taxable year.

In connection with the Domestication and the termination of the proposed business combination with Strike (as discussed in Note 5), the Company may utilize certain previously recorded start-up costs as a deduction to their taxable income.

The Company’s current taxable income consists of interest income on the Trust Account net of franchise taxes and expenses of approximately $5.6 million related to the terminated business combination with Strike effective as of February 12, 2019 (as discussed in Note 5) and other tax deductible expenses in conjunction with the Company’s search for another business combination candidate. The Company’s costs are generally considered start-up costs and are not levied oncurrently deductible. During the Company. Consequently,three and nine months ended September 30, 2019, the Company recorded income taxes are not reflected in the Company’s financial statements.tax expense of approximately $104,000.

Related Parties

The Company follows Financial Accounting Standards Board (FASB) subtopic Accounting Standards Codification (ASC)FASB ASC 850-10 for the identification of related parties and disclosure of related party transactions.

Pursuant to ASC 850-10-20, the Company’s related parties include: (a) affiliates of the Company (“Affiliate” means, with respect to any specified person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person, as such terms are used in and construed under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

Subsequent Events

The Company evaluates subsequent events and transactions that occur after the balance sheet date for potential recognition or disclosure. Any material events that occur between the balance sheet date and the date that the financial statements were issued are disclosed as subsequent events, while the financial statements are adjusted to reflect any conditions that existed at the balance sheet date.

Recent Accounting Pronouncements

The Company’s management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have an effect on the Company’s financial statement.statements.

3. Public Offering

In November 2017, the Company closed its Public Offering of 34,500,000 Unitsunits at a price of $10.00 per Unit,unit (the “Units”), with gross proceeds of $345,000,000 from the sale of Units. The closings occurred on November 7, 2017 with respect to 30,000,000 Units and on November 9, 2017 with respect to 4,500,000 Units related to the exercise of the underwriters’ overallotment option.

Each Unit consists of one share of the Company’s Class A ordinary shares,common stock, $0.0001 par value, and one-third of one warrant (each, a “Warrant”“Public Warrant” and, collectively, the “Warrants”“Public Warrants”). Each whole Public Warrant entitles the holder to purchase one share of Class A ordinary sharecommon stock at a price of $11.50 per share. No fractional shares will be issued upon separation of the Units and only whole Public Warrants will trade. Each Public Warrant will become exercisable on the later of 30 days after the completion of the Company’s Initial Business Combinationinitial business combination or 12 months from the closing of the Public Offering and will expire five years after the completion of the Company’s Initial Business Combinationinitial business combination or earlier upon redemption or liquidation. Once the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants in whole and not in part at a price of $0.01 per Public Warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if the last sale price of the Company’s Class A ordinary sharescommon stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sent the notice of redemption to the Public Warrant holders.

SENTINEL ENERGY SERVICES INC.

NOTES TO CONDENSED Interim FINANCIAL STATEMENTS

(unaudited)

Simultaneous with the closing of the Public Offering on November 7, 2017, the SponsorSentinel Management Holdings, LLC (the “Sponsor”) purchased an aggregate of 5,333,333 Private Placement Warrantsprivate placement warrants at a price of $1.50 per whole warrant (approximately $8,000,000 in the aggregate) in a private placement.placement (the “Private Placement Warrants”). Simultaneously with the closing of the overallotment, the Company consummated the private placement of an additional 600,000 Private Placement Warrants to the Sponsor, generating gross proceeds of approximately $900,000.

The Company paid an underwriting discount of 2.0% of the per Unit offering price to the underwriters at the closing of the Public Offering, with an additional fee (the “Deferred Discount”“Deferred Discount”) of 3.5% of the gross offering proceeds payable upon the Company’s completion of an Initial Business Combination.initial business combination. The Deferred Discount will becomewas payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completescompleted its Initial Business Combination.initial business combination. 

4. Related Party Transactions

Founder Shares

In June 2017, the Sponsor entered into an Amended and Restated Securities Purchase Agreement, for the purchase of 14,375,000 shares of Class B ordinary sharescommon stock (the “Founder Shares”“Founder Shares”) for $25,000, or approximately $0.002 per share. As used herein, unless the context otherwise requires, “Founder Shares” shall be deemed to include the shares of Class A ordinary sharescommon stock issuable upon conversion thereof. The Sponsor is a portfolio company of CSL Capital Management, L.P., an energy services-focused private equity fund.

The Founder Shares are identical to the shares of Class A ordinary sharescommon stock included in the Units sold in the Public Offering except that (1) holders of the Founder Shares are shareshave the right to vote on the election of Class B ordinary shares which automatically convert into shares of Class A ordinary shares atdirectors prior to an initial business combination, (2) the time of the Company’s Initial Business Combination andFounder Shares are subject to certain transfer restrictions, as described in more detail below, (3) holders of the Founder Shares entered into letter agreements with the Company pursuant to which they agreed to waive their redemption rights with respect to any Founder Shares held by them in connection with the completion of an initial business combination, (4) the Founder Shares are shares of Class B common stock that will automatically convert into shares of Class A common stock at the time of an initial business combination and (5) the Founder Shares are subject to registration rights, as described below.

In August 2017, the Sponsor surrendered 5,750,000 shares of its Class B ordinary sharescommon stock for no consideration, resulting in the Sponsor holding an aggregate of 8,625,000 shares of Class B ordinary shares.common stock. This forfeiture also adjusted the shares subject to forfeiture from 1,875,000 to 1,125,000, to the extent that the over-allotment option is not exercised in full by the underwriters so that the Founder Shares will represent 20.0% of the Company’s issued and outstanding shares after the Public Offering.As described above, the underwriters exercised their overallotment option in connection with the Public Offering in full, and therefore none of the Founder Shares were forfeited.

The Company’s initial shareholdersstockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of the Initial Business Combinationan initial business combination or (B) subsequent to the Initial Business Combination,an initial business combination, (x) if the last sale price of the Company’s Class A ordinary sharescommon stock equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Initial Business Combination,an initial business combination, or (y) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction that results in all of the Company’s shareholdersstockholders having the right to exchange their ordinary sharescommon stock for cash, securities or other property.

The Sponsor and the Company’s officers and directors will agree, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the Initial Business Combination.

In October 2017 and April 2018, the Sponsor transferred 37,500 founder sharesFounder Shares to Marc Zenner and Jon A. Marshall, respectively, both of whom are independent directors of the Company, at the original purchase price. As a result of these transfers, the Sponsor holds 8,550,000 Founder Shares.

Private Placement Warrants

Upon the closing of the Public Offering on November 7, 2017 and November 9, 2017, the Sponsor purchased an aggregate of 5,933,333 Private Placement Warrants at a price of $1.50 per whole warrant (approximately $8,900,000 in the aggregate) in a private placement that occurred simultaneously with the closing of the Public Offering. Each whole Private Placement Warrant is exercisable forto purchase one whole share of the Company’s Class A ordinary sharecommon stock at a price of $11.50 per share. A portion of the purchase price of the Private Placement Warrants was added to the proceeds from the Public Offering held in the Trust Account. If the Initial Business Combination is not completed within 24 months from the closingThe remaining portion of the Public Offering,purchase price was held outside the Trust Account for transaction and working capital expenses. An initial business combination has not been completed by November 7, 2019, and therefore, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Warrants will expire worthless.worthless (see note 8). The Private Placement Warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.

The Sponsor and the Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of the Private Placement Warrants until 30 days after the completion of an initial business combination.

SENTINEL ENERGY SERVICES INC.

NOTES TO CONDENSED Interim FINANCIAL STATEMENTS

(unaudited)

Registration Rights

The holders of Founder Shares, Private Placement Warrants and Public Warrants that may be issued upon conversion of working capital loans, if any, will be entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to shares of Class A ordinary shares)common stock) pursuant to a registration rights agreement to be signed on or before the date of the prospectus for the Public Offering. These holders will be entitled to certain demand and “piggyback” registration rights.

However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Advances from Related Parties

During the three and nine months ended September 30, 2019, the Sponsor or an affiliate of the Sponsor incurred certain administrative expenses on behalf of the Company in the amount of $15,858 and $44,183, respectively. During the three and nine months ended September 30, 2018, the Sponsor or an affiliate of the Sponsor incurred certain administrative expenses on behalf of the Company in the amount of $4,793 and $94,168, respectively. These advances were due on demand and were non-interest bearing. The outstanding balance on the advances was repaid in full during the periods then ended.

Administrative Support Agreement

Commencing on the date the Units were first listed on the NASDAQ,Nasdaq, the Company agreed to pay an affiliate of the sponsorSponsor up to $10,000 per month for office space, utilities and secretarial and administrative support. Upon completion of the initial business combination or the Company’s liquidation, the Company will cease paying these monthly fees. The Company recorded $8,313incurred $7,139 and $17,589 for such expenses under the administrative service agreement for the three and nine months ended March 31, 2018.September 30, 2019, respectively. The Company incurred $3,642 and $16,005 for such expenses under the administrative service agreement for the three and nine months ended September 30, 2018, respectively.

OrdinaryOption Agreement

On November 2, 2017, the Company entered into an option agreement (“Option Agreement”) pursuant to which CSL Energy Opportunities Fund III, L.P. and CSL Energy Holdings III, Corp, LLC (“Option Holders”) agreed to purchase an aggregate of up to 10,000,000 units (the “Co-Investment Units”), consisting of one share of Class A common stock (the “Co-Investment Shares”) and one-third of one warrant to purchase one share of Class A common stock (the “Co-Investment Warrants,” and together with the Co-Investment Shares, the “Co-Investment Securities”), for $10.00 per unit (the “Exercise Price”), or an aggregate maximum amount of $100,000,000, immediately prior to the closing of the Company’s initial business combination.

The Co-Investment Warrants will have the same terms as the Private Placement Warrants so long as they are held by the Option Holders or its permitted transferees, and the Co-Investment Shares will be identical to the shares of Class A common stock included in the Units, except that the Co-Investment Shares will be subject to transfer restrictions and certain registration rights, as described herein. Any Co-Investment Warrant held by a holder other than the Option Holders or their permitted transferees will have the same terms as the Public Warrants.

The Option Holders will have the right to transfer a portion of their option to purchase the Co-Investment Securities to third parties, subject to compliance with applicable securities laws. The Option Agreement also provides that the Option Holders and any permitted transferees will be entitled to certain registration rights with respect to their Co-Investment Securities, including the shares of Class A common stock underlying their Co-Investment Warrants.

Convertible Promissory Note Payable

On March 1, 2019, the Company issued a convertible promissory note in the amount of up to $1,500,000 with the Sponsor to fund the Company’s ongoing expenses. The convertible promissory note does not bear interest and all unpaid principal will be due and payable in full on the earlier of November 7, 2019 or the consummation of an initial business combination by the Company. The Sponsor had the option to convert any amounts outstanding under the convertible promissory note into warrants of the post-business combination entity to purchase shares, at a conversion price of $1.50 per warrant. As of September 30, 2019, the outstanding balance on convertible promissory note was $999,640.

5. Termination of Proposed Business Combination

On October 18, 2018, the Company entered into a transaction agreement and plan of merger (the “Transaction Agreement”) with Strike, OEP Secondary Fund (Strike), LLC, One Equity Partners Secondary Fund, L.P., the other equityholders of Strike party thereto, OEP-Strike Seller Representative, LLC and SES Blocker Merger Sub, LLC, relating to the proposed acquisition by the Company of a majority of the equity interests of Strike. For more information on the proposed transaction, please see the Definitive Proxy Statement filed by the Company with the SEC on January 18, 2019. On February 12, 2019, the Company and Strike entered into a termination agreement (the “Termination Agreement”), pursuant to which the parties agreed to mutually terminate the Transaction Agreement, effective as of February 12, 2019.

SENTINEL ENERGY SERVICES INC.

NOTES TO CONDENSED Interim FINANCIAL STATEMENTS

(unaudited)

As a result of the termination of the Transaction Agreement, each of (i) the purchase and contribution agreement, dated as of October 18, 2018 (the “Contribution Agreement”), by and among the Company, Strike, LLC, a wholly owned subsidiary of Strike, CSL Energy Holdings III Corp, LLC and Invacor Pipeline and Process Solutions, LLC, (ii) the subscription agreements, dated as of October 18, 2018, between the Company and each of CSL Capital Management, L.P. and certain funds and accounts managed by Fidelity Management & Research Company, and (iii) the Voting and Support Agreement, dated as of October 18, 2018, by and among the Company, the Sponsor and certain stockholders of the Company party thereto, which the Company entered into in connection with the proposed acquisition, was automatically terminated in accordance with its terms.

Pursuant to the Termination Agreement, all costs and expenses (including all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a party and its affiliates) incurred by a party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of the Transaction Agreement, the Contribution Agreement or the Termination Agreement and the transactions contemplated thereby are to be paid by the party incurring such expenses. The Company incurred approximately $4.2 million of costs related to the proposed business combination. For more information, please see the Current Report on Form 8-K filed by the Company with the SEC on February 13, 2019 relating to the termination of the proposed business combination.

Of the approximate $4.2 million in costs related to the business combination, the Company negotiated with certain vendors to reduce the amounts due. Accordingly, the Company recorded a reduction in accrued expenses of $950,000 and reversed approximately $950,000 of general and administrative expenses during the three and nine months ended September 30, 2019.

6. Stockholders’ Equity

Common Stock

The authorized ordinary sharescommon stock of the Company includeincludes up to 200,000,000 shares of Class A ordinary sharescommon stock and 20,000,000 shares of Class B ordinary shares.common stock. If the Company enters into an Initial Business Combination,initial business combination, it may (depending on the terms of such an Initial Business Combination)initial business combination) be required to increase the number of shares of Class A ordinary sharescommon stock which the Company is authorized to issue at the same time as the Company’s shareholdersstockholders vote on the Initial Business Combinationan initial business combination to the extent the Company seeks shareholderstockholder approval in connection with the Initial Business Combination.an initial business combination. Holders of the Company’s ordinary sharescommon stock are entitled to one vote for each ordinary share.share of common stock held by them.

At March 31, 2018September 30, 2019 and December 31, 2017,2018, there were 34,500,000 shares of Class A issued and outstanding, of which 32,981,94033,340,301 and 32,898,039,33,046,570, respectively, were classified outside of permanent equity, and 8,625,000 shares of Class B ordinary sharescommon stock issued and outstanding.

Preferred SharesStock

The Company is authorized to issue 1,000,000 shares of preferred sharesstock with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At March 31, 2018September 30, 2019 and December 31, 2017,2018, there were no shares of preferred sharesstock issued or outstanding.

7. Fair Value Measurements

The following table presents information about the Company’s assets that are measured on a recurring basis as of March 31, 2018September 30, 2019 and December 31, 20172018 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability.

SENTINEL ENERGY SERVICES INC.

NOTES TO CONDENSED Interim FINANCIAL STATEMENTS

(unaudited)

8. Subsequent Events

Failure to Consummate an Initial Business Combination

The Charter and the prospectus that the Company filed in connection with its initial public offering provided that the Company had 24 months after the closing of its initial public offering, or until November 7, 2019, to complete a business combination. During the period since the Company’s initial public offering, the Company diligently searched for a business to combine with in a transaction that would generate value for the Company’s stockholders; however, over the same period, the energy sector experienced significant headwinds, which increased the challenges faced by the Company in sourcing a compelling target business. Despite the Company’s best efforts, it was not able to consummate a business combination prior to the November 7, 2019 deadline under its Charter. As a result, the Company has commenced the liquidation of the Trust Account and will return the funds held therein to its public stockholders by redeeming 100% of the Company’s Public Shares in accordance with the Charter, which will completely extinguish the public stockholders’ rights in the Company. 

Warrants and Founder Shares

In addition, the Company intends to propose to the holders of its Public Warrants an amendment to the Warrant Agreement, dated as of November 2, 2017 (the “Warrant Agreement”), between the Company and Continental Stock Transfer & Trust Company, to automatically convert each of the Company’s 11,500,000 outstanding Public Warrants into the right to receive $0.02 per whole Public Warrant, payable in cash. If the Warrant Agreement amendment is not approved, the Company will liquidate the Public Warrants and they will expire worthless.

The Sponsor has agreed to forfeit 90% of the 8,550,000 Founder Shares and all of the 5,933,333 Private Placement Warrants held by it for no consideration because the Company was unable to consummate an initial business combination by the November 7, 2019 deadline under its Charter.

Deferred Discount

In accordance with the terms of the underwriting agreement entered into in connection with the Public Offering, the underwriters forfeited any rights or claims to the Deferred Discount because the Company was unable to consummate an initial business combination by the November 7, 2019 deadline under its Charter.

Promissory Note

In addition, in accordance with the terms of the convertible promissory note, the unpaid principal of $999,640 became due on November 7, 2019. The Company and the Sponsor are currently evaluating the treatment of the convertible promissory note.