EDGAR 10-K Filing

Company CIK: 1110607
Filing Year: 2025
Filename: 1110607_10-K_2025_0001683168-25-002554.json

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ITEM 1. BUSINESS
ITEM 1. Business
General
Koil Energy Solutions, Inc., a Nevada corporation (the “Company”, “Koil Energy”, “we”, “our” and “us”), is an energy services company that provides equipment and support services to the world’s energy and offshore industries. Primary operations are conducted under Koil Energy Solutions, Inc., a Delaware corporation (“Koil Energy Delaware”), which is a wholly owned subsidiary of the Company.
Koil Energy’s website address is www.koilenergy.com. The Company makes available, free of charge on its website, its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after the Company electronically files such material with, or furnishes them to, the Securities and Exchange Commission (the “SEC”). Paper or electronic copies of these documents may be obtained upon request by contacting the Company. The SEC maintains an internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, including the Company, at www.sec.gov.
Business Overview
Koil Energy is an energy services company that provides equipment and support services to the world’s energy and offshore industries. The Company provides innovative solutions to complex customer challenges presented between the production facility and the energy source. Koil Energy’s core services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, and related services. Additionally, Koil Energy’s experienced professionals can support subsea engineering, manufacturing, installation, commissioning, and maintenance projects located anywhere in the world. The Company’s broad line of solutions are engineered and manufactured primarily for major integrated, large independent, and foreign national energy companies in offshore areas throughout the world. These products are often developed in direct response to customer requests for solutions to critical needs in the field. The Company primarily serves the offshore oil and gas market; however, the Company’s product offerings and service capabilities are based on core competencies that are energy source agnostic and can be applied to additional markets, including offshore wind, offshore wave energy, hydrogen, and liquefied natural gas.
Koil Energy’s goal is to provide superior services and products to its customers in a safe, cost-effective, and timely manner. The Company believes there is significant demand for, and brand name recognition of, its established services and products due to the technical capabilities, reliability, cost-effectiveness, timeliness of delivery and execution, and operational efficiency features of these solutions.
In 2022, we changed our name from Deep Down, Inc., to Koil Energy Solutions, Inc. In connection with the name change, our ticker symbol was changed to “KLNG”.
For the years ended December 31, 2024 and 2023, the Company’s operations were organized as one reportable and one operating segment.
Services
Koil Energy supports all aspects of subsea field development with its engineering and project management services, including the design, installation, and retrieval of subsea equipment and systems, connection and termination operations, well-commissioning services, and construction support. The Company works closely with all customers to provide the fastest, safest, and most cost-effective solutions to a variety of complex issues. The Company also serves a range of customers, including operators, installation contractors, and subsea equipment manufacturers.
Project Management and Engineering. Koil Energy’s project managers and engineers have extensive experience and knowledge to support customers both on and offshore. Particularly, the Company specializes in the design and engineering of steel tube flying leads, umbilicals, flexible and rigid risers, flowlines, and jumpers. Koil Energy’s comprehensive subsea engineering services oversee all project requirements from conception to final commissioning, including offshore participation during installation to ensure proper execution and safe completion of projects.
Spooling Services. Koil Energy’s engineering teams provide the planning, supervision, specialized equipment, and coordination with offshore installation personnel for a customer’s pull-in and spooling needs. The Company has the ability to manage every stage of the process from terminations, spooling operations, installation, testing, monitoring, and pull-in for umbilicals and flying leads.
Testing and Commissioning Services. The Company can perform all aspects of testing related to connecting the umbilical termination assemblies, performing installations, and completing the commissioning of the system thereafter. This includes initial factory acceptance testing, extended factory acceptance testing, and system integration testing, and offshore installation and commissioning services. The Company also offers a variety of pumping systems to meet industry needs and offers maximum flexibility to ensure a safe and efficient commissioning program.
Storage Management. Koil Energy’s facility in Houston, Texas offers high quality warehousing and workshop capacity, external storage, and a strategic location near customers and key suppliers. Among other capabilities, the Company provides long-term specialized contract warehousing, long and short-term storage, material handling equipment, integrated inventory management, packing, and labeling.
Equipment Refurbishment and Intervention Services. The Company provides refurbishment and repurposing of recovered subsea equipment and associated support services for offshore interventions. As an emergency or intervention arises, the stored asset is engineered, reconfigured, and tested per customer specifications. Additionally, Koil Energy has developed a suite of proprietary equipment and tools available to address the critical offshore needs of its customers and minimize production disruptions due to unplanned events. A Koil Energy service technician is then deployed with the equipment to support the offshore campaign.
Products
Koil Energy designs, manufactures, fabricates, inspects, assembles, tests, and installs subsea distribution equipment used by major integrated, large independent, and foreign national energy companies in offshore areas throughout the world. The Company’s products are used during exploration, development, and production operations on offshore drilling rigs, installation and intervention vessels, and as part of the permanently installed subsea production infrastructure.
Flying Leads. Koil Energy designs, manufactures, and installs flying leads, particularly steel tube flying leads. Flying leads are umbilical jumpers with a termination plate at either end that support the transmission of hydraulic fluid and/or chemicals between the subsea equipment. The Company’s flagship product, the Loose Steel Tube Flying Lead (“LSFL®”), was developed to eliminate the residual memory left in traditional flying leads due to the bundling process. The loose lay of the tubes is more compliant allowing the bundle to lay flat on the sea floor and follow the prescribed lay path precisely. Koil Energy employs its Moray® termination system on each end of the LSFL®. The Moray® termination is a lightweight, high-strength, configurable, and field serviceable framework used to connect any commercially available multi-quick connect plate to the LSFL® bundle. The Moray® termination assembly offers several cost and time saving benefits over traditional competitive solutions that allow the Company to lower the total installed cost of customer projects.
Umbilical Hardware. Koil Energy designs and fabricates lightweight and compact umbilical hardware that covers the entire scope of a project’s needs from the topside platform to the subsea connection. The Company’s compliant Umbilical Termination Assembly (“UTA”) allows the installation team to terminate an umbilical with a higher degree of quality, place the critical components of the base unit on the reel or on the carousel, and handle it with additional ease and safety. The UTA can then be combined with the mud mat assembly easily and offers both first-end stab and hinge-over features as well as yoke second end landing.
Koil Energy’s termination services offer the ability to refurbish existing topside umbilical terminations from multiple manufacturers and provide a completely new connection, thus extending the life of the umbilical and the subsea field. Bend Stiffener Latchers® are designed to secure a dynamic umbilical to an existing or standard flange offering significant cost savings without the need for modification to the rig interface or the use of divers. The quick-release and locking mechanism allows a single remotely operated vehicle to engage or disengage the locking mechanism resulting in significant savings to the customer.
Riser Isolation Valves and Subsea Isolation Valve Services. Koil Energy’s Riser Isolation Valve and Subsea Isolation Valve control systems are unique solutions that provide platform personnel hydraulic control and electrical indication for subsea production valves. These systems provide numerous advantages to the customer including emergency shutdown capabilities, valve positioning monitoring systems, and auxiliary positions for spare and/or future field development.
In addition to the fabrication of these systems, Koil Energy provides subsea installation engineering, consulting, and service personnel to support customers, installation contractors, valve vendors, and more. The Koil Energy team provides commissioning and technical assistance to customers and platform personnel and seeks to ensure that the systems are working properly.
Installation Aids. The Company has developed an extensive array of installation aids, including flying lead installation systems, tensioners, lay chutes, buoyancy modules, clump weights, mud mats, pumping and testing skids, control booths, fluid drum carriers, under-rollers, 200 ton, 400 ton, 3,400 ton, and 3,500 ton carousels, running and parking deployment frames, termination shelters, pipe straighteners, Subsea Deployment Basket® system, Horizontal Drive Units, and Rapid Deployment Cartridges.
Manufacturing
Koil Energy’s facilities located in Houston, Texas are integral to our operations, serving as the backbone of our manufacturing process. Strategically organized and equipped, these spaces efficiently facilitate fabrication, manufacturing, assembly, and testing of our products. Within our well-structured environment, our skilled teams harness their expertise alongside machinery and tools, ensuring precise execution at every stage. We also have a significant footprint dedicated to our clean, stainless steel welding and tube bending environment, which is separated from all carbon steel fabrication.
Our manufacturing facility is ISO 9001 certified. We enhance our standards and product quality by having our quality assurance specialists work alongside our product manufacturing personnel throughout the manufacturing process. We have the capacity to complete large turn-key projects and still have reserve space for unforeseen emergency projects requiring immediate service and the attention to which our customers are accustomed.
Customers
Demand for our deepwater and ultra-deepwater services, equipment and offshore rig equipment is dependent on the condition of the energy industry and its ability and need to make capital expenditures, as well as continual maintenance and improvements on its offshore exploration, drilling, and production operations. The level of these expenditures is generally dependent upon various factors such as expected commodity prices, exploration and production costs, and the level of offshore drilling and production activity. The prevailing view of future commodity prices is influenced by numerous factors affecting supply and demand. These factors include, but are not limited to, worldwide economic activity, interest rates, cost of capital, environmental regulation, tax policies, and production levels and prices set and maintained by producing nations and the Organization of the Petroleum Exporting Countries. Capital expenditures are also dependent on the cost of exploring for and producing oil and gas, the sale and expiration dates of domestic and international offshore leases, the discovery rate of new oil and gas reserves in offshore areas and technological advances. Oil and gas prices and the level of offshore drilling and production activity have historically been characterized by significant volatility.
Our principal customers are primarily major integrated, large independent, and foreign national energy companies as well as subsea equipment manufacturers and subsea equipment installation contractors involved in the offshore exploration, development, and production of natural and renewable resources. Offshore drilling contractors, engineering and construction companies, and other companies involved in maritime operations represent a smaller customer base.
Koil Energy is not dependent on any one customer or group of customers. The amount and variety of our products and services required in a given period by a customer can depend upon the customer’s capital expenditure budget as well as the results of competitive bids. Consequently, a customer may account for a material portion of revenues in one period and may represent an immaterial portion of revenues in a subsequent period. While we are not dependent on any one customer or group of customers, the loss of one or more of our significant customers could, at least on a short-term basis, have an adverse effect on the results of our operations and cash flows.
Marketing and Sales
We market our services and products worldwide through our Houston-based sales force. We periodically advertise in trade and technical publications targeting our customer base. We also participate in industry conferences and trade shows to enhance industry awareness of our products and services. Our customers generally order products and services after consulting with us on their project. Orders are typically completed within two weeks to three months depending on the type of product or service. Larger and more complex products may require significantly more time to complete. Our customers generally select our products and services based on the quality, reliability and reputation of the product or service, price, timely delivery, and advanced technology. For large production system orders, we engage our project management team to coordinate customer needs with our engineering, manufacturing, and service departments, as well as with our trusted subcontractors and vendors. Our profitability on projects is dependent on performing accurate and cost-effective bids as well as performing efficiently in accordance with bid specifications. Various factors can affect our performance on individual projects that could potentially adversely affect the profitability of a project.
Product Development and Engineering
The technological demands of the energy industry continue to increase as offshore exploration and drilling operations expand into deeper and more hostile environments. Conditions encountered in these environments could soon include well pressures of up to 20,000 psi, mixed flows of oil and gas under high pressure that may also be highly corrosive, and water depths exceeding 10,000 feet. We are continually engaged in product development activities to generate new products and to improve existing products and services to meet our customers’ needs. We also focus our activities on reducing the overall cost to the customer, which includes not only the initial capital costs, but also ongoing operating costs associated with our products.
We have an established track record of introducing new products and product enhancements. Our product development work is conducted at our facility in Houston, Texas, and in the field. Our application engineering staff also provides engineering services to customers in connection with the design and sales of our products. Our ability to develop new products and maintain technological advantages is important to our future growth and success.
We believe that the success of our business depends more on the technical competence, performance, creativity, and marketing abilities of our employees than on any individual patent, trademark, or copyright. Nevertheless, as part of our ongoing product development and manufacturing activities, our policy is to seek patents when appropriate on inventions concerning new products and product improvements. All patent rights for products developed by employees are assigned to us.
Competition
The principal competitive factors in the offshore drilling, development and production, and maritime equipment markets are quality, reliability, and reputation of the product, price, technology, and timely delivery. We face significant competition from other manufacturers of exploration, production, and maritime equipment. Several of our primary competitors are diversified multinational companies with substantially larger operating staffs and greater capital resources and have a longer history in the manufacturing of these types of equipment.
Employees
At December 31, 2024, we had a total of 63 employees, all of whom were full-time. We also work with a pool of independent contractors who enable us to scale our operations at short notice, as business needs demand. Our employees are not covered by collective bargaining agreements, and we generally consider our employee relations to be good. Our operations depend in part on our ability to attract a skilled labor force. While we believe that our wage rates are competitive and that our relationship with our skilled labor force is good, a significant increase in the wages paid by competing employers could result in a reduction of our skilled labor force or increases in the wage rates that we pay, or both.
Governmental Regulations
A significant portion of our business activities are subject to federal, state, local and foreign laws and regulations and similar agencies of foreign governments. The technical requirements of these laws and regulations are becoming increasingly expensive, complex, and stringent. These regulations are administered by various federal, state, and local health and safety and environmental agencies and authorities, including the Occupational Safety and Health Administration of the U.S. Department of Labor and the U.S. Environmental Protection Agency. From time to time, we are also subject to a wide range of reporting requirements, certifications and compliance as prescribed by various federal and state governmental agencies. Expenditures relating to such regulations are made in the normal course of our business and are neither material nor place us at any competitive disadvantage. We do not currently expect that compliance with such laws will require us to make material additional expenditures.
We are also affected by tax policies and other laws and regulations generally relating to the oil and gas industry, including those specifically directed to offshore operations. Adoption of laws and regulations that curtail exploration and development drilling for oil and gas could adversely affect our operations by limiting demand for our services or products.
Increased concerns about the environment have resulted in offshore drilling in certain areas being opposed by environmental groups, and certain areas have been restricted. To the extent that new or additional environmental protection laws that prohibit or restrict offshore drilling are enacted and result in increased costs to the oil and gas industry in general, our business could be materially affected. In addition, these laws may provide for “strict liability” for damages to natural resources or threats to public health and safety, rendering a party liable for the environmental damage without regard to negligence or fault on the part of such party. Sanctions for noncompliance may include revocation of permits, corrective action orders, administrative or civil penalties and criminal prosecution. Certain environmental laws provide for joint and several liabilities for remediation of spills and releases of hazardous substances. In addition, companies may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances, as well as damage to natural resources. Such laws and regulations may also expose us to liability for the conduct of or conditions caused by others, or for our acts that complied with all applicable laws at the time such acts were performed. Compliance with environmental laws and regulations may require us to obtain permits or other authorizations for certain activities and to comply with various standards or procedural requirements.
We cannot determine to what extent our future operations and earnings may be affected by new legislation, new regulations, or changes in existing regulations. We believe that our facilities are in substantial compliance with current regulatory standards. Based on our experience to date, we do not currently anticipate any material adverse effect on our business or consolidated financial position as a result of future compliance with existing environmental laws and regulations controlling the discharge of materials into the environment. However, future events, such as changes in existing laws and regulations or their interpretation, more vigorous enforcement policies of regulatory agencies, or stricter or different interpretations of existing laws and regulations, may require additional expenditures which may be material.
Intellectual Property
While we are the holder of various patents, trademarks and licenses relating to our business, we do not consider any individual intellectual property to be material to our business operations.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
Not Applicable

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None

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ITEM 2. PROPERTIES
ITEM 2. PropertIES
Our operating facility is located at 1310 Rankin Road, Houston, Texas 77073 (“Rankin Rd.”) and includes approximately 101,000 square feet of office, manufacturing, and storage space. The term of the lease is for ten years, which commenced on August 1, 2022 at a base rate of $78,000 per month with a 2% increase each subsequent year. Koil Energy uses the facility as its primary base of operations, which includes the fabrication of custom engineered products as well as other subsea equipment for both oil and gas and renewable energy applications.
We also lease, on a month-to-month basis, approximately 19,000 square feet of storage space in Mobile, AL to house our 3,400 metric ton and 3,500 metric ton carousel systems for $11,200 per month.
We believe that these facilities are suitable, adequate and of sufficient capacity to support our current operations.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. Legal Proceedings
From time to time, the Company is party to various legal proceedings arising in the ordinary course of business. The Company expenses or accrues legal costs as incurred. Except as described below, the Company is not a party to any material pending legal proceedings, other than ordinary routine litigation incidental to our business.
On September 23, 2024, WW Champion Developments, Inc. ("WW Champion”) sued the Company alleging breach of contract and seeking money damages of $1,229,000 in the 281st District Court of Harris County in an action styled WW Champion Developments, Inc. vs. Koil Energy Solutions, Inc., Cause Number 2024-65006. WW Champion alleged that Koil Energy breached a lease agreement between the parties by abandoning the premises, failing to maintain proper fire prevention measures, and failing to pay its remaining rental payments. The Company disputes WW Champion’s allegations, intends to vigorously defend itself against this lawsuit, and believes that the liability recorded for this matter has been adequately accrued.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSUREs
None
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market for Common Stock
Our common stock is quoted on the QB Tier of the OTC Markets Group (the “OTCQB”) under the symbol “KLNG.” Quotations for our common stock on the OTCQB represent quotations between dealers without adjustment for retail markup, mark down or commissions, and may not represent actual transactions.
Stockholders of Record
As of March 24, 2025, there were approximately 1,439 holders of record of our common stock. All common stock held in street names are recorded in the Company’s stock register as being held by one stockholder.
Dividend Policy
To date, we have not paid any cash dividends and our present policy is to retain earnings for working capital for the growth of our operations.
Securities Authorized for Issuance Under Equity Compensation Plan
STOCK OPTIONS ISSUED
Plan category
Number of securities to be issued upon exercise of outstanding options
Weighted-average exercise price of outstanding options
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(a)
(b)
(c)
Equity compensation plans not approved by security holders
725,000
$ 0.65
-

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. [RESERVED]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements appearing elsewhere in this Report. This discussion contains forward-looking statements that involve significant risks and uncertainties. As a result of many factors, our actual results may differ materially from those anticipated in our forward-looking statements.
All dollar and share amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are in thousands of dollars and shares, unless otherwise indicated.
General
Koil Energy is an energy services company that provides equipment and support services to the world’s energy and offshore industries. The Company provides innovative solutions to complex customer challenges presented between the production facility and the energy source. Koil Energy’s core services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, and related services. Additionally, Koil Energy’s experienced professionals can support subsea engineering, manufacturing, installation, commissioning, and maintenance projects located anywhere in the world. The Company’s broad line of solutions are engineered and manufactured primarily for major integrated, large independent, and foreign national energy companies in offshore areas throughout the world. These products are often developed in direct response to customer requests for solutions to critical needs in the field. The Company primarily serves the offshore oil and gas market; however, the Company’s product offerings and service capabilities are based on core competencies that are energy source agnostic and can be applied to additional markets, including offshore wind, offshore wave energy, hydrogen, and liquefied natural gas.
Industry and Executive Outlook
The energy services industry relies heavily on the capital and operating expenditure programs of energy companies. Operators’ decisions to scale back or accelerate their exploration, drilling, and production activities are significantly influenced by the overall state of the energy sector. Notably, the oil and gas industry has historically experienced fluctuations in commodity prices, driven by various global market forces.
The current consensus among our customers is that the demand for energy is increasing. Our clients are indicating that the world’s energy demand will require supply growth within oil and natural gas as well as for renewables. Oil and natural gas supply from existing wells naturally declines over time, making sustained investments more important over the coming years. The years of underinvestment in offshore production appear to have triggered a general shift and returning focus on increasing production. As a result, several key subsea basins, particularly Gulf of America, the North Sea, and off the coasts of Brazil, are being prepared to contribute significantly to this production output. Our strengthened positioning in these markets is therefore essential to achieve a sustained level of growth. A leading indicator for our main products is the number of subsea trees purchased by operators. Our product lines include vital support systems for subsea trees. According to Westwood Global Energy Group, a market analyst firm, the global annual subsea tree awards included 284 and 279 awards in 2023 and 2024, respectively. This healthy market presents good opportunities for KOIL Energy going forward, as our offering, such as subsea distribution equipment and services, are typically awarded 1 to 1 ½ years after the subsea tree awards. During the first quarter of this year, we have seen a significant increase in bidding activity. We therefore anticipate experiencing the benefits of this positive momentum throughout this year and into next year.
As part of our growth strategy, we have also been focusing on expanding our service and product offerings to better address the operating expenditures of our energy customers. We also expect this expenditure to increase due to aging infrastructure. Re-termination of an umbilical cable on an existing installation is an example of our success in the maintenance market.
The 48% year-over-year increase in our revenues for 2024 is exceptional and beyond the industry benchmark. This outstanding growth in revenue in a fairly flat market was the result of an assertive strategy and excellent work effort by our teams.
We are one year into an ambitious 3-year strategy where continued profitable revenue growth is the objective. The strategy has been concentrated on further developing the systems that address the critical needs of our customers, while upselling more product and associated services. In April 2024 we announced the award of a major contract for a Subsea Safety Control System from a major international energy company. In August last year we announced the award of a significant contract for delivering Bend Stiffener Latchers (BSL®) to an operator in a new region. In October we secured a significant contract to provide umbilical re-termination (maintenance and repair) on an offshore production platform for an international oil and gas company. In December we were awarded a significant contract to supply Electrical and Hydraulic Distribution Manifolds for a project in West Africa. Although we secure numerous smaller contracts on a weekly basis, it is the major and significant awards that drive our growth.
We continue progressing towards achieving our goal of becoming the premier provider of integrated subsea distribution systems.
Results of Operations
Revenues
Year Ended December 31, Increase (Decrease)
$ %
Revenues $ 22,734 $ 15,343 $ 7,391 48%
The 48 percent increase in revenues was primarily driven by an increase in fixed price contracts for the manufacture of subsea distribution equipment, such as flying leads and hydraulic distribution manifolds, partially offset by a decrease in service contract activity.
Cost of sales and Gross profit
Year Ended December 31, Increase (Decrease)
$ %
Cost of sales $ 13,985 $ 10,493 $ 3,492 33%
Gross profit $ 8,749 $ 4,850 $ 3,899 80%
Gross profit % 38% 32% - 6%
The increase in gross profit was primarily driven by increased revenues. Gross profit percentage increased 6% when compared to the previous year.
The Company records depreciation expense related to revenue-generating property, plant and equipment as cost of sales, which totaled $459 and $497 for the years ended December 31, 2024 and 2023, respectively.
Selling, general and administrative expenses
Year Ended December 31, Increase (Decrease)
$ %
Selling, general & administrative $ 6,192 $ 6,460 $ (268 ) (4 )%
Selling, general & administrative as a % of revenue 27% 42% - (15 )%
The reduction in selling, general, and administrative expenses (“SG&A”) was driven by lower administrative payroll expense, advertising expense, research and development expense, and rental expense related to the Company’s short-term lease for furniture at the Company’s operating facility.
The Company records depreciation and amortization expense related to administrative property, plant and equipment and intellectual property as SG&A, which totaled $112 and $108 for the years ended December 31, 2024 and 2023, respectively.
Interest expense (income), net
Net interest income for the year ended December 31, 2024 was $47 compared to net interest income of $7 for the year ended December 31, 2023. The increase of $40 is mainly due to an increase in interest received on the Company’s interest bearing financial instruments during the year ended December 31, 2024.
Other income, net
The Company recorded net other income of $33 and $50 for the years ended December 31, 2024 and December 31, 2023, respectively, which primarily consists of insurance policyholder dividends.
Gain/loss on sale of assets
The Company recorded loss of $1 and gain of $4 related to equipment sold by the Company during the years ended December 31, 2024 and December 31, 2023, respectively.
Modified EBITDA
Management evaluates Company performance based on a measure that is not in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), which consists of earnings (net income or loss) available to common stockholders before net interest income, income taxes, depreciation and amortization, non-cash share-based compensation expense, non-cash impairments, non-cash gains or losses on the sale of property, plant and equipment (“PP&E”), other non-cash items and one-time charges (“Modified EBITDA”). This measure may not be comparable to similarly titled measures employed by other companies. The measure should not be considered in isolation or as a substitute for operating income or loss, net income or loss, cash flows provided by operating, investing, or financing activities, or other cash flow data prepared in accordance with US GAAP. The amounts included in the Modified EBITDA calculation, however, are derived from amounts included in the accompanying consolidated statements of operations.
We believe Modified EBITDA is a useful measure of a company’s operating performance, which can vary substantially from company to company depending upon accounting methods and book value of assets, financing methods, capital structure and the method by which assets were acquired. It helps investors more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure (primarily interest), asset base (primarily depreciation and amortization), and actions that do not affect liquidity (share-based compensation expense) from our operating results. Additionally, it helps investors identify items that are within our operational control. Depreciation and amortization charges, while a component of operating income, are fixed at the time of the asset purchase or acquisition in accordance with the depreciable lives of the related asset and as such are not a directly controllable period operating charge.
The following is a reconciliation of net income (loss) to Modified EBITDA for the years ended December 31, 2024 and 2023:
Years Ended December 31,
Net income (loss) $ 2,620 $ (1,554 )
Deduct: Interest (income) expense, net (47 ) (7 )
Add: Income tax expense
Add: Depreciation and amortization
Add: Share-based compensation
Add: Relocation costs -
Deduct: Loss (gain) on sale of asset (4 )
Modified EBITDA $ 3,537 $ (882 )
The $4,419 increase in Modified EBITDA primarily resulted from revenue and gross profit improvement associated with the increase in fixed price contracts and lower SG&A during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
Liquidity and Capital Resources
As an offshore energy services provider, our revenues, profitability, cash flows, and future rate of growth are generally dependent on the condition of the global oil and gas industry and our customers’ ability to invest capital for offshore exploration, drilling and production, and maintenance of offshore drilling and production facilities. Oil and gas prices and the level of offshore drilling and production activity have historically been characterized by significant volatility. At times, we enter into large, fixed-price contracts which may require significant lead time and investment. A decline in offshore drilling and production activity could result in lower contract volume or delays in significant contracts, which could negatively impact our earnings and cash flows. Our earnings and cash flows could also be negatively affected by delays in payments by significant customers or delays in the completion of our contracts for any reason.
The Company believes it will have adequate liquidity to meet its future operating requirements. We are generally dependent on our cash flows from operations to fund our working capital requirements, and the uncertainties noted above create risks that we may not achieve our planned earnings or cash flow from operations. On May 24, 2023, the Company entered into a Purchase and Sale Agreement/Security Agreement with Zions Bancorporation, N.A., d/b/a Amegy Bank Business Credit (“Amegy”), which provides for Koil Energy from time to time to sell its accounts receivable and other rights to payment to Amegy, subject to Amegy’s right to approve or reject future accounts receivable and other rights proposed for sale, in its sole discretion. At December 31, 2024 and 2023, respectively, the Company had no outstanding sales of accounts receivable to Amegy.
The principal liquidity needs of the Company are to fund ongoing operations, working capital, and capital expenditures. During the year ended December 31, 2024, the Company reported a $1,392 increase in cash. The Company generated $1,726 of net cash provided by operating activities, primarily driven by cash used by changes in operating assets and liabilities of $1,824 and other adjustments to reconcile net income to net cash provided by operating activities of $930, which includes items such as non-cash lease expense, loss on sale of property, plant and equipment, share-based compensation, bad debt expense, and depreciation and amortization. This was partially offset by net income of $2,620. The Company used $373 of net cash for investing activities, primarily to fund capital expenditures. The Company also provided by $39 of net cash in financing activities for principal payments made under its finance lease obligations, proceeds from stock options exercised, and proceeds and principal payments on short-term borrowings.
During the year ended December 31, 2023, the Company reported a $323 decrease in cash. The Company generated $203 of net cash from operating activities, primarily driven by changes in operating assets and liabilities of $1,234 and other adjustments to reconcile net loss to net cash provided by operating activities of $523, which includes items such as non-cash lease expense, gain on sale of property, plant and equipment, share-based compensation, bad debt expense (recovery), and depreciation and amortization. This was partially offset by a net loss of $1,554. The Company used $226 of net cash for investing activities, primarily to fund capital expenditures. The Company also used $300 of net cash in financing activities for principal payments made under its finance lease obligations.
The Company maintains a positive outlook on customer inquiries and views this as an opportunity to capitalize on its product, service, and rental offerings to address the subsea distribution and cable management needs of its customers. The reasons for this expected increase are set forth in the “Industry and Executive Outlook” section above. As such, the Company believes it will have adequate liquidity to meet its future operating requirements through a combination of cash on hand, cash expected to be generated from operations, and potential sales of PP&E. Given the inherent volatility in oil prices and global economic activity, the Company cannot predict this with certainty. To mitigate this uncertainty and preserve liquidity, the Company will concentrate capital investments on key growth needs and pursue opportunistic cost containment initiatives, which can include workforce alignment, restricting overhead spending and limiting research and development efforts to only critical items.
Summary of Critical Accounting Estimates
Use of Estimates
The preparation of financial statements in accordance with US GAAP requires us to make estimates and judgments that may affect assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition and related allowances, contract assets and liabilities, impairments of long-lived assets, including intangibles, income taxes including the valuation allowance for deferred tax assets, contingencies and litigation, and share-based payments. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.
Property, Plant and Equipment
PP&E is stated at cost, net of accumulated depreciation, amortization, and related impairments. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the respective assets. Replacements and betterments are capitalized, while maintenance and repairs are expensed as incurred. It is our policy to include amortization expense on assets acquired under finance leases with depreciation expense on owned assets. Additionally, we record depreciation and amortization expense related to revenue-generating assets as a component of cost of sales in the accompanying consolidated statements of operations.
If circumstances associated with our PP&E have changed or a significant event has occurred that may affect the recoverability of the carrying amount of our PP&E, an impairment indicator exists, and we test the PP&E for impairment. Before testing for impairment, we group PP&E with other finite-lived long-lived assets (“long-lived assets”) at the lowest level of identifiable cash flows that are largely independent of cash flows from other assets or groups of assets. Testing long-lived assets for impairment is a two-step process:
Step 1 - We test the long-lived asset group for recoverability by comparing the carrying amount of the asset group with the sum of the undiscounted future cash flows from use and the eventual disposal of the asset group. If the carrying amount of the long-lived asset group is determined to be greater than the sum of the undiscounted future cash flows from use and disposal, we would need to perform step 2.
Step 2 - If the long-lived group of assets fails the recoverability test in step 1, we would record an impairment expense for the difference between the carrying amount and the fair value of the long-lived asset group.
During the years ended December 31, 2024 and December 31, 2023, the Company conducted assessments of whether impairment indicators were present that indicate the carrying amount of its long-lived asset group might not be recoverable and determined that no such events or changes in circumstances were present.
Revenue Recognition
Revenues are recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. To determine the proper revenue recognition method for our customer contracts, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate the combined or single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period.
For most of our fixed price contracts, the customer contracts with us to provide a significant service of integrating a complex set of tasks and components into a single project or capability even if that single project results in the delivery of multiple units. Hence, the entire contract is accounted for as one performance obligation. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.
Fixed Price Contracts
For fixed price contracts, we generally recognize revenue over time as we perform because of continuous transfer of control to the customer. This continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work in process. In our fixed price contracts, the customer either controls the work in process or we deliver products with no alternative use to the Company and have rights to payment for work performed to date plus a reasonable profit as evidenced by contractual termination clauses.
Because of control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We generally use the cost-to-cost measure of progress for our contracts because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred.
Contracts are often modified to account for changes in contract specifications and requirements. We consider a contract modification to exist when the modification either creates new, or changes the existing, enforceable rights and obligations. Most of our contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price, and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.
We have a company-wide standard and disciplined quarterly estimate at completion process in which management reviews the progress and execution of our performance obligations. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenues and costs. Changes in estimates of net sales, cost of sales and the related impact to operating income are recognized quarterly on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation’s percentage of completion. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations. When estimates of total costs to be incurred exceed total estimates of revenue to be earned on a performance obligation related to fixed price contracts, a provision for the entire loss on the performance obligation is recognized in the period the loss is estimated.
Service Contracts
We recognize revenue for service contracts measuring progress toward satisfying the performance obligation in a manner that best depicts the transfer of goods or services to the customer. The control over services is transferred over time when the services are rendered to the customer on a daily basis. Specifically, we recognize revenue as the services are provided as we have the right to invoice the customer for the services performed. Services are billed on a monthly basis. Payment terms for services are usually 30 days from invoice receipt but can increase to 45, 60, or 90 days depending on the customer.
Contract Balances
Costs and estimated earnings in excess of billings on uncompleted contracts arise when revenues are recorded based on the extent of progress towards completion but cannot be invoiced under the terms of the contract. Such amounts are invoiced upon completion of contractual milestones. Billings in excess of costs and estimated earnings on uncompleted contracts arise when milestone billings are permissible under the contract, but the related costs have not yet been incurred. All contract costs are recognized currently on jobs formally approved by the customer and contracts are not shown as complete until virtually all anticipated costs have been incurred and the risk of loss has passed to the customer.
Assets related to costs and estimated earnings in excess of billings on uncompleted contracts, as well as liabilities related to billings in excess of costs and estimated earnings on uncompleted contracts, have been classified as current. The contract cycle for certain long-term contracts may extend beyond one year, thus complete collection of amounts related to these contracts may extend beyond one year, though such long-term contracts include contractual milestone billings as discussed above. For the years ended December 31, 2024 and 2023, there were no contracts with terms that extended beyond one year.
Allowance for Credit Losses
The estimation of anticipated credit losses that may be incurred as we work through the invoice collection process with our customers requires us to make judgments and estimates regarding our customers’ ability to pay amounts due. We monitor our customers’ payment history and current creditworthiness, if needed, to determine that collectability is reasonably assured. We provide an allowance for credit losses based upon a review of each accounts receivable balance with respect to a customer’s ability to make payments. We also evaluate historical loss rates as well as consider forward-looking factors specific to the customers, the overall economic environment, and management expectations to determine expected losses. When certain accounts are determined to require an allowance, they are expensed by a provision for bad debts in that period. At December 31, 2024 and 2023, we estimated the allowance for credit losses requirement to be $0. Bad debt expense totaled $0 and $1 for the years ended December 31, 2024 and 2023, respectively. We believe that our allowance for credit losses is adequate to cover the anticipated credit losses under current conditions; however, uncertainties regarding changes in the financial condition of our customers, either adverse or positive, could impact the amount and timing of any additional credit losses that may be required.
Income Taxes
We follow the asset and liability method of accounting for income taxes. This method considers the differences between financial statement treatment and tax treatment of certain transactions. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using 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 of a change in tax rates is recognized as income or expense in the period that includes the enactment date.
We record a valuation allowance to reduce the carrying value of our deferred tax assets when it is more likely than not that some or all of the deferred tax assets will expire before realization of the benefit or that future deductibility is not probable. The ultimate realization of the deferred tax assets depends upon our ability to generate sufficient taxable income of the appropriate character in the future. This requires management to use estimates and make assumptions regarding significant future events such as the taxability of entities operating in the various taxing jurisdictions. In evaluating our ability to recover our deferred tax assets, we consider all reasonably available positive and negative evidence, including our past operating results, the existence of cumulative losses in the most recent years and our forecast of future taxable income. In estimating future taxable income, we develop assumptions, including the amount of future state, and federal pre-tax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment. When the likelihood of the realization of existing deferred tax assets changes, adjustments to the valuation allowance are charged in the period in which the determination is made, either to income or goodwill, depending upon when that portion of the valuation allowance was originally created.
We record an estimated tax liability or tax benefit for income and other taxes based on what we determine will likely be paid in the various tax jurisdictions in which we operate. We use our best judgment in the determination of these amounts. However, the liabilities ultimately realized and paid are dependent upon various matters, including resolution of tax audits, and may differ from amounts recorded. An adjustment to the estimated liability would be recorded as a provision or benefit to income tax expense in the period in which it becomes probable that the amount of the actual liability or benefit differs from the recorded amount.
Our future effective tax rates could be adversely affected by changes in the valuation of our deferred tax assets or liabilities or changes in tax laws or interpretations thereof. If and when our deferred tax assets are no longer fully reserved, we will begin to provide for taxes at the full statutory rate. In addition, we are subject to the examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.
Recent Accounting Pronouncements
Recent Accounting Pronouncements are included in Note 1, “Description of Business and Summary of Significant Accounting Policies and Estimates”, of the Notes to Consolidated Financial Statements included in this Report.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements AND SUPPLEMENTAry DATA
The financial statements are included herewith commencing on page.
Report of Independent Registered Public Accounting Firm (PCAOB ID: 659)
Consolidated Balance Sheets - December 31, 2024 and 2023
Consolidated Statements of Operations - Years ended December 31, 2024 and 2023
Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2024 and 2023
Consolidated Statements of Cash Flows - Years ended December 31, 2024 and 2023
Notes to Consolidated Financial Statements - Years ended December 31, 2024 and 2023

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
Under the supervision of and with the participation of our management, including our Chief Executive Officer, who is our principal executive officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report. The term “disclosure controls and procedures,” as set forth in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Based on the evaluation of our disclosure controls and procedures as of the end of the period covered by this Annual Report, we concluded that, as of such date, our disclosure controls and procedures were not effective due to the existence of the material weaknesses in the Company’s internal control over financial reporting described below under “Material Weakness.”
Notwithstanding the conclusion that our disclosure controls and procedures as of the end of the period covered by this Annual Report were not effective, and notwithstanding the material weakness in our internal control over financial reporting described below, management believes that the consolidated financial statements and related financial information included in this Annual Report fairly present in all material respects our financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with GAAP.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Our management conducted an assessment of our internal control over financial reporting as set forth in Item 308(a) of Regulation S-K promulgated under the Exchange Act and Section 404 of the Sarbanes-Oxley Act as of the end of the period covered by this Annual Report. Based on this assessment, our management concluded that our internal control over financial reporting was ineffective due to the material weakness in our internal control over financial reporting described below under “Material Weakness”.
Material Weaknesses
A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
The following material weaknesses were identified:
· The Company did not maintain certain components of the COSO framework, including elements of the control environment, risk assessment and monitoring activities components, relating to: 1) sufficiency of competent personnel with appropriate levels of knowledge, experience, and training in accounting for share-based payments; (ii) identifying and assessing changes that could significantly impact internal control; and (iii) performing ongoing evaluations to ascertain whether the components of internal controls are present and functioning. These entity level material weaknesses gave rise to the following control deficiency, which was also determined to be a material weakness.
· The Company did not design and maintain effective management review controls relating to its accounting for share-based payments.
Remediation Plan
In 2025, we intend to engage outside consultants to assist with various accounting and financial reporting matters and we will continue assessing the need for hiring additional internal accounting and third-party financial reporting resources, including additional training. We are in the process of replacing our recently departed VP-Finance, retained additional accounting resources in the fourth quarter of 2024 and are implementing a more efficient ERP system to streamline and automate certain processes. As we continue to obtain additional financial resources and as we continue to increase our operating activity, management, under the oversight of the Audit Committee of the Board of Directors, will continue to implement measures designed to improve our internal control over financial reporting to remediate the identified material weaknesses, namely, to identify and engage, through internal hiring and the use of external third parties, a sufficient complement of accounting and financial reporting resources and to periodically assess the design and operating effectiveness of our internal controls over financial reporting.
While we believe that these efforts will improve our internal control over financial reporting, the implementation of these measures is ongoing and will continue to require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles. We cannot assure you that the measures we have taken to date, or that we may take in the future, will be sufficient to remediate the material weakness we have identified or avoid potential future material weaknesses.
Changes in Internal Control over Financial Reporting
Other than as described above, there were no changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information
During the quarter ended December 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance
Current Directors and Executive Officers
The following table sets forth the names, ages and positions of our directors and executive officer as of December 31, 2024:
Name
Age
Position Held with Koil Energy
Erik Wiik
President, Chief Executive Officer, and Director
Mark Carden
Chairman of the Board of Directors
David J. Douglas
Director
Neal I. Goldman
Director
Biographical information regarding each of these directors and executive officer is as follows. The following paragraphs also include specific information about each director’s experience, qualifications, attributes, or skills that led the Board of Directors to the conclusion that the individual should serve on the Board as of the time of this filing, in light of our business and structure:
Erik Wiik, President, Chief Executive Officer, and Director. Mr. Wiik has served as the Company’s Chief Executive Officer since April 2024 and Board Member since March 2024. Mr. Wiik, served as President of ReAdapt Inc., an engineering consultancy firm providing subject matter expertise within subsea technology, from July 2018 through March 2024. From March 2015 to June 2018, he was Group President of CIRCOR Energy, a manufacturer of products for the oil and gas industry. Prior to that, he served in various capacities over 24 years with Aker Solutions, a provider of integrated solutions, products and services to the global energy industry. His most recent position with Aker was as Regional President of North America, and he also served as president of business units within subsea controls and umbilicals, marine contracting, well services, engineering and floating production. Mr. Wiik also served on the Board of Directors of the United Stated National Ocean Industry Association, Spindletop Charities and the Norwegian American Chamber of Commerce. Mr. Wiik was commissioned as an officer in the Norwegian Navy and has an Engineering degree from Texas A&M University.
Mr. Wiik is qualified to serve as a director based on his in-depth knowledge of the Company’s operations and his international business experience.
Mark Carden, Chairman of the Board of Directors. Mr. Carden has served as Chairman of the Board since September 30, 2017. Mr. Carden joined the Board as an independent director effective May 1, 2014 and was appointed Chairman of the Audit Committee of the Board of Directors. Mr. Carden was a Partner at Coopers & Lybrand, LLP, now PricewaterhouseCoopers, LLP and held multiple senior-level financial positions specializing in electric and gas utilities from 1981 to 1999; he most recently served as Chief Operating Officer, Global Energy Assurance Practice. Additionally, Mr. Carden was one of three CPAs in the US selected to serve a two-year fellowship at the Financial Accounting Standards Board from 1991 to 1993. Mr. Carden holds a BBA from Texas A&M University. He is currently the Executive Pastor and Elder at Clear Creek Community Church, in League City, Texas. Mr. Carden is also a member of the Compensation Committee.
Mr. Carden is qualified for service on the Board based on his experience and expertise in management, notably his knowledge of the energy market and business strategy.
David J. Douglas, Director. Mr. Douglas joined the Board as an independent director effective April 16, 2019. Mr. Douglas is the Principal of Jamaka Capital Management, LLC, the Company’s largest institutional investor. Mr. Douglas has over 30 years of investment experience as a principal, including 25 years in the family office industry. Mr. Douglas is a graduate of the University of Pennsylvania’s Wharton School earning a BS in Economics, Magna Cum Laude. Mr. Douglas is a member of the Audit Committee and Chairman of the Compensation Committee.
Mr. Douglas is qualified to serve as a director based on his significant finance and investment experience.
Neal I. Goldman, Director. Mr. Goldman joined the Board as an independent director effective April 16, 2019. Mr. Goldman is the President and Founder of Goldman Capital Management, Inc., a family office since 2018, which was previously an investment advisory firm founded in 1985. Mr. Goldman is a Chartered Financial Analyst (CFA). Mr. Goldman received his B.A. degree in Economics from The City University of New York (City College). Mr. Goldman is a member of the Audit and Compensation Committees.
Mr. Goldman is qualified to serve as a director based on his significant finance and investment background.
Corporate Governance
Code of Ethics
The Company has adopted Codes of Ethical Conduct that apply to all its directors, officers (including its chief executive officer, chief operating officer, controller and any person performing such functions) and employees. These Codes of Ethical Conduct are filed as Exhibits 14.1 and 14.2 to this Report. Copies of the Company’s Codes of Ethical Conduct may also be obtained at the Investors section of the Company’s website, www.koilenergy.com, or by written request addressed to the Corporate Secretary, Koil Energy Solutions, Inc., 1310 Rankin Rd., Houston, TX 77073. The Company intends to satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of amendments to, or waivers from, provisions of its code of ethics that apply to the Chief Executive Officer, Vice President of Finance or Controller by posting such information on the Company’s website. Information contained on the website is not part of this Report.
Accounting and Audit Matters
The Company’s Board of Directors is responsible for reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results, and effectiveness of the annual audit of the Company’s financial statements and other services provided by the Company’s independent public accountants. The Board of Directors reviews the Company’s internal accounting controls, practices, and policies. Our Board of Directors has determined that Mr. Carden qualifies as an independent audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K.
Insider Trading Policy
We are committed to promoting high standards of ethical business conduct and compliance with applicable laws, rules and regulations. As part of this commitment, we have adopted our Insider Trading Policy governing the purchase, sale, and/or other dispositions of our securities by our directors, executive officers and designated employees, that we believe is reasonably designed to promote compliance with insider trading laws, rules and regulations. A copy of our Insider Trading Policy is filed as Exhibit 19.1 to this Report.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of securities ownership and changes in such ownership with the SEC. Officers, directors and greater than ten percent shareholders also are required by rules promulgated by the SEC to furnish us with copies of all Section 16(a) forms they file.
Based solely on the Company’s review of the copies of such forms received by it, the Company believes that all Section 16(a) filing requirements applicable to its officers and directors and greater-than ten percent beneficial owners during the year ended December 31, 2024 were satisfied.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation
The following table sets forth information concerning total compensation earned in the years ended December 31, 2024 and 2023 by each person serving as our Principal Executive Officer (our “Named Officers”).
Summary Compensation Table for the years ended December 31, 2024 and
Name and Principal Position
Year
Salary
Stock Awards
All Other Compensation
(1) (2)
Total
Erik Wiik,
$ 231,250
$ 46,112
$ 26,727
$ 304,089
President and Chief Executive Officer
Charles K. Njuguna, former President,
$ 229,128
$ -
$ 26,553
$ 255,681
Chief Executive Officer, and Chief Financial Officer
$ 325,000
$ -
$ 46,056
$ 371,056
(1) Amounts in 2024 represent:
· Automobile allowances of $8,769 to Mr. Wiik; and
· Reimbursement of $17,958 to Mr. Wiik for healthcare premiums
· Automobile allowances of $6,000 to Mr. Njuguna;
· Reimbursement of $8,053 to Mr. Njuguna for healthcare premiums; and
·
Payments for vacation not taken in 2024 of $12,500 for Mr. Njuguna.
(2) Amounts in 2023 represent:
· Automobile allowances of $19,500 to Mr. Njuguna; and
· Reimbursement of $26,556 to Mr. Njuguna for healthcare premiums.
Narrative Disclosure to Summary Compensation Table
On April 1, 2024, the Company entered into an employment agreement with Mr. Wiik (the “Employment Agreement”. Under the terms of the Employment Agreement, Mr. Wiik is entitled to receive an annual base salary (the amount of which is $325,000), subject to annual adjustment by the Company’s Board. Mr. Wiik is also entitled to receive an annual bonus based upon the achievement of financial objectives by the Company, which objectives shall be set by the Board annually. In connection with entering into the Employment Agreement, the Company granted 300,000 shares of restricted stock, and options for 300,000 shares, to Mr. Wiik. Each of the foregoing will vest in three equal installments on the anniversaries of the grant date.
The Company was party to an employment agreement with Mr. Njuguna, pursuant to which Mr. Njuguna received annual cash compensation of $325,000 and certain other compensation. Due to his resignation, the employment agreement with Mr. Njuguna was terminated effective as of March 31, 2024.
Outstanding Equity Awards
The following table summarizes information with respect to unexercised options and unearned stock awards for our Named Officer as of December 31, 2024.
OPTION AWARDS STOCK AWARDS
Number of securities underlying unexercised options
Name (#) exercisable (#) unexercisable Option exercise price ($) Option expiration date Number of Shares or Units of Stock That Have Not Vested Market Value of Shares or Units of Stock that Have Not Vested Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)
Erik Wiik - 300,000 $ 0.65 3/6/2029 300,000 $ 693,000 $ 693,000
Benefits payable upon change in control
Mr. Wiik’s Employment Agreement contains provisions related to a change in control.
In the event of a Change in Control (as defined in the Employment Agreement), the awards and grants to Mr. Wiik that are comprised of or based upon equity securities under the Company’s plans, practices, policies and programs will immediately vest.
The Employment Agreement provides that if any payment or distribution to Mr. Wiik would be subject to any additional tax or excise tax, or any interest or penalties are incurred by Mr. Wiik with respect to such excise tax, then Mr. Wiik will be entitled to receive from the Company an additional payment ("Gross-Up Payment”) in an amount such that after payment of all taxes Mr. Wiik will retain an amount of the Gross-Up Payment equal to the additional or excise tax imposed upon such payment or distribution.
In the event of termination of Mr. Wiik’s employment for any reason, Mr. Wiik will be entitled to receive all accrued, unpaid salary and vacation time through the date of termination and all benefits to which Mr. Wiik is entitled or vested under the terms of all employee benefit and compensation plans, agreements and arrangements in which Mr. Wiik is a participant as of the date of termination. In addition, subject to executing a general release in favor of the Company, Mr. Wiik will be entitled to receive certain severance payments in the event his employment is terminated by the Company "other than for cause” or by Mr. Wiik with "good reason.” These severance payments include the following:
i. a lump sum in cash equal to one time Mr. Wiik’s annual base salary (at the rate in effect on the date of termination);
ii. a lump sum in cash equal to a pro rata portion of the annual bonus payable for the period in which the date of termination occurs based on the actual performance under the Company’s annual incentive bonus arrangement; provided, however, that such pro rata portion shall be calculated based on Mr. Wiik’s annual bonus for the previous fiscal year; provided further that if no previous annual bonus has been paid to Mr. Wiik, then the lump sum cash payment shall be no less than fifty percent of Executive’ annual base salary; and
iii. if Mr. Wiik’s termination occurs prior to the date that is twelve months following a Change in Control, then each and every share option, restricted share award and other equity-based award that is outstanding and held by Mr. Wiik shall immediately vest and become exercisable.
iv. Mr. Wiik has agreed, during the term of his employment and for a one-year period after his termination, not to engage in Competition (as defined in the Employment Agreement) with the Company, solicit business from any customer or potential customer of the Company, solicit the employment or services of any person employed by or a consultant to the Company on the date of termination or with six months prior thereto, or otherwise knowingly interfere with the business or accounts of the Company or any of its subsidiaries.
The Employment Agreement also provides that the Company, to the extent permitted by applicable law and the by-laws of the Company, will defend, indemnify and hold harmless Mr. Wiik from any and all claims, demands or causes of action, including reasonable attorneys’ fees and expenses, suffered or incurred by Mr. Wiik as a result of the assertion or filing of any claim, demand, litigation or other proceedings based upon statements, acts or omissions made by or on behalf of Mr. Wiik pursuant to the Employment Agreement or in the course and scope of Mr. Wiik’s employment with the Company. The Company will also maintain and pay all applicable premiums for directors’ and officers’ liability insurance which shall provide full coverage for the defense and indemnification of Mr. Wiik, to the fullest extent permitted by applicable law.
In connection with entering into the Employment Agreement, the Company granted 300,000 shares of restricted stock, and options for 300,000 shares, to Mr. Wiik. Each of the foregoing will vest in three equal installments on the anniversaries of the grant date.
The above description of the Employment Agreement is qualified in its entirety by reference to the full text of the Employment Agreement, a copy of which is filed as Exhibit 10.1 to this Annual Report on Form 10-K.
No family relationship exists between Mr. Wiik and any of the Company’s directors or executive officers. There are no arrangements or understandings between Mr. Wiik and any other person pursuant to which Mr. Wiik was selected as an officer of the Company, nor are there any transactions to which the Company is or was a participant and in which Mr. Wiik had or will have a direct or indirect material interest subject to disclosure under Item 404(a) of Regulation S-K.
Compensation of Directors
The Compensation Committee of the Board of Directors makes all decisions regarding director compensation. Only directors who are not employees, independent contractors, or consultants of the Company or any of its subsidiaries or affiliates (“Independent Directors”), are entitled to receive a fee, plus reimbursement of reasonable out-of-pocket expenses incurred to attend Board meetings.
The Company uses equity-based compensation, in the form of restricted stock or stock options, to attract and retain qualified candidates to serve on the Board. We believe our compensation arrangement for Independent Directors is comparable to the standards of peer companies within our industry and geographical location.
The following table provides certain information with respect to the 2024 compensation awarded or earned by our Independent Directors who served in such a capacity during the year.
Name Option Awards
($) (1) (2)
Total
Mark Carden $ 15,283 $ 15,283
David J. Douglas $ 15,283 $ 15,283
Neal I. Goldman $ 15,283 $ 15,283
(1) On August 2, 2023, the Company’s independent directors each received stock options to purchase 50,000 shares of our common stock with an exercise price of $0.55 per share. Fair value of these stock options was $0.32 per share at the date of grant. Twenty-five percent of the shares vested on each of August 31, 2023, November 30, 2023, February 28, 2024, and May 31, 2024.
(2) On August 26, 2024, the Company’s independent directors each received stock options to purchase 50,000 shares of our common stock with an exercise price of $1.28 per share. Fair value of these stock options was $0.99 per share at the date of grant. Twenty-five percent of the shares vested on each of August 31, 2024, November 30, 2024, February 28, 2025, and the remainder are scheduled to vest on May 31, 2025. In addition to the foregoing, all shares shall vest immediately prior to a change in control.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Set forth below is certain information with respect to beneficial ownership of Common Stock as of March 27, 2025, except as otherwise noted below, by (i) each person known by us to beneficially own more than 5 percent of the outstanding shares of our common stock; (ii) each Director as of such date; (iii) our “Named Officers” (as determined under Item 402(m) of Regulation S-K); and (iv) all directors and executive officers of Koil Energy as a group. To our knowledge, all persons listed in the table have sole voting and investment power with respect to their shares, except to the extent that authority is shared with their respective spouse under applicable law.
Name
Number of
Shares of
Common Stock
Beneficially
Owned
Number of
Shares That
May Be
Acquired By
Options
Exercisable
Within 60 Days
Total
Percent of
Outstanding
Common Stock (1)
Ronald E. Smith
2,449,383
(2)
-
2,449,383
19.5%
Galloway Capital Partners, LLC
985,651
(3)
-
985,651
7.8%
Aegis Financial Corporation
813,000
(4)
-
813,000
6.5%
Intelligent Fanatics Capital Management LLC
795,424
(5)
-
795,424
6.4%
MAZ Capital Advisors, LLC
618,767
(6)
-
618,767
5.0%
Directors and Executive Officers:
David J. Douglas
1,484,091
(7)
237,500
1,721,591
13.7%
Neal I. Goldman
700,000
(8)
37,500
737,500
5.9%
Erik Wiik
-
300,000
300,000
2.4%
Charles K. Njuguna
267,350
-
267,350
2.1%
Mark Carden
60,980
(9)
237,500
298,480
2.4%
All directors and executive officers as a group (4 persons)
2,512,421
812,500
3,324,921
26.4%
__________________
(1) The percentages in the table are calculated using the total shares outstanding as of March 27, 2025 or a total of 12,388,202 shares, plus the number of shares that may be acquired by such person or group upon the exercise of options that are exercisable within 60 days of such date.
(2) Based on a Schedule 13D filed with the SEC dated November 26, 2019, by Ronald E. Smith, 1447 FM 1010 Rd., Cleveland, TX 77327. This amount includes 710,562 shares held indirectly through an IRA, 930,651 shares held directly by Mr. Smith’s spouse, and 23,071 shares held indirectly by Mr. Smith’s spouse through an IRA.
(3) Based on a Schedule 13D filed with the SEC dated March 6, 2024, by Galloway Capital Partners, LLC, 323 Sunny Isles Blvd, 7th Floor, Sunny Isles Beach, FL 33160.
(4) Based on a Schedule 13G/A filed with the SEC dated February 8, 2024, by Aegis Financial Corporation, 6862 Elm Street, Suite 830, McLean, VA 22101.
(5)
Based on a Schedule 13G filed with the SEC dated April 2, 2025, by Intelligent Fanatics Capital Management LLC, 350 Rumford Road, Lititz, PA 17543.
(6) Based on a Schedule 13D/A filed with the SEC dated July 16, 2024, by MAZ Partners LP, 8774 Lakes Boulevard, West Palm Beach, FL 33412.
(7) Based on a Schedule 13D/A filed with the SEC dated September 2, 2022, by Jamaka Capital Management LLC, 3889 Maple Avenue, Dallas, TX 75219.
(8) Based on a Form 3 filed with the SEC dated September 27, 2024, by Neal I. Goldman, Goldman Capital Management Inc., 767 Third Ave, New York, NY 10017.
(9) Includes 980 shares held indirectly in retirement and trading accounts owned by Mr. Carden and his wife.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. Certain Relationships and Related Transactions, and Director Independence
Certain Relationships and Related Transactions
Our Board of Directors and management recognize that related person transactions present a heightened risk of conflicts of interest, and therefore we review all relationships and transactions in which we and our directors, director nominees and executive officers or their immediate family members, as well as holders of more than 5 percent of any class of our voting securities and their family members, have a direct or indirect material interest. As required under SEC rules, transactions that are determined to be directly or indirectly material to us or a related person are disclosed in the appropriate annual and/or quarterly statements filed with the SEC.
Director Independence
We believe that Messrs. Carden, Douglas, and Goldman are “independent” under the requirements of Rule 303A.02 of the NYSE Listed Company Manual.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. Principal Accountant Fees and Services
The Company’s independent registered public accounting firm is Moss Adams LLP (“Moss Adams”); issuing office is Houston, TX; PCAOB ID: 659. The following table sets forth the aggregate fees billed by Moss Adams for audit services rendered in connection with the Company’s consolidated financial statements and reports for the years ended December 31, 2024 and 2023 and for other services rendered during those years on behalf of Koil Energy and its subsidiaries:
Year Ended December 31,
Audit Fees $ 225,000 $ 225,000
Audit Related Fees - -
Tax Fees 50,000 50,000
All Other Fees - -
Audit Fees: Consists of fees and expenses billed for professional services rendered for the audit of Koil Energy’s consolidated financial statements, the review of interim condensed consolidated financial statements included in quarterly reports, services that are normally provided in connection with statutory and regulatory filings or engagements and attest services, except those not required by statute or regulation.
Audit-Related Fees: Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit and review of Koil Energy’s consolidated financial statements and are not reported under “Audit Fees.”
Tax Fees: Consists of tax compliance, tax preparation and other tax services. Tax compliance and tax preparation consists of fees and expenses billed for professional services related to assistance with tax returns. Other tax services consist of fees billed for other miscellaneous tax consulting.
All Other Fees: None.
Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
The Board of Directors pre-approves all audit and permissible non-audit services provided by Moss Adams. These services may include audit services, audit-related services, tax services and other services. The Board of Directors may also pre-approve particular services on a case-by-case basis and may delegate pre-approval authority to one or more directors. If delegated, the director must report any pre-approval decision to the Board of Directors at its first meeting after the pre-approval was obtained.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Information required by this item is incorporated herein by reference from the section entitled “Exhibit Index” of this Report.