Koil Energy Solutions Inc. (KLNG)

[Pharaoh-1]

Future gross margin is expected to increase-bright days ahead

Gross margins were impacted by increased engineering and other costs associated with new product development, including our new line of Proteus™ custom-engineered active heave compensated in-line winches, deep water rated (4000 meter) launch and retrieval systems, and other products in development. Management expects gross margins on these products to increase on future orders. Management also expects overall margins to increase as a result of its recent acquisition of Mako’s rental and service operations.