COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2026

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 8: COMMITMENTS AND CONTINGENCIES

CEO Employment Agreement

Our CEO is employed under an employment agreement containing severance provisions. In the event of termination of the CEO’s employment for any reason, the CEO will be entitled to receive all accrued, unpaid salary and vacation time through the date of termination and all benefits to which the CEO is entitled or vested under the terms of all employee benefit and compensation plans, agreements, and arrangements in which the CEO participates as of the date of termination.

In addition, subject to executing a general release in favor of the Company, the CEO will be entitled to receive certain severance payments in the event his employment is terminated by the Company “other than for cause” or by the CEO with “good reason.” These severance payments include: (i) a lump sum in cash equal to one time the CEO’s annual base salary; (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, but no less than fifty percent of the CEO’s annual base salary; and (iii) if the CEO’s termination occurs prior to the date that is twelve months following a change of control, then each and every share option, restricted share award and other equity-based award that is outstanding and held by the CEO shall immediately vest and become exercisable. 

CFO Employment Agreement

Our Chief Financial Officer ("CFO”) is also employed under an employment agreement containing severance provisions. In the event of termination of the CFO’s employment for any reason, the CFO will be entitled to receive all accrued, unpaid salary and vacation time through the date of termination and all benefits to which the CFO is entitled or vested under the terms of all employee benefit and compensation plans, agreements, and arrangements in which the CFO participates as of the date of termination.

In addition, subject to executing a general release in favor of the Company, the CFO will be entitled to receive certain severance payments in the event his employment is terminated by the Company "other than for cause” or by the CFO with "good reason.” These severance payments include: (i) a lump sum in cash equal to six months of the CFO’s annual base salary; (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, but no less than fifty percent of the CFO’s annual base salary; and (iii) if the CFO’s termination occurs prior to the date that is twelve months following a change of control, then each and every share option, restricted share award and other equity-based award that is outstanding and held by the CFO shall immediately vest and become exercisable.

Litigation

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 and is not involved in any material legal proceedings as of the date of these financial statements.

WW Champion Developments Lawsuit

On September 23, 2024, WW Champion Developments, Inc. ("WW Champion”) sued the Company alleging breach of contract and seeking money damages of $1,229 in the 281^st 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 matter was settled in June 2025 for $590. Payment terms for the settlement included the forfeiture of a $90 deposit, a $200 payment on July 1, 2025, and six monthly payments of $50 each commencing August 1, 2025. As of January 2026, all such amounts were fully paid, and no liability remains

OMSi Lawsuit

In December 2024, the Company completed work under purchase orders with OMS International Limited (OMSi), a UK-based subsea engineering firm. The Company successfully completed the project in March 2025 and issued invoices totaling $569. OMSi has not remitted payment on the outstanding invoices and has not responded to the Company’s repeated requests for payment.

On September 29, 2025, the Company filed a civil action against OMSi in the United States District Court for the Southern District of Texas seeking to recover the unpaid amounts. OMSi has not yet filed a response. For the quarter ending September 30, 2025, the Company recorded a reserve of $569 in Allowance for Credit Losses. The Company received a judgment in US District Court against OMSi in January 2026 in the amount of approximately $575 and intends to pursue full recovery. The Company will adjust the reserve as new information becomes available.