Koil Energy Swings to Loss Amid Rising Costs, Cash Drains

TL;DR

**KLNG is bleeding cash and profits, signaling deep operational issues despite flat revenue – sell or avoid.**

AI Summary

Koil Energy Solutions, Inc. (KLNG) reported a significant net loss of $413 thousand for the three months ended September 30, 2025, a sharp decline from a net income of $523 thousand in the same period of 2024. For the nine months ended September 30, 2025, the company posted a net loss of $381 thousand, contrasting with a net income of $2.083 million in the prior year. Revenues saw a modest increase, reaching $6.367 million for the three months ended September 30, 2025, up from $5.223 million in 2024, and $16.799 million for the nine months, a slight increase from $16.793 million. However, total costs and expenses surged to $6.829 million for the quarter, up from $4.745 million, primarily driven by a rise in cost of sales to $4.315 million and selling, general and administrative expenses to $2.514 million. The company's cash position decreased from $3.422 million at December 31, 2024, to $1.948 million at September 30, 2025, and working capital declined from $5.682 million to $4.885 million. Strategic outlook includes continued reliance on cash on hand, cash flows from operations, and a bank accounts receivable factoring facility with Amegy, which had $703 thousand outstanding as of September 30, 2025.

Why It Matters

Koil Energy's shift from profitability to a net loss, despite stable revenues, signals significant operational challenges for investors. The substantial increase in costs and expenses, particularly selling, general, and administrative, suggests potential inefficiencies or increased competitive pressures in the energy solutions market. For employees, this could indicate future cost-cutting measures, while customers might face price adjustments or service changes. The declining cash position and increased reliance on factoring facilities highlight liquidity concerns, potentially impacting KLNG's ability to invest in growth or weather market volatility, especially given the inherent volatility in oil and natural gas prices.

Risk Assessment

Risk Level: high — Koil Energy Solutions, Inc. exhibits high risk due to a significant swing from a net income of $2.083 million in the nine months ended September 30, 2024, to a net loss of $381 thousand in the same period of 2025. Furthermore, cash on hand decreased by 43% from $3.422 million at December 31, 2024, to $1.948 million at September 30, 2025, and the company utilized $703 thousand in short-term borrowings from a factoring agreement, indicating liquidity strain.

Analyst Insight

Investors should consider reducing their exposure to Koil Energy Solutions, Inc. given the sharp decline in profitability and deteriorating cash position. Monitor future filings closely for any signs of cost containment success or improved operating margins, as the current trend suggests increasing financial pressure.

Financial Highlights

debt To Equity

1.31

revenue

$6.367 million

operating Margin

-7.3%

total Assets

$19.657 million

total Debt

$11.156 million

net Income

$ -413 thousand

eps

$ -0.03

gross Margin

32.5%

cash Position

$1.948 million

revenue Growth

+21.9%

Key Numbers

• $413 thousand — Net loss for Q3 2025 (Compared to $523 thousand net income in Q3 2024)
• $381 thousand — Net loss for nine months ended Sept 30, 2025 (Compared to $2.083 million net income in the same period of 2024)
• $6.367 million — Revenues for Q3 2025 (Up from $5.223 million in Q3 2024)
• $16.799 million — Revenues for nine months ended Sept 30, 2025 (Slightly up from $16.793 million in the same period of 2024)
• $6.829 million — Total costs and expenses for Q3 2025 (Up from $4.745 million in Q3 2024)
• $1.948 million — Cash on hand as of Sept 30, 2025 (Down from $3.422 million at Dec 31, 2024)
• $4.885 million — Working capital as of Sept 30, 2025 (Down from $5.682 million at Dec 31, 2024)
• $703 thousand — Short-term borrowings from factoring facility as of Sept 30, 2025 (No outstanding factored invoices at Dec 31, 2024)
• 12,188,202 — Shares outstanding of Common Stock as of Nov 14, 2025 (Indicates current share count)
• $569 thousand — Bad debt expense for nine months ended Sept 30, 2025 (Compared to $0 in the same period of 2024, indicating increased credit risk)

Key Players & Entities

• Koil Energy Solutions, Inc. (company) — registrant
• Amegy Bank Business Credit (company) — accounts receivable factoring facility provider
• Zions Bancorporation, N.A. (company) — parent company of Amegy Bank Business Credit
• SEC (regulator) — Securities and Exchange Commission
• Nevada (company) — state of incorporation for Koil Energy Solutions, Inc.
• Houston, Texas (company) — address of Principal Executive Offices
• Maca, Brazil (company) — location of leased operating space
• Mobile, Alabama (company) — location of leased storage space

FAQ

Risk Factors

• Deteriorating Profitability and Cash Position [high — financial]: The company experienced a significant shift from net income to net loss, with a $413 thousand loss in Q3 2025 compared to $523 thousand income in Q3 2024. For the nine months, the loss was $381 thousand versus a $2.083 million income in the prior year. This is coupled with a decrease in cash from $3.422 million to $1.948 million and a decline in working capital from $5.682 million to $4.885 million.
• Increased Operating Costs [high — financial]: Total costs and expenses surged by 43.9% to $6.829 million in Q3 2025 from $4.745 million in Q3 2024. This increase was primarily driven by a rise in cost of sales (up 29.9% to $4.315 million) and selling, general and administrative expenses (up 58.5% to $2.514 million).
• Rising Short-Term Borrowings [medium — financial]: Koil Energy Solutions utilized its bank accounts receivable factoring facility, resulting in $703 thousand in short-term borrowings as of September 30, 2025, compared to no outstanding borrowings at December 31, 2024. This indicates an increased reliance on short-term financing.
• Increased Bad Debt Expense [medium — financial]: The company reported a bad debt expense of $569 thousand for the nine months ended September 30, 2025, a significant increase from $0 in the same period of 2024. This suggests a potential increase in credit risk among its customers.
• Declining Asset Values and Contract Assets [medium — operational]: While total assets increased slightly to $19.657 million from $18.740 million, key current assets have decreased. Cash fell by $1.474 million, and contract assets decreased by $1.366 million. Inventory also declined by $217 thousand.

Industry Context

Koil Energy Solutions operates in the energy services sector, which is typically cyclical and sensitive to commodity prices and overall economic activity. The industry faces ongoing pressure to innovate and improve efficiency while managing environmental regulations and the transition to cleaner energy sources. Competition can be intense, with companies vying for contracts based on price, technology, and reliability.

Regulatory Implications

The energy sector is subject to various environmental, safety, and financial regulations. Changes in these regulations, such as stricter emissions standards or new reporting requirements, could increase compliance costs for Koil Energy Solutions. Additionally, any financial reporting irregularities or non-compliance could lead to penalties and reputational damage.

What Investors Should Do

1. Monitor cost control measures closely.
2. Assess the sustainability of revenue growth.
3. Evaluate the impact of increased short-term debt and bad debt expense.
4. Analyze the company's cash burn rate.

Key Dates

• 2025-09-30: End of Q3 2025 — Reported a net loss of $413 thousand and a significant increase in costs and expenses, alongside a reduced cash position.
• 2024-09-30: End of Q3 2024 — Reported a net income of $523 thousand, indicating a substantial year-over-year decline in profitability.
• 2025-12-31: End of Fiscal Year 2024 — Company had a cash position of $3.422 million and no short-term borrowings from the factoring facility.

Glossary

Contract assets

Represents a company's right to consideration in exchange for goods or services that have been transferred to a customer when that right is conditional on something other than the passage of time. (A decrease in contract assets from $3.080 million to $1.714 million suggests potential issues with contract fulfillment or customer payments.)

Right-of-use operating lease assets

Represents the value of an asset that a company has the right to use for a specified period under an operating lease agreement. (The increase in these assets from $5.383 million to $6.000 million indicates expansion or new leasing commitments, which also increases long-term liabilities.)

Accumulated deficit

The total cumulative net losses of a company since its inception, minus any cumulative net income. (The accumulated deficit increased from $(62.483) million to $(62.864) million, reflecting the recent net loss and ongoing historical losses.)

Accounts receivable, net

The total amount of money owed to a company by its customers for goods or services delivered, net of any allowance for doubtful accounts. (The significant increase in accounts receivable from $2.767 million to $5.403 million, coupled with increased bad debt expense, warrants close monitoring.)

Bank accounts receivable factoring facility

A financial arrangement where a company sells its accounts receivable to a third party (a factor) at a discount to raise immediate cash. (The company's use of this facility, with $703 thousand outstanding, highlights a need for immediate liquidity and reliance on external financing.)

Year-Over-Year Comparison

Compared to the prior year, Koil Energy Solutions has seen a dramatic deterioration in profitability, swinging from a net income of $2.083 million for the nine months ended September 30, 2024, to a net loss of $381 thousand for the same period in 2025. While revenues have remained relatively flat year-over-year for the nine-month period ($16.793 million vs. $16.799 million), total costs and expenses have surged by $2.796 million, or 19%, leading to a significant operating loss. The company's cash position has also weakened considerably, and it has begun utilizing short-term borrowings, a stark contrast to its prior year's financial standing.

Key Financial Figures

• $0.001 — outstanding of Common Stock, par value $0.001 per share. IMPORTANT INFORMATION REGAR

Filing Documents

• koil_i10q-093025.htm (10-Q) — 581KB
• koil_ex3101.htm (EX-31.1) — 7KB
• koil_ex3102.htm (EX-31.2) — 7KB
• koil_ex3201.htm (EX-32.1) — 3KB
• koil_ex3202.htm (EX-32.2) — 3KB
• 0001683168-25-008457.txt ( ) — 3407KB
• klng-20250930.xsd (EX-101.SCH) — 30KB
• klng-20250930_cal.xml (EX-101.CAL) — 45KB
• klng-20250930_def.xml (EX-101.DEF) — 67KB
• klng-20250930_lab.xml (EX-101.LAB) — 261KB
• klng-20250930_pre.xml (EX-101.PRE) — 204KB
• koil_i10q-093025_htm.xml (XML) — 421KB

Forward-Looking Statements

Forward-Looking Statements The statements contained or incorporated by reference in this Report that are not historical facts are "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995), within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements include any statement that may project, indicate or imply future results, events, performance or achievements. The forward-looking statements contained herein are based on current expectations that involve a number of risks and uncertainties. These statements can be identified by the use of forward-looking terminology such as "believes," "expect," "may," "will," "should," "intend," "plan," "could," "estimate," or "anticipate," or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. Given the risks and uncertainties relating to forward-looking statements, investors should not place undue reliance on such statements. Forward-looking statements included in this Report speak only as of the date of this Report and are not guarantees of future performance. Although we believe that the expectations reflected in the forward-looking statements are reasonable, such expectations may prove to be incorrect. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary Economic uncertainty and financial market conditions may impact our customer base, suppliers and backlog; The volatility of oil and natural gas prices; Our use of

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (unaudited) 1 Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Operations 2 Consolidated Statements of Stockholders' Equity 3 Condensed Consolidated Statements of Cash Flows 4 Notes to Unaudited Condensed Consolidated Financial Statements 5 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 22 Item 4.

Controls and Procedures

Controls and Procedures 23

OTHER INFORMATION

PART II. OTHER INFORMATION Item 5. Other Information 24 Item 6. Exhibits 24

Signatures

Signatures 25 Index to Exhibits 26 iii

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS KOIL ENERGY SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, 2025 December 31, 2024 (In thousands, except share and per share amounts) ASSETS Current assets: Cash $ 1,948 $ 3,422 Accounts receivable, net 5,403 2,767 Employee retention tax credit receivable – 323 Inventory 187 404 Contract assets 1,714 3,080 Prepaid expenses and other current assets 540 210 Total current assets 9,792 10,206 Property, plant and equipment, net 3,431 2,791 Intangibles, net 278 64 Right-of-use operating lease assets 6,000 5,383 Right-of-use finance lease assets 58 29 Other assets 98 267 Total assets $ 19,657 $ 18,740 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 2,757 $ 3,319 Contract liabilities 415 542 Deferred revenue 75 114 Short-term borrowings 703 – Current notes payable 328 – Current operating lease liabilities 887 537 Current finance lease liabilities 20 12 Total current liabilities 5,185 4,524 Long-term notes payable 26 – Operating lease liability, long-term 5,914 5,600 Finance lease liability, long-term 31 12 Total liabilities 11,156 10,136 Commitments and contingencies (Note 8) – Stockholders' equity: Common stock, 24,500,000 shares authorized at $ 0.001 par value, 16,206,010 issued at September 30, 2025 and 16,106,010 issued at December 31, 2024 16 16 Additional paid-in capital 74,484 74,206 Treasury stock, 4,017,808 shares at September 30, 2025 and December 31, 2024, at cost ( 3,135 ) ( 3,135 ) Accumulated deficit ( 62,864 ) ( 62,483 ) Total stockholders' equity 8,501 8,604 Total liabilities and stockholders' equity $ 19,657 $ 18,740 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. 1 KOIL ENERGY SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPE

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