Subsequent Events

12 Months Ended

Dec. 31, 2022

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

We have evaluated the effects of events that have occurred subsequent to December 31, 2022, and there have been no material events that would require recognition in the 2022 consolidated financial statements or disclosure in the notes to the consolidated financial statements, except as disclosed below.

On January 19, 2023, the Company announced the departure of John W. Gibson, Jr. from his role as Chief Executive Officer and President of the Company, effective January 19, 2023. Mr. Gibson also stepped down from his role as Chairman of the Board of Directors (the “Board”) of the Company.

In connection with his separation, the Company and Mr. Gibson have entered into a Separation Agreement and General Release (the “Separation Agreement”) pursuant to which Mr. Gibson will receive $1,500,000 payable in four installments and being fully paid by April 2023. As part of the Separation Agreement, Mr. Gibson has agreed to forfeit all of his outstanding options and unvested restricted stock units. In addition, Mr. Gibson has agreed to a 6-month lock up period with respect to 250,000 shares of common stock owned by Mr. Gibson, which will prohibit Mr. Gibson from selling those shares during the lock up period.

On February 1, 2023, the Company entered into an amendment to the ProFrac Agreement (the “Amended ProFrac Agreement No. 2”) between Flotek Chemistry and ProFrac Services, LLC dated February 2, 2022. The Amended ProFrac Agreement No. 2 has an effective date of January 1, 2023. Pursuant to the Amended ProFrac Agreement No. 2, the Parties agree (1) to a ramp-up period from January 1, 2023 to May 31, 2023 for ProFrac Services, LLC to increase the number of active fleets to 30 fleets, (2) that the potential liquidated damages payment relating to order shortfall, prior to January 1, 2023 is waived for that period, (3) to add additional fees to certain products, and (4) to provide margin increases based on revenue percentages from non-ProFrac customers.

On February 2, 2023, the Convertible Notes Payable and certain Contract Consideration Convertible Notes previously issued on February 2, 2022 were converted upon maturity into 10,355,840 shares of common stock and 25,366,561 Pre-Funded Warrants to purchase common stock for a nominal exercise price of $0.0001 per share exercisable subject to the limitations on exercise described therein. All of the holders elected to receive shares of common stock upon conversion except for ProFrac Holdings LLC, which elected to receive the Pre-Funded Warrants.