Item 2.01. Completion of Acquisition of Disposition of Assets.

THE BUSINESS COMBINATION AND RELATED TRANSACTIONS

The Business Combination

On November 12, 2017, NESR, entered into the following agreements to acquire 100% of the shares of two independent oil field service companies operating in the Middle East and North Africa, GES and NPS:

The Business Combination was approved by NESR’s   shareholders at the special meeting in lieu of an annual meeting of shareholders (the “Special Meeting”) on May 18, 2018. At the Special Meeting, 26,238,964 ordinary share, were voted in favor of the proposal to approve the Business Combination, 123,129 ordinary shares were voted against the proposal, and holders of 14,620 ordinary shares abstained from voting on the proposal. In connection with the Business Combination, public shareholders holding 1,916,511 ordinary shares elected to have such shares redeemed for an aggregate amount of $19,379,614.

On June 6, 2018, NESR consummated the Business Combination and related transactions, including but not limited to an approximately $48.2 million drawdown on the Backstop, (as defined below) and a $50 million convertible loan borrowed from Hana Investments Co. WLL, all as described in further detail below.

As of the Closing Date and following the completion of the Business Combination and related redemptions, the Company had the following outstanding securities: (a) 85,562,769 ordinary shares, (b) 22,921,700 public warrants, and (c) 12,618,680 private warrants.

Prior to the Closing, NESR was a shell company (as defined in Rule 12b-2 of the Exchange Act ) with no operations, formed as a vehicle to effect a business combination with one or more operating businesses. After the Closing, the Company became a holding company whose assets primarily consist of interests in its subsidiaries, NPS and GES. The following information summarizes the material agreements and related transactions that were entered into and consummated in connection with the Business Combination.

The NPS Transaction

NPS Stock Purchase Agreement

The NPS Selling Stockholders agreed pursuant to the NPS Stock Purchase Agreement to sell to NESR and Hana Investments, by June 30, 2018 or at such later time as mutually agreed upon by the parties, 100% of the 370,000,000 outstanding NPS shares in two (2) separate closings. The total consideration to be paid to the NPS Selling Stockholders pursuant to the Hana Investments and the NESR closings, assuming no NPS Leakage (defined below) adjustments, will be $442.8 million in cash (including $150.0 million from Hana Investments) plus 11,318,828 ordinary shares of NESR valued at $10.00 per share. In addition, the NPS Selling Stockholders elected to declare a dividend after execution of the NPS Stock Purchase Agreement and receive a distribution out of certain receivables proceeds from NPS, of $48 million (the “Receivable Proceeds”).

First Closing . Hana Investments agreed in the NPS Stock Purchase Agreement to pay $150.0 million of the total cash requirements to NPS Selling Stockholders in exchange for 83,660,878 shares of NPS. This payment was made on January 14, 2018. The NPS Selling Stockholders mutually agreed on the proportion of cash to be received by each of the NPS Selling Stockholders and on the allocation of NESR shares to be received among the NPS Selling Stockholders who remain shareholders in NESR through the Closing Date.

Second Closing. Upon approval by the shareholders of NESR, NESR agreed to buy the remaining outstanding NPS shares by (i) paying the remaining $292.8 million cash required and (ii) issuing 11,318,828 ordinary shares of NESR ordinary shares valued at $10.00 per share for the balance of the purchase price, adjusted for any NPS Leakage. “NPS Leakage” is defined in the NPS Stock Purchase Agreement to cover transfers or removals of assets from NPS for the benefit of the NPS Selling Stockholders, other than Receivable Proceeds.

Contemporaneously with the Closing Date, Hana Investments agreed to transfer the 83,660,878 NPS shares it acquired from the NPS Selling Stockholders to NESR in exchange for NESR ordinary shares valued at $11.244 per share, which will result in the issuance of 13,340,448 ordinary shares of NESR to Hana Investments. In addition, NESR shall pay Hana Investments an amount of interest accrued from the date of the payment of the $150.0 million to the NPS Selling Stockholders until the Closing Date up to $4.7 million in cash or ordinary shares at a value of $11.244 equal to 418,001 ordinary shares. On the Closing Date, the Company paid interest totaling $4.7 million in stock.

Earnout Consideration. Potential earn-out mechanisms enable the NPS Selling Stockholders to receive additional consideration after the Closing Date as follows:

NESR is also required to make additional payments for delays in receiving shareholder approval (“Ticker Fee”) to complete the Business Combination beyond December 31, 2017 as per the NPS Stock Purchase Agreement. The NPS Selling Stockholders have agreed to waive the Ticker Fee associated with Hana Investments payment of $150.0 million which was made on January 14, 2018 to purchase 83,660,878 NPS Shares. For the remaining cash payments, the NPS Selling Stockholders agreed to waive $8.7 million of the Ticker Fee, such that the total Ticker Fee payable by NESR amounts to $13,411,501, which amount was paid in full to the NPS Selling Stockholders at the closing of the Business Combination. The total Ticker Fee as agreed to by the parties is set forth in a letter agreement reached between the NPS Selling Stockholders and NESR on June 6, 2018. Pursuant to the letter agreement, the parties further agreed that NESR would reimburse the NPS Selling Stockholders for a total of $5,240,401 in fees, costs and expenses incurred by the NPS Selling Stockholders, to be paid on or before July 3, 2018.

Assumed Liabilities

The existing bank agreement of NPS allows the banks to terminate the loan contract upon a change of control. The NPS Selling Stockholders have provided assurances or commitments backing these facilities. NESR has executed, or has agreed to execute, guarantees of the NPS debt and additional borrowings leaving these facilities in place. Such a guarantee of NESR only became effective upon closing, and there was liability to NESR if the Business Combination did not occur.

Management Alignment/Lock Up

The NPS Stock Purchase Agreement imposes a contractual restriction upon NESR management’s ability to sell or transfer legal title to any of the Founder Shares acquired by Sponsor upon formation of NESR and owned beneficially for the original management group. The Sponsor previously agreed in connection with NESR’s IPO to prohibit sales after the Business Combination for a period of one year or earlier if the stock price exceeds $12.00 per share. The NPS Stock Purchase Agreement imposes further restrictions on 50% of the Founder Shares during the one year period, permitting the sale of up to 75% of the Founder Shares when the price of NESR stock exceeds $15.00, and the 100% of the shares may be traded after the share price exceeds $17.50, for 20 trading days within any 30 day trading period.

Other Lock-Up Agreements

Pursuant to the ANI Relationship Agreement and the WAHA Relationship Agreement, each of ANI and WAHA and their affiliates agreed not to sell the shares acquired pursuant to the NPS Stock Purchase Agreement for six months after the Closing Date.

Relationship Agreements

Two of the NPS Selling Stockholders have agreed to enter into the ANI Relationship Agreement and the WAHA Relationship Agreement which become effective on the Business Combination until they are terminated. Pursuant to these agreements each of ANI and WAHA are entitled to nominate a member and observer to the Board and together with their affiliates agreed not to sell the shares acquired pursuant to the NPS Stock Purchase Agreement for six months after the Closing Date.

The foregoing description of the Relationship Agreements does not purport to be complete. For further information, please refer to the copy of the Relationship Agreements that are filed as Exhibit 10.1 and 10.2 to this Report.

Voting Rights

Pursuant to each of ANI Relationship Agreement and the Waha Relationship Agreement the Board of NESR will nominate for election to NESR’s Board a person nominated by each of those two parties, and each of ANI and Waha will be entitled to nominate a representative on the Board (“Board Observer”) in a nonvoting capacity, so long as ANI and Waha continue to hold at least 50% of the total number of NESR shares acquired pursuant to the NPS Stock Purchase Agreement. The first nomination was appointed by the Board when it expanded the size of the board to nine members on June 12, 2018. ANI and Waha have the right to remove the Director nominated by them (with or without cause) at any time. The rights of the Board Observer will include the right to participate in discussions of the Board, to receive notice of the meetings of the Board and to receive copies of all minutes, written consents, and other material received by the members of the Board, as permitted by law. Each Board Observer must accept in writing to keep confidential all information of which they become aware in their position as a Board Observer. Each of ANI and WAHA shall retain the right to nominate a Board member and appoint a Board Observer for so long as the respective shareholder holds 50% of the shares that it acquired pursuant to the NPS Stock Purchase Agreement.

Furthermore, each of ANI and WAHA agreed that for six (6) months after the NESR Closing, it shall not, and shall cause its affiliates to not, directly or indirectly offer, sell, issue, contract to sell, pledge or otherwise dispose of the stock of NESR acquired at the NESR closing. Notwithstanding the lock-up provision, ANI and WAHA shall each have the right to grant a security interest in respect of their acquired NESR stock to any provider of finance provided that it shall retain the voting rights with respect to that stock.

Neither ANI nor WAHA may assign or transfer in whole or in part any rights under either agreement.

In addition, pursuant to the NPS Stock Purchase Agreement, during the 2018 earn-out period the NPS Selling Stockholders shall jointly be entitled by giving written notice to NESR to appoint (and to remove and replace such appointee) and maintain either (at the option of the NPS Selling Stockholders) one director or a Board Observer. The Board Observer shall have the right to attend all meetings of the Board and receive all notices of meetings of the Board and to receive the monthly management reports, chief executive officer commentary and budgets for the 2018 financial year in respect of NESR.

Preemptive Right to Provide Capital

Pursuant to the NPS Stock Purchase Agreement, the reinvesting NPS Selling Stockholders (that accepted NESR ordinary shares) have the right of first refusal to provide up to 50% of any equity financing offered by NESR prior to the Closing Date. When the offer is presented, it must be accepted within 48 hours or will be waived.

Non-solicitation, Non-Compete

For one year after the Closing Date, the NPS Selling Stockholders are prohibited from soliciting certain senior NPS employees and from causing any material adverse change to any relationships that NPS has with a material customer or supplier.

The foregoing description of the NPS Stock Purchase Agreement does not purport to be complete. For further information, please refer to the copy of the NPS Stock Purchase Agreement that is filed as Exhibit 2.1 to this Report. There are representations and warranties contained in the NPS Stock Purchase Agreement that were made by the parties to each other as of specific dates. The assertions embodied in these representations and warranties were made solely for purposes of the NPS Stock Purchase Agreement and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating their terms. Moreover, some representations and warranties may not be accurate or complete as of any specified date because they are subject to a contractual standard of materiality that is different from certain standards generally applicable to shareholders or were used for the purpose of allocating risk between the parties rather than establishing matters as facts. For these reasons, investors should not rely on the representations and warranties in the NPS Stock Purchase Agreement as statements of factual information.

The GES Transaction

GES Stock Purchase Agreement

On November 12, 2017, the GES Stock Purchase Agreement was entered by which NESR contracted to acquire 61% of the outstanding shares of GES for a valuation of $184.8 million through a stock exchange for NESR ordinary shares valued at $10.00 per share, to occur within one year of the signing of the GES Stock Purchase Agreement or at such later time as mutually agreed upon by the parties. The GES Stock Purchase Agreement provides that the purchase price shall be reduced to the extent that the “Net Debt” in the company (i.e. bank debt less cash) exceeds $47.2 million at the Closing Date and to the extent of any GES Leakage. “GES Leakage” is defined in the GES Stock Purchase Agreement as any dividend distributions or payments to or for the benefit of the GES Selling Stockholders or certain other transactions that would reduce the value of the company, such as transactions not on an arm’s-length basis. The GES Stock Purchase Agreement contains substantial seller warranties regarding the stock and the financial condition of GES.

Contribution Agreement of SV3’s 27.3% Shares

SV3 and NESR entered into the SV3 Contribution Agreement pursuant to which SV3 agreed to contribute its 27.3% of GES shares to NESR in exchange for NESR ordinary shares at an agreed valuation of $10.00 per NESR share for the net price paid by SV3 to acquire the GES shares. In October 2017, SV3 closed on the purchase of 136,500 shares of GES stock from certain shareholders of GES, representing 27.3% of the outstanding stock of GES, for $68.25 million.

The foregoing description of the Contribution Agreement does not purport to be complete. For further information, please refer to the copy of the Contribution Agreement that is filed as Exhibit 10.4 to this Report.

Minority Interests Acquisitions/ Shares Exchange Agreement

The Sponsor contracted with the GES Selling Stockholders and the National Bank of Oman (“NBO”) to acquire for cash 58,500 shares of GES, which represents 11.7% of the outstanding stock of GES, for a total purchase price of $29.2 million. The Sponsor organized for the financing of the acquisition of the 11.7% through Loan Contracts with the GES Investors. The Sponsor also contracted to acquire 5% of the GES shares from NBO for $12.5 million and completed that purchase on or about October 8, 2017. The GES Selling Stockholders agreed to sell 6.7% of the GES shares to the Sponsor for a purchase price of $16.7 million. Nine of the GES Investors provided the total purchase price to acquire 55,100 shares of GES. Two of the GES Investors are affiliates, Antonio Jose Campo Mejia and Round Up Resource Service, Inc., a company controlled by Thomas Wood or his family, which funded Sponsor with $1.2 million to acquire 2,400 shares of GES and $500,000 to acquire 1,000 shares respectively.

Each GES Investor has agreed that Sponsor can assign the Loan Contracts to NESR if the shareholders of NESR approve the Business Combination. Each Investor agreed to accept in repayment of the Loan Contracts either NESR ordinary shares at a value of $10.00 per share (subject to their consent after review of the proxy statement), payment in cash, or GES shares acquired with their respective loans. All Loan Contracts have similar terms, but interest for payment ranges from zero to 18 percent per annum from the respective loan dates.

NESR executed with Sponsor the Shares Exchange Agreement pursuant to which, subject to receiving approval from NESR shareholders for the Business Combination, the Sponsor agreed to assign all 58,500 shares of GES acquired to NESR, and NESR has assumed the obligation to satisfy the Loan Contracts. No GES Investor elected not to accept NESR ordinary shares to satisfy the debt, and NESR issued NESR ordinary shares to the GES Investors to satisfy the debt.

The foregoing description of the Share Exchange Agreement does not purport to be complete. For further information, please refer to the copy of the Share Exchange Agreement that are filed as Exhibit 10.6 to this Report.

Voting Rights

The GES Stock Purchase Agreement provides a contractual right for the two GES Founders to be appointed to the NESR Board.

Also, in connection with the GES acquisition, the SV3 Voting Agreement was executed upon approval by the shareholders of NESR of the Business Combination. The SV3 Voting Agreement provides that the Board of NESR will nominate for election to NESR’s Board a person nominated by SV3, and SV3 shall be entitled to have two representatives attend all meetings of the Board in a nonvoting capacity, as long as SV3 and its private equity owners continue to hold at least 60% of the total number of NESR shares acquired pursuant to the SV3 Contribution Agreement. The first nomination was appointed by the Board of Directors on June 6, 2018. SV3 has the right to remove such SV3 Director (with or without cause). The rights of the Board Observer will include the right to participate in discussions of the Board, to receive notice of the meetings of the Board, and to receive copies of all minutes, written consents, and other materials received by the members of the Board, as permitted by law. However, if a Director is duly elected and serving, SV3 shall only have the right to designate one Board Observer. Furthermore, if SV3 owns less than 60% of the NESR ordinary shares acquired but more than 1% of the total outstanding ordinary shares of NESR, then SV3 shall only have the right to designate one Board Observer.

The foregoing description of the Voting Agreement does not purport to be complete. For further information, please refer to the copy of the Voting Agreement that are filed as Exhibit 10.5 to this Report.

Non-Compete

The GES Founders executed a Non-Compete and Non-Disclosure Agreement and agreed to provide advisory services to NESR for five (5) years. Furthermore, pursuant to separate Waiver of Termination Fees Agreements (“Waiver Agreements”), each Founder agreed to waive their right to substantial severance payments triggered either by the event of the termination of their employment or change of control. Pursuant to these commitments and replacing prior compensation structure, the GES Founders will each receive annual payments of $1 million over the course of five years.

Representations, Warranties and Covenants

The GES Stock Purchase Agreement contains customary indemnifications, representations and warranties by the parties thereto. The cap on GES Selling Stockholders liability is 50% of the total consideration received, except for breach of “Fundamental or Tax Warranties” or fraud. The NPS Selling Stockholders under the NPS Stock Purchase Agreement have only provided limited representations with respect to our organization, execution and delivery of the NPS Stock Purchase Agreement, title to the 370 million shares, power and authority to sell, and similar warranties of rights and ability to deliver stock ownership unencumbered. The NPS Stock Purchase Agreement does not have any mechanism for adjusting the purchase price post-closing in the event of undisclosed or contingent liabilities except for Leakage. No party may claim damages for breach of warranty under the NPS Stock Purchase Agreement unless the total damages exceed $2.5 million.

The foregoing description of the GES Stock Purchase Agreement does not purport to be complete. For further information, please refer to the copy of the GES Stock Purchase Agreement that is filed as Exhibit 2.2 to this Report. There are representations and warranties contained in the GES Stock Purchase Agreement that were made by the parties to each other as of specific dates. The assertions embodied in these representations and warranties were made solely for purposes of the GES Stock Purchase Agreement and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating their terms. Moreover, some representations and warranties may not be accurate or complete as of any specified date because they are subject to a contractual standard of materiality that is different from certain standards generally applicable to shareholders or were used for the purpose of allocating risk between the parties rather than establishing matters as facts. For these reasons, investors should not rely on the representations and warranties in the GES Stock Purchase Agreement as statements of factual information.

Registration Rights Agreement

Various forms of agreements contemplated by the Stock Purchase Agreements were executed by the parties upon closing of the Business Combination, including among others, registration rights agreements for the resale of the shares to be issued to two of the NPS Selling Stockholders, to the Backstop Investor, to Hana Investments and to SV3. The Sponsor is entitled to make three demands that NESR register its securities. WAHA and ANI are entitled to two demands each, but the Company shall not be obligated to grant more than an aggregate of three demand registrations, like the Sponsor. In addition, the Sponsor, WAHA, and ANI have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Business Combination. NESR has also agreed to file a resale registration statement within a specific period of time following the Closing Date. NESR will bear the expenses incurred in connection with the filing of any such registration statements.

In addition, pursuant to the SV3 Contribution Agreement, SV3 has one demand registration right and piggyback registration rights on terms consistent with the Form of Amended and Restated Registration Rights Agreement, including any amendment thereof. NESR expects to offer the same registration rights to the GES Investors. Similar registration rights will be provided to Hana Investments and the Backstop Investor and certain GES Investors.

The foregoing description of the Registration Rights Agreement does not purport to be complete. For further information, please refer to the copy of the Registration Rights Agreements that are filed as Exhibits 10.3 and 10.16 to this Report.

Backstop and Forward Purchase Agreement

In connection with the Business Combination, on April 27, 2018 the Company entered into the Forward Purchase Agreement with MEA Energy Investment Company 2 Ltd. (the “Backstop Investor”), pursuant to which the Company agreed to sell up to $150 million (the “Backstop”) of the Company’s ordinary shares to the Backstop Investor or its designees and commonly controlled affiliates, including co-investment funds controlled by Backstop Investor or its affiliates. Such Backstop consisted of: (i) a primary placement to occur concurrently with the closing of the Business Combination, pursuant to which the Company shall sell 7,000,000 ordinary shares at $10.00 per share for a total drawdown of $70 million; and (ii) at the Company’s election, a secondary placement, pursuant to which the Company had the option to draw, in one or more installments, up to an additional $80 million by selling up to 7,114,906 ordinary shares at $11.244 per share. If the Company elected to engage in a secondary placement, at least $30 million must be sold on the first draw and at least $12.5 million must be sold in subsequent draws. All draw notices must be given with 3-10 business days’ advance written notice, with the applicable closing to occur on or within 3 months after the Business Combination. Such proceeds would (i) offset any capital used for shareholder redemptions; (ii) fund the cash portion of the consideration to certain shareholders of NPS and transaction expenses in connection with the Business Combination; or (iii) be used for other corporate purposes, including satisfaction of its minimum cash requirements immediately following the Business Combination. The Company and the Backstop Investor entered into a registration rights agreement to grant the Backstop Investor certain rights to register the resale of any shares issued in the Backstop Commitment after the Business Combination.

On the Closing Date, the Company drew down $48,293,763 under the primary placement of the Forward Purchase Agreement, and issued 4,829,375 ordinary shares to the Backstop Investor.

The Backstop Investor is wholly owned by Waha Capital. The Forward Purchase Agreement contains a similar provision as the WAHA Relationship Agreement, entitling the Backstop Investor to nominate one person to NESR’s board of directors for as long as it directly owns at least 7,057,453 ordinary shares within three months after the Business Combination and Adnan Ghabris is not otherwise nominated to the board; provided, however, that such nominating right shall terminate if and when the Backstop Investor fails to deliver the required purchase price in any drawdown of a secondary placement.

MEA Energy, an affiliate of the Backstop Investor, participated in the negotiation with NESR for the NPS Stock Purchase Agreement and represented the interests of Waha Capital, a shareholder of NPS. As the transaction was being agreed upon in early November 2017, MEA Energy approached NESR with an interest to arrange funding required to close the transaction as well as replacement capital for any redemptions through a private placement. At the start of this process MEA Energy wanted to arrange for these investors on its own and without any involvement from Waha Capital. In line with this, NESR agreed to sign a term sheet with MEA Energy for the Backstop Commitment. NESR was able to negotiate the Backstop Commitment on more favorable terms, than what NESR believed would be offered by alternative financing sources.

The foregoing description of the Forward Purchase Agreement does not purport to be complete. For further information, please refer to the copy of the Forward Purchase Agreement that is filed as Exhibit 10.9 to this Report.

Additional Agreements with Hana Investments 

Hana Loan Agreement

In connection with the Business Combination, on June 5, 2018 the Company entered into a Loan Agreement with Hana Investments, pursuant to which the Company borrowed $50,000,000 (the “Hana Loan”) on an unsecured basis. The Hana Loan matures on December 17, 2018 and can be prepaid at any time in NESR ordinary shares at a conversion rate of $11.244 per share or cash, at the election of the lender after the Company delivers five business days’ notice of its intent to repay the Hana Loan. The Hana Loan is interest bearing and will accrue interest at the greater of (i) an amount equal to $4.0 million or prorated if the loan is prepaid and (ii) at a rate per annum equal to One Month ICE LIBOR, adjusted monthly on the first day of each calendar month, plus a margin of 2.25% payable on maturity or prepaid. The interest is payable in NESR ordinary shares or cash at the election of the lender. In addition, Hana Investments has the right to convert the principal of the Hana Loan into NESR ordinary shares on or prior to maturity at a conversion rate of $11.244 per share. The loan is subject to an origination fee of $600,000 payable in NESR ordinary shares at $11.244 per share or 53,362 shares at closing of the Business Combination. If as a result of exercising any conversion rights in the Hana Loan, Hana Investments’ total share ownership equals or exceeds 20% of the then outstanding NESR shares, then the conversion of any amount into NESR ordinary shares will be contingent upon NESR receiving shareholder approval for such issuance of NESR ordinary shares.

The foregoing description of the Hana Loan does not purport to be complete. For further information, please refer to the copy of the Loan Agreement that is filed as Exhibit 10.12 to this Report.

Shares Purchase Exchange Agreement

The Shares Purchase Exchange Agreement provides that Hana Investments shall contribute to the Company the NPS shares owned by Hana Investments as of the Business Combination closing date and NESR shall issue to Hana Investments 13,340,448 shares of NESR ordinary shares. In addition, at closing the Company agreed to pay Hana Investments interest of $4.7 million on Hana Investments initial purchase of NPS shares. The Company has the right to pay the interest in cash or issue 418,001 NESR ordinary shares to Hana Investments. The Company also agreed to enter into the Registration Rights Agreement related to any shares issued by the Company pursuant to the Shares Purchase Exchange Agreement and to enter into the Olayan Relationship Agreement.

The foregoing description of the Shares Purchase Exchange Agreement does not purport to be complete. For further information, please refer to the copy of the Shares Purchase Exchange Agreement that is filed as Exhibit 10.13 to this Report.

Olayan Relationship Agreement

In connection with the Business Combination, on June 5, 2018 the Company entered into a Relationship Agreement with Hana Investments (the “Olayan Relationship Agreement”), to set out certain rights to which Hana Investments will be entitled as a shareholder of the Company and certain obligations of the Company and the Sponsor. The Olayan Relationship Agreement entitles Hana Investments to have the right, as long as Hana Investments and its affiliates collectively hold, in the aggregate, at least 6,879,225 NESR ordinary shares, (i) to nominate, and the Company and the Sponsor shall take all action necessary to cause the NESR Board to include one director to the NESR Board (ii) a second independent director by agreement with the Company management and subject to approval of the Board of the Company, and (iii) Hana Investments shall also have the right to nominate, and the Company and the Sponsor shall take all necessary action to cause the Company senior management to include, one Executive Vice President who shall oversee the Company’s operations. Hana Investments further agreed that any shares of the Company received by Hana Investments pursuant to the Shares Purchase Agreement will not be sold by Hana Investments prior to six months after the closing of the Business Combination. The Company also agreed to reimburse Olayan for transaction fees and expenses in the amount of $2.4 million through the issuance of NESR ordinary shares at a conversion rate of $11.244 per share at closing of the Business Combination.

The foregoing description of the Olayan Relationship Agreement does not purport to be complete. For further information, please refer to the copy of the Relationship Agreement that is filed as Exhibit 10.14 to this Report.

Registration Rights Agreement

The Registration Rights Agreement provides that any time after the closing of the Business Combination Hana Investments may make a written demand for registration under the Securities Act of 1933 all or a part of the NESR ordinary shares or other securities held by Hana Investments and the Company shall file a registration statement within 60 days of receiving such demand. The agreement also provides that the registration of securities by the Company in response to such demand can be completed by the Company offering securities in an underwritten offering and Hana Investments shall have the right to participate in any underwritten offering or by participating in certain other registrations of securities by the Company. The Company also agrees to file a shelf registration statement within 4 months following the closing of the Business Combination and to maintain the effectiveness of any shelf registration and that the Company shall file any reports or take further actions allow Hana Investments to sell any registered securities pursuant to Rule 144 under the Securities Act

The foregoing description of the Registration Rights Agreement does not purport to be complete. For further information, please refer to the copy of the Registration Rights Agreement that is filed as Exhibit 10.15 to this Report.

DESCRIPTION OF BUSINESS

The business of NPS and GES prior to the Business Combination are described in the definitive Proxy Statement, dated May 8, 2018 (the “Proxy Statement”) in the sections entitled “Information about NPS Group” beginning on page 133 and “Information about GES Group” beginning on page 164, which are incorporated herein by reference. The business of NESR prior to the Business Combination is described in the Proxy Statement in the section entitled “Information about NESR” beginning on page 122, which is incorporated herein by reference.

RISK FACTORS

The risk factors related to the Company’s business and operations are described in the Proxy Statement in the section entitled “Risk Factors” beginning on page 32, which is incorporated herein by reference.

SELECTED HISTORICAL FINANCIAL INFORMATION OF NPS AND GES

The selected historical financial information of NPS for the three years ended December 31, 2017 is provided in the Proxy Statement in the section entitled “Selected Historical Financial Information of NPS” beginning on page 27, which is incorporated herein by reference. The selected historical financial information of NPS for the three months ended March 31, 2018 is provided below.

NPS reports its operations on a calendar year ending on December 31. The consolidated statements of operations for the three months ended March 31, 2018 and 2017, and the balance sheet as of March 31, 2018 have been derived from NPS’s unaudited condensed consolidated financial statements included elsewhere in this Report.

The historical results presented below are not necessarily indicative of the results to be expected for any future period. This information should be read in conjunction with “Risk Factors,” “NPS Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and NPS’s unaudited consolidated financial statements and the related notes included elsewhere in this Report and in the Proxy Statement.

The selected historical financial information of GES for the three years ended December 31, 2017 is provided in the Proxy Statement in the section entitled “Selected Historical Financial Information of GES” beginning on page 28, which is incorporated herein by reference. The selected historical financial information of GES for the three months ended March 31, 2018 is provided below.

GES reports its operations on a calendar year ending on December 31. The consolidated statements of operations data for the three months ended March 31, 2018 and 2017, and the balance sheet as of March 31, 2018 have been derived from GES’s unaudited condensed consolidated financial statements included elsewhere in this Report.

The historical results presented below are not necessarily indicative of the results to be expected for any future period. This information should be read in conjunction with “Risk Factors,” “GES Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and GES’s unaudited consolidated financial statements and the related notes included elsewhere in this in this Report and in the Proxy Statement.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The unaudited pro forma condensed combined financial information of NESR for the year ended December 31, 2017 included in the Proxy Statement beginning on page 57 is incorporated herein by reference.

In addition, the unaudited pro forma condensed combined financial information of NESR for the period ended March 31, 2018 is provided below.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined balance sheet as of March 31, 2018 and the unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2018 and the year ended December 31, 2017 are based on the historical financial statements of NESR, NPS and GES. NESR, NPS and GES shall collectively be referred to herein as the “combined company.”

The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2018 and the year ended December 31, 2017 gives pro forma effect to the Business Combination, the Backstop Commitment, and the Hana Loan as if they had occurred on January 1, 2017. The unaudited pro forma condensed combined balance sheet as of March 31, 2018 assumes that the Business Combination, the Backstop Commitment, and the Hana Loan were completed on March 31, 2018. The unaudited pro forma condensed combined financial information is presented on the basis of NESR as the accounting acquirer.

The unaudited pro forma condensed combined balance sheet as of March 31, 2018 has been prepared using the following:

The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2018 has been prepared using the following:

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2017 has been prepared using the following:

The historical financial information of GES has been adjusted to give effect to the differences between the accounting principles generally accepted in the United States of America (“US GAAP”) and International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The adjustments presented in the unaudited pro forma condensed combined financial information have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company after giving effect to the Business Combination, the Backstop Commitment, and the Hana Loan.

The allocation of the purchase consideration for the Business Combination depends upon certain estimates and assumptions, all of which are preliminary. The allocation of the purchase consideration has been made for the purpose of developing the unaudited pro forma condensed combined financial information. A final determination of fair values of assets acquired and liabilities assumed relating to the acquisition could differ materially from the preliminary allocation of purchase consideration. This final valuation will be based on the actual net tangible and intangible assets of NPS and GES existing at the acquisition date. Therefore, certain pro forma adjustments, such as recording fair value of assets and liabilities, conversion from IFRS as issued by the IASB to US GAAP, and adjustments for consistency of accounting policy, are preliminary in this unaudited condensed combined pro forma financial information and are subject to further adjustments as additional information becomes available and as additional analyses are performed. The final valuation may materially change the allocation of purchase consideration, which could materially affect the fair values assigned to the assets and liabilities and could result in a material change to the unaudited pro forma condensed combined financial information.

The Business Combination is accounted for under the scope of Financial Accounting Standards Board’s Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”). Pursuant to ASC 805, NESR has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

The preponderance of the evidence discussed above supports the conclusion that NESR is the accounting acquirer in the Business Combination.

NPS and GES both constitute businesses. Accordingly, the Business Combination constitutes the acquisition of such businesses for purposes of ASC 805, and due to the change in control from the Business Combination, are accounted for using the acquisition method.

See accompanying notes to unaudited pro forma condensed combined financial information.

See accompanying notes to unaudited pro forma condensed combined financial information.