Innovex International, Inc. Commitments Disclosure

NOTE 16. COMMITMENTS AND CONTINGENCIES

Litigation

We are sometimes involved in legal proceedings and certain regulatory matters. We record a liability for those legal proceedings and regulatory matters when we determine it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. We also disclose when it is reasonably possible that a material loss may be incurred. From time to time, we may enter into discussions regarding settlement of these matters, and may enter into settlement agreements, if we believe settlement is in the best interest of the Company and our stockholders. Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable.

Impulse Litigation

In conjunction with the DWS acquisition, $4.0 million of the purchase price (the “Impulse Litigation Holdback Amount”) was retained by the Company for purposes of funding any post-closing expenses and liabilities related to a patent infringement litigation matter to which DWS is a party, captioned Impulse Downhole Solutions Ltd., and Impulse Downhole Tools USA Ltd (collectively hereto referred to as “Impulse”), v. Downhole Well Solutions, LLC, Civil Action No. 4:23-cv-02954, in the United States District Court for the Southern District of Texas Houston Division (the “Impulse Litigation”). This lawsuit was filed in 2023 by Impulse Downhole Solutions, Ltd and Impulse Downhole Tools USA Ltd. against DWS alleging infringement of several of Impulse Downhole Solutions Ltd. U.S. patents related to friction reduction tools used in directional oil drilling.

We cannot predict with any degree of certainty the outcome of the Impulse Litigation or determine the extent of any potential liability or damages. As of December 31, 2025, we estimate that the remaining Impulse Litigation Holdback Amount will be fully utilized given the amount of legal defense costs incurred on the case. In connection with this litigation matter, as of December 31, 2025, we have an accrual of $5.0 million, consisting of estimated future legal defense costs. It is reasonably possible that the estimate will change in the near term and the effect of the change could be material and therefore we can provide no assurance as to the scope and outcome of these matters. Accordingly, we can provide no assurance that our business, financial position, results of operations or cash flows will not be materially adversely affected. We believe that the case is without merit and we intend to vigorously defend this matter.