false2021Q10001043186--12-31us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortizationus-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization00010431862021-01-012021-03-31xbrli:shares00010431862021-05-03iso4217:USD00010431862021-03-3100010431862020-12-31iso4217:USDxbrli:shares0001043186us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMember2021-01-012021-03-310001043186us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMember2020-01-012020-03-310001043186slng:RentalServiceAndOtherMember2021-01-012021-03-310001043186slng:RentalServiceAndOtherMember2020-01-012020-03-310001043186slng:PowerDeliveryMember2021-01-012021-03-310001043186slng:PowerDeliveryMember2020-01-012020-03-3100010431862020-01-012020-03-310001043186us-gaap:CommonStockMember2020-12-310001043186us-gaap:AdditionalPaidInCapitalMember2020-12-310001043186us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001043186us-gaap:RetainedEarningsMember2020-12-310001043186us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001043186us-gaap:RetainedEarningsMember2021-01-012021-03-310001043186us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001043186us-gaap:CommonStockMember2021-03-310001043186us-gaap:AdditionalPaidInCapitalMember2021-03-310001043186us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001043186us-gaap:RetainedEarningsMember2021-03-310001043186us-gaap:CommonStockMember2019-12-310001043186us-gaap:AdditionalPaidInCapitalMember2019-12-310001043186us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001043186us-gaap:RetainedEarningsMember2019-12-3100010431862019-12-310001043186us-gaap:CommonStockMember2020-01-012020-03-310001043186us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001043186us-gaap:RetainedEarningsMember2020-01-012020-03-310001043186us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001043186us-gaap:CommonStockMember2020-03-310001043186us-gaap:AdditionalPaidInCapitalMember2020-03-310001043186us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001043186us-gaap:RetainedEarningsMember2020-03-3100010431862020-03-31slng:gallon0001043186stpr:TX2021-01-012021-03-310001043186slng:PermianBasinMember2021-01-012021-03-31xbrli:pure0001043186slng:BomayMember2021-03-310001043186slng:RentalServiceMember2021-01-012021-03-310001043186slng:RentalServiceMember2020-01-012020-03-310001043186us-gaap:ServiceMember2021-01-012021-03-310001043186us-gaap:ServiceMember2020-01-012020-03-310001043186us-gaap:ProductAndServiceOtherMember2021-01-012021-03-310001043186us-gaap:ProductAndServiceOtherMember2020-01-012020-03-310001043186country:BR2021-01-012021-03-310001043186country:BR2020-01-012020-03-310001043186country:MX2021-01-012021-03-310001043186country:MX2020-01-012020-03-310001043186country:US2021-01-012021-03-310001043186country:US2020-01-012020-03-3100010431862020-01-012020-12-31slng:segment0001043186slng:LNGSegmentMember2021-01-012021-03-310001043186slng:PowerDeliverySegmentMember2021-01-012021-03-310001043186slng:LNGSegmentMember2021-03-310001043186slng:PowerDeliverySegmentMember2021-03-310001043186slng:LNGSegmentMember2020-01-012020-03-310001043186slng:PowerDeliverySegmentMember2020-01-012020-03-310001043186slng:LNGSegmentMember2020-12-310001043186slng:PowerDeliverySegmentMember2020-12-310001043186slng:LiquefactionPlantsAndSystemsMember2021-03-310001043186slng:LiquefactionPlantsAndSystemsMember2020-12-310001043186us-gaap:BuildingMember2021-03-310001043186us-gaap:BuildingMember2020-12-310001043186us-gaap:VehiclesMember2021-03-310001043186us-gaap:VehiclesMember2020-12-310001043186us-gaap:OfficeEquipmentMember2021-03-310001043186us-gaap:OfficeEquipmentMember2020-12-310001043186us-gaap:ConstructionInProgressMember2021-03-310001043186us-gaap:ConstructionInProgressMember2020-12-310001043186us-gaap:LeaseholdImprovementsMember2021-03-310001043186us-gaap:LeaseholdImprovementsMember2020-12-310001043186slng:BaojiOilfieldMachineryCoLtdMemberslng:BomayMember2021-03-310001043186slng:AAEnergiesIncMemberslng:BomayMember2021-03-310001043186srt:AffiliatedEntityMember2021-01-012021-03-310001043186srt:AffiliatedEntityMember2020-01-012020-03-310001043186slng:BomayMemberus-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2021-03-310001043186slng:BomayMemberus-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2020-12-310001043186slng:BomayMemberus-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2021-01-012021-03-310001043186slng:BomayMemberus-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2020-01-012020-03-310001043186slng:BomayMember2020-12-310001043186slng:BomayMember2019-12-310001043186slng:BomayMember2021-01-012021-03-310001043186slng:BomayMember2020-01-012020-12-310001043186slng:CadenceBankNAMemberslng:LoanPursuantToCARESActMemberus-gaap:NotesPayableToBanksMember2020-12-310001043186slng:UnsecuredPromissoryNoteMember2021-01-012021-03-310001043186slng:UnsecuredPromissoryNoteMember2020-01-012020-03-310001043186slng:SeniorSecuredTermNoteMember2021-01-012021-03-310001043186slng:SeniorSecuredTermNoteMember2020-01-012020-03-310001043186slng:SecuredPromissoryNoteMember2021-01-012021-03-310001043186slng:SecuredPromissoryNoteMember2020-01-012020-03-310001043186slng:InsuranceandOtherNotesPayableMember2021-01-012021-03-310001043186slng:InsuranceandOtherNotesPayableMember2020-01-012020-03-310001043186us-gaap:CostOfSalesMember2021-01-012021-03-310001043186us-gaap:CostOfSalesMember2020-01-012020-03-310001043186us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-03-310001043186us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-01-012020-03-31slng:agreement00010431862021-01-2500010431862021-01-252021-01-2500010431862019-12-012019-12-3100010431862018-01-012018-12-310001043186slng:AppliedCryoTechnologiesMember2020-03-310001043186slng:AppliedCryoTechnologiesMember2021-03-310001043186slng:AppliedCryoTechnologiesMember2021-01-012021-03-310001043186slng:AppliedCryoTechnologiesMember2020-01-012020-03-310001043186srt:AffiliatedEntityMemberslng:TmgMembersrt:BoardOfDirectorsChairmanMember2021-01-012021-03-310001043186srt:AffiliatedEntityMemberslng:AppliedCryoTechnologiesMember2021-01-012021-03-310001043186srt:AffiliatedEntityMemberslng:AppliedCryoTechnologiesMember2020-01-012020-03-310001043186srt:AffiliatedEntityMemberslng:AppliedCryoTechnologiesMember2020-12-310001043186srt:AffiliatedEntityMemberslng:AppliedCryoTechnologiesMember2021-03-310001043186srt:AffiliatedEntityMemberslng:TmgMember2021-03-310001043186srt:AffiliatedEntityMemberslng:TmgMember2021-01-012021-03-310001043186srt:AffiliatedEntityMemberslng:TmgMember2020-01-012020-03-310001043186srt:AffiliatedEntityMemberslng:TmgMember2020-12-310001043186srt:AffiliatedEntityMemberslng:ChartEnergyChemicalsIncMember2021-03-310001043186srt:AffiliatedEntityMember2021-03-310001043186srt:AffiliatedEntityMember2020-12-3100010431862018-10-012018-10-310001043186slng:WarrantNovember132022ExpirationMember2021-03-310001043186us-gaap:RestrictedStockMember2020-02-290001043186us-gaap:RestrictedStockMember2021-01-012021-03-310001043186us-gaap:RestrictedStockMember2020-02-012020-02-290001043186us-gaap:RestrictedStockMember2020-01-012020-03-310001043186us-gaap:RestrictedStockMember2021-03-310001043186us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001043186us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-03-310001043186us-gaap:RestrictedStockUnitsRSUMember2021-03-310001043186slng:LoanAgreementMemberus-gaap:SubsequentEventMemberslng:AmeriStateBankMember2021-04-080001043186slng:LoanAgreementMemberus-gaap:SubsequentEventMemberslng:AmeriStateBankMember2021-04-082021-04-080001043186us-gaap:PrimeRateMemberslng:LoanAgreementMemberus-gaap:SubsequentEventMemberslng:AmeriStateBankMember2021-04-082021-04-08

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 March 31, 2021
TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                 to
Commission file number. 000-24575
____________________
STABILIS SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
____________________
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’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $.001 par valueSLNGThe 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 filerAccelerated filer
Non-accelerated filerSmaller 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 May 3, 2021, there were 16,896,626 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 March 31, 2021
Page
Item 1.
Item 2.
Item 4.
Item 1.
Item 1A.
Item 5.
Item 6.
2


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This document includes statements that constitute forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties. 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, our recent business combination, 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 necessarily estimates reflecting the best judgment of senior management, not guarantees of future performance. They are subject to a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described in Part II. “Item 1A. Risk Factors” in this document.
Forward-looking statements represent intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In addition to the risk factors and other cautionary statements described in Part II. “Item 1A. Risk Factors” in this document, the factors include:
our ability to execute our business strategy;
our limited operating history;
our ability to satisfy our liquidity needs, including our ability to generate sufficient liquidity or cash flow from operations and our ability to obtain additional financing to affect our strategy;
loss of one or more of our customers;
credit and performance risk of our customers and contractual counterparties;
cyclical or other changes in the demand for and price of LNG and natural gas;
operational, regulatory, environmental, political, legal and economic risks pertaining to the construction and operation of our facilities;
the effects of current and future worldwide economic conditions and demand for oil and natural gas and power system equipment and services;
hurricanes or other natural or man-made disasters;
public health crises, such as the ongoing COVID-19 outbreak, which could further deteriorate economic conditions;
dependence on contractors for successful completions of our energy related infrastructure;
reliance on third party engineers;
competition from third parties in our business;
failure of LNG to be a competitive source of energy in the markets in which we operate, and seek to operate;
increased labor costs, and the unavailability of skilled workers or our failure to attract and retain qualified personnel;
major health and safety incidents relating to our business;
failure to obtain and maintain approvals and permits from governmental and regulatory agencies including with respect to our planned operational expansion in Mexico;
changes to health and safety, environmental and similar laws and governmental regulations that are adverse to our operations;
changes in regulatory, geopolitical, social, economic, tax or monetary policies and other factors resulting from the transition to the Biden administration and Democratic control of Congress;
volatility of the market price of our common stock;
our ability to successfully integrate acquisitions; and
future benefits to be derived from our investments in technologies, joint ventures and acquired companies.
Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements contained herein. 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 Quarterly Report on Form 10-Q, 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 share and per share data)
March 31, 2021December 31, 2020
Assets
Current assets:
Cash and cash equivalents
$3,062 $1,814 
Accounts receivable6,327 5,620 
Inventories, net
158 226 
Prepaid expenses and other current assets
3,336 3,111 
Due from related parties
2 42 
Total current assets
12,885 10,813 
Property, plant and equipment:
Cost90,763 90,422 
Less accumulated depreciation(40,560)(38,384)
Property, plant and equipment, net50,203 52,038 
Right-of-use assets
678 786 
Goodwill
4,453 4,453 
Investments in foreign joint ventures
12,256 11,897 
Other noncurrent assets
320 326 
Total assets
$80,795 $80,313 
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term notes payable$641 $680 
Current portion of long-term notes payable - related parties
3,422 3,351 
Current portion of finance lease obligation17  
Current portion of finance lease obligation - related parties
 648 
Current portion of operating lease obligations
306 362 
Short-term notes payable
190 432 
Accrued liabilities
5,232 4,361 
Accounts payable
5,401 4,395 
Total current liabilities
15,209 14,229 
Long-term notes payable, net of current portion
667 682 
Long-term notes payable, net of current portion - related parties
2,093 2,726 
Finance lease obligations, net of current portion75  
Long-term portion of operating lease obligations
436 490 
Deferred compensation
44 59 
Deferred income taxes
106 97 
Total liabilities
18,630 18,283 
Commitments and contingencies (Note 12)


Stockholders’ Equity:
Preferred Stock; $0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding at March 31, 2021 and December 31, 2020
  
Common stock; $0.001 par value, 37,500,000 shares authorized, 16,896,626 shares issued and outstanding at March 31, 2021 and December 31, 2020 (Note 13)
17 17 
Additional paid-in capital91,440 91,278 
Accumulated other comprehensive income (loss)(80)122 
Accumulated deficit(29,212)(29,387)
Total stockholders’ equity
62,165 62,030 
Total liabilities and stockholders’ equity
$80,795 $80,313 
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
March 31,
20212020
Revenue
LNG product
$11,695 $9,131 
Rental, service and other
4,425 3,397 
Power delivery1,544 1,310 
Total revenues
17,664 13,838 
Operating expenses:
Costs of LNG product8,812 6,097 
Costs of rental, service and other2,241 1,671 
Costs of power delivery1,160 1,247 
Selling, general and administrative expenses
3,225 3,186 
Depreciation expense
2,225 2,270 
Total operating expenses
17,663 14,471 
Income (loss) from operations before equity income1 (633)
Net equity income (loss) from foreign joint ventures' operations:
Income (loss) from equity investments in foreign joint ventures421 (114)
Foreign joint ventures' operations related expenses(67)(60)
Net equity income (loss) from foreign joint ventures' operations354 (174)
Income (loss) from operations355 (807)
Other income (expense):
Interest expense, net
(17)(11)
Interest expense, net - related parties
(173)(240)
Other income90 38 
Gain from disposal of fixed assets
 11 
Total other income (expense)
(100)(202)
Income (loss) before income tax expense255 (1,009)
Income tax expense80 41 
Net income (loss)$175 $(1,050)
Common Stock Data:
Net income (loss) per common share:
Basic and diluted
$0.01 $(0.06)
Weighted average number of common shares outstanding:
Basic and diluted
16,896,626 16,819,681 
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)
(Unaudited)
(in thousands)
Three Months Ended
March 31,
20212020
Net income (loss)$175 $(1,050)
Foreign currency translation adjustment(202)(619)
Total comprehensive income (loss)$(27)$(1,669)
The accompanying notes are an integral part of the condensed consolidated financial statements.
6


Stabilis Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(in thousands, except share data)
Common Stock
SharesAmountAdditional
Paid-in Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Balance at December 31, 202016,896,626 $17 $91,278 $122 $(29,387)$62,030 
Stock-based compensation— — 162 — — 162 
Net loss— — — — 175 175 
Other comprehensive loss— — — (202)— (202)
Balance at March 31, 202116,896,626 $17 $91,440 $(80)$(29,212)$62,165 
Common Stock
SharesAmountAdditional
Paid-in Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Balance at December 31, 201916,800,612 $17 $90,748 $(291)$(22,631)$67,843 
Common stock issued34,706 — — — — — 
Stock-based compensation— — 19 — — 19 
Net loss— — — — (1,050)(1,050)
Other comprehensive income— — — (619)— (619)
Balance at March 31, 202016,835,318 $17 $90,767 $(910)$(23,681)$66,193 
The accompanying notes are an integral part of the condensed consolidated financial statements.
7


Stabilis Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Three Months Ended
March 31,
20212020
Cash flows from operating activities:
Net income (loss)$175 $(1,050)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization2,225 2,270 
Deferred income tax expense(11)41 
Stock-based compensation expense162 19 
Bad debt expense 144 
Gain on disposal of fixed assets (11)
Income (loss) from equity investment in joint venture
(421)114 
Deferred compensation costs(15) 
Change in operating assets and liabilities, net of acquisitions:
Accounts receivable(707)(356)
Due to (from) related parties15 (19)
Inventories68 82 
Prepaid expenses and other current assets(200)991 
Accounts payable and accrued liabilities1,268 (1,902)
Other4 26 
Net cash provided by operating activities2,563 349 
Cash flows from investing activities:
Acquisition of fixed assets(298)(112)
Proceeds on sales of fixed assets 11 
Net cash used in investing activities(298)(101)
Cash flows from financing activities:
Proceeds on long-term borrowings  
Payments on long-term borrowings  
Payments on long-term borrowings from related parties(783)(768)
Proceeds from short-term notes payable  
Payments on short-term notes payable(296)(237)
Net cash used in financing activities(1,079)(1,005)
Effect of exchange rate changes on cash62 (60)
Net increase (decrease) in cash and cash equivalents1,248 (817)
Cash and cash equivalents, beginning of period1,814 3,979 
Cash and cash equivalents, end of period$3,062 $3,162 
Supplemental disclosure of cash flow information:
Interest paid$162 $251 
Income taxes paid5  
Non-cash investing and financing activities:
Equipment acquired under capital leases104  
The accompanying notes are an integral part of the condensed consolidated financial statements
8


STABILIS SOLUTIONS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Overview and Basis of Presentation
Overview
Stabilis Solutions, Inc. and its subsidiaries (the “Company”, “Stabilis”, “our”, “us” or “we”) produce, provide turnkey clean energy production, storage, transportation and fueling solutions using liquefied natural gas (“LNG”) and hydrogen to multiple end markets across North America. The Company also distributes LNG and hydrogen from third parties and provides services, transportation, and equipment to customers.
The Company is a supplier of LNG and hydrogen solutions to customers in diverse end markets, including aerospace, agriculture, industrial, utility, pipeline, mining, energy, remote clean power, and high horsepower transportation markets in North America and provides turnkey fuel solutions to help industrial users of propane, diesel and other crude-based fuel products convert to LNG, which may result in reduced fuel costs and improved environmental footprint. Stabilis opened its 100,000 gallons per day (“gpd”) LNG production facility in George West, Texas in January 2015 to service industrial and oilfield customers in Texas and the greater Gulf Coast region. The Company owns a second liquefaction plant capable of producing 25,000 gpd that is currently not in operation. Stabilis is vertically integrated from LNG production through distribution including cryogenic equipment rental and field services.
The Company also provides power delivery equipment and services through its subsidiary in Brazil, M&I Electric Brazil Sistemas e Servicios em Energia LTDA (“M&I Brazil”) and its 40% interest in a joint venture in China, BOMAY Electric Industries Co., Ltd. (“BOMAY”).
Basis of Presentation
The accompanying interim unaudited condensed consolidated financial 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 condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. We believe that the presentation and disclosures herein are adequate to make the information not misleading. The unaudited 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 period are not necessarily indicative of the results of operations to be expected for the full year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2020 included in the Company's Annual Report on Form 10-K, as filed on March 16, 2021.
All intercompany accounts and transactions have been eliminated in consolidation. In the Notes to Condensed Consolidated Financial Statements (Unaudited), all dollar amounts in tabulations are in thousands, unless otherwise indicated.
The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is required to make certain disclosures if it concludes that there is substantial doubt about the entity’s ability to continue as a going concern within one year from the date of the issuance of these financial statements. The Company has incurred recurring operating losses and has negative working capital. The Company is subject to business risks and uncertainties inherent in the current LNG industry. Furthermore, the impact of the COVID-19 pandemic has created additional uncertainties regarding the future demand for LNG from our customers. There is no assurance that the Company will be able to generate sufficient revenues in the future to sustain itself or to support future growth.
These factors were reviewed by management to determine if there was substantial doubt as to the Company’s ability to continue as a going concern. Management concluded that its plan to address the Company’s liquidity issues would allow it to continue as a going concern. The Company has recently experienced its highest ever quarterly revenue, including a resumption of activity with existing customers as well as new revenue opportunities, particularly in Mexico and with power generation customers. Accordingly, management believes the business will generate sufficient cash flows from its operations to fund the business for the next 12 months.
9


Use of Estimates
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 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.
2. Recent Accounting Pronouncements
Recently Adopted Accounting Standards
In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12, “Simplifying the Accounting for Income Taxes” (“ASU No. 2019-12”), which simplifies the accounting for income taxes by removing certain exceptions to the general principles of Topic 740, Income Taxes and also improves consistent application by clarifying and amending existing guidance. ASU No. 2019-12 was adopted by the Company effective January 1, 2021. The adoption of this standard had no impact on our unaudited condensed consolidated financial position or results of operations.
Recently Issued Accounting Standards
In March 2020, 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 unaudited condensed consolidated financial statements.
3. Revenue Recognition
Disaggregated Revenues
The table below presents revenue disaggregated by source, for the three months ended March 31, 2021 and 2020 (in thousands):
Three Months Ended March 31,
20212020
LNG Product$11,695 $9,131 
Rental3,387 2,890 
Service242 93 
Power Delivery1,544 1,310 
Other796 414 
$17,664 $13,838 
10


The table below presents revenue disaggregated by geographic location, for the three months ended March 31, 2021 and 2020 (in thousands):
Three Months Ended March 31,
20212020
Revenues
Brazil$1,544 $1,310 
Mexico1,616 33 
United States14,504 12,495 
$17,664 $13,838 
See Note 4—Business Segments, below, for additional disaggregation of revenue.
Contract Liabilities
The Company recognizes contract liabilities upon receipt of payments for which the performance obligations have not been fulfilled at the reporting date, resulting in deferred revenue. Contract liabilities are included in accrued liabilities in the accompanying unaudited condensed consolidated balance sheets. The following table presents the changes in the Company’s contract liabilities for the periods ended March 31, 2021 and December 31, 2020 (in thousands):
March 31, 2021December 31, 2020
Balance at beginning of period$357 $185 
Cash received, excluding amounts recognized as revenue31 777 
Amounts recognized as revenue(344)(605)
Balance at end of period$44 $357 
The Company has no other material contract assets or liabilities and contract costs.
4. Business Segments
The Company’s revenues are derived from two operating segments: LNG and Power Delivery. The LNG segment 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 Power Delivery segment provides power delivery equipment and services through our subsidiary in Brazil and in China through our 40% interest in BOMAY.
Three Months Ended March 31, 2021
(in thousands)
LNGPower DeliveryTotal
Revenues$16,120 $1,544 $17,664 
Depreciation2,188 37 2,225 
Income (loss) from operations before equity income268 (267)1 
Net equity income from foreign joint ventures' operations 354 354 
Income from operations268 87 355 
Interest expense, net7 10 17 
Interest expense, net - related parties173  173 
Income tax expense44 36 80 
Net income15 160 175 
11


March 31, 2021
(in thousands)
LNGPower DeliveryTotal
Total assets$65,233 $15,562 $80,795 

Three Months Ended March 31, 2020
(in thousands)
LNGPower DeliveryTotal
Revenues$12,528 $1,310 $13,838 
Depreciation2,235 35 2,270 
Loss from operations before equity income(199)(434)(633)
Net equity income from foreign joint ventures' operations (174)(174)
Loss from operations(199)(608)(807)
Interest expense, net4 7 11 
Interest expense, net - related parties240  240 
Income tax expense35 6 41 
Net loss(480)(570)(1,050)
December 31, 2020
(in thousands)
LNGPower DeliveryTotal
Total assets$64,757 $15,556 $80,313 

Our operating segments offer different products and services and are managed separately as business units. Cash, cash equivalents and investments are not managed centrally, so the gains and losses on foreign currency remeasurement, and interest and dividend income, are included in the segments’ results.
5. Prepaid Expenses and Other Current Assets
The Company’s prepaid expenses and other current assets consisted of the following (in thousands):
March 31,
2021
December 31,
2020
Prepaid LNG$93 $90 
Prepaid insurance501 734 
Prepaid supplier expenses311 299 
Other receivables1,969 1,521 
Deposits310 285 
Other152 182 
Total prepaid expenses and other current assets$3,336 $3,111 
12


6. Property, Plant and Equipment
The Company’s property, plant and equipment consisted of the following (in thousands):
March 31,
2021
December 31,
2020
Liquefaction plants and systems$40,850 $40,841 
Real property and buildings1,611 1,649 
Vehicles and tanker trailers and equipment47,567 47,179 
Computer and office equipment513 532 
Construction in progress191 191 
Leasehold improvements31 30 
90,763 90,422 
Less: accumulated depreciation(40,560)(38,384)
$50,203 $52,038 
Depreciation expense for the three months ended March 31, 2021 and 2020 totaled $2.2 million and $2.3 million, respectively, of which all is included in the unaudited condensed consolidated statements of operations as its own and separate line item.
7. Investments in Foreign Joint Ventures
BOMAY. The Company holds a 40% interest in BOMAY Electric Industries Company, Ltd. (“BOMAY”), which builds electrical systems for sale in China. 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 in the three months ended March 31, 2021 and 2020.
Below is summary financial information for BOMAY at March 31, 2021 and December 31, 2020, and operational results for the three months ended March 31, 2021 and 2020 in U.S. dollars (in thousands, unaudited):
March 31,
2021
December 31, 2020
Assets:
Total current assets
$52,096 $51,811 
Total non-current assets
7,042 7,136 
Total assets
$59,138 $58,947 
Liabilities and equity:
Total liabilities
$25,636 $26,355 
Total joint ventures’ equity
33,502 32,592 
Total liabilities and equity
$59,138 $58,947 
Three Months Ended
March 31,
20212020
Revenue
$14,216 $8,556 
Gross Profit
2,233 896 
Earnings
970 (284)
The following is a summary of activity in our investment in BOMAY for the periods ended March 31, 2021 and December 31, 2020 in U.S. dollars (in thousands, unaudited):
13


March 31, 2021December 31, 2020
Investments in BOMAY (1)(2)
Initial investment$9,333 $9,333 
Undistributed earnings:
Balance at the beginning of the period1,908 1,257 
Equity in earnings421 2,705 
Dividend distributions (2,054)
Balance at end of period2,329 1,908 
Foreign currency translation:
Balance at the beginning of the period656 (69)
Change during the period(62)725 
Balance at end of period594 656 
Total investment in BOMAY at end of period$12,256 $11,897 
________
(1)Accumulated statutory reserves in equity method investments of $2.66 million at March 31, 2021 and December 31, 2020 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 of approximately $1.2 million will be accreted over the remaining eight year life of the joint venture. The Company accreted $32 thousand and $43 thousand during the three months ended March 31, 2021 and 2020, respectively, which is included in income from equity investments in foreign joint ventures in the accompanying condensed consolidated statement of operations. As of March 31, 2021 and December 31, 2020, accumulated accretion totaled $215 thousand and $183 thousand, respectively.
The Company accounts for its investment in BOMAY using the equity method of accounting. Under the equity method, the Company’s share of the joint venture operations earnings or losses is recognized in the condensed consolidated statements of operations as equity income (loss) from foreign joint venture operations. Joint venture income increases the carrying value of the joint venture and joint venture losses reduce the carrying value. Dividends received from the joint venture reduce the carrying value. The Company considers dividend distributions received from its equity method investments which do not exceed cumulative equity in earnings subsequent to the date of investment to be a return on investment and classifies these distributions as operating activities in the accompanying consolidated statements of cash flows. 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 adjustment is necessary at March 31, 2021.
14


8. Accrued Liabilities
    The Company’s accrued liabilities consisted of the following (in thousands):
March 31,
2021
December 31,
2020
Compensation and benefits$1,957 $1,745 
Professional fees390 408 
LNG fuel and transportation2,016 1,151 
Accrued interest31 21 
Contract liabilities44 357 
Other taxes payable454 328 
Other accrued liabilities340 351 
Total accrued liabilities$5,232 $4,361 

9. Debt
The Company’s carrying value of debt consisted of the following (in thousands):
March 31,
2021
December 31,
2020
Unsecured promissory note$1,080 $1,080 
Secured term note payable - related party
1,077 1,077 
Secured promissory note - related party
4,438 5,000 
Insurance and other notes payable
418 714 
Less: amounts due within one year
(4,253)(4,463)
Total long-term debt
$2,760 $3,408 
Unsecured Promissory Note
During 2020, the Company received loan proceeds of $1.1 million (the “Loan”) pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Under the terms of the PPP, all or a portion of the principal may be forgiven if the Loan proceeds are used for qualifying expenses as described in the CARES Act, such as payroll costs, benefits, rent, and utilities. While no assurance is provided that the Company will obtain forgiveness of the Loan in whole or in part, management believes we currently meet the requirements. The Company has applied for forgiveness under the terms of the Loan and is currently awaiting a response. With respect to any portion of the Loan that is not forgiven, the Loan will be subject to customary provisions for a loan of this type, including customary events of default relating to, among other things, payment defaults and breaches of the provisions of the Note.
During the three months ended March 31, 2021 and 2020, the Company recorded interest expense on debt as follows (in thousands):
March 31,
2021
March 31,
2020
Unsecured promissory note$ $ 
Secured term note payable - related party
10 25 
Secured promissory note - related party
154 215 
Insurance and other notes payable
14 11 
Total interest expense$178 $251 
Certain of the agreements governing our outstanding debt have certain covenants with which we must comply. As of March 31, 2021, we were in compliance with all of these covenants.
15


10. Leases
The following table summarizes the supplemental balance sheet information related to lease assets and lease liabilities as of March 31, 2021 and December 31, 2020 (in thousands):
Classification
March 31, 2021December 31, 2020
Assets
Operating lease assets
Right-of-use assets$678$786
Finance lease assets
Property and equipment, net of accumulated depreciation1016,781
Total lease assets
$779$7,567
Liabilities
Current
Operating
Current portion of operating lease obligations $306$362
Finance
Current portion of finance lease obligation17
Finance
Current portion of finance lease obligation - related parties648
Noncurrent
Operating
Long-term portion of operating lease obligation436490
Finance
Finance lease obligations, net of current portion75
Total lease liabilities
$834$1,500
The following table summarizes the components of lease expense for the three months ended March 31, 2021 and 2020 (in thousands, unaudited):
Lease Cost
Classification
Three Months Ended
March 31,
20212020
Operating lease cost
Cost of sales$43$39
Operating lease costSelling, general and administrative expenses7791
Finance lease cost
Amortization of leased assetsDepreciation3293
Interest on lease liabilitiesInterest expense12161
Net lease cost
$135$584
16


On January 25, 2021, the Company entered into three finance lease agreements for vehicles. Under the terms of the lease agreements, the Company's total monthly principal and interest payments are $2 thousand for a 36-month period at an annual rate of 10.7%. The leases include purchase options, which are reasonably certain to occur.
In December 2019, the Company refinanced its lease agreement with a subsidiary of The Modern Group, Ltd. (“The Modern Group”) for equipment purchases totaling approximately $3.2 million. Under the terms of the lease agreement, the Company exercised its purchase option and the remaining outstanding lease obligation of approximately $648 thousand became due on January 25, 2021. The assets are now owned outright. These assets are included in the Company's property, plant and equipment, net on the consolidated balance sheets and the purchase had no effect on the net book value of these assets.
During 2018, Stabilis LLC entered into lease agreements with a subsidiary of The Modern Group to finance vehicles and machinery and equipment totaling approximately $1.5 million. During 2020, the Company exercised its purchase options under the terms of the lease agreements, which included remaining outstanding lease obligations of $413 thousand. The assets are now owned outright. These assets are included in the Company's property, plant and equipment, net on the consolidated balance sheets and the purchase had no effect on the net book value of these assets.
The following schedule presents the future minimum lease payments for our operating and finance obligations at March 31, 2021 (in thousands):
Operating
Leases
Finance
Leases
Total
Remainder 2021
$295$19$314
202221125236
202314525170
202414943192
20252525
Thereafter
Total lease payments
825112937
Less: Interest
(83)(20)(103)
Present value of lease liabilities
$742$92$834
Lease term and discount rates for our operating and finance lease obligations are as follows:
Lease Term and Discount Rate
March 31, 2021
Weighted-average remaining lease term (years)
Operating leases
2.9
Finance leases
2.8
Weighted-average discount rate
Operating leases
7.3%
Finance leases
10.7%
The following table summarizes the supplemental cash flow information related to leases for the three months ended March 31, 2021 and 2020:
Other information
March 31, 2021March 31, 2020
(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
$123$109
Financing cash flows from finance leases
164768
Interest paid
3131
Noncash activities from right-of-use assets obtained in exchange for lease obligations:
Operating leases
$$
17


11. Related Party Transactions
Other Purchases and Sales
During the three months ended March 31, 2021 and 2020, the Company paid Applied Cryo Technologies, Inc. (“ACT”), a company owned 51% by Crenshaw Family Holdings, LP (“Crenshaw Family Holdings”), $366 thousand and $33 thousand, respectively, for equipment, repairs and services. Casey Crenshaw is the beneficial owner of 25% of Crenshaw Family Holdings and is deemed to jointly control Crenshaw Family Holdings with family members. The Company had no sales to ACT during three months ended March 31, 2021 and 2020. The Company had $2 thousand due from ACT included in accounts receivable on the unaudited condensed consolidated balance sheets at both March 31, 2021 and December 31, 2020. As of March 31, 2021 and December 31, 2020, the Company had $353 thousand and $121 thousand, respectively, due to ACT included in accounts payable on the unaudited condensed consolidated balance sheets.
The Company purchases supplies and services from a subsidiary of The Modern Group. Casey Crenshaw is the beneficial owner of 25% of the Modern Group and is deemed to jointly control The Modern Group with family members. During the three months ended March 31, 2021 and 2020, the Company made purchases of supplies and services from a subsidiary of The Modern Group totaling $530 thousand and $33 thousand, respectively. There was no receivable due from The Modern Group as of March 31, 2021 and December 31, 2020. As of March 31, 2021 and December 31, 2020, the Company had $902 thousand and $582 thousand, respectively, due to The Modern Group included in accounts payable on the unaudited condensed consolidated balance sheets.
Chart Energy & Chemicals, Inc. (“Chart E&C”) beneficially owns 8.7% of our outstanding common stock and is party to a Secured Term Note Payable with the Company. The Company purchases services from Chart E&C. During the three months ended March 31, 2021 and 2020, purchases from Chart E&C totaled $43 thousand and $10 thousand, respectively. As of March 31, 2021 and December 31, 2020, the Company had $19 thousand and $14 thousand, respectively, due to Chart E&C included in accounts payable on the unaudited condensed consolidated balance sheets.
12. 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 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 consolidated financial position, results of operations, or liquidity. Additionally, the Company currently expenses all legal costs as they are incurred.
In October 2018, American Electric Technologies, Inc., a predecessor in interest to the Company (“American Electric”) received notification of a potential liability of $4.3 million associated with an asset purchase agreement to sell substantially all of its U.S. business assets and operations to Myers Power Products, Inc. (“Myers”). The contractual terms of the agreement included a provision for true-up of the net working capital, estimated as of the date of closing, to actual working capital as calculated by Myers and agreed to by American Electric. Any difference in the actual (conclusive) net working capital in relation to the estimated working capital at closing results in an adjustment to the purchase price. In response, American Electric disputed Myers’ claim and Myers’ working capital calculation. On November 5, 2020, the Company filed a petition in Harris County, Texas requesting a declaratory judgment in favor of the Company. During the three months ended March 31, 2021, the parties reached an amicable resolution of their differences and all claims regarding the net working capital were mutually released and the lawsuit was dismissed with prejudice to refiling same.
18


13. Stockholders’ Equity
Issuances of Common Stock
The Company is authorized to issue up to 37,500,000 shares of common stock, $0.001 par value per share.
During the three months ended March 31, 2021, the Company did not issue any shares of common stock.
Issuances of Warrants
As of March 31, 2021, the Company had outstanding Warrants to purchase 62,500 shares of our common stock as follows:
Date of IssuanceNo. of WarrantsExercise PriceExpiration Date
Nov. 13, 201762,500$18.08Nov. 13, 2022
14. Stock-Based Compensation
Restricted Stock Awards
In February 2020, independent directors received 50% of their retainer fee as Restricted Stock Awards (“RSAs”). The 34,706 RSAs were issued immediately upon grant and were subject to a one year vesting period and other restrictions under the Company's 2019 Long Term Incentive Plan (the “2019 Plan”). During the three months ended March 31, 2021, the 34,706 RSAs vested.
The Company did not grant RSAs to independent directors during the three months ended March 31, 2021. The Company recognized $17 thousand and $19 thousand in stock-based compensation costs for the three months ended March 31, 2021 and 2020, respectively, which is included in general and administrative expenses in the unaudited condensed consolidated statements of operations.
As of March 31, 2021, the Company had no unrecognized compensation costs related to grants of restricted stock awards.
Restricted Stock Units
The Company did not grant Restricted Stock Units (“RSUs”) to employees under the 2019 Plan during the three months ended March 31, 2021. The Company recognized $145 thousand in stock-based compensation costs for the three months ended March 31, 2021, which is included in general and administrative expenses in the unaudited condensed consolidated statements of operations. The Company did not recognize stock-based compensation costs related to RSUs during the three months ended March 31, 2020. The Company recognized 500 forfeitures, at a weighted average grant date fair value of $1.75 per share, as a reduction of expense previously recorded as general and administrative expenses in the unaudited condensed consolidated statements of operations during the three months ended March 31, 2021. No awards vested during the three months ended March 31, 2021.
As of March 31, 2021, the Company had $820 thousand of unrecognized compensation costs related to 778,000 outstanding RSUs, which is expected to be recognized over a weighted average period of two years. All units are expected to vest.
15. Income Taxes
The Company records income taxes for interim periods based on an estimated annual effective tax rate. The estimated annual effective tax rate is recomputed on a quarterly basis and may fluctuate due to changes in forecasted annual operating income, positive or negative changes to the valuation allowance for net deferred tax assets, the timing of distributions on foreign investments from which foreign taxes are withheld, and changes to actual or forecasted permanent book to tax differences.
The Company’s effective tax rate for the three months ended March 31, 2021 and 2020 was 23.6% and 4.1%, respectively. The 2021 rate reflects state and foreign income taxes and the Company’s deferred federal income tax expense generated from an expected net operating income, offset by a change in the valuation allowance on net deferred tax assets.
19


16. Subsequent Events
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 “Loan”), of which $2.0 million was drawn and outstanding as of the filing date of this report. The 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 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 Loan.
Upon an Event of Default (as defined in the Loan Agreement), Lender may (i) terminate its commitment, (ii) declare the outstanding principal amount of the Advancing Notes (as defined in the Loan Agreement) under the Loan 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 Lender. The Security Agreement grants to Lender a first priority security interest in the collateral identified therein, which includes specific equipment collateral held by Debtor.
On April 29, 2021, the Company announced it has commenced trading on The Nasdaq Market LLC under the Company's existing ticker symbol, “SLNG”.
20


ITEM 2. MANAGEMENT’S 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 and the consolidated financial statements included in the 2020 Annual Report on Form 10-K filed on March 16, 2021. 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 is an energy transition company that provides turnkey clean energy production, storage, transportation and fueling solutions including using natural gas and hydrogen to multiple end markets in North America. Our diverse customer base utilizes LNG and hydrogen solutions as a fuel source in a variety of applications in the aerospace, industrial, utilities and pipelines, mining, energy, remote clean power and high horsepower transportation markets. Our customers use LNG as a partner fuel for renewable energy and as an alternative to traditional fuel sources, such as diesel, fuel oil, and propane, to reduce harmful environmental emissions and to lower fuel costs. Our customers also use LNG as a “virtual pipeline” solution when natural gas pipelines are not available or are curtailed.
Stabilis seeks to provide our customers with safe, reliable and cost effective LNG and hydrogen fueling solutions and power delivery equipment and services. We provide multiple products and services to our customers, including:
LNG Production, LNG and Hydrogen Sales—Stabilis builds and operates cryogenic natural gas processing facilities, called “liquefiers”, which convert natural gas into LNG through a multiple stage cooling process. We currently own and operate a liquefier that can produce up to 100,000 LNG gallons (379 cubic meters) per day. We also purchase LNG from third-party production sources which allows us to support customers in markets where we do not own liquefiers.
Transportation and Logistics Services—Stabilis offers our customers a “virtual natural gas pipeline” by providing them with turnkey LNG transportation and logistics services in North America. We deliver LNG to our customers’ work sites from both our own production facility and our network of approximately 25 third-party production sources located throughout North America. We own a fleet of LNG fueled trucks and cryogenic trailers to transport and deliver LNG. We also outsource similar equipment and transportation services for both LNG and hydrogen from qualified third-party providers as required to support our customer base.
Cryogenic Equipment Rental—Stabilis owns and operates a rental fleet of approximately 150 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 fueling operations.
Engineering and Field Support Services—Stabilis has experience in the safe, cost effective, and reliable use of LNG and hydrogen in multiple customer applications. We have also developed many processes and procedures that we believe improve our customers’ use of LNG and hydrogen 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.
Stabilis generates revenue by selling and delivering LNG and hydrogen to our customers. We also generate revenue by 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 pricing 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 and hydrogen in their operations for multiple reasons, including lower and more stable fuel costs, reduced environmental emissions, and improved operating performance. We believe that LNG and hydrogen consumption will continue to increase in the future.
21


Power Delivery—As a result of the business combination with American Electric, Stabilis provides power delivery equipment and services for the oil and gas, marine, power generation and broad industrial market segments in Brazil, and builds electrical systems for sale in China through our 40% interest in BOMAY.
Recent Developments
The market in which we operate has been impacted by the recent downturn in the energy market as well as the outbreak of COVID-19 and its progression into a pandemic. Various containment measures, including large-scale travel bans, border closures, quarantines, shelter-in-place orders and business and government shutdowns, have resulted in the slowing of economic growth and a reduced demand for oil and natural gas and the disruption of global manufacturing supply chains. As the COVID-19 pandemic continues to evolve, governments, corporations and other authorities may continue to implement restrictions or policies that adversely impact consumer spending, the economy, commodity prices, demand for our products, and our business, operations and share price. The ultimate extent and long-term effects of the pandemic are difficult to determine, but a prolonged period of market fluctuations and weak general economic conditions may have a material adverse effect on the Company’s financial results.

22


Results of Operations
Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020
The following table reflects line items from the accompanying Consolidated Statements of Operations for the three months ended March 31, 2021 (the “Current Quarter”) as compared to the three months ended March 31, 2020 (the “Prior Year Quarter”):
Stabilis Solutions, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except percentages)
Three Months Ended March 31,
Change
% Change
20212020
(unaudited)
Revenue:
LNG product
$11,695 $9,131 $2,564 28.1 %
Rental, service and other
4,425 3,397 1,028 30.3 
Power delivery1,544 1,310 234 17.9 
Total revenues
17,664 13,838 3,826 27.6 
Operating expenses:
Costs of LNG product
8,812 6,097 2,715 44.5 
Costs of rental, service and other
2,241 1,671 570 34.1 
Costs of power delivery1,160 1,247 (87)(7.0)
Selling, general and administrative
3,225 3,186 39 1.2 
Depreciation
2,225 2,270 (45)(2.0)
Total operating expenses
17,663 14,471 3,192 22.1 
Income (loss) from operations before equity income(633)634 (100.2)
Net equity income (loss) from foreign joint ventures' operations:
Income (loss) from investments in foreign joint ventures
421 (114)535 (469.3)
Foreign joint venture's operations related expenses
(67)(60)(7)11.7 
Net equity income (loss) from foreign joint ventures' operations
354 (174)528 (303.4)
Income (loss) from operations355 (807)1,162 (144.0)
Other income (expense):
Interest expense, net
(17)(11)(6)54.5 
Interest expense, net - related parties
(173)(240)67 (27.9)
Other income90 38 52 136.8 
Gain from disposal of assets— 11 (11)(100.0)
Total other income (expense)
(100)(202)102 (50.5)
Income (loss) before income tax expense255 (1,009)1,264 (125.3)
Income tax expense
80 41 39 95.1 
Net income (loss)$175 $(1,050)$1,225 (116.7)%
23


Segment Results
The Company’s revenues are derived from two operating segments: LNG and Power Delivery. The Company evaluates the performance of its segments based primarily on segment operating income.
LNG Segment
Our LNG segment 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.
<
Three Months Ended
March 31,
Change
% Change
20212020
(unaudited)
(In thousands, excluding percentages)
Revenue:
LNG product
$11,695 $9,131 $2,564 28.1 %
Rental, service and other
4,425 3,397 1,028 30.3 
Total revenues
16,120 12,528 3,592 28.7 
Operating expenses:
Costs of LNG product
8,812 6,097 2,715 44.5 
Costs of rental, service and other
2,241 1,671 570 34.1 
Selling, general and administrative
2,611 2,724 (113)(4.1)
Depreciation
2,188 2,235 (47)(2.1)
Total operating expenses
15,852 12,727 3,125 24.6 
Income (loss) from operations before equity income$268 $(199)$467 234.7 %