Table of Contents



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________


FORM 10-Q

____________________


QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2022

2023

TRANSITION REPORT UNDER SECTION 13 OR 15 (D)OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to

Commission file number. 001-40364


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STABILIS SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

____________________


Florida

59-3410234

Florida59-3410234

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

11750 Katy Freeway, Suite 900, Houston, TX 77079

(Address of principal executive offices, including zip code)

(832) 456-6500

(Registrant’sRegistrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $.001 par value

SLNG

SLNG

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Act: 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of November 1, 2022,7, 2023, there were 18,386,73318,573,391 outstanding shares of our common stock, par value $.001 per share.





STABILIS SOLUTIONS, INC. AND SUBSIDIARIES

FORM 10-Q Index

For the Quarterly Period Ended September 30, 2022

2023

Page

Page

Item 1.

Item 2.

Item 4.

Item 1.

Item 1A.

Item 5.

Item 6.

25

35
2


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report ofon Form 10-Q ("(“this Report"Report”) includes statements that constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements represent intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks and uncertainties and other factors. These statements may relate to, but are not limited to, information or assumptions about us, our capital and other expenditures, dividends, financing plans, capital structure, cash flow, pending legal and regulatory proceedings and claims, including environmental matters, future economic performance, operating income, cost savings, and management’s plans, strategies, goals and objectives for future operations and growth. These forward-looking statements generally are accompanied by words such as “intend,” “anticipate,” “believe,” “estimate,” “expect,” “should,” “seek,” “project,” “plan” or similar expressions. Any statement that is not a historical fact is a forward-looking statement. It should be understood that these forward-looking statements are necessary estimates reflecting the best judgment of senior management, not guarantees of future performance. Many of the factors that impact forward-looking statements are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements as described in Part I. “Item 1A. Risk Factors” of the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("the SEC") on March 10, 2022,9, 2023, as well as the additional risk factors identified and described in Part II. “Item 1A. Risk Factors” of this Report.

We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. All forward-looking statements included in this document are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

In this Report, we may rely on and refer to information from market research reports, analyst reports and other publicly available information. Although we believe that this information is reliable, we cannot guarantee the accuracy and completeness of this information, and we have not independently verified it.

3

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Stabilis Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except sharesshare and per share data)

  

September 30,

  

December 31,

 
  

2023

  

2022

 

Assets

Current assets:

        

Cash and cash equivalents

 $4,914  $11,451 

Accounts receivable, net

  6,135   16,326 

Inventories, net

  128   205 

Prepaid expenses and other current assets

  3,381   2,186 

Assets held for sale

     2,049 

Total current assets

  14,558   32,217 

Property, plant and equipment:

        

Cost

  109,669   103,368 

Less accumulated depreciation

  (59,651)  (55,699)

Property, plant and equipment, net

  50,018   47,669 

Goodwill

  4,314   4,314 

Investments in foreign joint ventures

  11,591   11,606 

Right-of-use assets and other noncurrent assets

  602   774 

Total assets

 $81,083  $96,580 

Liabilities and Stockholders’ Equity

Current liabilities:

        

Accounts payable

 $2,208  $4,474 

Accrued liabilities

  8,749   19,642 

Current portion of long-term notes payable

  1,675   848 

Current portion of long-term notes payable - related parties

  622   2,435 

Current portion of finance and operating lease obligations

  168   133 

Total current liabilities

  13,422   27,532 

Long-term notes payable, net of current portion and debt issuance costs

  8,049   8,650 

Long-term portion of finance and operating lease obligations

  51   183 

Other noncurrent liabilities

     348 

Total liabilities

  21,522   36,713 

Commitments and contingencies (Note 11)

          

Stockholders’ Equity:

        

Preferred stock; $0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding at September 30, 2023 and December 31, 2022

      

Common stock; $0.001 par value, 37,500,000 shares authorized, 18,573,391 and 18,420,067 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

  19   19 

Additional paid-in capital

  101,670   100,137 

Accumulated other comprehensive (loss) income

  (460)  82 

Accumulated deficit

  (41,668)  (40,371)

Total stockholders’ equity

  59,561   59,867 

Total liabilities and stockholders’ equity

 $81,083  $96,580 
September 30,
2022
December 31,
2021
Assets
Current assets:
Cash and cash equivalents$11,102 $910 
Accounts receivable, net10,375 9,397 
Inventories, net214 258 
Prepaid expenses and other current assets3,118 1,522 
Assets held for sale2,049 — 
Assets of discontinued operations, current3,667 3,446 
Total current assets30,525 15,533 
Property, plant and equipment:
Cost101,752 101,192 
Less accumulated depreciation(53,617)(47,027)
Property, plant and equipment, net48,135 54,165 
Goodwill4,314 4,314 
Investment in foreign joint venture10,424 12,325 
Right-of-use assets and other noncurrent assets565 167 
Assets of discontinued operations, noncurrent— 832 
Total assets$93,963 $87,336 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$1,781 $5,065 
Accrued liabilities17,189 6,317 
Current portion of notes payable1,086 855 
Current portion of long-term notes payable - related parties2,399 1,168 
Current portion of finance and operating lease obligations157 292 
Liabilities of discontinued operations, current2,817 1,931 
Total current liabilities25,429 15,628 
Long-term notes payable, net of current portion8,640 7,608 
Long-term notes payable, net of current portion - related parties622 2,435 
Long-term portion of finance and operating lease obligations219 318 
Other noncurrent liabilities612 — 
Liabilities of discontinued operations, noncurrent— 288 
Total liabilities35,522 26,277 
Commitments and contingencies (Note 11)
Stockholders’ Equity:
Preferred Stock; $0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding at September 30, 2022 and December 31, 2021— — 
Common stock; $0.001 par value, 37,500,000 shares authorized, 18,386,733 and 17,691,268 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively19 18 
Additional paid-in capital99,531 97,875 
Accumulated other comprehensive (loss) income(1,073)351 
Accumulated deficit(40,036)(37,185)
Total stockholders’ equity58,441 61,059 
Total liabilities and stockholders’ equity$93,963 $87,336 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

4

Stabilis Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except share and per share data)

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2023

  

2022

  

2023

  

2022

 

Revenues:

                

Revenues

 $15,316  $25,819  $55,065  $69,236 

Operating expenses:

                

Cost of revenues

  12,056   19,904   42,911   54,945 

Change in unrealized loss on natural gas derivatives

  (267)  (926)  (322)  (27)

Selling, general and administrative expenses

  3,002   3,658   9,424   9,643 

Gain from disposal of fixed assets

  (1,002)  46   (1,002)  (34)

Depreciation expense

  2,003   2,115   6,006   6,589 

Total operating expenses

  15,792   24,797   57,017   71,116 

Income (loss) from operations before equity income

  (476)  1,022   (1,952)  (1,880)

Net equity income from foreign joint venture operations:

                

Income from equity investment in foreign joint venture

  332   205   1,466   1,126 

Foreign joint venture operating related expenses

  (48)  (91)  (152)  (239)

Net equity income from foreign joint venture operations

  284   114   1,314   887 

Income (loss) from operations

  (192)  1,136   (638)  (993)

Other income (expense):

                

Interest income (expense), net

  60   (150)  (237)  (437)

Interest (expense), net - related parties

  (15)  (49)  (71)  (129)

Other (expense), net

  (3)  (28)  (127)  (99)

Total other income (expense)

  42   (227)  (435)  (665)

Net loss from continuing operations before income tax (benefit) expense

  (150)  909   (1,073)  (1,658)

Income tax expense (benefit)

  57   (115)  224   (248)

Net loss from continuing operations

  (207)  1,024   (1,297)  (1,410)

Loss from discontinued operations, net of income tax

     (1,301)     (1,441)

Net loss

 $(207) $(277) $(1,297) $(2,851)
                 

Net income (loss) per common share (Note 13):

                

Basic net income (loss) per common share from continuing operations

 $(0.01) $0.06  $(0.07) $(0.08)

Basic loss per common share from discontinued operations

 $  $(0.08) $  $(0.08)

Basic net income (loss) per common share

 $(0.01) $(0.02) $(0.07) $(0.16)
                 

Diluted net income (loss) per common share from continuing operations

 $(0.01) $0.06  $(0.07) $(0.08)

Diluted loss per common share from discontinued operations

 $  $(0.07) $  $(0.08)

Diluted net income (loss) per common share

 $(0.01) $(0.01) $(0.07) $(0.16)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Revenues:
Revenues$25,819 $17,779 $69,236 $48,291 
Operating expenses:
Cost of revenues19,904 14,369 54,945 37,301 
Change in unrealized gain on natural gas derivatives(926)— (27)— 
Selling, general and administrative expenses3,658 5,286 9,643 10,558 
Loss (gain) from disposal of fixed assets46 — (34)(24)
Depreciation expense2,115 2,284 6,589 6,653 
Impairment of right-of-use lease asset— 376 — 376 
Total operating expenses24,797 22,315 71,116 54,864 
Income (loss) from operations before equity income1,022 (4,536)(1,880)(6,573)
Net equity income from foreign joint venture operations:
Income from equity investment in foreign joint venture205 308 1,126 1,267 
Foreign joint venture operating related expenses(91)(62)(239)(192)
Net equity income from foreign joint venture operations114 246 887 1,075 
Income (loss) from operations1,136 (4,290)(993)(5,498)
Other income (expense):
Interest expense, net(150)(119)(437)(189)
Interest expense, net - related parties(49)(120)(129)(441)
Other income (expense)(28)37 (99)1,031 
Total other income (expense)(227)(202)(665)401 
Net income (loss) from continuing operations before income tax expense909 (4,492)(1,658)(5,097)
Income tax (benefit) expense(115)89 (248)229 
Net income (loss) from continuing operations1,024 (4,581)(1,410)(5,326)
Loss from discontinued operations, net of tax(1,301)(44)(1,441)(128)
Net loss$(277)$(4,625)$(2,851)$(5,454)
Net income (loss) per common share (Note 13):
Basic income (loss) per common share from continuing operations$0.06 $(0.26)$(0.08)$(0.31)
Basic loss per common share from discontinued operations(0.07)— (0.08)(0.01)
Basic net loss per common share(0.02)(0.26)(0.16)(0.32)
Diluted income (loss) per common share from continuing operations$0.06 $(0.26)$(0.08)$(0.31)
Diluted loss per common share from discontinued operations(0.07)— (0.08)(0.01)
Diluted net loss per common share(0.01)(0.26)(0.16)(0.32)

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

5

Stabilis Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

Loss

(Unaudited, in thousands)

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2023

  

2022

  

2023

  

2022

 

Net loss

 $(207) $(277) $(1,297) $(2,851)

Foreign currency translation adjustment, net of tax

  (111)  (849)  (542)  (1,424)

Total comprehensive loss

 $(318) $(1,126) $(1,839) $(4,275)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Net loss$(277)$(4,625)$(2,851)$(5,454)
Foreign currency translation adjustment(849)(150)(1,424)50 
Total comprehensive loss$(1,126)$(4,775)$(4,275)$(5,404)

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

6

Stabilis Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’Stockholders Equity

(Unaudited, in thousands, except shares)share data)

              

Accumulated

         
              

Other

         
  

Common Stock

  

Additional

  

Comprehensive

  

Accumulated

     
  

Shares

  

Amount

  

Paid-in Capital

  

Income

  

Deficit

  

Total

 

Balance at December 31, 2021

  17,691,268  $18  $97,875  $351  $(37,185) $61,059 

Common stock issued from vesting of stock-based awards

  501,334                

Stock-based compensation

        531         531 

Net loss

              (406)  (406)

Other comprehensive income, net of tax

           377      377 

Balance at March 31, 2022

  18,192,602   18   98,406   728   (37,591)  61,561 

Common stock issued from vesting of stock-based awards

  87,337                

Stock-based compensation

        608         608 

Net loss

              (2,168)  (2,168)

Other comprehensive loss, net of tax

           (952)     (952)

Balance at June 30, 2022

  18,279,939   18   99,014   (224)  (39,759)  59,049 

Common stock issued from vesting of stock-based awards

  125,000   1            1 

Stock-based compensation

        602         602 

Employee tax payments from stock-based withholding

  (18,206)     (85)        (85)

Net loss

              (277)  (277)

Other comprehensive income, net of tax

           (849)     (849)

Balance at September 30, 2022

  18,386,733  $19  $99,531  $(1,073) $(40,036) $58,441 

          

Accumulated

      
Common StockAdditional
Paid-in Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total          

Other

      
SharesAmount 

Common Stock

  

Additional

 

Comprehensive

 

Accumulated

   
Balance at December 31, 202117,691,268 $18 $97,875 $351 $(37,185)$61,059 
 

Shares

  

Amount

  

Paid-in Capital

  

Income

  

Deficit

  

Total

 

Balance at December 31, 2022

 18,420,067  $19  $100,137  $82  $(40,371) $59,867 
Common stock issued from vesting of stock-based awardsCommon stock issued from vesting of stock-based awards501,334 — — — — —  13,587           
Stock-based compensationStock-based compensation— — 531 — — 531      589      589 
Net loss— — — — (406)(406)

Net income

         1,084  1,084 
Other comprehensive income, net of taxOther comprehensive income, net of tax— — — 377 — 377            187      187 
Balance at March 31, 202218,192,602 18 98,406 728 (37,591)61,561 

Balance at March 31, 2023

  18,433,654   19   100,726   269   (39,287)  61,727 
Common stock issued from vesting of stock-based awardsCommon stock issued from vesting of stock-based awards87,337 — — — — —  45,175           
Stock-based compensationStock-based compensation— — 608 — — 608      593      593 
Net lossNet loss— — — — (2,168)(2,168)         (2,174) (2,174)
Other comprehensive loss, net of taxOther comprehensive loss, net of tax— — — (952)— (952)           (618)     (618)
Balance at June 30, 202218,279,939 18 99,014 (224)(39,759)59,049 

Balance at June 30, 2023

  18,478,829   19   101,319   (349)  (41,461)  59,528 
Common stock issued from vesting of stock-based awardsCommon stock issued from vesting of stock-based awards125,000 — — —  125,000           
Stock-based compensationStock-based compensation— — 602 — — 602      513      513 
Employee tax payments from stock-based withholdingEmployee tax payments from stock-based withholding(18,206)— (85)— — (85) (30,438)   (162)     (162)
Net loss— — — — (277)(277)
Other comprehensive loss, net of tax— — — (849)— (849)
Balance at September 30, 202218,386,733 $19 $99,531 $(1,073)$(40,036)$58,441 

Net income

         (207) (207)

Other comprehensive income, net of tax

           (111)     (111)

Balance at September 30, 2023

  18,573,391  $19  $101,670  $(460) $(41,668) $59,561 
7


Stabilis Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity - Continued
(Unaudited, in thousands, except shares)
Common StockAdditional
Paid-in Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
SharesAmount
Balance at December 31, 202016,896,626 $17 $91,278 $122 $(29,387)$62,030 
Stock-based compensation— — 162 — — 162 
Net income— — — — 175 175 
Other comprehensive loss, net of tax— — — (202)— (202)
Balance at March 31, 202116,896,626 17 91,440 (80)(29,212)62,165 
Common stock issued from vesting of stock-based awards101,284 — — — — — 
Stock-based compensation— — 122 — — 122 
Shares issued in asset acquisition500,000 3,794 — — 3,795 
Net loss— — — — (1,004)(1,004)
Other comprehensive income, net of tax— — — 402 — 402 
Balance at June 30, 202117,497,910 18 95,356 322 (30,216)65,480 
Common stock issued from vesting of stock-based awards250,000 — — — — — 
Stock-based compensation— — 2,447 — — 2,447 
Employee tax payments from stock-based withholdings(56,642)— (430)— — (430)
Net loss— — — — (4,625)(4,625)
Other comprehensive loss, net of tax— — — (150)— (150)
Balance at September 30, 202117,691,268 $18 $97,373 $172 $(34,841)$62,722 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

8
7



Stabilis Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

  

Nine Months Ended

 
  

September 30,

 
  

2023

  

2022

 

Cash flows from operating activities:

        

Net loss from continuing operations

 $(1,297) $(1,410)

Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities:

        

Depreciation

  6,006   6,589 

Stock-based compensation expense

  1,695   1,741 

Gain from disposal of fixed assets

  (1,002)  (34)

Income from equity investment in joint venture

  (1,466)  (1,126)

Cash settlements from natural gas derivatives, net

     (1,179)

Realized and unrealized losses on natural gas derivatives

  540   513 

Distributions from equity investment in joint venture

  813   1,550 

Changes in operating assets and liabilities:

        

Accounts receivable

  5,636   (977)

Prepaid expenses and other current assets

  948   529 

Accounts payable and accrued liabilities

  (6,633)  5,174 

Other

  140   (570)

Net cash provided by operating activities from continuing operations

  5,380   10,800 

Net cash provided by operating activities from discontinued operations

     738 

Net cash provided by operating activities

  5,380   11,538 

Cash flows from investing activities:

        

Acquisition of fixed assets

  (8,982)  (1,746)

Proceeds from sale of fixed assets

     100 

Proceeds from assets held for sale

     2,049 

Net cash provided by (used in) investing activities from continuing operations

  (8,982)  403 

Net cash used in investing activities from discontinued operations

     (334)

Net cash provided by (used in) investing activities

  (8,982)  69 

Cash flows from financing activities:

        

Proceeds from borrowings on short- and long-term notes payable

     1,000 

Payments on short- and long-term notes payable

  (860)  (1,555)

Payments on notes payable and finance leases from related parties

  (1,813)  (669)

Payment of debt issuance costs

  (108)   

Employee tax payments from restricted stock withholdings

  (162)  (85)

Net cash used in financing activities from continuing operations

  (2,943)  (1,309)

Net cash used in financing activities from discontinued operations

     (113)

Net cash used in financing activities

  (2,943)  (1,422)

Effect of exchange rate changes on cash

  8   7 

Net increase (decrease) in cash and cash equivalents

  (6,537)  10,192 

Cash and cash equivalents, beginning of period

  11,451   910 

Cash and cash equivalents, end of period

 $4,914  $11,102 
Nine Months Ended
September 30,
20222021
Cash flows from operating activities:
Net loss from continuing operations$(1,410)$(5,326)
Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities:
Depreciation6,589 6,653 
Stock-based compensation expense1,741 2,731 
Gain on disposal of fixed assets(34)(24)
Gain on extinguishment of debt— (1,080)
Income from equity investment in joint venture(1,126)(1,267)
Change in unrealized gain on natural gas derivatives(27)— 
Cash settlements from derivatives1,062 — 
Distributions from equity investment in joint venture1,550 1,387 
Impairment of right-of-use lease asset— 376 
Change in operating assets and liabilities:
Accounts receivable(977)(1,381)
Inventories44 (23)
Prepaid expenses and other current assets(1,216)218 
Accounts payable and accrued liabilities5,174 3,611 
Other(570)(3)
Cash provided by operating activities from continuing operations10,800 5,872 
Cash provided by (used in) operating activities from discontinued operations738 (443)
Net cash provided by operating activities11,538 5,429 
Cash flows from investing activities:
Acquisition of fixed assets(1,746)(6,748)
Proceeds from sale of fixed assets100 258 
Proceeds from assets held for sale2,049 — 
Cash provided by (used in) investing activities from continuing operations403 (6,490)
Cash used in investing activities from discontinued operations(334)(200)
Net cash provided by (used in) investing activities69 (6,690)
Cash flows from financing activities:
Proceeds from borrowings on short- and long-term notes payable1,000 6,997 
Payments on short- and long-term notes payable(1,555)(432)
Payments on notes payable and finance leases from related parties(669)(3,277)
Payment of debt issuance costs— (420)
Employee tax payments from restricted stock withholdings(85)(430)
Cash provided by (used in) financing activities from continuing operations(1,309)2,438 
Cash provided by (used in) financing activities from discontinued operations(113)13 
Net cash provided by (used in) financing activities(1,422)2,451 
Effect of exchange rate changes on cash(76)
Net increase in cash and cash equivalents10,192 1,114 
Cash and cash equivalents, beginning of period910 1,240 
Cash and cash equivalents, end of period$11,102 $2,354 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements

9
8

STABILIS SOLUTIONS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Stabilis Solutions, Inc. and its subsidiaries (the “Company”, “Stabilis”, “our”, “us” or “we”) is an energy transition company that provides turnkey clean energy production, storage, transportation and fueling solutions primarily using liquefied natural gas (“LNG”) to multiple end markets across North America.

markets.

The Company provides LNG solutions toserves customers in diverse end markets, including aerospace, agriculture, energy, industrial, marine bunkering, mining, pipeline, remote clean power and utility markets. LNG can be used to deliver natural gas to locations where pipeline service is not available,unavailable, has been interrupted, or needs to be supplemented. Additionally, LNG can be used as a partner fuel for renewable energy, and as an alternative to traditional fuel sources, such as distillate fuel oil (including diesel fuel and other fuel oils) and propane, among others to provide both environmental and economic benefits. Stabilis operates two LNG production facilities in George West, Texas and Port Allen, Louisiana to service customers in Texas and the greater Gulf Coast region.

The Company also builds power and control systems for the energy industry in China through its 40% owned Chinese joint venture, BOMAY Electric Industries, Inc (“BOMAY”). The BOMAY operations is accounted for as an equity investment.

The Company has historically provided electrical switch-gear, generator and instrumentation construction, installation and service to the marine, power generation, oil and gas, and broad industrial market segments in Brazil. At September 30, 2022, the Company agreed to exit its operations in Brazil (the "Brazil Operations") and has presented the Brazil Operations as discontinued operations in accordance with U.S. GAAP. See also "Basis of Presentation and Consolidation" below and Note 2 for a further discussion of our discontinued operations.

Basis of Presentation and Consolidation

The accompanying unaudited, interim condensed consolidated financial statements ("(“Condensed Consolidated Financial Statements"Statements”) include our accounts and those of our subsidiaries and, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and disclosures normally included in the notes to consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("(“U.S. GAAP"GAAP”) have been condensed or omitted. We believe that the presentation and disclosures herein are adequate to prevent the information presented herein from being misleading. The Condensed Consolidated Financial Statements reflect all adjustments (consisting of normal recurring adjustments) for a fair presentation of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the results of operations to be expected for the full year. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 20212022 included in the Company's Annual Report on Form 10-K,10-K, as filed on March 10, 2022.

9,2023.

All intercompany accounts and transactions have been eliminated in consolidation. In the Notes to Condensed Consolidated Financial Statements, all dollar amounts in tabulations are in thousands, unless otherwise indicated.

The Company believes thatsale of the Brazil Operations meeton October 31, 2022, met the criteria for discontinued operations presentation at September 30, 2022. Accordingly, such assets and liabilities at September 30, 2022, results of operations for the three and nine months ended and cash flows for the nine months ended September 30, 2022 have been classified as discontinued operations on our Condensed Consolidated Balance Sheet, Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows, respectively.presentation. The classification of these assets, liabilities, results of operations and cash flows as discontinued operations requires retrospective application to financial information for all prior periods presented. Therefore, such assetspresented (preceding the sale). Accordingly, the operating results related to our Brazil Operations for the three and liabilities at December 31, 2021, and operating resultsnine months ended September 30, 2022, and cash flows for the corresponding 2021 periods have been recastnine months ended September 30, 2022, are included within loss from discontinued operations, net of tax on our Condensed Consolidated Balance Sheet, Condensed Consolidated StatementStatements of Operations and Condensed Consolidated Statements of Cash Flows, respectively.Flows. There were no assets and liabilities from discontinued operations as of September 30, 2023 or December 31, 2022, and no results of operations or cash flows for the three and nine months ended September 30, 2023. Unless otherwise noted, the amounts presented throughout the notes to our Financial Statements relate to our continuing operations. See Note 2 for further discussion of the Company's decision to exit the Brazil Operations.


10


Reclassifications
The Company reclassified $0.5 million and $1.5 million from selling, general and administrative expenses to costs of rental, service and other within the Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2021, respectively, to conform to current period presentation. The Company also reclassified $0.3 million from costs of LNG product to costs of rental service and other within the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2021 to conform to current period presentation. Such reclassifications had no impact on the consolidated financial position, income from operations, net income or cash flows.
discontinued operations.

Use of Estimates in the Preparation of the Consolidated Financial Statements

The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include the fair value of natural gas derivatives, the carrying amount of contingencies, valuation allowances for receivables, inventories, and deferred income tax assets, valuations assigned to assets and liabilities in business combinations, and impairments of long-lived assets. Actual results could differ from those estimates, and these differences could be material to the Condensed Consolidated Financial Statements.

Derivative instruments

The Company had certain natural gas derivative instruments as of September 30, 2022.2023 and December 31, 2022. The Company recognizes all of its derivative instruments as either assets or liabilities which are recorded at fair value on itsthe Company's Condensed Consolidated Balance Sheet.Sheets. The accounting for changes in the fair value of a derivative instrument depends on whether it qualifies for and has been designated as a hedge andas well as the type of hedge. The Company has not designated the derivativeits derivatives as a hedgehedges under U.S. GAAP and all resulting gains and losses from changes in the fair value of its derivative instruments are included within the Condensed Consolidated Statements of Operations. The Company did not enter into any derivative transactions for speculative purposes. See Note 4 for further discussion of the Company's derivatives.

Recent Accounting Pronouncements

Recently Issued Accounting Standards Not Yet Adopted

In March 2020, June 2016, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU No. 2020-04”), which provides guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying generally accepted accounting principles to contract modifications, hedging relationships, and other transactions impacted by reference rate reform. The provisions of ASU No. 2020-04 apply only to those transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. Adoption of the provisions of ASU No. 2020-04 are optional and are effective from March 12, 2020 through December 31, 2022. We are currently evaluating the impact of ASU No. 2020-04 on our consolidated financial position and results of operations.

In June 2016 the FASB issued ASU 2016-13,-13, “Financial Instruments - Credit Losses - Measurement of Credit Losses on Financial Instruments,” which changes the way companies evaluate credit losses for most financial assets and certain other instruments. For receivables, and other short-term financial instruments, companies will be required to use a new forward-looking “expected loss” model to evaluate impairment, potentially resulting in earlier recognition of allowances for losses. The new standard also requires enhanced disclosures, including the requirement to disclose the information used to track credit quality by year of origination. ASU No. 2016-13 will be2016-13 was effective for the Company in the first quarter 2023. Early adoption Adoption of this standard had no material impact to the new standard is permitted; however, Stabilis has not elected to early adopt the standard. We are currently evaluating the effect that the new standard will have on our consolidated financial statements, if any.

Company's Condensed Consolidated Financial Statements.

119

2. DISCONTINUED OPERATIONS

At September 30,

On October 31,2022, the Company determined that it would exitentered into a sales agreement and closed on the sale of its Brazil Operations as the Company desires to focus its resources and management on the core LNG business.Operations. The Company expects that the exit will be in the formsale of a sale for cash or a combination of cash and a note receivable. The Company expects the sale will close within the next year.

Impairment of Brazil Operations
The Company reviews its long-lived assets whenever events or changes in circumstances indicate that a particular asset or group of asset's carrying value may not be recoverable. The Company determined that the decision to exit the Brazil Operations is such an event and recorded an impairment charge of $1.3 million measured as the estimated fair value of $0.9 million (calculated as the estimated net proceeds that would be received in an orderly and timely sale of the operations) less the carrying value of the Brazil net assets at September 30, 2022. The impairment charge is included within income (loss) from discontinued operations, net of tax as reported in the Consolidated Condensed Statements of Operations for the three and nine months ended September 30, 2022.
Classification as Discontinued Operations
The Company believes that the decision to exit the Brazil Operations at September 30, 2022 meetsmet the criteria for discontinued operations presentation within the Condensed Consolidated Financial Statements as the decision to exit these operations representssale of the Brazil Operations represented a strategic shift of the future operations of the Company withCompany. Further, the Brazil Operations had separately reported financial information available as the Brazil Operations representrepresented substantially all of the revenue and expenses of the Company's previously reported Power Delivery segment.
Accordingly, such assets and liabilities at September 30, 2022, results of operations for the three and nine months ended and cash flows for the nine months ended September 30, 2022 have been classified as discontinued operations on our Condensed Consolidated Balance Sheet, Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows, respectively.

The classification of these assets, liabilities, results of operations and cash flows as discontinued operations requires retrospective application to financial information for all prior periods presented. Accordingly, for the 2022 periods preceding the sale, the Condensed Consolidated Financial Statements and related notes have been updatedrecast to separately state the assets and liabilities, revenues, and expenses and cash flows between its continuing operations and the discontinued operations. The Company had no assets and liabilities related to the Brazil Operations at September 30, 2023 or December 31, 2022. In addition, the Company had no results of operations as of and for all periods presented.

Corporate allocations of $0.1 million and $0.6 million previously reported within the Company's Power Delivery Segment have been reclassified to continuing operationsnor cash flows for the three and nine months ended September 30, 2022. Included within the Company's accumulated other comprehensive income (loss) at September 30, 2022 is $1.0 million of cumulative translation losses which will be removed upon sale.
2023.

The following table summarizes the components of income from discontinued operations for the periods presented (in thousands):

Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Revenue$3,202 $1,925 $8,602 $5,129 
Costs and expenses3,082 1,987 8,392 5,247 
Impairment1,310 — 1,310 — 
Other income and interest expense, net(45)22 (80)117 
Loss from discontinued operations before income taxes$(1,235)$(40)$(1,180)$(1)
Income tax expense66 261 127 
Loss from discontinued operations net of income taxes$(1,301)$(44)$(1,441)$(128)

12


The following table summarizes the assets and liabilities of discontinued operations (in thousands):
September 30,
2022
December 31,
2021
Assets
Cash and cash equivalents$478 $1,149 
Accounts receivable, net1,222 926 
Contract assets and other current assets1,967 1,371 
Total current assets of discontinued operations3,667 3,446 
Property, plant and equipment, net— 522 
Goodwill— 138 
Other noncurrent assets— 172 
Total assets of discontinued operations$3,667 $4,278 
September 30,
2022
December 31,
2021
Liabilities
Accounts payable$498 $492 
Accrued liabilities1,956 1,213 
Current portion of notes payable158 108 
Current portion of finance and operating lease obligations205 118 
Total current liabilities of discontinued operations2,817 1,931 
Long-term notes payable, net of current portion and other noncurrent liabilities— 288 
Total liabilities of discontinued operations$2,817 $2,219 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2023

  

2022

  

2023

  

2022

 

Revenues

 $  $3,202  $  $8,602 

Costs and expenses

     3,082      8,392 

Impairment

     1,310      1,310 

Other (expense), net

     (45)     (80)

Income from discontinued operations before income taxes

     (1,235)     (1,180)

Income tax expense

     66      261 

Loss from discontinued operations, net of income taxes

 $  $(1,301) $  $(1,441)

Segment Reporting

As a result of the classification of the Brazil Operations as discontinued operations, the Company believes that it only has one reporting segment.

3. REVENUE RECOGNITION

We recognize revenues when the transfer of promised goods or services are delivered to our customers in accordance with the applicable customer contract and we are entitled to be paid by the customer.Revenues are measured as consideration specified in the contract.contract and exclude any sales incentives and amounts collected on behalf of third parties. Amounts are billed upon delivery of product or completion of service or transfer of a product and are generally due within 30 days. days from receipt of the invoice. Revenues from contracts with customersare disaggregated into (1)(1) LNG product (2)Product (2) rental (3) service and (3)(4) other.

LNG product revenue generated includesProduct revenues

LNG Product revenues represent the revenuesale of LNG from both produced and purchased sources as well as the product and delivery oftransportation performed to deliver the LNG to our customer’scustomer location. LNG Product revenue isrevenues are recognized upon delivery of the related itemLNG to the customer, at which point the customer controls the product and the Company has an unconditional right to payment. Product contracts are established by agreeing on a sales price or transaction price for the related item. Revenue is recognized when the customer has taken control of the product. Payment terms for product contracts are generally within thirty days from the receipt of the invoice. The Company acts as a principal when usingthird party transportation companies and therefore recognizes the gross revenue for the deliverysupply of LNG.

Rental, service The Company does not differentiate between the revenue from the sale of LNG production and otherpurchased LNG as the criteria for revenue generated byrecognition are identical. Some of our contracts contain minimum take-or-pay amounts where a customer has agreed to source a minimum volume of LNG under the contract. Take or pay revenues are only recognized when the customer has failed to take the minimum contracted volumes upon completion of the time period specified within the contract and the Company includeshas the unconditional right to receive payment for the take or pay amount. Certain of our sales contracts contain provisions that may meet the criteria of a derivative in the event delivery is not made. These contracts are accounted for under the normal purchase normal sales exclusion under U.S. GAAP and are not measured at fair value each reporting period. Our LNG contracts are generally one to 24 months in duration.

Rental revenues

Rental revenues are generated from the rental of cryogenic equipment and human resources provided to our customers. Rental revenues are not dependent upon the customer to supportgallons delivered but based upon day rates or monthly rates for the use of equipment as specifically established within the contract and are disaggregated from LNG and power delivery equipment and services in their application. Rental contracts are established by agreeing on aProduct revenues. Revenues related to rental price or transaction price for the related piece of equipment are recognized under Topic 606and not ASC 842: Leases, as the rental period which is generally daily or monthly. The Company maintains control of the equipment that the customer uses and can replace the rented equipment with similar equipment should the rented equipment become inoperable or the Company chooses to replace the equipment for maintenance purposes. Revenue is recognized as the rental period is completed and for periods that cross month end, revenue is recognized for the portion of the rental period that has been completed to date. Payment terms for rental contracts are generally within thirty days from the receipt of the invoice. Performance obligations for rental revenue are considered to be

13


satisfied as the rental period is completed based upon the terms of the related contract. The stated rental rates within each contract are representative of the stand-alone rental rates at the time the contract was negotiated.

Service revenues

Service revenues are generated from engineering and field support services and represent the human resources provided to the customer to support the use of LNG service revenue generated byat the Company consists ofcustomer’s job site. These include support and costs for mobilization and demobilization of equipment andat customer sites as well as onsite technical support while customers are consuming LNG in their applications.LNG. Service revenue is billedrevenues are not dependent upon the gallons delivered or rental period but based onupon the specific contractual terms thatand can be based on an event (i.e. mobilization or demobilization) or an hourly rate. Revenuerate as specifically established within the contract and are disaggregated from LNG Product revenues and Rental revenues. Service revenue is recognized as the event is completed or work is done. Performance obligations for service revenueThe stated hourly labor rates in each contract are considered to be satisfied as the event is completed or work is done per the termsrepresentative of the related contract.stand-alone hourly rates at the time the contract was negotiated.

10

Other

Other revenuesare items that, due to their nature, are disaggregated from the categories mentioned above such as expenses incurred by the Company on behalf of the customer that we contractually rebill to our customer on a cost-plus basis. 

Disaggregated Revenues

The table below presents revenue disaggregated by source, for the three and nine months ended September 30, 2022 2023 and 20212022 (in thousands):

Three Months Ended
September 30,
Nine Months Ended
September 30,
Revenues:2022202120222021
LNG Product$21,623 $14,420 $58,744 $37,927 
Rental and service3,843 3,046 9,966 8,996 
Other353 313 526 1,368 
$25,819 $17,779 $69,236 $48,291 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 

Revenues:

 

2023

  

2022

  

2023

  

2022

 

LNG Product

 $12,122  $21,823  $44,595  $58,944 

Rental

  1,330   1,690   4,640   5,015 

Service

  1,579   2,154   4,745   4,952 

Other

  285   152   1,085   325 

Total revenues

 $15,316  $25,819  $55,065  $69,236 

The table below presents revenue disaggregated by geographic location, for the three and nine months ended September 30, 2022 2023 and 20212022 (in thousands):

Three Months Ended
September 30, 2022
Nine Months Ended
September 30,
Revenues:2022202120222021
Mexico3,427 3,501 12,087 7,198 
United States22,392 14,278 57,149 41,093 
$25,819 $17,779 $69,236 $48,291 
Substantially all revenues included

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 

Revenues:

 

2023

  

2022

  

2023

  

2022

 

Mexico

 $1,558  $3,427  $6,122  $12,087 

United States

  13,758   22,392   48,943   57,149 

Total revenues

 $15,316  $25,819  $55,065  $69,236 

Variable and Other Revenue Components

Certain of our contracts may include rental or services that may vary upon the customer demands at stated rates within discontinued operations (See Note 2)the contract and are satisfied as the work is authorized by the customer and performed by the Company. LNG product sales agreements may include both fixed and variable fees per gallon of LNG, but is representative of the stand-alone selling price for LNG at the time the contract was negotiated. We have concluded that the variable LNG fees meet the exception for allocating variable consideration to specific parts of the contract. As such, the variable consideration for these contracts is allocated to each distinct gallon of LNG and recognized when that distinct gallon of LNG is delivered to the customer.

Taxes assessed by a governmental authority that are directly imposed on revenue-producing transactions between the Company and its customers, such as sales, use and value-added taxes, are excluded from Brazil.revenue.

4. DERIVATIVE INSTRUMENTS

As of September 30, 2023 and December 31, 2022, the Company held a series of call options (“the Call Options”) for the purchase of natural gas related to customer commitments. The Call Options are for a total of 2.00.5 million MMBtu (million British thermal units) of natural gas over a periodat September 30, 2023 which extend into the second quarter of approximately two years.2024. The Company purchased the Call Options to manage the risk of increasing natural gas prices above what it can charge its customers. The Company may also enter into other derivative transactions when beneficial. Except for contracts qualifying for the normal purchase normal sales exception, as further described below, the Company recognizes all of its derivative instruments as either assets or liabilities which are recorded at fair value on itsthe Company's Condensed Consolidated Balance Sheet.Sheets. The fair value of the Call Options are predominantly determined from broker quotes and are considered a level 2 fair value measurement. The following table presents the location and fair value of the Call Options at September 30, 20222023 and December 31, 20212022 on the Company's Condensed Consolidated Balance Sheets (in thousands):

Location on Condensed Consolidated Balance Sheet
September 30, 2022(1)
December 31,
2021(2)
Prepaid expenses and other current assets (3)
$1,190 $— 
Right-of-use assets and other noncurrent assets (3)
538 — 
$1,728 $— 
_______________
(1)    

  

September 30,

  

December 31,

 

Location on Condensed Consolidated Balance Sheet

  

2023 (1)

   

2022 (1)

 

Prepaid expenses and other current assets (2)

 $32  $347 

Right-of-use assets and other noncurrent assets (2)

     225 
  $32  $572 


(1)Amounts are presented on a gross basis.

(2)    The Company did not have any derivative instruments at December 31, 2021.
(3)    

(2)The classification between current and noncurrent assets is based upon when the Call Options mature.

11

The Company has not designated the Call Options as a hedge under U.S. GAAP and all resulting gains and losses from changes in the fair value of its derivative instruments are included within change in unrealized loss on natural gas derivatives

14


within the Company's Condensed Consolidated Statements of Operations. The table below presents the changes in the fair value of the Call Options for the three and nine months ended September 30, 2023 and 2022 as well as their net realized gains and losses.
Three Months Ended
September 30,
Nine Months Ended
September 30,
Changes in fair value of derivatives2022
2021(1)
2022
2021(1)
Fair value of natural gas derivatives, beginning of period$1,126 $— $— $— 
Purchases of natural gas derivatives— — 2,241 — 
Unrealized gains (losses) transferred to realized gains (losses), net(324)— (540)— 
Change in unrealized gain on natural gas derivatives (2)
926 — 27 — 
Fair value of natural gas derivatives, end of period$1,728 $— $1,728 $— 
Three Months Ended
September 30,
Nine Months Ended
September 30,
Realized gain (loss) from derivative instruments2022
2021(1)
2022
2021(1)
Unrealized gains (losses) transferred to realized gains (losses), net$(324)$— $(540)$— 
Derivative settlement payments received (2)
682 — 1,062 — 
Realized gain (loss) from natural gas derivatives, net (3)
$358 $— $522 $— 
losses (in thousands).

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 

Changes in fair value of derivatives

 

2023

   

2022

   2023   

2022

 

Fair value of natural gas derivatives, beginning of period

 $81  $1,126  $572  $ 

Purchases of natural gas derivatives

           2,241 

Unrealized losses transferred to realized losses, net

  (316)  (324)  (862)  (540)

Change in unrealized gain (loss) on natural gas derivatives (1)

  267   926   322   27 

Fair value of natural gas derivatives, end of period

 $32  $1,728  $32  $1,728 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 

Realized gain (loss) from derivative instruments

 

2023

   

2022

   2023   

2022

 

Unrealized gains (losses) transferred to realized gains (losses), net

 $(316) $(324) $(862) $(540)

Derivative settlement payments received (2)

     682      1,062 

Realized gain (loss) from natural gas derivatives, net (2)

 $(316) $358  $(862) $522 


_______________(1)

(1)    The Company did not have any derivative instruments at December 31, 2021.
(2)    Amounts are presented as their own separate line item within the Company's Condensed Consolidated StatementStatements of Operations and Condensed Consolidated Statement of Cash Flows.
(3)    Operations.

(2)Amounts are included within cost of LNG productrevenues on the Company's Condensed Consolidated StatementStatements of Operations.

The Company may enteralso enters into forward contracts for purchases of natural gas and/or electricity to meet liquefaction requirements and forward sales contracts for the delivery of LNG to its customers. These contracts are not accounted for as derivatives, but accounted for under the normal purchase normal sales exclusion under U.S. GAAP and are not measured at fair value each reporting period.

5. PREPAID EXPENSES AND OTHER CURRENT ASSETS

The Company’s prepaid expenses and other current assets at September 30, 20222023 and December 31, 20212022 consisted of the following (in thousands):

  

September 30,

  

December 31,

 
  

2023

  

2022

 

Prepaid insurance

 $1,354  $990 

Prepaid supplier expenses

  162   286 

Other receivables

  1,526   254 

Natural gas derivatives at fair value, current

  32   347 

Deposits

  203   236 

Other

  104   73 

Total prepaid expenses and other current assets

 $3,381  $2,186 

September 30,
2022
December 31,
2021
Prepaid LNG$— $92 
Prepaid insurance1,342 892 
Prepaid supplier expenses248 201 
Fair value of derivatives, current1,190 — 
Deposits287 243 
Other51 94 
Total prepaid expenses and other current assets$3,118 $1,522 
15


6. ASSETS HELD FOR SALE AND PROPERTY, PLANT AND EQUIPMENT

Assets Held for Sale
During the quarter, the Company entered into an agreement to sell certain assets for $2.0 million. At September 30, 2022, the Company had received the funds; however, the purchaser had not taken delivery of the assets and they remain within the Company's custody as of the date of this Report, but are expected to be delivered to the purchaser during the fourth quarter 2022. The Company classified the assets as assets held for sale which are included as their own line item on the Company's Condensed Consolidated Balance Sheet at September 30, 2022. Proceeds received from the purchaser have been reported as investing activities within the Company's Condensed Consolidated Statement of Cash flows for the nine months ended September 30, 2022 and included within accrued liabilities on the Company's Condensed Consolidated Balance Sheet at September 30, 2022. The proceeds received from the sale equaled the carrying value of the assets. Accordingly, no impairment was recorded at September 30, 2022. At December 31, 2021, these assets were classified as construction in progress within property, plant and equipment. These assets did not meet the criteria for discontinued operations presentation.
Property, Plant and Equipment

The Company’s property, plant and equipment at September 30, 20222023 and December 31, 20212022 consisted of the following (in thousands):

September 30,
2022
December 31,
2021
Liquefaction plants and systems$47,606 $47,235 
Real property and buildings2,057 2,047 
Vehicles and tanker trailers and equipment51,168 49,905 
Computer and office equipment483 478 
Construction in progress408 1,495 
Leasehold improvements30 32 
101,752 101,192 
Less: accumulated depreciation(53,617)(47,027)
$48,135 $54,165 

  

September 30,

  

December 31,

 
  

2023

  

2022

 

Liquefaction plants and systems

 $48,005  $47,636 

Real property and buildings

  2,066   2,057 

Vehicles and tanker trailers and equipment

  49,489   52,647 

Computer and office equipment

  457   470 

Construction in progress

  9,620   527 

Leasehold improvements

  32   31 
   109,669   103,368 

Less: accumulated depreciation

  (59,651)  (55,699)
  $50,018  $47,669 

Depreciation expense totaled $2.1$2.0 million and $2.3$2.1 million for the three months ended September 30, 2022 2023 and 2021, respectively, and $6.6 million and $6.7 million for the nine months ended September 30, 2022 and 2021,, respectively, all of which is included in the Condensed Consolidated Statements of Operations as a separate line item. Depreciation expense totaled $6.0 million and $6.6 million for the nine months ended September 30, 2023 and 2022, respectively, all of which is included in the Condensed Consolidated Statements of Operations as a separate line item.

In October 2023, the Company’s insurance carriers settled with the Company with respect to certain assets that were damaged in a fire in June of 2023. The damages did not adversely impact the Company’s operations and were covered under the Company’s insurance policies less the policy deductible. The insurance proceeds to be received totaled $1.4 million including the reimbursement of site remediation and clean up expenses incurred by the Company.  At September 30, 2023, the damaged assets were written off and the corresponding gain of $1.0 million is included in gain from disposal of fixed assets within the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023, and proceeds to be received under the above referenced settlement are included in prepaid expenses and other current assets at September 30, 2023.

12

7. INVESTMENT IN FOREIGN JOINT VENTURE

The Company holds a 40% interest in BOMAY, Electric Industries Company, Ltd. (“BOMAY”), which builds electrical systems for sale in China.systems. The majority partner in this foreign joint venture is Baoji Oilfield Machinery Co., Ltd. (a subsidiary of China National Petroleum Corporation), which owns 51%. The remaining 9% is owned by AA Energies, Inc. The Company made no sales to its joint venture during the three and nine months ended September 30, 2022 2023 and 2021.

16


2022.

The tables below present a summary of BOMAY's assets, and liabilities and equity at September 30, 20222023 and December 31, 2021,2022, and its operational results for the three and nine months ended September 30, 2022 2023 and 20212022 in U.S. dollars (in thousands, unaudited)thousands):

September 30,
2022
December 31, 2021
Assets:
Total current assets$75,220 $75,249 
Total non-current assets2,968 3,544 
Total assets$78,188 $78,793 
Liabilities and equity:
Total liabilities$49,469 $45,253 
Total joint ventures’ equity28,719 33,540 
Total liabilities and equity$78,188 $78,793 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Revenue$12,364 $10,040 $55,090 $43,261 
Gross Profit2,332 3,420 7,637 8,111 
Earnings430 688 2,573 2,923 

  

September 30,

  

December 31,

 
  

2023

  

2022

 

Assets:

        

Total current assets

 $136,833  $88,536 

Total non-current assets

  2,677   3,016 

Total assets

 $139,510  $91,552 

Liabilities and equity:

        

Total liabilities

 $106,982  $58,482 

Total joint ventures’ equity

  32,528   33,070 

Total liabilities and equity

 $139,510  $91,552 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2023

  

2022

  

2023

  

2022

 

Revenue

 $18,565  $12,364  $70,148  $55,090 

Gross Profit

  2,754   2,332   8,640   7,637 

Net income

  749   430   3,422   2,573 

The table below presents the components of our investment in BOMAY and a summary of the activity within those components for the nine months ended September 30, 20222023 in U.S. dollars (in thousands, unaudited):

Initial Investment at Merger (1), (2)
Undistributed EarningsCumulative Foreign Exchange Translation AdjInvestment in BOMAY
Balance at December 31, 2021$9,333 $1,965 $1,027 $12,325 
Equity in earnings— 1,126 — 1,126 
Less: dividend distributions— (1,550)— (1,550)
Foreign currency translation gain (loss)— — (1,477)(1,477)
Balance at September 30, 2022$9,333 $1,541 $(450)$10,424 
_______________
(1)Accumulated statutory reserves in equity method investments of $2.7 million at September 30, 2022 and December 31, 2021 is included in our investment in BOMAY. In accordance with the People’s Republic of China, (“PRC”) regulations on enterprises with foreign ownership, an enterprise established in the PRC with foreign ownership is required to provide for certain statutory reserves, namely (i) General Reserve Fund, (ii) Enterprise Expansion Fund and (iii) Staff Welfare and Bonus Fund, which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A non-wholly-owned foreign invested enterprise is permitted to provide for the above allocation at the discretion of its board of directors. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends.
(2)The Company’s initial investment in BOMAY differed from the Company’s 40% share of BOMAY’s equity as a result of applying fair value accounting pursuant to ASC 805. The basis difference is being accreted over eight years (the expected life of the joint venture). The Company's accretion during the nine months ended September 30, 2022 and 2021 both totaled approximately $96 thousand each, respectively, and is included in income from equity investment in foreign joint venture in the accompanying Condensed Consolidated Statement of Operations. The remaining basis difference, net of accumulated accretion at September 30, 2022 and December 31, 2021 is summarized in the following table (amounts in thousands):
17

  Initial Investment at Merger (1), (2)  

Undistributed Earnings

  Cumulative Foreign Exchange Translation Adj  

Investment in BOMAY

 

Balance at December 31, 2022

 $9,333  $2,295  $(22) $11,606 

Equity in earnings

     1,466      1,466 

Less: dividend distributions

     (813)     (813)

Foreign currency translation gain (loss)

        (668)  (668)

Balance at September 30, 2023

 $9,333  $2,948  $(690) $11,591 



September 30,
2022
December 31,
2021
Original basis difference$1,165 $1,165 
Less accumulated accretion(410)(314)
Net remaining basis difference, net at end of period$755 $851 

(1)

Accumulated statutory reserves in equity method investments of $2.7million at September 30, 2023 and December 31, 2022 is included in our investment in BOMAY. In accordance with the Peoples Republic of China, (PRC) regulations on enterprises with foreign ownership, an enterprise established in the PRC with foreign ownership is required to provide for certain statutory reserves, namely (i)General Reserve Fund, (ii)Enterprise Expansion Fund and (iii)Staff Welfare and Bonus Fund, which are appropriated from net profit as reported in the enterprises PRC statutory accounts. A non-wholly-owned foreign invested enterprise is permitted to provide for the above allocation at the discretion of its board of directors. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends.

(2)

The Companys initial investment in BOMAY differed from the Companys 40% share of BOMAYs equity as a result of applying fair value accounting pursuant to ASC 805. The basis difference is being accreted over an original period of nine years (the expected life of the joint venture). The Company's accretion during the nine months ended September 30, 2023 and 2022 both totaled approximately $97 thousand each, respectively, and is included in income from equity investment in foreign joint venture in the accompanying Condensed Consolidated Statements of Operations. The remaining basis difference, net of accumulated accretion at September 30, 2023 and December 31, 2022 is summarized in the following table (in thousands):

  

September 30,

  

December 31,

 
  

2023

  

2022

 

Original basis difference

 $1,165  $1,165 

Less accumulated accretion

  (539)  (443)

Net remaining basis difference at end of period

 $626  $722 

In accordance with our long-lived asset policy, when events or circumstances indicate the carrying amount of an asset may not be recoverable, management tests long-lived assets for impairment. If the estimated future cash flows are projected to be less than the carrying amount, an impairment write-down (representing the carrying amount of the long-lived asset which exceeds the present value of estimated expected future cash flows) would be recorded as a period expense. In making this evaluation, a variety of quantitative and qualitative factors are considered including national and local economic, political and market conditions, industry trends and prospects, liquidity and capital resources and other pertinent factors. Based on this evaluation for this reporting period, the Company does not believe an impairment of our investment in BOMAY is necessary for the period ending September 30, 2022.2023.

13

8. ACCRUED LIABILITIES

The Company’s accrued liabilities at September 30, 20222023 and December 31, 20212022 consisted of the following (in thousands):

  

September 30,

  

December 31,

 
  

2023

  

2022

 

Compensation and benefits

 $2,202  $3,111 

Professional fees

  404   454 

LNG fuel and transportation

  3,989   6,549 

Accrued interest

  44   33 

Customer deposits and prepayments

  1,505   8,456 

Other taxes payable

  457   701 

Other accrued liabilities

  148   338 

Total accrued liabilities

 $8,749  $19,642 

September 30,
2022
December 31,
2021
Compensation and benefits$2,526 $2,465 
Professional fees275 275 
LNG fuel and transportation6,969 2,788 
Accrued interest32 53 
Customer deposits6,821 — 
Other taxes payable394 476 
Other accrued liabilities172 260 
Total accrued liabilities$17,189 $6,317 

9. DEBT

The Company’s carrying value of debt, net of debt issuance costs at September 30, 20222023 and December 31, 20212022 consisted of the following (in thousands):

September 30,
2022
December 31,
2021
Secured term note, net of debt issuance costs$8,640 $7,608 
Secured promissory note - related party3,022 3,603 
Insurance and other notes payable1,085 855 
Less: amounts due within one year(3,485)(2,023)
Total long-term debt$9,262 $10,043 

  

September 30,

  

December 31,

 
  

2023

  

2022

 

Secured term note, net of debt issuance costs

 $8,585  $8,650 

Secured promissory note - related party

  622   2,435 

Insurance and other notes payable

  1,139   848 

Less: amounts due within one year

  (2,297)  (3,283)

Total long-term debt

 $8,049  $8,650 

 Total interest expense was $0.1 million and $0.5 million during three and nine months ended September 30, 2023 and $0.2 million and $0.6 million during the three and nine months ended September 30, 2022, respectively.  During the three and nine months ended September 30, 2023, the Company capitalized $0.1 million of interest expense.

Revolving Credit Facility

On June 9, 2023, the Company, along with its subsidiaries, Stabilis LNG Eagle Ford LLC, Stabilis GDS, Inc. and Stabilis LNG Port Allen, LLC (collectively, the “Borrowers”) entered into a three-year loan agreement (the “Revolving Credit Facility”) with Cadence Bank. The Revolving Credit Facility provides for a maximum aggregate amount of $10.0 million, subject to a borrowing base of 80% of eligible accounts receivable. The Company may request an increase in the maximum aggregate amount under the Revolving Credit Facility by up to $5.0 million, subject to the approval of Cadence Bank. All borrowings under the Revolving Credit Facility are secured by the Company’s accounts receivable and deposit accounts. Borrowings under the Revolving Credit Facility incur interest at the Prime Rate published by the Wall Street Journal. Any unused portion is subject to a quarterly unused commitment fee of 0.5% per annum. As of September 30, 2023, no amounts have been drawn under the Revolving Credit Facility. The Revolving Credit Facility matures on June 9, 2026. Debt issuance cost of $0.1 million was incurred and is reflected at September 30, 2023 in long-term notes payable, net, on the Condensed Consolidated Balance Sheets and as debt issuance costs paid on the Condensed Consolidated Statements of Cashflows. Amortization of debt issuance costs is in interest expense on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023

The Revolving Credit Facility contains various restrictions and covenants. Among other requirements, the Borrowers must maintain a consolidated net worth of at least $50 million as of September 30, 2023, increasing by 50% of the Borrowers’ net income as of the end of each year ended December 31, and must maintain a minimum Fixed Charge Coverage Ratio of 1.2 to 1.0 on a consolidated basis, as defined in the Revolving Credit Facility, as of the last day of each fiscal quarter, on a trailing twelve (12) months basis. The Revolving Credit Facility also contains customary events of default. If an event of default under the Revolving Credit Facility occurs and is continuing, then Cadence Bank may declare any outstanding obligations under the Loan Agreement to be immediately due and payable. In addition, if any of the Borrowers become the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency or similar law, then any outstanding obligations under the Loan Agreement will automatically become immediately due and payable. As of September 30, 2023, the Company was in compliance with all its covenants related to the Revolving Credit Facility.

Secured Term Note

On April 8, 2021, the Company entered into a loan agreement (the “Loan Agreement”) with AmeriState Bank (“Lender”), as lender, pursuant to the United States Department of Agriculture, Business & Industry Loan Program, to provide for an advancing loan facility in the aggregate principal amount of up to $10.0 million (the “AmeriState Loan”). The Loan Agreement is secured by specific equipment owned by the Company. On September 19, 2023, the Loan Agreement was amended (the "First Amendment"), for the purpose of which $9.0 million was drawn and outstandingsubstituting certain items of Collateral under the Loan Agreement; the First Amendment is attached as of September 30, 2022.an exhibit to this filing.  The AmeriState Loan which is in the form of a term loan facility, matures on April 8, 2031 and bears interest at 5.75% per annum through April 8, 2026, and the U.S. prime lending rate plus 2.5% per annum thereafter. The AmeriState Loan provides that proceeds from borrowings may be used for working capital purposes at the Company’s liquefaction plant in George West, Texas and related fees and costs associated with the AmeriState Loan.

18


As of September 30, 2023, $9.0 million was drawn and outstanding.

The Loan Agreement requires the Company to meet certain financial covenants which include a debt-to-net-worth ratio of not more than 9.1 to 1.0 and a debt service coverage ratio of not less than 1.2 to 1.0 on an annual basis beginning December 31, 2022. The Company was in compliance with all of its debt covenants as of September 30, 2023.  Upon an Event of Default (as defined in the Loan Agreement), the Lender may (i)(i) terminate its commitment, (ii) declare the outstanding principal amount of the Advancing Notes (as defined in the Loan Agreement) due and payable, or (iii) exercise all rights and remedies available to Lender under the Loan Agreement.

On April 8, 2021, Mile High LNG LLC, Stabilis GDS, Inc., Stabilis LNG Eagle Ford LLC and Stabilis Energy Services, LLC, each a wholly owned subsidiary of the Company (collectively, “Debtor”), entered into a Security Agreement and Assignment (the “Security Agreement”) in favor of the Lender. The Security Agreement grants to Lender a first priority security interest in the collateral identified therein, which includes specific equipment collateral owned by the Company.

Secured Promissory Note - Related Party

On August 16, 2019, the Company issued a secured promissory noteSecured Promissory Note to M/GMG Finance Co., Ltd., a related party, in the principal amount of $5.0 million, at an interest rate per annum of 6.0% until December 10, 2020, and 12.0% thereafter, maturing in December 2022. The secured promissory notewhich was subsequently amended on September 20, 2021, and on March 9, 2022 to defer scheduled debt and interest payments reduceand lower the interest rate and extend the maturity date. Paymentsfrom 12.0% to 6.0%. Repayments under the secured promissory note, as amended, resume in October 2022 and will beamendment are in equal monthly installments through December 2023. The secured promissory note, as amended, bears interest at 6.0%.As of September 30, 2023, the outstanding balance is $0.6 million. The debt is secured by certain equipment of the Company. See Note 10 - Related Party Transactions.

14

Insurance and Other Notes Payable

The Company finances its annual commercial insurance premiums for its business and operations with a finance company. Duringoperations. For the three and nine months ended 2023-2024 policies, the amount financed was $1.1 million, which is the amount of the outstanding principal balance at September 30, 2022, the2023. The Company financed $1.4 million of insurance premiums with a short term note payable. The short term note payable requiresmakes equal monthly payments of principal and interest over ten months withthe term of the note. The interest at 5.75%. The Company's priorrate for the insurance note payable was paid in full August, 2022 and incurred interest of 3.95%financing is 7.95%.  At September 30, 2022 and December 31, 2021,2022, the policies' outstanding principal under the Company's insurance notes payablebalance was $1.1$0.8 million, and $0.9 million, respectively.

Interest Expense
During the three and nine months ended September 30, 2022 and 2021, the Company recorded interest expense on debt and capital lease as follows (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Secured term note$143 $117 $408 $176 
Secured promissory note - related party49 120 129 441 
Insurance and other notes payable— 23 
Interest expense on debt197 237 560 624 
Other interest
Total interest expense$199 $239 $566 $630 
Certain of the agreements governing our outstanding debt have certain covenants with which we must comply. As of September 30, 2022, we were in compliance with all of these covenants.
Loan Forgiveness under the Paycheck Protection Program
In June 2021, the Company's loan pursuantrelated to the Paycheck Protection Program (the “PPP”) under2022-2023 policies.  The final installment payment on the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) of $1.1 million (the “PPP Loan”)2022-2023 policies was forgiven by the Small Business Administration. The Company recognized a gain on forgiveness of debtmade in the amount of $1.1 million which is included in other income (expense) within our Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021.July 2023.


19


10. RELATED PARTY TRANSACTIONS

Other Purchases and Sales
Applied Cryo Technologies, Inc. (“ACT”), is a company that was owned 51% by

Secured Promissory Note - Related Party

Casey Crenshaw Family Holdings, LP (“Crenshaw Family Holdings”). Crenshaw Family Holdings sold its interest in ACT on November 22, 2021. During(our Chairman of the three and nine months ended September 30, 2021, the Company purchased from ACT $32 thousand and $0.5 million for equipment, repairs and services, respectively. The Company had $29 thousand of sales to ACT during the threeand nine months ended September 30, 2021. At December 31, 2021, the Company had $18 thousand due from ACT included in accounts receivable on the Condensed Consolidated Balance Sheets and $23 thousand due to ACT included in accounts payable on the Condensed Consolidated Balance Sheets.

The Company purchases supplies and services from a subsidiary of The Modern Group. Casey CrenshawBoard) is the beneficial owner of 25%50% of The Modern Group and is deemed to jointly control The Modern Group with family members. The Company has a secured promissory note payable with MG Finance Co., Ltd, a subsidiary of The Modern Group. See additional discussion in Note 9.

Other Purchases and Sales

The Company purchases supplies and services from subsidiaries of The Modern Group. The Company made purchases of supplies and services from a subsidiary of The Modern Group totaling $38 thousand$0.2 million and $0.1 million for the three months ended September 30, 2022 2023 and 2021, respectively,2022, respectively. For the nine months ended September 30, 2023 and 2022, purchases totaled $0.4 million and $0.2 million, and $0.8 million forrespectively. During the nine months ended September 30, 2022 and 2021, respectively. Thethird quarter, the Company had no sales to The Modern Group during either the three or nine months ended September 30, 2022, and had sales of $13 thousand during the three and nine months ended September 30, 2021. The Company had no receivable duealso purchased equipment it was renting from The Modern Group at for $0.1 million. As of September 30, 2022 or 2023 and December 31, 2021. As of September 30, 2022 and December 31, 2021,, the Company had $0.1 million$33 thousand and $0.8$0.1 million, respectively, due to a subsidiary of The Modern Group included in accounts payable on the Condensed Consolidated Balance Sheets.

Chart E&C beneficially owns 8.0%7.9% of our outstanding common stock at September 30, 2022, and was party to a Secured Term Note Payable with the Company prior to its repayment by the Company during 2021. The Company purchases services from Chart E&C.2023. The Company made purchases from Chart E&C for the three months ended September 30, 2023 and 2022of $0.0 million$11 thousand and $2 thousand, respectively.  For the nine months ended September 30, 2023 and 2022, the Company made purchases from Chart E&C totaling $22 thousand and $0.1 million, for the three months ended September 30, 2022 and 2021, respectively, and purchases also totaled $0.1 million and $0.1 million during the nine months ended September 30, 2022 and 2021, respectively. The Company had no receivable due from Chart at September 30, 2022 or December 31, 2021. As of September 30, 2022 the Company had no amounts due to Chart E&C. At December 31, 2021, the Company had $0.2$0.5 million due to Chart E&C included in accounts payable on the Condensed Consolidated Balance Sheets.

Secured Promissory Note - Related Party
Sheets at December 31, 2022, with no accounts payable due at September 30, 2023. The Company also has a secured promissory note payable with M/G Finance Co., Ltd, a related party. See additional discussion in Note 9.commitment for the future delivery of equipment during 2023 totaling $0.6 million. The Company had no receivable due from Chart E&C at September 30, 2023 or December 31, 2022.

11. COMMITMENTS AND CONTINGENCIES

Environmental Matters

The Company is subject to federal, state and local environmental laws and regulations. The Company does not anticipate any expenditures to comply with such laws and regulations that would have a material impact on the Company’s condensed consolidated financial position, results of operations or liquidity. The Company believes that its operations comply, in all material respects, with applicable federal, state and local environmental laws and regulations.

Litigation, Claims and Contingencies

The Company may become party to various legal actions that arise in the ordinary course of its business. The Company is also subject to audit by tax and other authorities for varying periods in various federal, state and local jurisdictions, and disputes may arise during the course of these audits. It is impossible to determine the ultimate liabilities that the Company may incur resulting from any of these lawsuits, claims, proceedings, audits, commitments, contingencies and related matters or the timing of these liabilities, if any. If these matters were to ultimately be resolved unfavorably, it is possible that such an outcome could have a material adverse effect upon the Company’s condensed consolidated financial position, results of operations, or liquidity. The Company does not, however, anticipate such an outcome and it believes the ultimate resolution of these matters will not have a material adverse effect on the Company’s condensed consolidated financial position, results of operations, or liquidity. Additionally, the Company currently expenses all legal costs as they are incurred.


20


12. STOCKHOLDERS’ STOCKHOLDERS EQUITY AND STOCK-BASED COMPENSATION

Issuances of Common Stock

Stock-based Compensation

The Company is authorized to issue up to 37,500,000 sharesincludes stock compensation expense within general and administrative expenses in the Condensed Consolidated Statements of common stock, $0.001 par value per share.

Operations. During the nine months ended September 30, 2023 and 2022, the Company issued 500,000 sharesrecognized $1.7 million and $1.7 million of common stock to its former chief executive officer pursuant to the termscompensation expense, respectively.

Issuance of his separation and release agreement. The restricted stock units (RSU's) were expensed during the third quarter 2021. In addition, during the nine months ended September 30, 2022, 212,337 shares of common stock were issued to other employees upon vesting of RSU's issued under the Company's long term incentive plan.

Amended and Restated 2019 Long Term Incentive Plan
Stock-based Awards

The Company has a long termlong-term incentive plan (the “Amended and Restated Plan”) which provides for a maximum number of shares of common stock available for issuance of 5,500,000 shares. The plan was amended in 2023 to increase the maximum number of shares from 4,000,000 shares. to 5,500,000, as approved by shareholders at the annual stockholders meeting held August 16, 2023. Awards under the Amended and Restated Plan may be granted to employees, officers and directors of the Company and affiliates, and any other person who provides services to the Company and its affiliates (including independent contractors and consultants of the Company and its subsidiaries). Awards may be granted in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, substitute awards, other stock-based awards, cash awards and/or any combination of the foregoing. No participant may receive a grant covering more than 2,000,000 shares of our common stock in any year and a non-employee member of the Board may not be granted more than 100,000 shares in any year.

Stock-Based Compensation and Awards

During the nine months ended September 30, 2022,

On June 26, 2023, the Company issued a total of 40,764 RSU’s and 774,505granted 685,437 stock options pursuant toappreciation rights (“SARs”) under the Amended and Restated Plan.Plan, with a $10.00 strike price. The RSU’s were valued at $0.2 million based upon the closing price of $4.11 on the date of grant and willSARs 100% vest over three years. The Company has estimated the value of the options issued using a valuation model. The full aggregate fair value determined was $1.5 million using observable inputs from trading values of the Company's shares of stock. Assumptions used in determining the valuation of the options included the following:

A strike price of $6.00 per share with 3-year vesting terms andwhen the closing price of the Company's common stock averages $10.00 over 10 (ten) consecutive trading days, prior to January 1, 2025. The SARs expire December 31, 2026. Once vested, the SARs may be exercised, whole or in part, prior to their expiration.  The SARs may be paid in cash or shares, as elected by the Company, representing the then closing price of $4.11the Company's common stock in excess of the strike price. The Company valued the SARs at date$0.1 million as of grant.
The risk free rate assumed the return of a U.S. Treasury bill of 3 years (the vesting period), which was approximately 1.7% at the date of grant. Expense related to these grants was immaterial for the three and nine months ended September 30, 2023.

15

$0 dividends as we have not historically paid dividends.

Issuances of 3 years with an expiration date of 10 years.

Volatility of approximately 58%.
The Company includes stock compensation expense within general and administrative expenses in the Condensed Consolidated Statements of Operations. Common Stock

During the nine months ended September 30, 20222023, and 2021,2022, shares of common stock were issued upon vesting of restricted stock units totaling 153,324 and 695,465, respectively. There were no stock options or stock appreciation rights exercised during the Company recognized $1.7 million and $2.7 million of stock compensation expense, respectively. As of nine months ended September 30, 2023 or 2022 the Company had $1.1 million of unrecognized compensation costs related to 247,607 outstanding RSUs which are expected to be recognized over a weighted average period of less than one year and $3.3 million of unrecognized compensation costs related to 2,074,505 outstanding options which are expected to be recognized over a weighted average period of less than three years. All RSU's and options are expected to vest..

21


13. NET INCOME (LOSS) PER SHARE

The calculation of net income (loss) per common share includingfor the numberthree and nine months ended September 30, 2023 and 2022 are presented below. For the September 30, 2023 securities that were excluded that would have had an anti-diluted effect consist of shares for both basic and diluted net income (loss) per share is as follows (in thousands, except share and per share data):

Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Basic weighted average number of common shares outstanding18,324,534 17,578,653 18,256,587 17,202,631 
Dilutive securities (1),(2)
272,074 — 
Total shares including dilutive securities18,596,608 17,578,653 18,256,587 17,202,631 
Net income (loss) from continuing operations$1,024 $(4,581)$(1,410)$(5,326)
Loss from discontinued operations, net of tax(1,301)(44)(1,441)(128)
Net loss$(277)$(4,625)$(2,851)$(5,454)
Basic income (loss) per common share:
Basic income (loss) per common share from continuing operations$0.06 $(0.26)$(0.08)$(0.31)
Basic loss per common share from discontinued operations(0.07)— (0.08)(0.01)
Basic net loss per common share(0.02)(0.26)(0.16)(0.32)
.
Diluted income (loss) per common share:
Diluted income (loss) per common share from continuing operations$0.06 $(0.26)$(0.08)$(0.31)
Diluted loss per common share from discontinued operations(0.07)— (0.08)(0.01)
Diluted net loss per common share(0.01)(0.26)(0.16)(0.32)
_______________
(1)Dilutive securities include sharesrestricted stock units of unvested RSUs27,177, stock options of 2,074,505 and stock options with exercise prices below the share price (in-the-money options) at September 30, 2022. The numberappreciation rights of dilutive stock options is calculated under the treasury stock method which assumes proceeds received from the exercise of the options would be used to buy back shares of the Company's common stock at the market price. Excluded from the number of dilutive shares are 600,391 in-the-money options that could be repurchased under the treasury method and 1,300,000 options, with exercise prices in excess of the market price (out-of -the-money options) at September 30, 2022.658,437.

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2023

  

2022

  

2023

  

2022

 

Weighted average shares:

                

Basic weighted average number of common shares outstanding

  18,518,915   18,324,534   18,470,423   18,256,587 

Dilutive securities

     272,074       

Total shares including dilutive securities

  18,518,915   18,596,608   18,470,423   18,256,587 
                 

Net income (loss):

                

Net income (loss) from continuing operations

 $(207) $1,024  $(1,297) $(1,410)

Loss from discontinued operations, net of income tax

     (1,301)     (1,441)

Net income (loss)

 $(207) $(277) $(1,297) $(2,851)
                 

Net income (loss) per common share:

                

Basic net income (loss) per common share from continuing operations

 $(0.01) $0.06  $(0.07) $(0.08)

Basic loss per common share from discontinued operations

     (0.08)     (0.08)

Basic net income (loss) per common share

  (0.01)  (0.02)  (0.07)  (0.16)
                 

Diluted net income (loss) per common share from continuing operations

 $(0.01) $0.06  $(0.07) $(0.08)

Diluted loss per common share from discontinued operations

     (0.07)     (0.08)

Diluted net income (loss) per common share

  (0.01)  (0.01)  (0.07)  (0.16)

(2)The Company had no dilutive securities for the three months ended September 30, 2021 or for the nine months ended September 30, 2022 and 2021 since the Company incurred net losses for both continuing and discontinued operations for these periods and inclusion would be antidilutive.

22


14. SUPPLEMENTAL CASH FLOW INFORMATION

The Company's supplemental disclosure of cash flow information for the nine months ended September 30, 2022 2023 and 20212022 is as follows (in thousands):

Nine Months Ended
September 30,
Supplemental Disclosure of Cash Flow Information:20222021
Interest paid$635 $380 
Income taxes paid29 169 
Significant non-cash investing and financing activities:
Common stock issued to acquire fixed assets$— $3,795 
Equipment acquired from issuance of note payable359 — 
Acquisition of fixed assets included within accounts payable565 — 
Fixed assets transferred to assets held for sale1,841 — 
Equipment acquired under capital leases— 104 
Insurance premium financing1,203 1,278 
15. SUBSEQUENT EVENTS
On October 31, 2022, the Company entered into a sales agreement and closed on the sale of its Brazil Operations to the general manager of the Brazil Operations for approximately $0.9 million consisting of a cash payment of $0.2 million and a note receivable due in annual installments of $0.1 million, $0.1 million, $0.2 million and $0.3 million over the next four years. The Company does not expect to record a gain or loss on the sale due to the impairment loss recorded during the three and nine months ended September 30, 2022, in discontinued operations. See further discussion in Note 2 regarding the Company's decision to exit its Brazil Operations.

  

Nine Months Ended

 
  

September 30,

 

Supplemental Disclosure of Cash Flow Information:

 

2023

  

2022

 

Interest paid

 $489  $635 

Income taxes paid

  207   29 

Significant non-cash investing and financing activities:

        

Equipment acquired from issuance of note payable

     359 

Acquisition of fixed assets included within accounts payable and accrued expenses

  150   565 

Fixed assets transferred to assets held for sale

     1,841 

Receivable of insurance proceeds from disposition of assets

  1,441    

Insurance Premium Financing

  1,139   1,203 

2316

ITEM2. MANAGEMENT’SMANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included elsewhere in this Form 10-Q ("(“this Report"Report”) and the consolidated financial statements included in the 20212022 Annual Report on Form 10-K filed on March 10, 20229, 2023 with the U.S. Securities and Exchange Commission (the "SEC"“SEC”). Historical results and percentage relationships set forth in the Condensed Consolidated Statements of Operations and Cash Flows, including trends that might appear, are not necessarily indicative of future operations or cash flows.

Overview

Stabilis Solutions, Inc. and its subsidiaries is an energy transition company that provides turnkey clean energy production, storage, transportation and fueling solutions primarily using liquefied natural gas (“LNG”) to multiple end markets across North America.markets. We provide LNG solutions to customers in diverse end markets, including aerospace, agriculture, energy, industrial, marine bunkering, mining, pipeline, remote clean power and utility markets. LNG can be used to deliver natural gas to locations where pipeline service is not available,unavailable, has been interrupted, or needs to be supplemented. Our customers use LNG ascan also be used to replace a partner fuel for renewable energy, and as a cleanervariety of alternative to traditional fuel sources, such asfuels, including distillate fuel oil (including diesel fuel and other fuel oils) and propane, among others, to provide both environmental and economic benefits. Increasingly, LNG is being utilized as a transportation fuel in the marine industry and as a propellant in the private rocket launch sector. We believe that these alternative fuel markets are large and provide significant opportunities for LNG substitution.

usage.

We believe that LNG as well as other clean energy solutions will provide an important balance between environmental sustainability, security and accessibility, and economic viability when compared to both renewables and other traditional hydrocarbon-based fuels and will play a key role in the energy transition.

Our LNG operations generate

The Company generates revenue by selling and delivering LNG to our customers, renting cryogenic equipment and providing engineering and field support services. We sell our products and services separately or as a bundle depending on the customer’s needs. LNG pricingPricing depends on market pricing for natural gas and competing fuel sources (such as diesel, fuel oil, and propane among others), as well as the customer’s purchased volume, contract duration and credit profile. Stabilis’ customers use LNG for fuel in their operations for multiple reasons, including lower and more stable fuel costs, reduced environmental emissions, and improved operating performance.

LNG Production and Sales—Stabilis builds and operates cryogenic natural gas processing facilities, called “liquefiers,” which convert natural gas into LNG through a purification and multiple stage cooling process. We currently own and operate a liquefier that can produce up to 100,000 LNG gallons per day in George West, Texas and a liquefier that can produce up to 30,000 LNG gallons per day in Port Allen, Louisiana, which was purchased on June 1, 2021.Louisiana. We also purchase LNG from third-party production sources which allows us to support customers in markets where we do not own liquefiers. We make the determination of LNG and transportation supply sources based on the cost of LNG, the transportation cost to deliver to regional customer locations, and the reliability of the supply source.

Revenues earned from the production and sales of LNG are included within LNG Product revenue.

Transportation and Logistics Services—Stabilis offers our customers a “virtual natural gas pipeline” by providing turnkey LNG transportation and logistics services in North America. We deliver LNG to our customers’ work sites from both our own production facilities and our network of third-party production sources located throughout North America. We own a fleet of cryogenic trailers to transport and deliver LNG. We also outsource similar equipment and transportation services from qualified third-party providers as required to support our customer base.

 Revenues earned from the transportation and logistical services of LNG to our customers are included within LNG Product revenue.

Cryogenic Equipment Rental—Stabilis owns and operates a rental fleet of mobile LNG storage and vaporization assets, including: transportation trailers, electric and gas-fired vaporizers, ambient vaporizers, storage tanks, and mobile vehicle fuelers. We also own several stationary storage and regasification assets. We believe this is one of the largest fleets of small-scale LNG equipment in North America. Our fleet consists primarily of trailer-mounted mobile assets, making delivery to and between customer locations more efficient. We deploy these assets on job sites to provide our customers with the equipment required to transport, store, and consume LNG in their operations.

 Revenues earned from cryogenic equipment rental are included within Rental revenue.

Engineering and Field Support Services—Stabilis has experience in the safe, cost effective, and reliable use of LNG in multiple customer applications. We have also developed many processes and procedures that we believe improve our customers’ use of LNG in their operations. Our engineers help our customers design and integrate LNG and hydrogen into their fueling operations and our field service technicians help our customers mobilize, commission and reliably operate on the job site.

 Revenues earned from engineering and field support services are included within Service revenue.

24


Biofuels and Hydrogen—We believe that our technical expertise, production, transportation and storage asset capabilities are favorable for other alternative fuels, such as renewable natural gas, synthetic natural gas and hydrogen.
Additionally, we build power and control systems for the energy industry in China through our 40% interest in our Chinese joint venture, BOMAY Electric Industries, Inc (“BOMAY”).
Inflationary Pressures:
We continue to experience inflationary pressures for increasing costs for natural gas, liquefaction and transportation at least for the near-term. While we pass a significant portion of the cost of natural gas and transportation on to our customers, we are not able to pass through all costs which has resulted in margin pressure. Recent global events, which include Russia’s invasion of Ukraine, are exacerbating these trends. The ultimate extent and effects of recent events are difficult to estimate, but we expect them to continue to place pressure on the price of natural gas in the near-term. For a more complete discussion of the risks we encounter in our business, please refer to Risk Factors in Part I, Item 1A of the Company's Annual Report on Form 10-K filed with the SEC on March 10, 2022 and Part II, Item 1A of the Company's Quarterly Reports on Form 10-Q filed with the SEC on May 5, 2022 and August 11, 2022.
Recent Developments:
U.S. Department of Energy ("DOE") Approval to Export LNG
During the third quarter of 2022, Stabilis received authorization from the DOE to export domestically produced LNG to all free trade and non-free trade countries, including Asian, European, and Latin American importing nations for up to 51.75 billion cubic feet per year.year of natural gas equivalent. The authorization is for a term of 28 years. Stabilis didTo date, the Company has not makemade any exports under this approval during the quarter.
Saleand has not expended material funds nor entered into any sales commitments.  The Company has two years with which to initiate exportation of Brazil Operations and Discontinued Operations
At September 30, 2022,LNG under this authorization, otherwise the Company determined that it would exit its Brazil Operations.will need to obtain an extension for commencement of operations or reapply for the authorization.  This decision resulted in discontinued operations presentation for its Brazil Operationsauthorization supplements the Company's other two export licenses from the DOE and an impairment chargefrom the National Energy Board of $1.3 million measured as the estimated fair value of $0.9 million (calculated as the estimated net proceeds that would be received in an orderly and timely sale of the operations) less the carrying value of the Brazil net assets at September 30, 2022. On October 31, 2022,Canada (“NEB”), which authorizes the Company entered into a sales agreementto export LNG to Mexico and closed onCanada, via truck. 

Gas Pretreatment Upgrades at our George West, Tx Liquefaction Facility

During the salesecond and third quarters of its Brazil Operations2023, the Company was adversely impacted by natural gas feedstock composition changes which reduced production from our George West, Tx liquefaction facility (our "George West facility") as well as overall profitability. In August 2023, the Company completed installation of additional gas pretreatment equipment that allowed our George West facility to its Brazil management team for approximately $.9 million See also Notes 2 and 15 in the Notes to Condensed Consolidated Financial Statements for further discussion of the Company's discontinued operations and sale of the Brazil Operations.resume LNG production at full rates. 

25
17

Results of Operations

The Company

Stabilis supplies LNG to multiple end markets in North America and provides turnkey fuel solutions to help users of propane, diesel and other crude-based fuel products convert to LNG. The anticipated sale of the Brazil Operations representrepresents all of the revenuerevenues and expenses previously reported within the Company's Power Delivery segment with the exception of the Company's equity method investment in BOMAY. Further, the Company also believes that the decision to exit the Brazil Operations at September 30, 2022 meetsmet the criteria to be reported as discontinued operations. As a result, the Company believes that it has one reporting segment and the operating results presented in the tables below have been recast to separately present the revenues and expenses related to the Brazil Operations as discontinued operations for all periods presented.

Three Months Ended September 30, 20222023 Compared to Three Months Ended September 30, 2021

2022

The comparative tables below reflect our consolidated operating results for the three months ended September 30, 20222023 (the “Current Quarter”) as compared to the three months ended September 30, 20212022 (the “Prior Year Quarter”) (unaudited, amounts in thousands, except for percentages). Corporate allocations of $0.1 million previously reported within the Company's Power Delivery Segment have been reclassified to continuing operations for the Prior year Quarter and $0.5 million for the Prior Year Quarter was reclassified from selling, general and administrative expense to costs of rental, service and other in the table below to conform to current period presentation.

Three Months Ended
September 30,
 $ Change% Change
20222021
Revenues:
Revenues25,819 17,779 8,040 45.2 %
Operating expenses:
Cost of revenues19,904 14,369 5,535 38.5 
Change in unrealized gain on natural gas derivatives(926)— (926)      n/a
Selling, general and administrative expenses3,658 5,286 (1,628)(30.8)
Gain from disposal of fixed assets46 — 46       n/a
Depreciation expense2,115 2,284 (169)(7.4)
Impairment of right-of-use lease asset— 376 (376)(100.0)
Total operating expenses24,797 22,315 2,482 11.1 
Income (loss) from operations before equity income1,022 (4,536)5,558 122.5 
Net equity income from foreign joint venture operations114 246 (132)(53.7)
Income (loss) from operations1,136 (4,290)5,426 126.5 
Other income (expense):
Interest expense, net(150)(119)(31)(26.1)
Interest expense, net - related parties(49)(120)71 59.2 
Other income (expense)(28)37 (65)      n/a
Total other income (expense)(227)(202)(25)      n/a
Net income (loss) from continuing operations before income tax expense909 (4,492)5,401 120.2 
Income tax (benefit) expense(115)89 (204)(229.2)
Net income (loss) from continuing operations1,024 (4,581)5,605 122.4 
Loss from discontinued operations, net of tax(1,301)(44)(1,257)n/a
Net loss$(277)$(4,625)$4,348 94.0 
26


  

Three Months Ended

         
  

September 30,

         
  

2023

  

2022

  

$ Change

  

% Change

 

Revenues:

                

LNG Product

 $12,122  $21,823   (9,701)  (44.5)%

Increase / (decrease) in gallons delivered

  (3,032)            

Rental

  1,330   1,690   (360)  (21.3)

Service

  1,579   2,154   (575)  (26.7)

Other

  285   152   133   87.5 

Total revenues

  15,316   25,819   (10,503)  (40.7)

Operating expenses:

                

Cost of revenues

  12,056   19,904   (7,848)  (39.4)

Change in unrealized loss on natural gas derivatives

  (267)  (926)  659   (71.2)

Selling, general and administrative expenses

  3,002   3,658   (656)  (17.9)

Gain from disposal of fixed assets

  (1,002)  46   (1,048)  n/a 

Depreciation expense

  2,003   2,115   (112)  (5.3)

Total operating expenses

  15,792   24,797   (9,005)  (36.3)

Income (loss) from operations before equity income

  (476)  1,022   (1,498)  n/a 

Net equity income from foreign joint venture operations

  284   114   170   149.1 

Income (loss) from operations

  (192)  1,136   (1,328)  n/a 

Other income (expense):

                

Interest expense, net

  60   (150)  210   n/a 

Interest expense, net - related parties

  (15)  (49)  34   (69.4)

Other income (expense)

  (3)  (28)  25   (89.3)

Total other income (expense)

  42   (227)  269   (118.5)

Net income (loss) from continuing operations before income tax (benefit) expense

  (150)  909   (1,059)  (116.5)

Income tax (benefit) expense

  57   (115)  172   n/a 

Net income (loss) from continuing operations

  (207)  1,024   (1,231)  n/a 

Loss from discontinued operations, net of income tax

     (1,301)  1,301   (100.0)

Net income (loss)

 $(207) $(277) $70   (25.3)

Revenues

During the Current Quarter, revenues increased $8.0decreased  $10.5 million, or 45%41%, compared to the Prior Year Quarter related to an increase in LNG product revenue of $7.2 million and an increase in rental, service and other revenue of $0.8 million. The increase in LNG product revenue was primarily related to:

Additional LNG gallons delivered during the Current Quarter compared to the Prior Year Quarter;
Increased natural gas prices during the Current Quarter compared to the Prior Year Quarter; and
Increased pricing charged to our customers in response to increased costs from inflationary pressures.
The increase in rental, service and other revenue related to additional projects (primarily for marine bunkering) with equipment and increased labor revenues.
Operating Expenses
Costs of revenues. Cost of revenues increased $5.5 million, or 39%. due to an increase in the cost of LNG product of $4.8 million and an increase in the costs of rental, service and other of $0.7 million in the Current Quarter compared to the Prior Year Quarter. The increasedchange in revenue primarily related to:

Decreased natural gas prices in the Current Quarter compared to the Prior Year Quarter resulting in decreased revenue of $5.2 million; ​

Decreased LNG delivered to customers of 3.0 million gallons during the Current Quarter compared to the Prior Year Quarter resulting in decreased revenues of $4.4 million;

Decreased pricing related to customer mix in the Current Quarter compared to the Prior Year Quarter of $0.2 million;

Increased revenues from minimum purchase take-or-pay contracts in the Current Quarter compared to the Prior Year Quarter of $0.3 million; and​

Decreased rental, service and other revenues related to a short term marine bunkering project in the Prior Year Quarter compared to the Current Quarter resulting in decreased revenues of $1.0 million.

Operating Expenses

Costs of revenues. Cost of revenues decreased $7.8 million, or 39%, compared to the Prior Year Quarter. As a percentage of revenue, these costs related to LNG product were 79% and 77% in the Current Quarter and the Prior Year Quarter, respectively. The change in cost of revenues was primarily attributable to:

Decreased natural gas prices in the Current Quarter compared to the Prior Year Quarter resulting in decreased costs of revenues of $4.8 million; ​

Decreased LNG delivered to customers of 3.0 million gallons during the Current Quarter compared to the Prior Year Quarter resulting in decreased costs of revenues of $3.3 million; and

Decreased costs from minimum purchase take-or-pay contracts of $0.1 million during the Current Quarter compared to the Prior Year Quarter; and

Increased rental, service and other costs incurred during the Current Quarter compared to the Prior Year Quarter of $0.4 million.

18

Additional LNG gallons delivered during

Change in unrealized loss on natural gas derivatives. The Company incurred a gain of $0.3 million on the change in unrealized losses associated with the Company's natural gas derivatives in the Current Quarter compared to the Prior Year Quarter;

Increased natural gas prices during the Current Quarter compared to the Prior Year Quarter;
Inflationary pressures, including increased transportation costs and increased liquefaction costs; and
Increased electricity prices, particularly in Texas and Louisiana due to higher than average temperatures.
As a percentage of LNG product revenue, these costs decreased from 83% in the Prior Year Quarter to 74% in the Current Quarter. The decrease is primarily due to increased pricing charged to our customers. The increase in the costs of rental, service and other was primarily due to additional projects (primarily for marine bunkering) and increased costs for rental equipment to service additional contracts and increased service personnel to support increased services work.
Change in unrealized gain on natural gas derivatives. The Company incurred an unrealized gain of $0.9 million in the Prior Year Quarter. The gain in the Current Quarter on its natural gas derivatives. The unrealized gain was due to higher future natural gas prices at September 30, 2022offsetting amortization of realized losses as compared to June 30, 2022. The Company had no derivatives incall option volumes expired unexercised during the Prior YearCurrent Quarter. See also Note 4 in the Notes to the Condensed Consolidated Financial Statements for a further discussion of our derivatives.

Selling, general and administrative expenses. Selling, general and administrative expense decreased $1.6$0.7 million or 31%, duringprimarily due to lower compensation in the Current Quarter compared to the Prior Year Quarter. During the Prior Year Quarter, we recorded $2.2 million for the immediate vesting of restricted common stock related to our executive transition occurring in the Prior Year Quarter in addition to $0.8 million in severance and legal costs. Savings from the non-recurrence of these Prior Year Quarter expenses were partially offset during the Current Quarter by higher stock-based compensation expenses and increased compensation related to additional headcount to support our operations.

Gain from disposal of fixed assets. There were no significant gains or losses from disposal of fixed assets in either the Current Quarter or the Prior Year Quarter.

Depreciation. Depreciation expense decreased 7%5% during the Current Quarter as compared to the Prior Year Quarter due to assets reaching the end of their depreciable lives.

Gain on disposal of assets. The Company recorded a gain on the disposal of assets of $1.0 million in the Current Quarter related to insurance proceeds to be received for assets damaged in a fire. See also Note 6 in the Notes to the Condensed Consolidated Financial Statements for a further discussion of this gain.

Net equity income from foreign joint venture operations. Equity Income from investments the Company's foreign joint venture decreased $0.1improved by $0.2 million during thein Current Quarter due to supply chain challenges as well as foreign exchange losses resulting from a strong U.S. dollar compared to the Prior Year Quarter due to increased sales by the Company's joint venture in BOMAY.

Interest income (expense). Interest income, net was $44 thousand for the Current Quarter compared to expense of $0.2 million in the Prior Year Quarter.

  Interest income in the Current Quarter is related to increased interest rates and income earned on the Company's overnight deposits.  The decrease in interest expense compared to the Prior Year Quarter is due to capitalized interest on capital projects.

Interest expense, net. Interestnet - related parties. Related party interest expense increased $31decreased $34 thousand duringin the Current Quarter as compared to the Prior Year Quarter primarily related to lower debt balances and capitalized interest on additional borrowings from the Company's loan with AmeriState Bank.

Interest expense, net - related parties. Related party interest expense decreased $0.1 million during the Current Quarter as compared to the Prior Year Quarter primarily related to repayment of related party debt and due to amendments to the M/G Finance note payable which lowered the interest rate from 12% to 6%.
27


capital projects.

Other income (expense). Other expense was $28$2 thousand during the Current Quarter compared to other income of $37$28 thousand in the Prior Year Quarter.

Quarter related to transactional foreign exchange losses.

Income tax expense. The Company incurred a state and foreign income tax benefitexpense of $0.1 million during the Current Quarter compared to a state and foreign income tax expensebenefit of $0.1 million during the Prior Year Quarter. No U.S. federal income tax benefit was recorded for the Current Quarter or Prior Year Quarter as any net U.S. deferred tax assets generated from operating losses were offset by a change in the Company's valuation allowance on net deferred tax assets.

Discontinued Operations. Operating lossLoss from discontinued operations, net of tax was $1.3 million and $44 thousand for the Current Quarter and the Prior Year Quarter, respectively.Quarter. The Current Quarter operating lossCompany sold its Brazil Operations on October 31, 2022. There was no activity from discontinued operations increased induring the Current Quarter compared to the Prior Year Quarter due to the impairment of $1.3 million recorded as a result of the anticipated sale of the Brazil Operations.Quarter. See Note 2 in the Notes to Condensed Consolidated Financial Statements for further discussion of the Company's discontinued operations.

Nine Months Ended September 30, 20222023 Compared to Nine Months Ended September 30, 2021

2022

The following table reflects line items from the accompanying Condensed Consolidated Statements of Operationscomparative tables below reflect our consolidated operating results for the nine months ended September 30, 20222023 (the “Current Year”) as compared to the nine months ended September 30, 20212022 (the “Prior Year”) (unaudited, amounts in thousands, except for percentages). Corporate allocations of $0.6 million previously reported within the Company's Power Delivery Segment have been reclassified to continuing operations for the Prior Year and $1.5 million for the Prior Year was reclassified from selling, general and administrative expense to costs of rental, service and other, and $0.3 million was reclassified from costs of LNG product to costs of rental, service and other to conform to current period presentation.

Nine Months Ended
September 30,
$ Change% Change
20222021
Revenues:
Revenues69,236 48,291 20,945 43.4 %
Operating expenses:
Cost of revenues54,945 37,301 17,644 47.3 
Change in unrealized gain on natural gas derivatives(27)— (27)      n/a
Selling, general and administrative expenses9,643 10,558 (915)(8.7)
Gain from disposal of fixed assets(34)(24)(10)(41.7)
Depreciation expense6,589 6,653 (64)(1.0)
Impairment of right-of-use lease asset— 376 (376)(100.0)
Total operating expenses71,116 54,864 16,252 29.6 
Loss from operations before equity income(1,880)(6,573)4,693 71.4 
Net equity income from foreign joint venture operations887 1,075 (188)(17.5)
Loss from operations(993)(5,498)4,505 81.9 
Other income (expense):
Interest expense, net(437)(189)(248)(131.2)
Interest expense, net - related parties(129)(441)312 70.7 
Other income (expense)(99)1,031 (1,130)      n/a
Total other income (expense)(665)401 (1,066)      n/a
Net loss from continuing operations before income tax expense(1,658)(5,097)3,439 (67.5)
Income tax (benefit) expense(248)229 (477)(208.3)
Loss from continuing operations(1,410)(5,326)3,916 73.5 
Loss from discontinued operations, net of tax(1,441)(128)(1,313)n/a
Net loss$(2,851)$(5,454)$2,603 47.7 
28


  

Nine Months Ended

         
  

September 30,

         
  

2023

  

2022

  

$ Change

  

% Change

 

Revenues:

                

LNG Product

 $44,595  $58,944   (14,349)  (24.3)%

Increase / (decrease) in gallons delivered

  (8,894)            

Rental

  4,640   5,015   (375)  (7.5)

Service

  4,745   4,952   (207)  (4.2)

Other

  1,085   325   760   233.8 

Total revenues

  55,065   69,236   (14,171)  (20.5)

Operating expenses:

                

Cost of revenues

  42,911   54,945   (12,034)  (21.9)

Change in unrealized loss on natural gas derivatives

  (322)  (27)  (295)  n/a 

Selling, general and administrative expenses

  9,424   9,643   (219)  (2.3)

Gain from disposal of fixed assets

  (1,002)  (34)  (968)  n/a 

Depreciation expense

  6,006   6,589   (583)  (8.8)

Total operating expenses

  57,017   71,116   (14,099)  (19.8)

Income (loss) from operations before equity income

  (1,952)  (1,880)  (72)  3.8 

Net equity income from foreign joint venture operations

  1,314   887   427   48.1 

Income (loss) from operations

  (638)  (993)  355   (35.8)

Other income (expense):

                

Interest expense, net

  (237)  (437)  200   (45.8)

Interest expense, net - related parties

  (71)  (129)  58   (45.0)

Other income (expense)

  (127)  (99)  (28)  28.3 

Total other income (expense)

  (435)  (665)  230   (34.6)

Net income (loss) from continuing operations before income tax (benefit) expense

  (1,073)  (1,658)  585   (35.3)

Income tax (benefit) expense

  224   (248)  472   n/a 

Net income (loss) from continuing operations

  (1,297)  (1,410)  113   (8.0)

Loss from discontinued operations, net of income tax

     (1,441)  1,441   (100.0)

Net income (loss)

 $(1,297) $(2,851) $1,554   (54.5)

Revenues

During the Current Year, revenues increased $20.9decreased $14.2 million, or 43%20%, due to increased LNG product revenue of $20.8 million and increased rental, service and other revenue of $0.1 million compared to the Prior Year. The increasechange in LNG product revenue was primarily duerelated to:

Additional LNG gallons delivered during the Current Year compared to the Prior Year;
Increased natural gas prices compared to the Prior Year; and
Increased pricing charged to our customers.
The increase in rental, service and other revenue was primarily due to additional projects (primarily for marine bunkering) with additional equipment and labor revenues compared to the Prior Year.

Decreased LNG delivered to customers of 8.9 million gallons during the Current Year compared to the Prior Year resulting in decreased revenues of $11.5 million;

Decreased natural gas prices in the Current Year compared to the Prior Year resulting in decreased revenue of $7.8 million; ​

Increased revenues from minimum purchase take-or-pay contracts in the Current Year compared to the Prior Year of $4.9 million;

Increased pricing to customers in the Current Year compared to the Prior Year of $0.1 million;  and​

Increased rental, service and other revenues of $0.2 million related to a short term marine bunkering project in the first quarter of the Current Year compared to the Prior Year.

Operating Expenses

Costs of revenues. Cost of revenues. Cost of revenues increased $17.6 decreased $12.0 million, or 47%22%, in the Current Year compared to the Prior Year due to and increaseYear. As a percentage of revenue, these costs were 78% in the cost of LNG product of $16.5 million and an increase in the cost of rental, service and other revenue of $1.1 million. The increase in the cost of LNG product was due to:

Additional LNG gallons delivered during the Current Year compared to 79% in the Prior Year;Year. The change in cost of revenues was attributable to:

Decreased LNG delivered to customers of 8.9 million gallons during the Current Year compared to the Prior Year resulting in decreased costs of revenues of $8.9 million;

Decreased natural gas prices in the Current Year compared to the Prior Year resulting in decreased costs of revenues of $7.6 million.

Increased costs from minimum purchase take-or-pay contracts of $1.2 million during the Current Year compared to the Prior Year;

Increased liquefaction and transportation costs of $0.4 million during the Current Year compared to the Prior Year; and

Increased rental, service and other costs incurred during the Current Year compared to the Prior Year of $2.9 million.

Change in unrealized loss on natural gas prices duringderivatives. The Company incurred a gain of $0.3 million on the change in unrealized losses associated with the Company's natural gas derivatives in the Current Year compared to the Prior Year;

Inflationary pressures including increased transportation costs and increased liquefaction costs; and
Increased electricity prices, particularly in Texas and Louisiana due to higher than average temperatures.
As a percentage of LNG product revenue, these costs decreased from 79% in the Prior Year to 78% in the Current Year. The decrease is primarily due to increased pricing charged to our customers. The increase in cost of rental, service, and other was primarily due to additional projects (primarily for marine bunkering) and increased costs for rental equipment to service additional contracts and increased service personnel to support increased services work.
Change in unrealized gain on natural gas derivatives. We incurred an unrealized gain of $27 thousand in the Prior Year. The gain in the Current Year on our natural gas derivatives. The unrealized gain was due to higher future natural gas prices at September 30, 2022offsetting amortization of realized losses as compared tocall option volumes expired unexercised during the time of purchase of the derivatives. We had no derivatives in the PriorCurrent Year. See also Note 4 in the Notes to the Condensed Consolidated Financial Statements for a further discussion of our derivatives.

Selling, general and administrative expenses. Selling, general and administrative expensesexpense decreased $0.9$0.2 million or 9%primarily due to lower compensation in the Current Year compared to the Prior Year. During the Prior Year, we recorded $2.2 million for the immediate vesting of restricted common stock related to our executive transition occurring in the Prior Year in addition to $0.8 million in severance and legal costs. Savings from the non-recurrence of these Prior Year expenses were partially offset during the Current Year by higher stock-based compensation expenses and increased compensation related to additional headcount to support our operations.

Gain from disposal of fixed assets. There were no significant gains or losses from The Company recorded a gain on the disposal of fixed assets in either the Current Year or the Prior Year.

Depreciation. Depreciation expense decreased $0.1of $1.0 million in the Current Year related to insurance proceeds to be received for assets damaged in a fire. See also Note 6 in the Notes to the Condensed Consolidated Financial Statements for a further discussion of this gain.

Depreciation. Depreciation expense decreased 9% during the Current Year as compared to the Prior Year primarily due to assets reaching the end of their depreciable lives.

Net equity income from foreign joint venture operations. Equity Income from investments in the Company's foreign joint venture increased $0.4 million during the Current Year due to increased sales by the Company's joint venture in BOMAY.

Interest income (expense). Interest expense, net decreased $0.2 million duringfor the Current Year compared to the Prior Year.  The decrease in the Current Year primarily dueis related to supply chain challenges as well as foreign exchange losses resulting from a strong U.S. dollar compared toincome earned on the Prior Year.

Other Income (Expense)
Company's overnight deposits and capitalized interest on capital projects.

Interest expense, net. Interestnet - related parties. Related party interest expense increased $0.2decreased $0.1 million duringin the Current Year as compared to the Prior Year primarily related to lower debt balances and capitalized interest on capital projects.

Other income (expense). Other expense was $0.1 million for both the additional fundingCurrent Year and the Prior Year related to transactional foreign exchange losses.

Income tax expense. The Company incurred a state and foreign income tax expense of the Company's loan with AmeriState Bank.

Interest expense, net - related parties. Related party interest expense decreased $0.3$0.2 million during the Current Year compared to the Prior Year primarily related to repaymenta benefit of related party debt and due to amendments to the M/G Finance note payable which lowered the interest rate from 12% to 6%.
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Other Income (Expense). Other expense was $0.1$0.2 million during the Current Year compared to other income of $1.0 million in the Prior Year due to Paycheck Protection Program loan forgiveness of $1.1 million recognized in the Prior Year.
Income tax (benefit) expense. The Company incurred an income tax benefit in the Current Year of $0.2 million compared to income tax expense of $0.2 million in the Prior Year. The benefit in the Current Year was due to a favorable income tax result upon filing the Mexico income tax return. No U.S. federal income tax benefit was recorded for the Current Year or Prior Year as any net U.S. deferred tax assets generated from operating losses were offset by a change in the Company's valuation allowance on net deferred tax assets.

Discontinued Operations. Operating lossLoss from discontinued operations, net of tax was $1.4 million and $0.1 million for the Current Year and the Prior Year, respectively.Year. The Current Year operating lossCompany sold its Brazil Operations on October 31, 2022. There was no activity from discontinued operations increased compared toduring the Prior Year due to the impairment of $1.3 million recorded as a result of the anticipated sale of the Brazil Operations.Current Year. See Note 2 in the Notes to Condensed Consolidated Financial Statements for further discussion of the Company's discontinued operations.

Liquidity and Capital Resources

Historically, our principal sources of liquidity have consisted of cash on hand, cash provided by our operations, proceeds received from borrowings under ourthe AmeriState Loan and distributions received from our BOMAY joint venture. In prior years, the Company also obtained equipment financing from M/GMG Finance, a related party. During the Current Year,Quarter, our principal sourcessource of liquidity werewas our existing cash balances and cash provided by our operations, cash generated from sales of assets and deposits received from customers. We haveoperations. The Company has used cash flows generated from operations to invest in fixed assets and increased working capital to support growth as well as to pay interest and principal amounts outstanding under ourits debt borrowings.agreements. The Company's decision to exit itssale of the Brazil Operations on October 31, 2022 is not anticipated to adversely impact the Company's future cash flows.

On June 9, 2023, the Company, along with its subsidiaries, Stabilis LNG Eagle Ford LLC, Stabilis GDS, Inc. and Stabilis LNG Port Allen, LLC (collectively, the “Borrowers”) entered into a three-year loan agreement (the “Revolving Credit Facility”) with Cadence Bank. The Revolving Credit Facility provides for a maximum aggregate amount of $10.0 million, subject to a borrowing base of 80% of eligible accounts receivable. The Company may request an increase in the maximum aggregate amount under the Revolving Credit Facility by up to $5.0 million, subject to the approval of Cadence Bank. All borrowings under the Revolving Credit Facility are secured by the Borrowers’ accounts receivable and deposit accounts. Borrowings under the Revolving Credit Facility incur interest at the Prime Rate published by the Wall Street Journal. Any unused portion is subject to a quarterly unused commitment fee of 0.5% per annum. As of September 30, 2022,2023, no amounts have been drawn under the Revolving Credit Facility. The Revolving Credit Facility matures on June 9, 2026. The Revolving Credit Facility contains various restrictions and covenants. As of September 30, 2023, the Company was in compliance with all its covenants related to the Revolving Credit Facility. The Company also has a $10.0 million secured term loan facility with AmeriState Bank, of which, $1.0 million is available for future draws at September 30, 2023. 

As of September 30, 2023, we had $11.1$4.9 million in cash and cash equivalents on hand and 13.1$10.6 million in outstanding debt (net of debt issuance costs), and in lease obligations (of which $3.6$2.5 million is due in the next twelve months). The Company has a $10.0 millionTotal availability under the Revolving Credit Facility and the secured term loan facility with $1.0is $3.7 million available for future draws under the loan facility at September 30, 2022.2023. The Company has also filed a shelf registration statement (described below) which provides the Company the flexibility to raise capital to fund working capital requirements, repay debt and/or fund future transactions.

The Company is subject to substantial business risks and uncertainties inherent in the LNG industry. The Company has implemented a number of cost control measuresindustry and increased pricing to customers in response to inflationary costs; however, there is no assurance that the Company will be able to generate sufficient cash flows in the future to sustain itself or to support future growth. We have experienced a significant increase in sales since mid-2021. Accordingly, managementManagement believes the businessCompany will generate sufficient cash flows from its operations along with availability under our loan facility that is sufficientthe Company's debt agreements to fund the business for the next twelve months. As we continue to grow, management continues to evaluate additional financing alternatives, however, there is no guarantee that additional financing will be available or available at terms that would be beneficial to shareholders.

30
21

Cash Flows

Cash flows provided by (used in) our operating, investing and financing activities are summarized below (unaudited, in thousands):

Nine Months Ended September 30,
20222021
Net cash provided by (used in):
Operating activities$11,538 $5,429 
Investing activities69 (6,690)
Financing activities(1,422)2,451 
Effect of exchange rate changes on cash(76)
Net increase in cash and cash equivalents$10,192 $1,114 

  

Nine Months Ended September 30,

 
  

2023

  

2022

 

Net cash provided by (used in):

        

Operating activities

 $5,380  $11,538 

Investing activities

  (8,982)  69 

Financing activities

  (2,943)  (1,422)

Effect of exchange rate changes on cash

  8   7 

Net increase (decrease) in cash and cash equivalents

  (6,537)  10,192 

Cash and cash equivalents, beginning of period

  11,451   910 

Cash and cash equivalents, end of period

 $4,914  $11,102 

Operating Activities

Net cash provided by operating activities totaled $11.5$5.4 million for the nine months ended September 30, 20222023 compared to $5.4$11.5 million for the same period in 2021.2022. The increasedecrease in net cash provided by operating activities of $6.1$6.2 million as compared to the Prior Year was primarily attributable to deposits received from customers and improved profitability in the Current Year when excluding the impactslower net income exclusive of non-cash expenses and gains included in net loss such asnon cash items for depreciation, stock-based compensation, equity income from our joint venture, BOMAY, change in unrealized loss on natural gas derivatives and gain(gain) loss on extinguishmentdisposals of debtfixed assets; changes in working capital and lower dividends from our joint venture, BOMAY.

Investing Activities

Net cash used in investing activities totaled $9.0 million for the nine months ended September 30, 2023 compared to the Prior Year.

Investing Activities
Netnet cash provided by investing activities totaledof $0.1 million for the nine months ended September 30, 2022 compared2022. The increase in net cash used in the Current Year of $9.1 million was primarily due to cash paid to purchase additional assets.

Financing Activities

Net cash used of $6.7in financing activities totaled $2.9 million for the nine months ended September 30, 2021. The decrease in net cash used in the Current Year was primarily due2023, compared to the acquisition of our Port Allen liquefaction facility on June 1, 2021, which included $5.0 million in cash paid. Additionally, proceeds of $2.0 million were received for assets held for sale during 2022.

Financing Activities
Net cash used in financing activities totaled $1.4 million for the nine months ended September 30, 2022,2022. The increase in cash used in financing activities in the Current Year compared to net cash provided by financing activities totaling $2.5 million for the Prior Year primarily fromis due to $1.0 million of proceeds received from borrowings underin the AmeriState LoanPrior Year with no proceeds from borrowings in the Current Year.  For both periods, the cash used in financing activities was primarily for repayment of $7.0 million, partially offset by repayments of debt.

Future Cash Requirements

We require cash to fund our operating expenses and working capital requirements, including costs associated with fuel sales, capital expenditures, debt repayments, purchases of equipment and repurchases, equipment purchases,other capital expenditures, maintenance of LNG production facilities, mergers and acquisitions (if any), pursuing market expansion, supporting sales and marketing activities support of legislative and regulatory initiatives, and other general corporate purposes. While we believe we have sufficient liquidity and capital resources to fund our operations and repay our debt, we may elect to pursue additional financing activities such as refinancing existing debt, obtaining new debt, or debt or equity offerings to provide flexibility with our cash management. Certain of these alternatives may require the consent of current lenders or stockholders, and there is no assurance that we will be able to execute any of these alternatives on acceptable terms or at all.

Capital expenditures for the nine months ended September 30, 20222023 were $1.7$9.0 million and primarily related to capital expenditures for our operations in Mexicothe purchase of additional liquefaction assets and the addition of rolling stock and replacement assets.stock. The Company had open purchase orders open of approximately $1.5 - $2.0$1.0 million for capital expenditures at September 30, 2022 for2023. Future capital expenditures over the next twelve months.

months will be dependent upon investment opportunities as well as the availability of additional capital at favorable terms.

Shelf Registration Statement

On April 11, 2022, the Company filed a registration statement on Form S-3 (the "Shelf Registration"“Shelf Registration”) which was declared effective on April 26, 2022 and will permit the Company to issue up to $100.0 million in either common stock, preferred stock, warrants or a combination of the above, and gives the Company the flexibility to raise capital to fund working capital requirements, repay debt and/or fund future transactions. On December 16, 2022, the Company filed a prospectus supplement to the Shelf Registration that allows the Company to sell and issue shares of common stock directly to the public “at the market” as permitted in Rule 415 under the Securities Act. As a smaller reporting company, we are subject to General Instruction I.B.6 of Form S-3, which limits the amounts that we may sell under the Shelf Registration to no more than one-third of our public

31


float in any twelve month period as measured in accordance with such instruction. There is no assurance that we will be able to raise capital pursuant to the Shelf Registration on acceptable terms or at all.
We made no issuances under the Shelf Registration during the nine months ended September 30, 2023.

Off-Balance Sheet Arrangements

As of September 30, 2022,2023, we had no transactions that met the definition of off-balance sheet arrangements that may have a current or future material effect on our consolidated financial position or operating results.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("(“U.S. GAAP"GAAP”) which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities known to exist at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates on an ongoing basis, based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. There can be no assurance that actual results will not differ from those estimates.

There have been no significant changes in the Company's "Critical“Critical Accounting Policies and Estimates"Estimates” during the three and nine months ended September 30, 20222023 from those disclosed within the Company's Annual Report on Form 10-K for the year ended December 31, 20212022 as filed with the SEC on March 10, 2022.
9, 2023.

New Accounting Standards

See Note 1 to the Notes to Condensed Consolidated Financial Statements included elsewhere in this reportReport for information on new accounting standards.

22

ITEM3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a “smaller reporting company,” the Company is not required to provide this information.

ITEM4.CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report.Report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at September 30, 2022.

2023.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.


32


PART II. OTHER INFORMATION

ITEM1. LEGAL PROCEEDINGS.

The Company becomes involved in various legal proceedings and claims in the normal course of business. In management’s opinion, the ultimate resolution of these matters will not have a material effect on our financial position or results of operations.

ITEM1A. RISK FACTORS.

Our operations and financial results are subject to various risks and uncertainties, including those described in the Part I. “Item 1A. Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 20212022 filed with the SEC on March 10, 20229, 2023 (“Form 10-K”) and Part II, "Item 1A. Risk Factors" of the Company's Quarterly Report on Form 10-Q filed with the SEC on May 5, 2022 (the "First Quarter Form 10-Q"), which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. During the threenine months ended September 30, 2022,2023, there have been no material changes in our risk factors disclosed in our 20212022 Form 10-K and our First Quarter Form 10-Q.

10-K.

ITEM5. OTHER INFORMATION.

None.

23

On October 31, 2022, the Company entered into a sales agreement and closed on the sale
33


ITEM6. EXHIBITS.

(a) Index to Exhibits


ExhibitNo.

Exhibit Description

Exhibit No.Exhibit Description

3.1

3.1

3.2

4.1

4.1

4.2
4.3

4.4

4.2

4.3

4.5

4.6

31.1

4.5

10.1Amended and Restated Stabilis Solutions Inc. 2019 Long Term Incentive Plan (Incorporated by Reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K filed August 18, 2023).
10.2*First Amendment to Loan Agreement, made effective as of September 19, 2023, between Stabilis Solutions, Inc. and Ameristate Bank.

31.1

*Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer.

31.2

32.1

101

101.INS

*Interactive XBRL Instance Document (XBRL tags are embedded within the Inline XBRL document)

104101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document

104

* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*         Filed herewith.

herewith

†         Indicates management contract or compensatory plan, contract or arrangement



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 8, 2023

Date: November 3, 2022

STABILIS SOLUTIONS, INC.

By:

/s/ Westervelt T. Ballard, Jr.

Westervelt T. Ballard, Jr.

President and Chief Executive Officer

(Principal Executive Officer)

By:

/s/ Andrew L. Puhala

Andrew L. Puhala

Chief Financial Officer

(Principal Financial Officer)

35
25