Nabors Energy Transition (NETC) - 2022 Q4 - Annual Report

PART I Item 1. Business NETC is a blank check company focused on energy transition, recently agreeing to merge with Vast Solar, leveraging its sponsor's expertise Company Overview and Formation NETC, a blank check company incorporated in March 2021, completed its IPO and a private placement in November 2021 - NETC is a blank check company incorporated on March 24, 2021, with no operating history or revenues[23] Initial Public Offering and Private Placement Proceeds | Event | Date | Gross Proceeds | | :-------------------------- | :----------- | :------------- | | Initial Public Offering (Units) | Nov 19, 2021 | $276.0 million | | Private Placement (Warrants) | Nov 19, 2021 | $13.7 million | Proposed Business Combination with Vast Solar NETC entered a Business Combination Agreement with Vast Solar in February 2023, involving a merger, security exchange, and earn-out - On February 14, 2023, NETC entered into a Business Combination Agreement with Vast Solar Pty Ltd for a merger where NETC will become a wholly-owned subsidiary of Vast[27] - The Business Combination involves the exchange of NETC's Class A common stock for Vast Ordinary Shares and the assumption of NETC's warrants, converting them into Vast Warrants[32] - An earn-out provision allows for the issuance of up to 2,799,999 additional Vast Ordinary Shares to eligible Vast shareholders and up to 3,900,000 additional Vast Ordinary Shares to the sponsor, contingent on share price targets and project milestones within a five-year period post-closing[34][38] Business Strategy and Acquisition Focus NETC's strategy is to acquire energy transition companies, leveraging Nabors' expertise and focusing on ESG factors - NETC's strategy focuses on the "energy transition" by identifying solutions, opportunities, companies, or technologies that facilitate the shift from fossil fuels to renewable energy sources and reduce GHG emissions[51] - Specific focus sectors include alternative energy (e.g., geothermal), energy storage, emissions reduction, carbon capture (CCUS), advanced combustion, autonomous/industrial mobility, and other industrial applications[52][54][55] - The company leverages its sponsor, Nabors, for global market access, manufacturing proficiency, and expertise in developing and commercializing technologies, aiming for acquisition opportunities with strong growth prospects and sustainable competitive advantages[56][57][58][60][61] Acquisition Process and Governance The acquisition process involves due diligence, with potential conflicts of interest due to management's external affiliations and part-time roles - The acquisition process involves thorough due diligence, including meetings with management, document reviews, and facility inspections, utilizing operational and capital allocation experience[69] - Potential conflicts of interest exist due to officers and directors allocating time to other businesses (e.g., Nabors) and having fiduciary/contractual obligations to other entities, though the company's charter renounces interest in opportunities not solely offered to them in their NETC capacity[71][73][74][75] - NETC's status as an existing public company offers target businesses an alternative to traditional IPOs, providing access to public capital markets and potential for increased profile and management incentives[78][79] Financial Position and Business Combination Funding As of December 31, 2022, NETC held $284.8 million in its trust account, planning to fund acquisitions via cash, stock, or debt Funds in Trust Account | Metric | Amount (as of Dec 31, 2022) | | :-------------------------------- | :-------------------- | | Funds in Trust Account | $284.8 million | - NETC plans to fund its initial business combination using cash from IPO proceeds, private placement warrants, capital stock, debt, or a combination, allowing flexibility in tailoring consideration to target business needs[86] - The company may need additional financing if the transaction requires more cash or if significant redemptions occur, potentially involving additional securities issuance or debt[89] Shareholder Redemption and Liquidation Provisions Public stockholders have redemption rights upon business combination completion, subject to limitations, with mandatory liquidation if no deal is done within 21 months - Public stockholders can redeem their Class A common stock upon completion of the initial business combination for a cash price based on the trust account value, without reduction for deferred underwriting commissions[118] - Redemptions are subject to limitations, including preventing the Class A common stock from being considered "penny stock" (less than $5,000,001 in net tangible assets) and meeting minimum cash requirements in the business combination agreement[119] - If an initial business combination is not completed within the extended 21-month period, the company will cease operations, redeem public shares at a pro-rata portion of the trust account funds (less taxes and dissolution expenses), and liquidate, with warrants expiring without value[136] Operational Aspects and Regulatory Compliance NETC faces intense competition, operates with a part-time management team, and benefits from reduced reporting as an emerging growth company - NETC faces intense competition from other blank check companies, private equity groups, and operating businesses for acquisition opportunities, potentially placing it at a competitive disadvantage due to limited financial resources and its capital structure[156] - The company operates with four officers who are not obligated to devote full-time to its affairs, with their time commitment varying based on the stage of the business combination process[157] - As an "emerging growth company" under the JOBS Act, NETC is eligible for exemptions from certain reporting requirements, such as auditor attestation for Section 404 of Sarbanes-Oxley and reduced executive compensation disclosures, and has elected to delay adoption of new accounting standards[81][82][165][166] Item 1A. Risk Factors Significant risks include the Vast business combination, acquisition challenges, securities-related issues, and conflicts of interest with sponsor and management - Significant risks include the potential inability to complete the proposed Business Combination with Vast, the Convertible Financing, or the PIPE Financing in a timely manner or at all, due to conditions like stockholder approvals or minimum cash requirements[169][170][171] - As a blank check company with no operating history or revenues, investors lack a basis to evaluate NETC's ability to achieve its business objective, and past performance of the management team or Nabors is not indicative of future success[172][173] - Risks related to NETC's securities include potential delisting from NYSE, limited investor protections compared to other blank check companies, and the possibility of warrants expiring worthless if no business combination is completed[272][279][184] - Conflicts of interest may arise from officers and directors allocating time to other businesses (e.g., Nabors) and their significant economic interest in NETC's founder shares, potentially influencing business combination decisions[176][344][349][355][356] Risks Related to the Proposed Business Combination and Vast Risks include uncertainty in completing the Vast Business Combination, Convertible Financing, or PIPE Financing due to unmet conditions - The Business Combination, Convertible Financing, and PIPE Financing with Vast are subject to conditions, including required stockholder/shareholder approvals and minimum available cash, which may not be satisfied, leading to potential failure or delay[169][170][171] Risks Relating to Our Search for, Consummation of, or Inability to Consummate, a Business Combination and Post-Business Combination Risks Risks include NETC's blank check nature, reliance on management, challenges in timely business combination, competition, and high redemption rates - As a blank check company with no operating history or revenues, there is no basis to evaluate NETC's ability to achieve its business objective, and past performance of the management team or Nabors is not indicative of future success[172][173] - The requirement to complete a business combination within a prescribed timeframe (up to 21 months) may give target businesses leverage and limit due diligence time, potentially leading to unfavorable terms or inability to complete a deal[183][184] - High redemption rates by public stockholders could make NETC's financial condition unattractive to targets, hinder meeting closing conditions (e.g., minimum cash of $50 million for Vast deal), or force restructuring/abandonment of desirable combinations[179][180][182] - Increased competition among SPACs for attractive targets may raise acquisition costs or make it difficult to find and consummate an initial business combination[186][187] Risks Relating to Our Securities Risks include limited stockholder rights, potential NYSE delisting, worthless warrants, high exercise price, adverse warrant amendments, and uncertain tax consequences - Public stockholders have rights to funds from the trust account only under limited circumstances (redemption upon business combination, charter amendment, or liquidation), forcing them to sell shares/warrants to liquidate investment, potentially at a loss[270][271] - There is a risk of delisting from the NYSE if NETC fails to meet listing requirements, which could limit trading, reduce liquidity, and potentially classify Class A common stock as "penny stock"[272][273] - The exercise price of public warrants ($11.50 per share) is higher than some other blank check companies, making them more likely to expire without value; terms of warrants can be amended adversely with 50% holder approval[307][308][309] - An investment in NETC securities may result in uncertain or adverse U.S. federal income tax consequences, including issues with basis allocation for units, cashless warrant exercise, and holding period for Class A common stock[328] - The company may be subject to a new 1% U.S. federal excise tax on stock repurchases (including redemptions) after December 31, 2022, which could reduce cash available for distribution in a subsequent liquidation[332][335] Risks Relating to Our Sponsor and Management Team Risks arise from reliance on officers and directors, potential conflicts of interest due to external affiliations, and significant sponsor economic incentives - NETC is dependent on its officers and directors, whose loss could adversely affect operations; they are not full-time, leading to potential conflicts in allocating time to NETC versus other businesses, including Nabors[336][344] - Conflicts of interest may arise from officers and directors having fiduciary/contractual obligations to other entities (e.g., Nabors) and their significant economic interest in founder shares (purchased at ~$0.004/share), potentially influencing business combination decisions[345][346][349][355][356] - The sponsor and initial stockholders control the election of directors until the business combination and hold a substantial interest (20% of common stock, 71% of voting power post-combination), allowing them to exert significant influence on corporate actions[360][302] General Risk Factors General risks include dilution, emerging growth company status affecting comparability, Sarbanes-Oxley compliance, anti-takeover provisions, and cyber incidents - Issuance of additional common or preferred stock, or conversion of Class B common stock, could significantly dilute existing equity interests, subordinate common stock rights, and affect market prices[365][368] - As an "emerging growth company," NETC benefits from exemptions but may be less attractive to some investors, leading to less active trading and more volatile prices, and its financial statements may not be comparable to non-emerging growth companies[366][367] - Compliance with Sarbanes-Oxley Act, especially for a target business, may increase time and costs for acquisition; provisions in the certificate of incorporation may inhibit takeovers and discourage lawsuits against directors and officers[370][371][372] Item 1B. Unresolved Staff Comments This item confirms the absence of unresolved staff comments from the SEC - Not applicable, indicating no unresolved staff comments[374] Item 2. Properties NETC's executive offices are in Houston, TX, with monthly reimbursement of $15,000 to the sponsor for space and support - Executive offices are located at 515 West Greens Road, Suite 1200, Houston, TX 77067[375] - The company reimburses its sponsor or an affiliate $15,000 per month for office space, utilities, and administrative support[375] Item 3. Legal Proceedings No material legal, arbitration, or governmental proceedings are currently pending against NETC or its management - No material litigation, arbitration, or governmental proceedings are currently pending against NETC or its management[376] Item 4. Mine Safety Disclosure This item is not applicable to NETC - Not applicable[377] PART II Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities NETC's securities trade on NYSE, with specific holder counts; no dividends paid or planned before a business combination; recent unregistered sales occurred - NETC's Units (NETC.U), Class A common stock (NETC), and Warrants (NETC.WS) began trading on the NYSE in November 2021 and January 2022, respectively[379] - As of March 22, 2023, there was one holder of record for Units and Class A common stock, four for Class B common stock, one for Warrants, and sixteen for private placement warrants[380] - The company has not paid cash dividends and does not intend to prior to a business combination; future dividend payments are at the discretion of the board and may be limited by debt covenants[381] Market and Holder Information NETC's units, Class A common stock, and warrants are listed and traded on the NYSE, with separate trading beginning in late 2021 and early 2022 - Units (NETC.U) began trading on NYSE on November 17, 2021[379] - Class A common stock (NETC) and Warrants (NETC.WS) began separate trading on NYSE on January 7, 2022[379] Holders of Record | Security Type | Holders of Record (as of March 22, 2023) | | :---------------------- | :--------------------------------------- | | Units | 1 | | Class A Ordinary Shares | 1 | | Class B Ordinary Shares | 4 | | Warrants | 1 | | Private Placement Warrants | 16 | Dividends and Equity Compensation Plans NETC has not paid dividends and does not plan to before a business combination; future dividends depend on post-combination performance; no equity compensation plans exist - No cash dividends have been paid to date, and none are intended prior to the completion of a business combination[381] - The payment of future cash dividends is at the discretion of the board of directors and will depend on revenues, earnings, capital requirements, and financial conditions post-business combination[381] - No securities are authorized for issuance under equity compensation plans[382] Recent Securities Sales and Use of Proceeds NETC issued founder shares, sold private placement warrants, raised $276.0 million in IPO, and extended its combination period via a $2.76 million loan - 6,900,000 founder shares were issued to the sponsor and independent directors for a nominal aggregate price of $25,000 (initially 8,625,000 shares, with 1,900,000 surrendered by sponsor and 175,000 issued to independent directors)[383][384] IPO and Private Placement Proceeds | Event | Gross Proceeds | Funds in Trust Account | | :-------------------------- | :------------- | :--------------------- | | Initial Public Offering | $276.0 million | $281.5 million | | Private Placement Warrants | $13.7 million | | - On February 16, 2023, the company extended its business combination period by three months, funded by an aggregate $2,760,000 unsecured promissory note from Nabors Lux and Greens Road Energy LLC (affiliates of the Sponsor)[387] Item 6. [Reserved] This item is reserved and contains no information - This item is reserved and contains no information[391] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section reviews NETC's financial condition and operations, noting no operating revenues, a $1.3 million net income in 2022, and $0.5 million cash - NETC is a blank check company with no operating revenues, its activities limited to IPO preparation and searching for a business combination[393][399] Statement of Operations Summary | Metric | Year Ended Dec 31, 2022 | Period from Mar 24, 2021 (inception) to Dec 31, 2021 | | :----------------------------------- | :---------------------- | :--------------------------------------------------- | | Net Income (Loss) | $1.3 million | $(0.3) million | | General & Administrative Expenses | $2.0 million | $0.3 million | | Interest Income (Trust Investments) | $4.1 million | $3,211 | | Income Taxes | $0.8 million | $0 | Cash and Working Capital | Metric | As of Dec 31, 2022 | As of Dec 31, 2021 | | :-------------------- | :----------------- | :----------------- | | Cash | $0.5 million | $2.5 million | | Working Capital | $0.5 million | $1.7 million | Overview and Business Combination Context NETC, an emerging growth blank check company, raised $276.0 million in its 2021 IPO, with funds in trust for a business combination - NETC is a blank check company formed to effect a business combination, and is an "emerging growth company" under the JOBS Act[393] Initial Public Offering and Private Placement Proceeds | Event | Date | Gross Proceeds | Funds in Trust Account | | :-------------------------- | :----------- | :------------- | :--------------------- | | Initial Public Offering | Nov 19, 2021 | $276.0 million | $281.5 million | | Private Placement | Nov 19, 2021 | $13.7 million | | - The company's initial business combination must have a fair market value of at least 80% of the net assets held in the trust account[461] Results of Operations NETC reported no operating revenues, with a 2022 net income of $1.3 million from trust interest, offset by expenses and taxes - The company has not generated any operating revenues since inception, with activity limited to searching for a business combination[399] Statement of Operations Summary | Metric | Year Ended Dec 31, 2022 | Period from Mar 24, 2021 (inception) to Dec 31, 2021 | | :----------------------------------- | :---------------------- | :--------------------------------------------------- | | Net Income (Loss) | $1,297,593 | $(248,154) | | General & Administrative Expenses | $1,963,012 | $251,365 | | Interest Income (Trust Investments) | $4,073,078 | $3,211 | | Income Taxes | $812,473 | $0 | Liquidity and Capital Resources As of December 31, 2022, NETC had $0.5 million in cash; liquidity is sufficient until August 2023, but liquidation thereafter raises going concern doubts Cash and Working Capital | Metric | As of Dec 31, 2022 | As of Dec 31, 2021 | | :-------------------- | :----------------- | :----------------- | | Cash | $0.5 million | $2.5 million | | Working Capital | $0.5 million | $1.7 million | - Liquidity needs were satisfied by proceeds from the Private Placement not held in the Trust Account[402] - Management believes sufficient working capital exists until August 19, 2023, the business combination deadline, but mandatory liquidation thereafter raises substantial doubt about the company's ability to continue as a going concern[403][475] Related Party Transactions Related party transactions include founder shares, private placement warrants, sponsor loans for working capital and extensions, and administrative support fees - Founder shares (6,900,000 outstanding) were issued to the sponsor and independent directors for a nominal price[404][500] - 13,730,000 private placement warrants were sold to the sponsor's owners and independent directors for $1.00 each, generating $13.7 million[405][497] - The company received a $300,000 promissory note from a sponsor affiliate (repaid) and may receive "Working Capital Loans" from sponsor affiliates or officers/directors, convertible into warrants; as of Dec 31, 2022, $135,000 was owed to an affiliate for administrative support[406][407][408][502][503][504] - An administrative support agreement with a sponsor affiliate provides for reimbursement of $15,000 per month for office space, utilities, and secretarial/administrative support[410][505] - On February 16, 2023, the company extended its business combination period by three months via a $2,760,000 unsecured promissory note from sponsor affiliates, convertible into warrants at the sponsor's option if a business combination is consummated[423][424][537][538] Contractual Obligations Contractual obligations include registration rights for shares and warrants, plus $9.7 million in deferred underwriting commissions payable upon business combination - Holders of founder shares, private placement warrants, and warrants from working capital/extension loans are entitled to registration rights, with the company bearing filing expenses[425][508] Deferred Underwriting Commissions | Obligation | Amount | Condition for Payment | | :-------------------------- | :------------- | :-------------------- | | Deferred Underwriting Commissions | $9.7 million | Completion of initial Business Combination | Critical Accounting Policies and JOBS Act Critical accounting policies involve estimates for redeemable Class A common stock; as an emerging growth company, NETC delays new accounting standards and has reduced reporting - Preparation of financial statements requires significant management judgment and estimates, with actual results potentially differing from estimates[428][429][476][477] - Class A common stock subject to possible redemption is classified as temporary equity due to redemption rights being outside the company's control or subject to uncertain future events[431][485] - As an "emerging growth company" under the JOBS Act, NETC has elected to delay the adoption of new or revised accounting standards, which may make its financial statements less comparable to other public companies[434][472][473][474] - NETC benefits from reduced reporting requirements as an emerging growth company, including exemptions from auditor attestation for internal controls and certain executive compensation disclosures[435][471] Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, NETC is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, NETC is exempt from providing quantitative and qualitative disclosures about market risk[436] Item 8. Financial Statements and Supplementary Data This section presents audited financial statements and auditor's report, highlighting a going concern uncertainty due to mandatory liquidation if no business combination by August 2023 - The section includes audited financial statements for the year ended December 31, 2022, and the period from March 24, 2021 (inception) to December 31, 2021[439] - The independent auditor's report raises "substantial doubt about the Company's ability to continue as a going concern" due to the mandatory liquidation if a business combination is not completed by August 19, 2023[440][475] Independent Auditor's Report The independent auditor issued an unqualified opinion but noted a going concern uncertainty due to mandatory liquidation if no business combination by August 2023 - Ham, Langston & Brezina, LLP issued an unqualified opinion on the financial statements for the periods ended December 31, 2022, and 2021[439] - The report highlights a "going concern" issue, noting substantial doubt about the company's ability to continue if a business combination is not completed by August 19, 2023, leading to mandatory liquidation[440] Consolidated Financial Statements This sub-section presents the Balance Sheets, Statements of Operations, Changes in Stockholders' Equity, and Statements of Cash Flows Balance Sheet Summary | Balance Sheet Item | Dec 31, 2022 | Dec 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Cash | $468,461 | $2,505,395 | | Investments held in Trust | $284,840,707 | $281,523,211 | | Total Assets | $285,684,168 | $284,028,606 | | Total Liabilities | $11,463,658 | $11,105,689 | | Class A common stock subject to redemption | $284,477,945 | $281,520,000 | | Total Stockholders' Deficit | $(10,257,435) | $(8,597,083) | Statement of Operations Summary | Statement of Operations Item | Year Ended Dec 31, 2022 | Period from Mar 24, 2021 (inception) to Dec 31, 2021 | | :----------------------------------- | :---------------------- | :--------------------------------------------------- | | General and administrative expenses | $1,963,012 | $251,365 | | Interest income earned on investments held in trust | $4,073,078 | $3,211 | | Net income (loss) | $1,297,593 | $(248,154) | | Basic and diluted net income per redeemable common share | $0.04 | $2.95 | | Basic and diluted net income (loss) per non-redeemable common share | $0.04 | $(1.96) | Statement of Cash Flows Summary | Cash Flow Item | Year Ended Dec 31, 2022 | Period from Mar 24, 2021 (inception) to Dec 31, 2021 | | :----------------------------------- | :---------------------- | :--------------------------------------------------- | | Net cash (used by) provided by operating activities | $(2,792,516) | $3,211 | | Net cash provided by (used in) investing activities | $755,582 | $(281,523,211) | | Net cash provided by financing activities | $0 | $284,025,395 | | Net (decrease) increase in cash | $(2,036,934) | $2,505,395 | | Cash - end of the period | $468,461 | $2,505,395 | Notes to Financial Statements Notes detail NETC's organization, accounting policies, IPO, private placement, related party transactions, and subsequent events including the Vast Solar combination - NETC is a blank check company formed for a business combination, with its IPO in November 2021 raising $276.0 million and placing $281.5 million in a trust account[456][458][460] - The company's ability to continue as a going concern is uncertain due to mandatory liquidation if a business combination is not completed by August 19, 2023[475] - Class A common stock subject to possible redemption is classified as temporary equity, and all warrants have met criteria for equity treatment[485][486] - Related party transactions include founder shares, private placement warrants, and administrative support fees of $15,000 per month to a sponsor affiliate[500][504][505] - Subsequent events include the waiver of deferred underwriting fees by Citi Bank and Wells Fargo, the Business Combination Agreement with Vast Solar on February 14, 2023, and a three-month extension of the business combination period via a $2,760,000 promissory note from sponsor affiliates on February 16, 2023[534][535][537] Item 9. Change in and Disagreements with Accountants on Accounting and Financial Disclosure There have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure[542] Item 9A. Controls and Procedures As of December 31, 2022, management concluded that disclosure controls and internal control over financial reporting were effective, with no material changes - As of December 31, 2022, the CEO and CFO concluded that disclosure controls and procedures were effective[544] - Management assessed and concluded that internal control over financial reporting was effective as of December 31, 2022, based on the COSO framework[547] - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[548] Item 9B. Other Information This item states that there is no other information to report - None[550] Item 9C. Disclosure regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to NETC - Not applicable[551] PART III Item 10. Directors, Executive Officers and Corporate Governance This section details NETC's leadership, board committees, and potential conflicts of interest due to affiliations with Nabors and other entities - The board of directors consists of five members, and there are four executive officers, including Anthony G. Petrello (President, CEO, Secretary, Chairman) and William J. Restrepo (CFO)[553] - Directors and officers possess extensive experience in the energy sector, finance, and technology, with many holding leadership roles at Nabors Industries Ltd. and other energy-related companies[553][554][555][556][558][560][561][562][563][566][567][568][569] - The board has three standing committees: Audit, Compensation, and Nominating and Corporate Governance, all composed of independent directors (Mmes. Dreyfus, Calhoun, Roberts)[575][576][580][583] Board of Directors and Executive Officers NETC's leadership includes key executives and directors, with a staggered board where founder shareholders elect directors before a business combination Board of Directors and Executive Officers | Name | Age | Position | | :------------------ | :-- | :------------------------------------------------ | | Anthony G. Petrello | 68 | President, Chief Executive Officer, Secretary and Chairman | | William J. Restrepo | 63 | Chief Financial Officer | | Guillermo Sierra | 38 | Vice President-Energy Transition | | Siggi Meissner | 70 | President, Engineering and Technology | | John Yearwood | 63 | Director | | Maria Jelescu Dreyfus | 43 | Director | | Colleen Calhoun | 56 | Director | | Jennifer Gill Roberts | 60 | Director | - The board of directors is divided into three classes with staggered three-year terms, and holders of Class F common stock (initial stockholders) have the right to elect all directors prior to the initial business combination[570][571] Board Committees and Governance The board has Audit, Compensation, and Nominating and Corporate Governance committees, all composed of independent directors overseeing key governance functions - The board has three standing committees: Audit, Compensation, and Nominating and Corporate Governance, all composed of independent directors (Mmes. Dreyfus, Calhoun, Roberts)[575][576][580][583] - Ms. Dreyfus chairs the Audit Committee and qualifies as an "audit committee financial expert"[577] - The company has adopted a Code of Ethics applicable to directors, officers, and employees, and corporate governance guidelines in accordance with NYSE rules[590][591] Conflicts of Interest Potential conflicts of interest arise from officers' and directors' affiliations with Nabors and other entities, with the charter renouncing certain corporate opportunities - Nabors and its affiliates may compete with NETC for acquisition opportunities, and investment ideas suitable for both may be directed to Nabors first[592][595] - Officers and directors have fiduciary or contractual obligations to other entities (e.g., Nabors), potentially creating conflicts in allocating time and presenting business opportunities[596] - The company's amended and restated certificate of incorporation renounces interest in corporate opportunities offered to directors or officers unless expressly offered solely in their NETC capacity and suitable for the company[598] - A table summarizes the various entities to which officers and directors have fiduciary duties or contractual obligations, highlighting potential conflicts[607] Indemnification and Reporting NETC indemnifies officers and directors to the fullest extent of Delaware law, and all Section 16(a) reporting requirements were met for 2022 - Officers and directors are indemnified to the fullest extent by Delaware law, and directors are not personally liable for monetary damages for fiduciary duty breaches, with specific exceptions[608][609] - Officers and directors have waived rights to monies in the trust account and will not seek recourse against it for any reason[612] - All Section 16(a) reporting requirements for directors, certain officers, and 10% beneficial owners were complied with for the fiscal year ended December 31, 2022[615] Item 11. Executive Compensation No cash compensation has been paid to officers or directors; the company reimburses $15,000 monthly for administrative support and covers expenses; post-combination fees are possible - No cash compensation has been paid to officers or directors for services rendered to NETC[616] - The company reimburses its sponsor or an affiliate $15,000 per month for office space, utilities, and administrative support, and covers out-of-pocket expenses for business combination activities[616][603] - After the business combination, directors or management may receive consulting or management fees, with amounts determined by the compensation committee or independent directors[619] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Party Shareholder Matters This section details beneficial ownership of NETC's common stock as of March 22, 2023, with the sponsor and Anthony G. Petrello holding 19.5% Beneficial Ownership of Common Stock | Name of Beneficial Owner | Number of Shares Beneficially Owned (as of Mar 22, 2023) | Approximate % Outstanding Common Stock | | :----------------------------------- | :------------------------------------------------------- | :------------------------------------- | | Nabors Energy Transition Sponsor LLC | 6,725,000 | 19.5% | | Saba Capital Management, L.P. | 2,245,367 | 6.5% | | Anthony G. Petrello | 6,725,000 | 19.5% | | All executive officers and directors as a group (8 individuals) | 6,901,500 | 20.0% | - Nabors Energy Transition Sponsor LLC and Anthony G. Petrello are significant beneficial owners, with their interests primarily in founder shares (Class F common stock) convertible into Class B common stock[626][628] Item 13. Certain Relationships and Related Transactions and Director Independence This section details related party transactions, including founder shares, private placement warrants, and sponsor loans, and confirms the independence of certain directors - Related party transactions include the issuance of 6,900,000 founder shares to the sponsor and independent directors, and the sale of 13,730,000 private placement warrants to sponsor owners and independent directors[626][627] - The company has received loans from sponsor affiliates for working capital and administrative support, including a $300,000 promissory note (repaid) and current obligations of $135,213 as of December 31, 2022[628][629][630] - An administrative support agreement requires reimbursement of $15,000 per month to the sponsor or an affiliate for office space and administrative services[631] - The board has determined that Mmes. Dreyfus, Calhoun, and Roberts are "independent directors" as per NYSE listing standards, despite NETC's status as a "controlled company" which exempts it from certain independence requirements[634][635] Related Party Transactions This sub-section details financial and equity relationships with related parties, including founder shares, private placement warrants, and sponsor loans - Founder shares (6,900,000 outstanding) were issued to the sponsor and independent directors for a nominal price[626] - 13,730,000 private placement warrants were sold to the sponsor's owners and independent directors for $1.00 each, generating $13.7 million[627] - The company has an administrative support agreement to reimburse the sponsor or an affiliate $15,000 per month for office space and administrative services[631] - Loans from sponsor affiliates include a $300,000 promissory note (repaid) and working capital loans, with $135,213 owed as of December 31, 2022[628][629][630] Director Independence While exempt as a "controlled company," NETC's board has determined Mmes. Dreyfus, Calhoun, and Roberts are independent directors - The NYSE requires a majority of independent directors, but NETC is exempt as a "controlled company"[634] - Mmes. Dreyfus, Calhoun, and Roberts are determined to be "independent directors" under NYSE listing standards and applicable SEC rules[634] Item 14. Principal Accountant Fees and Services This section details audit fees paid to HL&B for 2022 ($56.8 thousand) and 2021 ($74.3 thousand), with the audit committee pre-approving all services Principal Accountant Fees | Fee Type | Year Ended Dec 31, 2022 | Period from Mar 24, 2021 (inception) to Dec 31, 2021 | | :-------------------- | :---------------------- | :--------------------------------------------------- | | Audit Fees | $56.8 thousand | $74.3 thousand | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | - The audit committee is responsible for appointing, setting compensation, overseeing, and pre-approving all audit and permitted non-audit services provided by the independent registered public accounting firm[641] PART IV Item 15. Exhibits and Financial Statement Schedules This section lists all exhibits and financial statement schedules filed with the Form 10-K, including the Business Combination Agreement and certifications - The section includes a comprehensive list of exhibits and financial statement schedules filed with the Annual Report on Form 10-K[643] - Key exhibits include the Business Combination Agreement with Vast Solar, Amended & Restated Certificate of Incorporation, Private and Public Warrant Agreements, and various related party agreements[645][646][647][648] - Certifications required by Rule 13a-14(a)/15d-14(a) and Section 1350 of Title 18 of the United States Code from the CEO and CFO are also filed[648]