FLOTEK INDUSTRIES INC/CN/

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. Other than the Securities Class Action and the Derivative Action (each as defined and described below), as to which the Company is currently unable to predict the outcome or reasonably estimate the amount or range of any possible loss, as of September 30, 2026, the Company was not a 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, including the Securities Class Action, the Derivative Action and any additional lawsuits that may be filed, cannot be predicted with certainty, and 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.

On August 26, 2026, a putative securities class action lawsuit captioned Saad Bashir v. Flotek Industries, Inc., et al., Case No. 1:26-cv-07285 (the “Securities Class Action”), was filed in the United States District Court for the Southern District of New York against the Company and certain of its current officers. The complaint alleges, among other things, that the defendants made materially false and/or misleading statements in violation of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder regarding the PREPA Contract and related matters described in a short seller report published on August 17, 2026. The complaint seeks unspecified compensatory damages, interest, attorneys’ fees and costs on behalf of a putative class of persons and entities that purchased or otherwise acquired the Company’s common stock between August 3, 2026 and August 17, 2026. Although the Company believes the claims are without merit the Securities Class Action is at an early stage, and we therefore cannot predict its outcome or reasonably estimate the amount or range of any possible loss.

On September 23, 2026, another purported Flotek shareholder, Felicia Marti, filed a related complaint in the United States District Court for the Southern District of New York, derivatively on behalf of the Company and against certain of the Company’s officers and directors (the “Derivative Action”). The complaint alleges, among other things, that the defendants breached their fiduciary duties by allowing the Company to make the same allegedly false or misleading statements alleged in the Securities Class Action. The complaint seeks unspecified damages (to be awarded to Flotek), purported corporate governance reforms, costs, attorneys’ fees, and other relief. The underlying factual allegations of the Derivative Action are substantially the same as those alleged in the Securities Class Action, which the Company believes to be without merit. The Derivative Action is at an early stage, and we therefore cannot predict its outcome or reasonably estimate the amount or range of any possible loss.

Additional lawsuits alleging similar claims may be filed against us and certain of our current or former officers and directors.

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 one major U.S. financial institution and balances often exceed insurable amounts.