Basis of Presentation

Unless otherwise indicated, the terms “Koil Energy Solutions, Inc.”, “Koil Energy”, the “Company”, “we”, “our” and “us” are used in this Report to refer to Koil Energy Solutions, Inc., a Nevada corporation (“Koil Energy Nevada”), its directly wholly owned subsidiary, Koil Energy Solutions, Inc., a Delaware corporation (“Koil Energy Delaware”), and its directly wholly owned subsidiary Koil Energy Solutions do Brasil Ltda., a Brazilian limited liability company (“Koil Energy Brazil”). The accompanying unaudited condensed consolidated financial statements of Koil Energy Solutions, Inc. were prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC” or the “Commission”) pertaining to interim financial information and instructions to Form 10-Q. As permitted under those rules, certain notes or other financial information that are normally required by United States generally accepted accounting principles (“US GAAP”) can be condensed or omitted. Therefore, these statements should be read in conjunction with the audited consolidated financial statements, and notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosed amounts of contingent assets and liabilities, and the reported amounts of revenues and expenses. If the underlying estimates and assumptions upon which the financial statements are based change in future periods, then the actual amounts may differ from those included in the accompanying unaudited condensed consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

Liquidity

The Company had cash on hand of $922 and working capital of $3,796 as of June 30, 2026. As of December 31, 2025, cash on hand and working capital were $1,535 and $4,805, respectively. The Company generally relies on cash on hand, cash flows from operations, an asset-based lending facility, and various financing arrangements to satisfy its liquidity needs.

On May 19, 2026, the Company entered into an asset-based Loan and Security Agreement with nFusion Capital Finance, LLC (“nFusion”). Advances made under the facility bear interest at a rate equal to the Wall Street Journal Prime Rate (“Prime Rate”) plus 4.75%. The Prime Rate has a floor and at no time shall it be less than 6.75% for the purposes of this agreement. As of June 30, 2026, the Company had $2,400 of outstanding borrowings under the nFusion facility. The facility has an initial term of 12 months and is scheduled to mature in May 2027. The Company expects the facility to be renewed at that time, although renewal remains subject to the terms of the agreement and the parties’ mutual agreement. The availability of additional borrowings under the facility is subject to the borrowing base, the terms and conditions of the agreement, and the Company’s continued compliance with applicable covenants.

The Company believes that its cash on hand, anticipated cash flows from operations, and borrowing capacity under the nFusion facility will provide adequate liquidity to meet its anticipated working-capital requirements and other liquidity needs over the next 12 months. This assessment is based on management’s current operating plan and assumptions regarding customer demand, project timing, customer collections, operating expenditures, and the continued availability of financing under existing arrangements.

The Company’s ability to generate cash from operations and maintain adequate liquidity is subject to risks and uncertainties, including variability in customer demand, the timing of project awards and customer payments, oil and natural gas price volatility, global economic conditions, supply-chain and labor costs, and the Company’s ability to comply with the terms of its financing arrangements. If our plans or assumptions change, or if actual results differ materially from management’s expectations, we may need to raise additional capital from other sources.

To manage liquidity risk, Koil Energy closely monitors cash balances, working capital needs, and forecasted operating cash flows. The Company also maintains discipline over capital expenditures and evaluates cost containment measures as appropriate. Such measures may include aligning workforce levels with business activity, limiting discretionary overhead expenditures, deferring non-essential capital spending, and prioritizing research and development expenditures toward critical initiatives.

Principles of Consolidation

The unaudited condensed consolidated financial statements presented herein include the accounts of Koil Energy for the three and six months ended June 30, 2026 and 2025. All intercompany transactions and balances have been eliminated.

Segments

For the three and six months ended June 30, 2026 and 2025, the Company’s operations were organized as one reportable segment and one operating segment.