OTC: KLNG

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, 2025, and 2024,
the Company’s operations were organized as one reportable 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.

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Project Management and Engineering. Koil
Energy’s project managers and engineers have extensive experience and knowledge to support customers both onshore 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, 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 need 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 at 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.

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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® systems, 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.

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Koil Energy is not dependent on a single customer,
but our two largest customers together accounted for approximately 40% of revenue in 2025. 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 manufacturing these types of equipment.

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Employees

At December 31, 2025, we had a total of 68 employees,
with only one being part-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. 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

We own and license various patents, trademarks
and other intellectual property rights that support our products and services. While no single intellectual property right is material
to our business operations, we believe our intellectual property portfolio as a whole provides meaningful support for our competitive
position

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