FLOTEK INDUSTRIES INC/CN/ 10-Q

Item 1. Financial Statements FLOTEK INDUSTRIES INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) March 31, 2026 December 31, 2025 ASSETS Current assets: Cash and cash equivalents $ 5,676 $ 5,731 Restricted cash 104 104 Accounts receivable, net of allowance for credit losses of $ 820 and $ 764 at March 31, 2026 and December 31, 2025, respectively 21,794 19,043 Accounts receivable, related party, net of allowance for credit losses of $ 0 at March 31, 2026 and December 31, 2025 61,023 64,204 Equipment credit, related party 11,782 — Inventories, net 14,303 10,629 Other current assets 2,709 3,445 Current contract asset 8,402 7,621 Total current assets 125,793 110,777 Long-term contract asset 52,102 55,115 Property and equipment, net 21,912 20,344 Right-of-use assets 2,895 3,083 Deferred tax assets, net 27,580 29,152 Other long-term assets 1,561 1,578 TOTAL ASSETS $ 231,843 $ 220,049 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 52,566 $ 48,317 Accrued liabilities 8,771 7,256 Income taxes payable 295 258 Interest payable, related party 986 1,008 Current portion of operating lease liabilities 1,287 1,251 Current portion of finance lease liabilities 156 153 Asset-based loan 4,666 3,332 Total current liabilities 68,727 61,575 Note payable - related party, net of deferred financing costs 39,608 39,584 Long-term operating lease liabilities 5,149 5,608 Long-term finance lease liabilities 184 224 TOTAL LIABILITIES 113,668 106,991 Stockholders’ equity: Preferred stock, $ 0.0001 par value, 100,000 shares authorized; no shares issued and outstanding — — Common stock, $ 0.0001 par value, 240,000,000 shares authorized; 37,390,332 shares issued and 36,174,338 shares outstanding at March 31, 2026; 31,320,960 shares issued and 30,130,480 shares outstanding at December 31, 2025 4 3 Additional paid-in capital 435,838 434,964 Accumulated other comprehensive income 130 96 Accumulated deficit ( 281,116 ) ( 285,780 ) Treasury stock, at cost; 1,215,994 and 1,190,480 shares at March 31, 2026 and December 31, 2025, respectively ( 36,681 ) ( 36,225 ) Total stockholders’ equity 118,175 113,058 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 231,843 $ 220,049 The accompanying Notes are an integral part of these Unaudited Condensed Consolidated Financial Statements. 4 FLOTEK INDUSTRIES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Three Months Ended March 31, 2026 2025 Revenue: Revenue from external customers $ 18,165 $ 24,423 Revenue from related party 51,886 30,939 Total revenues 70,051 55,362 Cost of sales 54,510 42,913 Gross profit 15,541 12,449 Operating costs and expenses: Selling, general, and administrative 6,925 6,282 Depreciation 631 252 Research and development 396 355 Gain on sale of property and equipment — ( 7 ) Total operating costs and expenses 7,952 6,882 Income from operations 7,589 5,567 Other expense: Interest expense ( 1,332 ) ( 229 ) Other income, net 16 106 Total other expense ( 1,316 ) ( 123 ) Income before income taxes 6,273 5,444 Income tax expense ( 1,609 ) ( 64 ) Net income $ 4,664 $ 5,380 Income per common share: Basic $ 0.13 $ 0.18 Diluted $ 0.12 $ 0.17 Weighted average common shares: Weighted average common shares used in computing basic income per common share 36,100 29,683 Weighted average common shares used in computing diluted income per common share 38,340 31,752 The accompanying Notes are an integral part of these Unaudited Condensed Consolidated Financial Statements. 5 FLOTEK INDUSTRIES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Three months ended March 31, 2026 2025 Net income $ 4,664 $ 5,380 Other comprehensive income: Foreign currency translation adjustment 34 ( 45 ) Comprehensive income $ 4,698 $ 5,335 The accompanying Notes are an integral part of these Unaudited Condensed Consolidated Financial Statements. 6 FLOTEK INDUSTRIES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (in thousands) Three months ended March 31, 2026 2025 Cash flows from operating activities: Net income $ 4,664 $ 5,380 Adjustments to reconcile net income to net cash provided by operating activities: Change in fair value of contingent consideration — ( 125 ) Amortization of contract assets 2,232 1,482 Depreciation 631 252 Amortization of deferred financing costs 95 71 Provision for credit losses, net of recoveries 56 66 Provision for excess and obsolete inventory 396 64 Gain on sale of property and equipment — ( 7 ) Non-cash lease expense 188 318 Stock compensation expense 824 461 Deferred income tax expense 1,572 14 Changes in current assets and liabilities: Accounts receivable ( 2,808 ) ( 2,489 ) Accounts receivable, related party ( 9,798 ) 4,124 Inventories ( 4,070 ) ( 354 ) Income tax receivable 20 — Other assets 663 ( 540 ) Accounts payable 4,249 893 Accrued liabilities 1,515 ( 1,811 ) Operating lease liabilities ( 423 ) ( 568 ) Income taxes payable 37 82 Interest payable, related party ( 22 ) — Net cash provided by operating activities 21 7,313 Cash flows from investing activities: Capital expenditures ( 1,002 ) ( 598 ) Proceeds from sale of assets — 7 Net cash used in investing activities ( 1,002 ) ( 591 ) Cash flows from financing activities: Payments on long term debt — ( 45 ) Proceeds from asset-based loan 55,100 53,345 Payments on asset-based loan ( 53,766 ) ( 58,136 ) Proceeds from exercise of April 2025 Warrant 1 — Payments to tax authorities for shares withheld from employees ( 456 ) ( 23 ) Proceeds from issuance of stock under Employee Stock Purchase Plan 44 31 Proceeds from stock option exercises 6 — Payments for finance leases ( 37 ) — Net cash provided by (used in) financing activities 892 ( 4,828 ) Effect of changes in exchange rates on cash and cash equivalents 34 ( 45 ) Net change in cash and cash equivalents and restricted cash ( 55 ) 1,849 Cash and cash equivalents at the beginning of the period 5,731 4,404 Restricted cash at the beginning of the period 104 102 Cash and cash equivalents and restricted cash at the beginning of the period 5,835 4,506 Cash and cash equivalents at the end of the period 5,676 6,253 Restricted cash at the end of the period 104 102 Cash and cash equivalents and restricted cash at the end of the period $ 5,780 $ 6,355 The accompanying Notes are an integral part of these Unaudited Condensed Consolidated Financial Statements. 7 FLOTEK INDUSTRIES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) Three Months Ended March 31, 2026 Common Stock Treasury Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders’ Equity Shares Issued Par Value Shares Cost Balance, December 31, 2025 31,321 3 1,190 ( 36,225 ) $ 434,964 $ 96 $ ( 285,780 ) $ 113,058 Net income — — — — — — 4,664 4,664 Foreign currency translation adjustment — — — — — 34 — 34 Stock option exercises 2 — — — 6 — — 6 Stock issued under employee stock purchase plan — — ( 2 ) — 44 — — 44 Restricted stock granted 67 — — — — — — — Stock compensation expense — — — — 824 — — 824 Shares withheld to cover taxes — — 28 ( 456 ) — — — ( 456 ) Exercise of April 2025 Warrant (Note 13) 6,000 1 — — — — — 1 Balance, March 31, 2026 37,390 $ 4 1,216 $ ( 36,681 ) $ 435,838 $ 130 $ ( 281,116 ) $ 118,175 Three Months Ended March 31, 2025 Common Stock Treasury Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders’ Equity Shares Issued Par Value Shares Cost Balance, December 31, 2024 30,938 $ 3 1,112 $ ( 34,666 ) $ 464,620 $ 251 $ ( 316,308 ) $ 113,900 Net income — — — — — — 5,380 5,380 Foreign currency translation adjustment — — — — — ( 45 ) — ( 45 ) Stock issued under employee stock purchase plan — — ( 4 ) — 31 — — 31 Restricted stock forfeited — — 3 — — — — — Restricted stock vested 3 — — — — — — — Stock compensation expense — — — — 461 — — 461 Shares withheld to cover taxes — — 3 ( 23 ) — — — ( 23 ) Balance, March 31, 2025 30,941 $ 3 1,114 $ ( 34,689 ) $ 465,112 $ 206 $ ( 310,928 ) $ 119,704 The accompanying Notes are an integral part of these Unaudited Condensed Consolidated Financial Statements. 8 FLOTEK INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 — Organization and Nature of Operations General Flotek strives to be the collaborative partner of choice for solutions that reduce the environmental impact of energy on air, water, land and people. An advanced technology-driven, chemical and data analytics company, Flotek seeks to provide unique and innovative solutions to its customers in both the domestic and international energy markets. The Company is committed to delivering products and services that endeavor to maximize customer returns by leveraging chemistry as the common value creation platform. The Company’s Chemistry Technologies (“CT”) segment designs, develops, manufactures, packages, distributes and markets optimized chemistry solutions that we believe help customers improve their return on invested capital, lower operational costs and realize tangible environmental benefits. The Company’s proprietary chemistries, specialty chemistries, logistics and technology services seek to enable our customers to pursue improved efficiencies and performance throughout the life cycle of their desired chemical applications program. The Company designs, develops, manufactures, packages, distributes and markets optimized chemistry solutions that are designed to accelerate existing sustainability practices to reduce the environmental impact of energy on the air, water, land and people. The Company’s Data Analytics (“DA”) segment delivers real-time measurement information and insights to its customers designed to enable optimization of operations and reduction of emissions and their carbon intensity. The Company’s technologies are founded upon an industry leading field-deployable, in-line optical near-infrared spectrometer that measures the quality, quantity and composition of hydrocarbon flows. The instrument’s response is processed with advanced chemometrics modeling, artificial intelligence and machine learning algorithms to deliver valuable insights to our customers every 5-15 seconds. We believe customers using our technology may obtain significant benefits, including additional profits, by enhancing operations in crude/condensates stabilization, enhancing blending operations, reducing time impacting transmix operations and increasing efficiencies and optimization of gas plants. The DA segment has expanded its presence in providing mobile power generation solutions through the acquisition and construction of power-generation assets which facilitate the use of significantly lower-cost field gas, as a replacement to diesel, to generate power, lower emissions and protect equipment through the continuous measurement of gas quality. The DA segment generates revenues through a combination of short and long-term equipment rentals (service revenue) and capital sales (product revenue) both of which are founded on the usage of the segment’s proprietary real-time measurement technologies. Customers of the DA segment span across the oil and gas industry, including oil and gas supermajors, some of the largest midstream oil and gas companies, large gas processing plants, independent exploration and production companies and oil field service companies that provide hydraulic fracturing services. The Company’s two operating segments, CT and DA, are supported by its Research & Innovation (“R&I”) advanced laboratory capabilities. For further discussion of our operations and segments, see Note 17, “Business Segment, Geographic and Major Customer Information.” As used herein, “Flotek,” the “Company,” “we,” “our” and “us” refers to Flotek Industries, Inc. and/or the Company’s wholly-owned subsidiaries. The use of these terms is not intended to connote any particular corporate status or relationship. Note 2 — Summary of Significant Accounting Policies Please refer to Note 2, “Summary of Significant Accounting Policies” to the consolidated financial statements from the 2025 Annual Report for the discussion of significant accounting policies. Accounts Receivable and Allowance for Credit Losses Changes in the allowance for credit losses are as follows (in thousands): March 31, 2026 December 31, 2025 Balance, beginning of year $ 764 $ 447 Charges to provision for credit losses, net of recoveries 56 603 Write-offs — ( 286 ) Balance, end of period $ 820 $ 764 9 FLOTEK INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 2026 and December 31, 2025, the Company had not recorded an allowance for credit losses for the related party accounts receivable from ProFrac Services, LLC (“ProFrac Services”) (see Note 16, “Related Party Transactions”). Recent Accounting Pronouncements Changes to U.S. GAAP are established by the FASB. We evaluate the applicability and impact of all authoritative guidance issued by the FASB. Guidance not listed below was assessed and determined to be either not applicable, clarifications of items listed below, have no material effect on the Company’s financial statements or already adopted by the Company. New Accounting Standards Issued and Not Adopted as of March 31, 2026 Expense Disaggregation Disclosures The FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures” (“ASU 2024-03”), which enhances the disclosures required for certain expense captions in the Company's annual and interim consolidated financial statements. ASU 2024-03 is effective prospectively or retrospectively for fiscal years beginning after December 15, 2026 and for interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its disclosures. Internal-Use Software Costs In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 eliminates the previously required stage-based model for capitalization of internal-use software costs and now requires capitalization to begin when (i) management authorizes and commits to funding the project, and (ii) it is probable the project will be completed and used as intended. The ASU also clarifies that all capitalized internal-use software, including implementation costs in hosting arrangements, are subject to the disclosure requirements of ASC 360-10. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adoption on our disclosures . Note 3 — Revenue from Contracts with Customers Disaggregation of Revenue The Company differentiates revenue based on whether the source of revenue is attributable to product sales, service revenue or rental income. Product, service and rental revenues include sales to related parties as described in Note 16, “Related Party Transactions.” Total revenue disaggregated by revenue source is as follows (in thousands): Three months ended March 31, 2026 2025 Revenue: Products $ 60,621 $ 53,625 Services 2,270 1,737 Rental 7,160 — $ 70,051 $ 55,362 Disaggregation of Cost of Sales The Company differentiates cost of sales based on whether the cost is attributable to tangible goods sold, cost of services sold or other costs that cannot be directly attributed to either tangible goods or services. 10 FLOTEK INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Total cost of sales disaggregated is as follows (in thousands): Three months ended March 31, 2026 2025 Cost of sales: Tangible goods sold $ 48,700 $ 38,232 Services 355 179 Other 5,455 4,502 $ 54,510 $ 42,913 Other cost of sales represents costs directly associated with the generation of revenue that cannot be attributed directly to tangible goods sold or services. Other cost of sales for the three months ended March 31, 2026 includes $ 0.8 million, related to the Lease Agreement. Examples of other costs of sales are certain personnel costs and equipment rental and insurance costs. Cost of sales, disaggregated between external customers and related party, is as follows (in thousands): Three months ended March 31, 2026 2025 Cost of sales: Cost of sales for external customers $ 14,556 $ 21,660 Cost of sales for related party 39,954 21,253 $ 54,510 $ 42,913 Note 4 — Contract Assets Contract assets are as follows (in thousands): March 31, 2026 December 31, 2025 Contract assets $ 83,060 $ 83,060 Less accumulated amortization ( 22,556 ) ( 20,324 ) Contract assets, net 60,504 62,736 Less current contract assets ( 8,402 ) ( 7,621 ) Contract assets, long term $ 52,102 $ 55,115 In connection with entering into the Initial ProFrac Agreement (defined below) and First Amendment to ProFrac Agreement (defined below) on February 2, 2022 and May 17, 2022, respectively, as discussed in Note 16, “Related Party Transactions,” the Company recognized contract assets of $ 10.0 million and $ 69.5 million, respectively, and associated fees of $ 3.6 million. As of March 31, 2026 and December 31, 2025, $ 52.1 million and $ 55.1 million, respectively, of the contract assets were classified as long term based upon our estimate of the forecasted revenues from the ProFrac Agreement that will not be realized within the next twelve months of the ProFrac Agreement. The Company’s estimate of the timing of the future contract revenues is evaluated quarterly. During the three months ended March 31, 2026 and 2025, the Company recognized $ 2.2 million and $ 1.5 million, respectively, of contract assets amortization that is recorded as a reduction of the transaction price included in related party revenue in the consolidated statement of operations. The table below reflects our estimated amortization per year (in thousands) based on the Company’s forecasted revenues from the ProFrac Agreement as of March 31, 2026. Years ending December 31, Amortization 2026 (excluding the first three months) $ 6,238 2027 9,606 2028 10,507 2029 10,507 2030 10,507 Thereafter through May 2032 13,139 Total contract assets $ 60,504 11 FLOTEK INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 5 — Inventories Inventories are as follows (in thousands): March 31, 2026 December 31, 2025 Raw materials $ 4,459 $ 4,821 Finished goods 13,782 9,711 Inventories 18,241 14,532 Less reserve for excess and obsolete inventory ( 3,938 ) ( 3,903 ) Inventories, net $ 14,303 $ 10,629 During the three months ended March 31, 2026 and 2025, additional reserves recorded were $ 0.4 million and $ 0.1 million, respectively, for the CT segment and $ 46 thousand and $ 13 thousand, respectively, for the DA segment. Note 6 — Property and Equipment Property and equipment are as follows (in thousands): March 31, 2026 December 31, 2025 Land $ 886 $ 886 Land improvements 520 520 Buildings and leasehold improvements 6,594 6,594 Machinery and equipment 10,879 8,804 Leased equipment 14,252 14,252 Furniture and fixtures 570 570 Transportation equipment 851 867 Computer equipment and software 2,075 1,934 Property and equipment 36,627 34,427 Less accumulated depreciation ( 14,715 ) ( 14,083 ) Property and equipment, net $ 21,912 $ 20,344 Depreciation expense totaled $ 0.6 million and $ 0.3 million for the three months ended March 31, 2026 a nd 2025, respectively. Note 7 — Leases The components of lease expense and supplemental cash flow information are as follows (in thousands): Three months ended March 31, 2026 2025 Operating lease expense $ 302 $ 491 Finance lease expense: Amortization of assets 39 — Interest on lease liabilities 8 — Total finance lease expense 47 — Short-term lease expense 574 442 Total lease expense $ 923 $ 933 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 686 $ 1,081 Operating cash flows from finance leases 63 — Financing cash flows from finance leases 8 — 12 FLOTEK INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Maturities of lease liabilities as of March 31, 2026 are as follows (in thousands): Years ending December 31, Operating Leases Finance Leases 2026 (excluding first three months) $ 1,332 $ 136 2027 1,865 180 2028 1,731 57 2029 1,644 — 2030 1,249 — Thereafter 54 — Total lease payments $ 7,875 $ 373 Less: Interest ( 1,439 ) ( 33 ) Present value of lease liabilities $ 6,436 $ 340 Supplemental balance sheet information related to leases is as follows (in thousands): March 31, 2026 December 31, 2025 Operating Leases Operating lease right-of-use assets $ 2,569 $ 2,718 Current portion of operating lease liabilities 1,287 1,251 Long-term operating lease liabilities 5,149 5,608 Total operating lease liabilities $ 6,436 $ 6,859 Finance Leases Finance lease right-of-use assets $ 326 $ 365 Current portion of finance lease liabilities $ 156 $ 153 Long-term finance lease liabilities 184 224 Total finance lease liabilities $ 340 $ 377 Weighted Average Remaining Lease Term Operating leases 4.4 years 4.6 years Finance leases 2.1 years 2.4 years Weighted Average Discount Rate Operating leases 9.4 % 9.4 % Finance leases 9.5 % 9.5 % 13 FLOTEK INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Lease Agreement Income The Company recorded income from the Lease Agreement (see Note 16, “Related Party Transactions”) of $ 6.8 million during the three months ended March 31, 2026. At March 31, 2026, the minimum future lease income related to the Lease Agreement is as follows (in thousands): Years ending December 31, Lease Agreement Income 2026 (excluding first three months) $ 20,531 2027 27,375 2028 27,375 2029 27,375 2030 (1) 9,125 Total rental income (through April 2030) $ 111,781 (1) Excludes rental income for the sixth year of the Lease Agreement as rental rates in year six will be determined based on prevailing market rates. Sublease Income On April 1, 2023, the Company entered into an agreement to sublease its office and lab space in Houston, Texas beginning September 1, 2023 and continuing through October 30, 2030. The Company recorded rental income from the sublease of $ 0.2 million and $ 0.2 million for the three months ended March 31, 2026 and 2025, respectively, which is included in the Company’s statement of operations in Other income (expense), net. Rental income from the sublease offsets the monthly rental expense from the Company’s lease of the facility. Sublease rental income for future years is as follows (in thousands): Years ending December 31, Sublease Income 2026 (excluding first three months) $ 575 2027 767 2028 767 2029 767 2030 639 Total rental income $ 3,515 Note 8 — Accrued Liabilities Current accrued liabilities are as follows (in thousands): March 31, 2026 December 31, 2025 Severance costs $ 655 $ 750 Payroll and benefits 4,819 4,006 Legal costs 131 85 Deferred revenue 1,670 716 Financed insurance 849 1,431 Other 647 268 Total current accrued liabilities $ 8,771 $ 7,256 14 FLOTEK INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 9 — Debt Asset Based Loan In August 2023, the Company entered into a 24-month revolving loan and security agreement in connection with an Asset Based Loan, which was amended in October 2023, August 2024 and April 2025 (as amended the “ABL”). The August 2024 amendment to the ABL extended the maturity date to August 2026, increased the credit availability and lowered the interest rate spread.The ABL provides up to $ 20.0 million of credit availability, which is limited by a borrowing base consisting of (i) 85 % of eligible accounts receivable, plus (ii) 60 % of the value of eligible inventory not to exceed 100 % of the eligible accounts receivable, plus (iii) 60 % of the value of certain real estate holdings. As of March 31, 2026 and December 31, 2025, the Company had $ 4.7 million and $ 3.3 million, respectively, outstanding under the ABL. As of March 31, 2026, the Company had approximately $ 5.4 million of available borrowings under the ABL. During the three months ended March 31, 2026 and 2025, the Company incurred $ 0.2 million and $ 0.1 million, respectively, in interest and fees related to the ABL. As of March 31, 2026 and 2025, the Company recorded $ 0.1 million and $ 0.2 million, respectively, of unamortized deferred financing costs related to the ABL. Borrowings under the ABL bear interest at the Wall Street Journal Prime Rate (subject to a floor of 5.50 %) plus 2.0 % per annum. For the three months ended March 31, 2026 and 2025, the weighted-average interest rate was 8.8 % and 9.5 %, respectively. The ABL contains an annual commitment fee equal to 1.0 % of the ABL’s borrowing base. Additionally, the Company will be assessed a non-usage fee of 0.25 % per quarter based on the difference between the average daily outstanding balance and the borrowing base limit of the ABL. If the ABL is terminated prior to the end of its term, the Company is required to pay an early termination fee of 2.5 % of the borrowing base limit of the ABL (if terminated with more than 12 months remaining until the maturity date) or 1.5 % of the borrowing base limit of the ABL (if terminated with less than 12 months remaining until the maturity date). The ABL contains customary representations, warranties, covenants and events of default, the occurrence of which would permit the lender to accelerate the payment of any amounts borrowed. The ABL requires the Company to maintain a minimum Tangible Net Worth (as defined in the ABL) of not less than $ 11 million. In addition, the ABL provides the lender a blanket security interest on all or substantially all of the Company’s assets, excluding the Acquired Assets (defined below). The Company was in compliance with all of the applicable covenants under the ABL as of March 31, 2026. Related Party Note Payable In connection with the PWRtek Transactions (see Note 16, “Related Party Transactions”), a component of the consideration paid by the Company consisted of a secured promissory note in the initial principal amount of $ 40.0 million (the “PWRtek Note”). The Company recorded $ 0.5 million as deferred financing costs. On November 7, 2025, the Company entered into a series of agreements with ProFrac GDM, LLC (“ProFrac GDM”), a subsidiary of ProFrac Holding Corp. (“ProFrac”), in connection with the assignment of the PWRtek Note by ProFrac GDM to PC Energy Credit I LLC, an affiliate of the founders and principal stockholders of ProFrac and entities owned by or affiliated with them and a related party to ProFrac (the “Note Assignment”). To facilitate the Note Assignment, all parties involved agreed to various amendments, which among other things, removed certain restrictions and other conditions that were outlined under the original PWRtek Note. As of March 31, 2026 and December 31, 2025, amounts outstanding under the PWRtek Note are as follows (in thousands): March 31, 2026 December 31, 2025 PWRtek Note payable $ 40,000 $ 40,000 Less: unamortized debt issuance cost ( 392 ) ( 416 ) Total PWRtek Note payable $ 39,608 $ 39,584 15 FLOTEK INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 2026 , the fair value of the PWRtek Note approximated the carrying amount. Principal payment for future years is as follows (in thousands): Years ending December 31, Principal Payments 2026 $ — 2027 — 2028 — 2029 — 2030 40,000 Total payment $ 40,000 For the three months ended March 31, 2026, interest expense related to the PWRtek Note was $ 1.0 million. At both March 31, 2026 and December 31, 2025, interest payable related to the PWRtek Note was $ 1.0 million and included in interest payable, related party in the condensed consolidated balance sheets. Note 10 — Fair Value Measurements Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company categorizes financial assets and liabilities into the three levels of the fair value hierarchy. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value and bases categorization within the hierarchy on the lowest level of input that is available and significant to the fair value measurement. • Level 1 — Quoted prices in active markets for identical assets or liabilities; • Level 2 — Observable inputs other than Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • Level 3 — Significant unobservable inputs that are supported by little or no market activity or that are based on the reporting entity’s assumptions about the inputs. Fair Value of Other Financial Instruments The carrying amounts of certain financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accrued liabilities, accrued liabilities - related party, accounts payable and ABL approximate fair value due to the short-term nature of these accounts. Assets Measured at Fair Value on a Nonrecurring Basis The Company’s non-financial assets, including property and equipment and operating lease ROU assets, are measured at fair value on a non-recurring basis and are subject to adjustment to their fair value in certain circumstances. 16 FLOTEK INDUSTRIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 11 — Income Taxes The income tax provision differed from the amounts computed by applying the U.S. federal income tax rate of 21% to income before income tax for the reasons set forth below (dollars in thousands): Three months ended March 31, 2026 U.S. federal statutory tax rate $ 1,318 21.0 % State income taxes, net of federal benefit 155 2.5 % Foreign tax effects 33 0.5 % Effect of cross-border tax laws 102 1.6 % Nontaxable or nondeductible items Stock-based awards ( 157 ) ( 2.5 ) % Executive compensation limit 134 2.1 % Other 24 0.4 % Income tax expense and effective rate $ 1,609 25.6 % Three months ended March 31, 2025 U.S. federal statutory tax rate $ 1,143 21.0 % State income taxes, net of federal benefit 64 1.2 % Foreign tax effects ( 90 ) ( 1.7 ) % Effect of cross-border tax laws 98 1.8 % Change in valuation allowance ( 1,183 ) ( 21.7 ) % Nontaxable or nondeductible items Stock-based awards ( 2 ) ( 0.1 ) % Executive compensation limit 4 0.1 % Other 30 0.6 % Income tax expense and effective rate $ 64 1.2 % As of March 31, 2026, the Company had U.S. net operating loss carryforwards (“NOLs”) of $ 183.5 million, including $ 37.1 million expiring in various amounts from 2029 through 2037, which can offset 100 % of taxable income, and $ 146.4 million that has an indefinite carryforward period, which can offset 80 % of taxable income per year. Additionally, the Company has an estimated $ 76.8 million in certain state NOL carryforwards and $ 3.2 million in tax credit carryforwards. As a result of the ownership change experienced in 2023, the Company’s ability to use NOLs to reduce taxable income is generally limited by Section 382 of the Internal Revenue Code of 1986 to an annual amount of $ 3.5 million plus net unrealized built in gain of $ 24.5 million. The Company’s use of NOLs arising after the date of the ownership change are not impacted by the Section 382 limitation. NOLs that exceed the Section 382 limitation in any year continue to be allowed as carryforwards until they expire and can be used to offset taxable income for years within the carryover period subject to the limitation in each year. If the Company does not generate a sufficient level of taxable income prior to the expiration of the pre-2018 NOL carryforward periods, then the ability to apply those NOLs as offsets to future taxable income is lost. Based on an analysis of the Section 382 limitation, the Company estimates that all carryforwards with the exception of $ 0.9 million of the state NOL carryforwards and $ 3.2 million of the tax credit carryforwards will be available for utilization if there is sufficient taxable income in subsequent periods. Although the ownership change will significantly limit the ability of the Company to utilize the pre-change net operating losses and credits, the Company does not expect a significant impact to its financial statements. Note 12 — Commitments and Contingencies Litigation From time to time, the Company is subject to litigation and other claims that arise in the normal course of business. As of March 31, 2026, the Company was not party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company’s results of operations, financial condition or cash flows. However, the results of current or future matters cannot be predicted with certainty; an unfavorable resolution of one or more of such matters could have a material adverse effect on the Company’s results of operations, financial condition or cash flows. 17 FLOTEK INDUSTRIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Other Commitments and Contingencies The Company is subject to concentrations of credit risk within trade accounts receivable and related party accounts receivable, as the Company does not generally require collateral as support for trade receivables. In addition, the majority of the Company’s cash is invested in three major U.S. financial institutions and balances often exceed insurable amounts. Note 13 — Stockholders’ Equity Pre-Funded Warrants On June 21, 2022, ProFrac Holdings II, LLC (“ProFrac Holdings II”) paid $ 19.5 million for Pre-Funded Warrants (the “June 2022 Warrants”) of the Company. The June 2022 Warrants permit ProFrac Holdings II to purchase 2,184,140 shares of the Company’s common stock at an exercise price equal to $ 0.0001 per share, subject to a $ 4.5 million exercise fee. ProFrac Holdings II and its affiliates may not receive any voting or consent rights in respect of the June 2022 Warrants or the underlying shares of common stock unless and until ProFrac Holdings II has paid an additional $ 4.5 million to the Company; provided, however, that ProFrac Holdings II may exercise the June 2022 Warrants immediately prior to the sale of the shares of common stock subject to such exercise to a non-affiliate of ProFrac Holdings II. The additional $ 4.5 million will be accounted for as an equity contribution if received. April 2025 Warrant A component of the consideration paid for the PWRtek Transactions (see Note 16, “Related Party Transactions”) consisted of a warrant (the “April 2025 Warrant”) to purchase 6,000,000 shares of the Company’s common stock. The April 2025 Warrant had a seven -year term and could be exercised on a cashless basis for nominal consideration. On March 13, 2026, ProFrac GDM exercised the April 2025 Warrant and was issued 6,000,000 shares of the Company’s common stock. Treasury Stock The Company accounts for treasury stock using the cost method and includes treasury stock as a component of stockholders’ equity. During the three months ended March 31, 2026 and 2025, the Company withheld approximately 28 thousand shares and 3 thousand shares, respectively, of the Company’s common stock at fair market value for payment of income tax withholding owed by employees upon the vesting of restricted shares. Shares issued as restricted stock awards to employees under the 2018 Long-Term Incentive Plan are accounted for as treasury stock when forfeited. During the three months ended March 31, 2025, approximately 3 thousand shares of forfeited stock awards were returned to treasury stock with no corresponding activity for the three months ended March 31, 2026. Note 14 — Earnings Per Share Basic earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing the adjusted net income by the weighted average number of common shares outstanding combined with dilutive common share equivalents outstanding, if the effect is dilutive. For the three months ended March 31, 2026 and 2025, there were no adjustments to net income. Potentially dilutive common share equivalents consist of incremental shares of common stock issuable upon exercise of the June 2022 Warrants and vesting and settlement of stock awards. The dilutive effect of non-vested stock issued under share‑based compensation plans, shares issuable under the Employee Stock Purchase Plan, employee stock options outstanding, and the June 2022 Warrants are computed using the treasury stock method. 18 FLOTEK INDUSTRIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The calculation of the basic and diluted earnings per share for the three months ended March 31, 2026 and 2025 is as follows (in thousands): Three months ended March 31, 2026 2025 Numerator: Net income for basic and diluted earnings per share $ 4,664 $ 5,380 Denominator: Basic weighted average shares outstanding 36,100 29,683 Dilutive effect of the June 2022 warrants 1,922 1,664 Dilutive effect of stock options and restricted shares 318 405 Diluted weighted average shares outstanding 38,340 31,752 Basic earnings per share $ 0.13 $ 0.18 Diluted earnings per share $ 0.12 $ 0.17 Note 15— Supplemental Cash Flow Information Supplemental cash flow information is as follows (in thousands): Three months ended March 31, 2026 2025 Supplemental cash flow information: Interest paid $ 1,265 $ 169 Equipment Credit (Note 16) $ 12,500 $ — Equipment purchases from ProFrac to offset receivables (1) $ 1,197 $ — (1) Includes $ 0.7 million of equipment purchases recorded against the Equipment Credit (as defined in Note 16, “Related Party Transactions”). Note 16— Related Party Transactions On February 2, 2022, the Company entered into a long-term supply agreement with ProFrac Services (the “Initial ProFrac Agreement”), upon issuance of $ 10 million in aggregate principal amount of the convertible notes (the “Contract Consideration Convertible Notes Payable”) to ProFrac Holdings LLC (“ProFrac Holdings”). Under the Initial ProFrac Agreement, ProFrac Services was obligated to order chemicals from the Company at least equal to the greater of (a) the chemicals required for 33 % of ProFrac Services’ hydraulic fracturing fleets and (b) a baseline measured by the first ten hydraulic fracturing fleets deployed by ProFrac Services during the term of the Initial ProFrac Agreement. If the minimum volumes are not achieved in any given year, ProFrac Services is required to pay to the Company, as liquidated damages an amount equal to twenty-five percent ( 25 %) of the difference between (i) the aggregate purchase price of the quantity of products comprising the minimum purchase obligation and (ii) the actual purchased volume during such calendar year (“Contract Shortfall Fees”). On May 17, 2022, the Company entered into an amendment to the Initial ProFrac Agreement (the “First Amendment to ProFrac Agreement”) upon issuance of $ 50 million in aggregate principal amount of Contract Consideration Convertible Notes Payable. The Initial ProFrac Agreement was amended to (a) increase ProFrac Services’ minimum purchase obligation for each year to the greater of 70 % of ProFrac Services’ requirements and a baseline measured by ProFrac Services’ first 30 hydraulic fracturing fleets, and (b) increase the term to 10 years. On February 2, 2023, the Company entered into a second amendment to the Initial ProFrac Agreement (the “Second Amendment to ProFrac Agreement” and together with the Initial ProFrac Agreement and the First Amendment to ProFrac Agreement, collectively the “ProFrac Agreement”) effective as of January 1, 2023. The Second Amendment to ProFrac Agreement amended the ProFrac Agreement to (1) provide a ramp-up period from January 1, 2023 to May 31, 2023 for ProFrac Services to increase the number of active hydraulic fracturing fleets to 30 fleets, (2) waive any Contract Shortfall Fee payment relating to any potential order shortfall prior to January 1, 2023, (3) add additional fees to certain products, and (4) provide margin increases based on margins with non-ProFrac Services customers. 19 FLOTEK INDUSTRIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS On April 28, 2025, the Company entered into a series of transactions with ProFrac GDM and various subsidiaries of ProFrac (the “PWRtek Transactions”) pursuant to which, among other things, the Company acquired certain mobile power generation assets, certain inventory and related intellectual property (the “Acquired Assets”). Total consideration paid by the Company in connection with the PWRtek Transactions was $ 107.5 million. Pursuant to an Agreement for Equipment Rental, dated as of April 28, 2025 (the “Lease Agreement”), ProFrac GDM agreed to lease from PWRtek, for a period of six years , twenty-two operating mobile power generation assets, comprised of fourteen digitally enhanced mobile natural gas power generation filtration units and eight gas distribution units and eight additional units, comprised of seven gas distribution units and one mobile natural gas power generation filtration unit (collectively, the “Leased Equipment”). The Lease Agreement provides for fixed rental rates for the Leased Equipment during the first five years of the Lease Agreement and then prevailing market rates during the sixth year. The Lease Agreement does not include a purchase option for the purchase of the Leased Equipment at the end of the Lease Agreement term. See Note 7, “Leases – Lease Agreement Income” for additional information on the Lease Agreement. The PWRtek Note was a component of the compensation for the PWRtek Transactions. On November 7, 2025, the Company entered into a series of agreements with ProFrac GDM, in connection with the Note Assignment. See Note 9, “Debt” for additional information on the PWRtek Note and Note Assignment. On March 12, 2026, the Company and ProFrac entered into an agreement (as amended, the “OSP Agreement”) regarding the settlement of 2025 Contract Shortfall Fees payable to the Company under the ProFrac Agreement for the measurement period of January 1, 2025 to December 31, 2025. The OSP Agreement provides for the payment of an aggregate of $ 19.7 million of consideration (which amount represents $ 27.4 million of 2025 Contract Shortfall Fees, net of a $ 7.2 million offset against the 2025 Contract Shortfall Fee (the “OSP Offset”) due under the ProFrac Agreement and other minor adjustments) to the Company as follows: $ 7.2 million to be paid in cash and $ 12.5 million to be satisfied through an equipment construction and rental credit (the “Equipment Credit”), which was reclassified from Accounts Receivable, related party to Equipment Credit, related party on our unaudited condensed consolidated balance sheets. Under the OSP Agreement, the Company has committed to purchase and/or rent $ 12.5 million of equipment from ProFrac to be used for opportunities within the Data Analytics segment, with the costs of such equipment to be offset by the Equipment Credit. Pursuant to the OSP Agreement, during the first quarter of 2026, the Company collected $ 5 million in cash and utilized $ 0.7 million of the Equipment Credit. The Company collected the remaining $ 2.2 million in cash during April 2026 and expects to utilize the remaining Equipment Credit during 2026, however any unused amounts at the end of 2026 would be available for use in 2027 until the full credit is utilized. The current measurement period for Contract Shortfall Fees is January 1, 2026 through December 31, 2026. The Company does not expect that the minimum purchase requirements will be met during the current measurement period, and as a result, related party revenues for the three months ended March 31, 2026 reflect Contract Shortfall Fees of $ 2.7 million, which is presented within accounts receivable, related party on the Company’s condensed consolidated balance sheet as of March 31, 2026. Related party revenues for the three months ended March 31, 2025 included $ 7.5 million of Contract Shortfall Fees. During the three months ended March 31, 2026 and 2025, the Company’s related party revenues were $ 51.9 million and $ 30.9 million, respectively. For the three months ended March 31, 2026 and 2025, these revenues were net of amortization of contract assets of $ 2.2 million and $ 1.5 million, respectively. Cost of sales attributable to these revenues were $ 40.0 million and $ 21.3 million, respectively, for the three months ended March 31, 2026 and 2025. As of March 31, 2026 and December 31, 2025 our accounts receivable from ProFrac was $ 61.0 million and $ 64.2 million, respectively, which is recorded in accounts receivable, related party on the condensed consolidated balance sheets. As of March 31, 2026, our accounts payable with ProFrac was $ 0.2 million, which is recorded in accounts payable on the condensed consolidated balance sheets. There was $ 0.3 million due to ProFrac included in accounts payable as of December 31, 2025. ProFrac Holdings or its affiliates beneficially owned approximately 61 % of the Company’s common stock, including the effects of the June 2022 Warrants, as of March 31, 2026. On March 13, 2026, ProFrac GDM exercised the April 2025 Warrant and was issued 6,000,000 shares of the Company’s common stock. Note 17 — Business Segment, Geographic and Major Customer Information Segment Information The Company’s segments are determined as those components whose results are reviewed regularly by the chief operating decision maker (“CODM”), who is the Company's Chief Executive Officer, in deciding how to allocate resources and assess performance. Each segment is organized and managed based upon the nature of the Company’s markets and customers and consists of similar products and services. Gross profit and income (loss) from operations for each segment are used by the CODM to assess the performance of each segment in a financial period. The CODM uses segment gross profit and income 20 FLOTEK INDUSTRIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (loss) from operations as the measure to make resource (including financial or capital resources) allocation decisions for each segment. Accounting policies have been applied consistently by each segment for all reporting periods. Intercompany revenue and expense amounts, if any, have been eliminated within each segment to report on the basis that management uses internally for evaluating segment performance. Various functions, including certain sales and marketing activities and general and administrative activities, are provided centrally by the corporate office. Costs associated with corporate office functions, other corporate income and expense items, and income taxes are not allocated to the reportable segments. The operations of the Company are categorized into the following reportable segments: Chemistry Technologies. The CT segment includes specialty chemistries, logistics and technology services, which we believe enable our customers to pursue improved efficiencies and performance throughout the life cycle of their wells, and also help our customers improve their environmental, social and governance (“ESG”) and operational goals. Customers of the CT segment include major integrated oil and gas companies, oilfield services companies, independent oil and gas companies, national and state-owned oil companies and international supply chain management companies . Data Analytics. The DA segment provides analytical measurement and digital solutions, including measure-and-control services, that deliver near real-time insights for process control across the oil and gas value chain and emerging applications in power and digital valuation. DA solutions help customers optimize performance, improve decision-making, and reduce emissions and carbon intensity. 21 FLOTEK INDUSTRIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Summarized financial information of the reportable segments is as follows (in thousands): As of and for the three months ended March 31, Chemistry Technologies Data Analytics Corporate and Other Total 2026 Revenue from external customers Products $ 13,842 $ 1,799 $ — $ 15,641 Services 899 1,309 — 2,208 Rental revenue — 316 — 316 Total revenue from external customers 14,741 3,424 — 18,165 Revenue from related party Products 44,926 54 — 44,980 Services 15 47 — 62 Rental revenue — 6,844 — 6,844 Total revenue from related parties 44,941 6,945 — 51,886 Cost of sales 51,874 2,636 — 54,510 Gross profit 7,808 7,733 — 15,541 Selling, general and administrative 2,231 1,058 3,636 6,925 Other segment items 449 542 36 1,027 Income (loss) from operations $ 5,128 $ 6,133 $ ( 3,672 ) $ 7,589 Reconciliation of profit to income before income taxes: Interest expense $ ( 1,332 ) $ ( 1,332 ) Other income, net 16 16 Income before income taxes $ 6,273 2025 Revenue from external customers Products $ 21,263 $ 1,662 $ — $ 22,925 Services 746 752 — 1,498 Total revenue from external customers 22,009 2,414 — 24,423 Revenue from related party Products 30,700 — — 30,700 Services 29 210 — 239 Total revenue from related parties 30,729 210 — 30,939 Cost of sales 41,295 1,618 — 42,913 Gross profit 11,443 1,006 — 12,449 Selling, general and administrative 2,166 947 3,169 6,282 Other segment items 386 183 31 600 Income (loss) from operations $ 8,891 $ ( 124 ) $ ( 3,200 ) $ 5,567 Reconciliation of profit to income before income taxes: Interest expense ( 229 ) ( 229 ) Other income, net 106 106 Income before income taxes $ 5,444 Other segment items for the three months ended March 31, 2026 include depreciation of $ 0.2 million and $ 0.4 million in the CT and DA segments, respectively; and R&D costs of $ 0.3 million and $ 0.1 million in the CT and DA segments, respectively. Other segment items for the three months ended March 31, 2025 include depreciation of $ 0.2 million and $ 0.1 million in the CT and DA segments, respectively; R&D costs of $ 0.2 million and $ 0.1 million in the CT and DA segments, respectively; and gain on the sale of property and equipment of $ 7 thousand in the CT segment. 22 FLOTEK INDUSTRIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Assets by reportable segments and corporate and other are as follows (in thousands): March 31, 2026 December 31, 2025 Chemistry Technologies $ 154,095 $ 161,332 Data Analytics 40,194 19,179 Corporate and Other 37,554 39,538 Total assets $ 231,843 $ 220,049 Additions to long-lived assets by reportable segments and corporate and other are as follows (in thousands): As of and for the three months ended March 31, Chemistry Technologies Data Analytics Corporate and Other Total 2026 Additions to long-lived assets $ ( 17 ) $ 2,075 $ 141 $ 2,199 2025 Additions to long-lived assets $ 567 $ 30 $ 1 $ 598 Geographic Information Revenue by country is based on the location where services are provided and products are sold. For the three months ended March 31, 2026 and 2025, no country other than the U.S. accounted for more than 10% of revenue. Revenue by geographic location is as follows (in thousands): Three months ended March 31, 2026 2025 U.S. (1) $ 68,373 $ 51,526 UAE 1,237 3,440 Other countries 441 396 Total revenue $ 70,051 $ 55,362 (1) Includes revenue from related party Long-lived assets held in countries other than the U.S. are not material to the consolidated financial statements. Major Customers Revenue from major customers, as a percentage of consolidated revenue, is as follows (in thousands): Revenue % of Total Revenue Three months ended March 31, 2026 Customer A (related party) $ 51,886 74.1 % Three months ended March 31, 2025 Customer A (related party) $ 30,939 55.9 % Customer B 5,821 10.5 % 23 FLOTEK INDUSTRIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The concentration with ProFrac and in the oil and gas industry increases credit, commodity and business risk. Accounts receivable from major external customers, as a percentage of non-related party accounts receivable, is as follows (in thousands): Accounts Receivable % of Total Non-Related Party Accounts Receivable As of March 31, 2026 Customer A $ 8,563 39.3 % Customer B $ 1,323 6.1 % As of December 31, 2025 Customer A $ 8,525 44.8 % Customer B $ 3,001 15.8 % Please see Note 16 - “Related Party Transactions” for additional information regarding accounts receivable with ProFrac. Major Suppliers Expenditures with major suppliers, as a percentage of consolidated supplier expenditure, is as follows (in thousands): Three months ended March 31, Expenditure % of Total Expenditure 2026 Supplier A $ 12,863 26.3 % Supplier B 9,295 19.0 % Supplier C 7,490 15.3 % Supplier D 5,560 11.4 % 2025 Supplier E $ 8,577 24.2 % Supplier A 6,038 17.1 % Supplier B 4,762 13.5 % Note 18 — Subsequent Events The Company has evaluated the effects of events that have occurred subsequent to March 31, 2026 through the date at which the Company’s interim financial statements are available to be issued and has determined that there have been no material events that would require disclosure in the March 31, 2026 interim financial statements. 24