Stabilis Solutions Inc

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

The Company serves customers in diverse end markets, including aerospace, agriculture, energy, industrial, marine bunkering, mining, pipeline, remote power and utility markets. LNG can be used to deliver natural gas to locations where pipeline service is 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.

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”). BOMAY is accounted for under the equity method of accounting.

Basis of Presentation and Consolidation

The accompanying consolidated financial statements ("Consolidated Financial Statements") include our accounts and those of our subsidiaries and, have been prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

The Company reclassified $4.2 million from accrued expenses to accounts payable at* December 31, 2023,to conform to current presentation resulting inno* effect to results of operations or cash flows.

Summary of Significant Accounting Policies

(a) Use of Estimates in the Preparation of the Consolidated Financial Statements

The preparation of the 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, 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 consolidated financial statements.

(b) Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities ofthree months or less, when purchased, to be cash and cash equivalents. Cash equivalents consist principally of money market accounts held with major financial institutions. The Company is exposed to credit risk from its deposits of cash and cash equivalents in excess of amounts insured by the Federal Deposit Insurance Corporation. The Company hasnot experienced any losses on its deposits of cash and cash equivalents.

(c) Accounts Receivable

Accounts receivable are recognized when products are sold. The Company extends credit to many of its customers in the ordinary course of business. Generally, these sales are unsecured. Accounts receivable are stated at the amount the Company expects to collect (cost, net of any allowances for credit losses). The Company maintains allowances for credit losses for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, past transaction history with the customer and current economic industry trends. Our allowance for credit losses was immaterial at* December 31, 2024* and* December 31, 2023*. For the years ended* December 31, 2024* and2023, the Company recorded bad debt expense of $0.1 million and $0.0 million, respectively.

(d) Inventories

LNG inventory consists of LNG produced that is either (1) in a storage container at our plants or (2) in a storage trailer that is in transit to a customer. Inventory quantities are measured at each reporting period and are valued at the lower of cost or net realizable value, determined on afirst-in,first-out basis.

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(e) Derivative Instruments

The Company had certain natural gas derivative instruments as of* December 31, 2024* and2023. The Company recognizes all of its derivative instruments as either assets or liabilities which are recorded at fair value on its Consolidated Balance 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 as well as the type of hedge. The Company hasnot designated its derivatives as hedges under U.S. GAAP and all resulting gains and losses from changes in the fair value of its derivative instruments are included within the Consolidated Statements of Operations. The Company didnot enter into any derivative transactions for speculative purposes. See Note4 for further discussion of the Company's derivatives.

The Company enters into forward sales contracts for the delivery of LNG to its customers. Certain of these sales contracts contain provisions that* maymeet the criteria of a derivative in the event delivery isnot* made. These contracts are accounted for under the normal purchase normal sales exclusion under U.S. GAAP and arenot measured at fair value each reporting period.

(f) Property, Plant and Equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation and amortization. Significant additions, renewals, and capital improvements are capitalized, whereas expenditures for maintenance and repairs are charged to expense as incurred. Leasehold improvements are amortized over the shorter of the applicable remaining lease term or the estimated useful life of the related assets. The cost and related accumulated depreciation of assets retired or sold are removed from the appropriate asset and depreciation accounts, and the resulting gain or loss is reflected in income. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets.

Property, plant, and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset* may**not* be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Companyfirst compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group isnot recoverable on an undiscounted cash flows basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flows models, quoted market values andthird-party independent appraisals, as considered necessary. There wereno impairments of the Company’s long-lived assets in the years ended* December 31, 2024* and2023.

(g) Goodwill

Goodwill represents the excess of the cost of an acquired entity over the fair value of the assets acquired less liabilities assumed. Intangible assets are assets that lack physical substance (excluding financial assets). Goodwill acquired in a business combination and intangible assets with indefinite useful lives arenot amortized, and intangible assets with finite useful lives are amortized. All of our goodwill was recognized from business acquisitions during thethird quarter of2019 and isnot amortized. We test goodwill for impairment annually or more frequently if a triggering event occurs. A triggering event occurs when there are changes in circumstances or events that indicate the assets carrying value* may**not* be recoverable. The Company tested its remaining goodwill for impairment during the years ended* December 31, 2024* and2023 and based upon a qualitative assessment, it determined a quantitative assessment wasnot required andno impairments of goodwill were identified.

(h) Leases

We determine if an arrangement is a lease at inception. Leases with an initial term of12 months or less arenot recorded in our Consolidated Balance Sheets unless we are reasonably certain at inception of the lease that we will renew the lease for a period that extends the initial term longer than12 months. All leases with an initial term greater than12 months, whether classified as operating or finance, are recorded on our Consolidated Balance Sheet based on the present value of lease payments over the lease term, determined at lease commencement. Determination of the present value of lease payments requires a discount rate. We use the implicit rate in the lease agreement when available. Most of our leases donot provide an implicit interest rate; therefore, we use a weighted average borrowing rate based on the information available at the commencement date. Certain of our leases contain non-lease components which arenot separated from the lease components when calculating the right-of-use asset and lease liability per our use of the practical expedient to combine both components of an arrangement for all classes of leased assets. See also Note10 for a further discussion or our leases.

(i) Revenue Recognition

The Company recognizes revenue from our contracts in accordance with Accounting Standards Codification (“ASC”), Topic606 “Revenue from Contracts with Customers” (“Topic606”). Topic606 requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenues from contracts with customers are disaggregated into (1) LNG product (2) rental, (3) service, and (4) other.

The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Revenue associated with the sale of LNG is recognized at the point in time when the customer obtains control of the asset. In evaluating when a customer has control of the asset, the Company primarily considers whether the transfer of legal title and physical delivery has occurred, whether the customer has significant risks and rewards of ownership, and whether the customer accepted delivery and a right of payment exists. Revenues from the providing of services, transportation and equipment to customers is recognized over time as the service is performed. Revenue is measured as consideration specified in a contract with a customer and excludes any sales incentives and amounts collected on behalf ofthird parties. Amounts are billed upon completion of service or transfer of a product and are generally due within30 days. See also Note2 for a further discussion of our accounting policy for revenue recognition.

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(j) Income Taxes

The Company recognizes income taxes under the asset-and-liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards for each tax jurisdiction in which we operate. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded when it is more likely thannot that the net deferred tax asset willnot be realized.

The Company recognizes the effect of income tax positions only if those positions are more likely thannot to be sustained. Recognized income tax positions are measured at the largest amount that is greater than50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general and administrative expenses. As of* December 31, 2024* and2023, the Company hadno uncertain tax positions that required recognition. See Note12 for a further discussion of our accounting policy related to income taxes.

The Company files income tax returns in the United States of America with the federal government and various state taxing authorities, in Mexico and Canada. With few exceptions, the Company is subject to examination by the applicable taxing authorities for years after2020.

(k) Earnings Per Share (“EPS”)

Basic earnings per share, or EPS, is computed by dividing net income (loss) available to stockholders by the weighted average shares outstanding during the period. Diluted EPS takes into account the potential dilution that could occur if securities or other contracts to issue shares, such as stock options and warrants were exercised. The Company included dilutive securities within its computation of earnings per share for the years ended* December 31, 2024* and2023. See Note16 for further discussion of the earnings per share calculation.

(l) Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

(m) Fair Value Measurements

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in the fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized inone of the following levels in accordance with U.S. GAAP:

Level1 Inputs —Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

Level2 Inputs — Other than quoted prices included in Level1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level3 Inputs — Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs arenot available, thereby, allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

The carrying value of cash and cash equivalents, accounts receivable, inventory, accounts payable and accrued liabilities approximate their respective fair values due to their relative short maturities. The Company estimated the fair value of its fixed and variable rate debt approximates the $8.6 million carrying value (see Note9) at* December 31, 2024*. The Company’s estimate of fair value is subjective in nature and is dependent on a number of important assumptions, including discount rates. The fair value of our fixed and variable rate debt was estimated by discounting the future cash flows using the Company’s estimate of its incremental borrowing rate at* December 31, 2024* (within Level2 of the fair value hierarchy). Different market assumptions and estimation methodologies could result in different estimations of fair value.

Nonfinancial assets and liabilities measured at fair value on a nonrecurring basis include certain nonfinancial assets and liabilities acquired in a business combination, are measured at fair value using quoted market prices or, to the extent that there areno available quoted market prices, market prices for similar assets or liabilities.

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(n) Foreign Currency Gains and Losses

Foreign currency translations are included as a separate component of comprehensive income (loss). The Company has determined the local currency of its foreign subsidiaries and foreign joint ventures to be the functional currency. In accordance with Accounting Standards Codification ("ASC830"), the assets and liabilities of the foreign equity investees and foreign subsidiaries, denominated in foreign currency, are translated into United States dollars at exchange rates in effect at the consolidated balance sheet date and net sales and expenses are translated at the average exchange rate for the period. Related translation adjustments are reported as comprehensive income (loss), net of deferred income taxes, which is a separate component of stockholders’ equity, whereas gains and losses resulting from foreign currency transactions are included in results of operations. In the event of liquidation of a foreign subsidiary, amounts included within accumulated other comprehensive income (loss) ("AOCI") and related to cumulative foreign currency translation gains and losses are reclassified out of AOCI and into net income (loss) upon sale.

(o) Stock-based Compensation

The Company accounts for stock-based compensation in accordance with ASC Topic718, Compensation — Stock Compensation (“ASC718”). Compensation expense for stock-based awards expected to vest is recognized on a straight-line basis over the requisite service period of the award based on their grant date fair value. See also Note14 for further discussion of our stock-based compensation.

(p) Segment Reporting

In accordance with ASC Topic280 - "Segment Reporting (ASC280)" the Company has determined that it has a single operating and reporting segment. As a result, the Company's segment accounting policies are the same as described herein and the Company doesnot have any material intra-segment sales and transfers of assets. The Company's Chief Operating Decision Maker ("CODM") is the Chief Executive Officer (the "CEO"). The CEO, with the Chief Financial Officer assesses the performance and makes operating decisions of the Company on a consolidated basis, based on the Company's net increase in shareholder's equity resulting from operations ("net income"). Company assets arenot reviewed by the CODM at a different asset level or category, but at the consolidated level. As the Company's operations are comprised of a single operating segment, the segment assets are reflected on the accompanying Consolidated Balance Sheets as "total assets" and the significant segment expenses are listed on the accompanying Consolidated Statement of Operations.

Recent Accounting Pronouncements

In* November 2023,the FASB issued ASUNo.* 2023-07, “Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures". ASU2023-07 requires additional disclosures for segment reporting, including disclosure of the title and position of the Chief Operating Decision Maker and requires a public entity that has a single reportable segment to provide all the disclosures required by amendments in ASU2023-07, and all existing segment disclosures in Topic280. ASU2023-07 is effective for fiscal periods beginning after* December 15, 2023.The Company adopted ASU2023*-07 effective for its Annual Report on this Form10-K for the year ended* December 31, 2024.Since ASU2023*-07 addresses only disclosures, the adoption didnot have a significant impact on the Company's consolidated financial statements.

In* November 2024,the FASB issued ASU2024*-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses". Under ASU2024-03 companies are required to disclose disaggregated information about certain costs and expenses in the notes to the financial statements. ASU2024-03 is effective for companies for annual reporting periods beginning after* December 15, 2026.The requirements can be applied either prospectively or retrospectively. Although early adoption is permitted, the Company will adopt the pronouncement when the pronouncement becomes effective on January 1, 2027.The Company doesnot* expect the adoption of ASU2023-09 to have a significant impact on its consolidated financial statements.

2. 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 and exclude any sales incentives and amounts collected on behalf ofthird parties. Revenues from contracts with customers are disaggregated into (1) LNG Product (2) rental (3) service and (4) other. Certain contracts* may*include multiple goods or services such as the usage of equipment and delivery of field support services that are bundled into an all-in price to the customer for each gallon of LNG delivered. Revenue recognition under these contracts requires significant judgment by the Company in order to determine the appropriate accounting for these transactions, including whether performance obligations should be accounted for separately versus together, how the price should be allocated among the performance obligations, and when to recognize revenue for each performance obligation. The Company has determined that these contracts have multiple performance obligations and the Company allocates the contract price to each performance obligation using its best estimates of the respective standalone selling price of each distinct good or service at the time the contract was negotiated.

LNG Product revenues

LNG Product revenues represent the sale of LNG from both produced and purchased sources as well as the transportation performed to deliver the LNG to our customer location. LNG Product revenues are recognized upon delivery of the LNG to the customer, at which point the customer controls the product and the Company has an unconditional right to payment. The Company acts as a principal when using* third party transportation companies and therefore recognizes the gross revenue for the supply of LNG. The Company doesnot differentiate between the revenue from the sale of LNG production and purchased LNG as the criteria for revenue recognition 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 has the unconditional right to receive payment for the take or pay amount. Certain of our sales contracts contain provisions that maymeet the criteria of a derivative in the event delivery isnot* made. These contracts are accounted for under the normal purchase normal sales exclusion under U.S. GAAP and arenot measured at fair value each reporting period. Our LNG contracts are generallyone to24 months in duration.

Rental revenues

Rental revenues are generated from the rental of cryogenic equipment to our customers. Rental revenues arenot dependent upon the gallons 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 Product revenues. Revenues related to rental of equipment are recognized under Topic606 andnot ASC842: Leases, as 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. Performance obligations for rental revenue are considered to be 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.

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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 at the customer’s job site. These include support and costs for mobilization and demobilization of equipment at customer sites as well as onsite technical support while customers are consuming LNG. Service revenues arenot dependent upon the gallons delivered or rental period but based upon the specific contractual terms and can be based on an event (i.e. mobilization or demobilization) or an hourly rate 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. The stated hourly labor rates in each contract are representative of the stand-alone hourly rates at the time the contract was negotiated.

Other revenues

Other revenues are 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 customers on a cost-plus basis.

Disaggregated revenues

The table below presents revenue disaggregated by source, for the years ended* December 31, 2024* and2023 (in thousands):

The table below presents revenue disaggregated by geographic location, for the years ended* December 31, 2024* and2023 (in thousands):

Variable and other Revenue Components

Certain of our contracts* mayinclude rental or services that mayvary upon the customer demands at stated rates within 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 is 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 revenue.

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3. SIGNIFICANT CUSTOMERS AND CONCENTRATION OF RISKS

Significant Customers

A material part of the Company’s business is dependent on a few customers, the loss of which could have a material adverse effect on the Company. The tables below present customers representing greater than10% of total revenues and/or outstanding accounts receivable as of and for the years ended* December 31, 2024* and2023 (in thousands):

No other customer represented more than10% of the Company’s total revenue or accounts receivable as of and for the years ended* December 31, 2024* and2023.

4. DERIVATIVE INSTRUMENTS

Natural gas derivatives

As of* December 31, 2024* and2023 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 0.3 million MMBtu (million British thermal units) of natural gas at* December 31, 2024*, and extend into thesecond quarter of2025. The Company purchased the Call Options to manage the risk of increasing natural gas prices above what it can charge its customers. The Company* mayalso enter into other derivative transactions when beneficial. The Company recognizes all of its derivative instruments as either assets or liabilities which are recorded at fair value on its Consolidated Balance Sheet. The fair value of the Call Options are predominantly determined from broker quotes and are considered a level2* fair value measurement. The following table presents the location and fair value of the Call Options at* December 31, 2024* and2023 (in thousands):

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The Company hasnot 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 or gain on natural gas derivatives within the Company's Consolidated Statements of Operations. The table below presents the changes in the fair value of the Call Options for the years ended* December 31, 2024* and2023 as well as the net realized gains and losses for all of its derivatives for the years ended* December 31, 2024* and2023 (in thousands):

5. PREPAID EXPENSES AND OTHER CURRENT ASSETS

The Company’s prepaid expenses and other current assets consisted of the following (in thousands):

6. PROPERTY, PLANT AND EQUIPMENT, NET

Property, Plant and Equipment

The Company’s property, plant and equipment, net consisted of the following (in thousands):

Depreciation expense for the years ended* December 31, 2024* and2023 totaled $7.1 million and $7.9 million respectively, of which all is included in the Consolidated Statements of Operations as its own line item.

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Construction in progress of $8.1 million and $9.9 million at* December 31, 2024* and2023, respectively, primarily relate to the deployment and build-out of liquefaction assets and the purchase of additional liquefaction assets.

7. INVESTMENTS IN FOREIGN JOINT VENTURES

BOMAY

We hold 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), who owns 51%. The remaining 9% is owned by AA Energies, Inc. The Company madeno sales to its joint venture during2024 and2023.

We account for our 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 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 donot 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.

The tables below present a summary of BOMAY's assets and liabilities and its operational results as of and for the years ended* December 31, 2024* and2023 in U.S. dollars (in thousands):

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The following is a summary of activity in our investment in BOMAY for the years ended* December 31, 2024* and2023 in U.S. dollars (in thousands):

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. There wereno impairments recognized in the years ended* December 31, 2024* and2023.

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8. ACCRUED LIABILITIES

The Company’s accrued liabilities as of* December 31, 2024* and2023 consisted of the following (in thousands):

9. DEBT

The Company’s carrying value of debt, net of debt issuance costs, at* December 31, 2024* and2023 consisted of the following (in thousands):

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 athree*-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 of80% of eligible accounts receivable. The Company* mayrequest 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 December 31, 2024*,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 were incurred and are reflected as debt issuance costs paid on the Consolidated Statements of Cashflows. Amortization of debt issuance costs is in interest expense on the Consolidated Statements of Operations.

The Revolving Credit Facility contains various restrictions and covenants. Among other requirements, the Borrowers must maintain a consolidated net worth of at least $51.9 million as of* December 31, 2024*, 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 to1.0* on a consolidated basis, as defined in the Revolving Credit Facility, as of the last day of each fiscal quarter, on a trailingtwelve (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* maydeclare 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 December 31, 2024*, the Company was in compliance with all its covenants related to the Revolving Credit Facility.

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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”). As of December 31, 2024* and2023, the amount drawn and outstanding totaled $9.0 million. The AmeriState Loan, which is in the form of a term loan facility, matures on* April 8, 2031and 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 maybe 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. Upon an Event of Default (as defined in the Loan Agreement), the Lender may (*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 afirst* priority security interest in the collateral identified therein, which includes specific equipment owned by the Company. The Loan Agreement requires the Company to meet certain financial covenants which include a debt-to-net-worth ratio ofnot more than 9.1 to1.0 and a debt service coverage ratio ofnot less than 1.2 to1.0. At* December 31, 2024*, the Company was in compliance with all of its debt covenants. Monthly payments are based upon aseven-year amortization in the amount of $0.1 million of principal per month plus accrued interest.

Secured Promissory Note - Related Party

On* August 16, 2019,the Company issued a secured promissory note to MG 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 debt was secured by certain equipment of the Company. On September 20, 2021,the Company amended its secured promissory note with MG Finance Co., Ltd, to defer scheduled debt and interest payments from Septemberthrough December 2021for a period ofone* year, with such payments to be included with the scheduled payments from* Septemberthrough December 2022.The Company again amended its secured promissory note with MG Finance Co., Ltd, on March 9, 2022to defer scheduled debt and interest payments beginning April 2022and lower the interest rate from 12.0% to 6.0%. Repayments under the amended note resumed in October 2022and were in equal monthly installments through December 2023.The loan was paid in full as of December 31, 2023.*

Insurance Notes Payable

The Company finances its annual commercial insurance premiums for its business and operations. For the2024-2025 policies, the amount financed was $1.2 million. The outstanding principal balance on the premium finance note was $0.9 million at* December 31, 2024*. The renewal occurs each* Septemberand covers a period of up toone* year. The Company makes equal monthly payments of principal and interest over the term of the note. The interest rate for the insurance financing on the2024-2025 policy is 7.95%. At* December 31, 2023*, the outstanding balance was $0.8 million, related to the2023-2024 policy with an interest rate of 7.95%.

Debt Maturities and Interest Expense

We had total indebtedness, net of debt issuance costs, on our Consolidated Balance Sheet of $9.2 million as of* December 31, 2024*. Expected maturities, excluding debt issuance costs of $0.3 million and leases at* December 31, 2024* are as follows (in thousands).

During the years ended* December 31, 2024* and2023, the Company recorded interest expense related to the above indebtedness and related to leases (see Note10 below) as follows (in thousands):

During the years ended* December 31, 2024* and2023, the Company capitalized interest of $0.4 million and $0.3 million, respectively.

10. LEASES

Our leases primarily consist of operating leases for certain facilities and office spaces, and financing leases for equipment. Our leases have remaining terms of 1 to 3 years and* may*include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease assets also include any upfront lease payments made and exclude lease incentives and initial direct cost incurred. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

The following table summarizes our operating and finance lease assets and liabilities as of* December 31, 2024* and2023 (in thousands):

The following table summarizes the components of lease expense for the years ended* December 31, 2024* and2023 (in thousands):

Other

The Company leases certain buildings and facilities, including office space in Houston, Texas and Monterrey, Mexico. The Company also leases marine bunkering and staging sites in Galveston, Texas, along with certain equipment on a short term basis. Leases which are less thantwelve months and haveno cancellation penalties arenot recorded on the Consolidated Balance Sheets.

Office rent expense totaled approximately $169 thousand and $188 thousand for the years ended* December 31, 2024* and2023, respectively.

The following schedule presents the future minimum lease payments for our operating and finance lease obligations at* December 31, 2024* (in thousands):

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Lease term and discount rates for our operating and finance lease obligations are as follows:

The following table summarizes the supplemental cash flow information related to leases as of* December 31, 2024* and2023 (in thousands):

11. RELATED PARTY TRANSACTIONS

Secured Promissory Note - Related Party

J. Casey Crenshaw (our Chairman of the Board) is the beneficial owner of 50% of The Modern Group and is deemed to jointly control The Modern Group with family members. Through* December 31, 2023the Company had a secured promissory note payable with MG Finance Co., Ltd, a subsidiary of The Modern Group. The loan was paid in full as of December 31, 2023.See additional discussion in Note9.*

Other Purchases and Sales

The Company purchases supplies and services from subsidiaries of The Modern Group. During the years ended* December 31, 2024* and2023 the Company made purchases of supplies, services and rent totaling $0.2 million and $0.4 million, respectively. During the years ended* December 31, 2024* and2023 the Company hadno sales to The Modern Group. As of* December 31, 2024* and2023, the Company hadno accounts receivable due from The Modern Group and the accounts payable due to The Modern Group as of* December 31, 2024* and2023 were immaterial.

Chart E&C beneficially owns 7.9% of our outstanding common stock at* December 31, 2024*. The Company made purchases from Chart E&C for the years ended* December 31, 2024* and2023 of $0.6 million and $0.7 million, respectively. Amounts owed to Chart E&C and included in accounts payable on the Consolidated Balance Sheets at* December 31, 2024* and2023 were immaterial.

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12. INCOME TAXES

The components for income tax expense included in the accompanying Consolidated Statements of Operations for the years ended* December 31, 2024* and2023 are as follows (in thousands):

A reconciliation of income taxes computed using the21% U.S. federal statutory rate to the amount reflected in the accompanying consolidated statement of operations within net income for the years ended* December 31, 2024* and2023 is as follows (in thousands):

The effects of temporary differences and carryforwards that give rise to deferred tax assets (liabilities) are as follows (in thousands):

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At* December 31, 2024,the Company has net operating loss carry forwards of approximately $53.2 million which maybe used to offset future taxable income. This excludes net operating loss carry forwards of $81.1 million it believes willnot* be eligible to offset future income. The $82.4 million is excluded from the Company's calculation of deferred tax assets prior to the establishment of a valuation allowance. The Company experienced a change in ownership significantly limiting its recognition of net operating loss carryforwards of an acquired subsidiary at* July 26, 2019*due to its change in ownership.

The Company’s net operating loss carryforwards include $30.2 million of losses arising prior to* December 31, 2017that expire in2028* through2037. Those arising in tax years after2017 can be carried forward indefinitely. Also, for losses arising in taxable years beginning after* December 31, 2017the operating loss deduction is limited to80%* of taxable income (determined without regard to the deduction). The Company has established a valuation allowance to fully reserve the Company's net deferred tax assets at* December 31, 2024based upon its assessment of whether it is more likely thannot* that the Company will realize its deferred tax assets which includes consideration of the nature and amount of the Company's net losses arising from prior periods. The Company has generated net income from operations for the years ended* December 31, 2024and2023* and the Company's assessment of the amount of valuation allowance needed could change in future periods.

The Company recognizes the tax benefit or obligation from an uncertain tax position only if it is more likely thannot that the tax position will be sustained on examination by the taxing authorities, basednot only on the technical merits of the tax position based on tax law, but also past administrative practices and precedents of the taxing authority. The tax benefits or obligations are recognized in our financial statements if there is a greater than50% likelihood of the tax benefit or obligation being realized upon ultimate resolution. As of* December 31, 2024and2023,* the Company hadno uncertain tax positions that required recognition.

As of* December 31, 2024,the Company's federal income tax return for the year ended December 31, 2022was under examination by the Internal Revenue Service (IRS). The Company doesnot* anticipate any additional amounts to be owed as a result of this examination. Tax returns for years2020 to2023 remain subject to examination for both federal and state filings.

13. COMMITMENTS AND CONTINGENCIES

Environmental Matters

The Company is subject to federal, state and local environmental laws and regulations. The Company doesnot anticipate any expenditures to comply with such laws and regulations that would have a material impact on the Company’s 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* maybecome 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 mayarise during the course of these audits. It is impossible to determine the ultimate liabilities that the Company mayincur 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, doesnot,* however, anticipate such an outcome and it believes the ultimate resolution of these matters willnot 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.

Other

Future capital expenditures will be dependent upon accretive investment opportunities as well as the availability of additional capital at favorable terms which is difficult to predict. At* December 31, 2024*, we had open purchase orders with approximately $1.0 million remaining related to future commitments for capital expenditures.

14. STOCKHOLDERS’** EQUITY AND STOCK-BASED COMPENSATION**

Stock-Based Compensation

The Company includes stock compensation expense within general and administrative expenses in the Consolidated Statements of Operations. The Company recognized total stock-based compensation costs, net of forfeitures, of $1.2 million and $2.1 million for the years ended* December 31, 2024* and2023, respectively. Stock-based compensation expense is related to equity awards to executives and other employees, awarded from the Company's Amended and Restated long-term incentive plan.

Issuance of Stock-based Awards

The Company has a long-term incentive plan, originally approved by the Board of Directors in2019. In* July 2021and in August 2023,the plan was amended (the “Amended and Restated Plan”) to increase the maximum number of shares of common stock available for issuance from its original 1,675,000 shares to 4,000,000 (in July 2021)and to 5,500,000 (in August 2023).The plan provides for the award 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 which maybe granted to employees, officers and directors of the Company and affiliates or to any other person who performs services to the Company and affiliates, including independent contractors and consultants of the Company and its subsidiaries. At December 31, 2024*, the number of shares of common stock available for issuance under the Amended and Restated Plan is 2,129,805 shares.

No participant* mayreceive 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. In the event of certain changes in the Company’s common stock such as recapitalization, reclassification, stock split, combination or exchange of shares, stock dividends or the like, appropriate adjustment will be made in the number and kind of shares available for issuance under the Amended and Restated Plan as well as the purchase price, if any, per share.

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(a) Stock Appreciation Rights

On* June 26, 2023,the Company granted 685,437 stock appreciation rights (“SARs”) under the Amended and Restated Plan, with a $10.00 strike price. The SARs100%* vest when the closing price of the Company's common stock averages $10.00 over10 (ten) consecutive trading days, prior to* January 1, 2025.At December 31, 2024*, the SARs hadnot met the10 (ten) consecutive trading days requirement and expired on* December 31, 2024.*

The SARs were valued using a Monte Carlo simulation model and expensed on a straight line basis. Upon expiration, prior amounts expensed were reversed including $11 thousand recognized for the year ended* December 31, 2023*.

A summary of the Company's SARs activity during the fiscal year2024 is presented in the following table:

(b) Restricted Stock Units

There wereno RSUs granted during the years ended* December 31, 2024* and2023. A summary of the Company's RSUs activity during the fiscal years ended* December 31, 2024* and2023 are presented in the following table:

During the years ended* December 31, 2024* and2023, the Company expensed stock based compensation related to restricted stock units of $0.1 million and $0.6 million, respectively.

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(c) Stock Options

On* February 18, 2022,the Company granted executives 774,505 stock options under the2019* plan to purchase an equal number of shares of the Company’s common stock, with a strike price equal to $6.00 per share. The stock options will vest equally over athree-year vesting period. The Company estimated the value of the options 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. The stock options are expensed over the vesting period. Assumptions used in determining the valuation of the options included the following:

A summary of the Company's stock option awards activity during the fiscal years2024 and2023 are presented in the following table:

During the years ended* December 31, 2024* and2023, the Company expensed stock based compensation related to stock options of $1.1 million and $1.5 million, respectively, which is included in general and administrative expenses in the Consolidated Statements of Operations.

** Unrecognized Stock-Based Compensation**

As of* December 31, 2024*, the Company had $0.1 million, of unrecognized compensation costs, related to 13,589 outstanding RSUs and 258,169 stock options, expected to be recognized over a weighted average period of less thanone year. All RSUs and stock options are expected to vest.

Common Stock

The Company is authorized to issue up to 37,500,000 shares of Common Stock, $0.001 par value per share. The following table summarizes issuances of shares of our common stock for the years ended* December 31, 2024* and2023 (amounts in thousands):

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Preferred Stock

Our Board of Directors has the authority, without stockholder approval, to issue up to 1,000,000 shares of Preferred Stock, $0.001 par value. The authorized Preferred Stock* maybe issued by the Board of Directors inone* or more series and with the rights, privileges and limitations of the Preferred Stock determined by the Board of Directors. The rights, preferences, powers and limitations of different series of Preferred Stock* maydiffer with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions, and other matters. As of December 31, 2024*, we haveno Preferred Stock issued or outstanding.

Employee401(k) Plan

The Company has established a savings plan ("Savings Plan") which is qualified under Section401(k) of the Internal Revenue Code. Eligible employees* mayelect to make contributions to the Savings Plan through salary deferrals of up to90%* of their base pay, subject to Internal Revenue Code limitations. The Company contributes to the Savings Plans, subject to limitations. For the years ended* December 31, 2024* and2023, the Company contributed $327 thousand and $274 thousand, respectively, in matching contributions to the Savings Plan.

15. SUPPLEMENTAL CASH FLOW INFORMATION

The Company's supplemental disclosure of cash flow information for the years ended* December 31, 2024* and2023 is as follows (in thousands):

16. NET INCOME (LOSS) PER SHARE

The calculation of net income (loss) per common share for the year ended* December 31, 2024* and2023 are presented below. For both the years ended* December 31, 2024* and2023 securities that were excluded that would have had an anti-diluted effect consist of stock options of 2,074,505. For the year ended* December 31, 2023SARs of 658,437 were excluded. No SARs were outstanding as of December 31, 2024*. For the year ended* December 31, 2024*, dilutive securities consisted of RSUs of 13,589 or 11,981 (net of the treasury stock method). For the year ended* December 31, 2023*, dilutive securities consisted of RSUs of 27,177 or 12,324 (net of the treasury stock method).

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17. SUBSEQUENT EVENT

Management Transition

On* January 31, 2025,the Company appointed the Company’s Chairman of the Board, J. Casey Crenshaw, as its Executive Chairman, and interim President and Chief Executive Officer. Mr. Crenshaw will replace Westervelt T. Ballard, Jr., who has mutually agreed with the Company to terminate his employment as the Company’s President and Chief Executive Officer and has voluntarily resigned his position as a director. In his new role, Mr. Crenshaw will assume day-to-day operations leadership. Mr. Crenshaw, co-founded the Company in2013* and has remained actively involved in the Company since its inception. In connection with Mr. Crenshaw’s position as Executive Chairman, the Company’s Board of Directors and Compensation Committee have approved annual cash compensation of $500,000 to Mr. Crenshaw. Mr. Crenshaw willnot receive additional compensation for his roles as interim President and Chief Executive Officer.

Release and Consulting Agreement

Effective* January 31, 2025,the Company entered into a release and consulting agreement with Westervelt T. Ballard, Jr. (formerly the Company's President and Chief Executive Officer) pursuant to which the Company and Mr. Ballard mutually agreed to terminate his employment as President and Chief Executive Officer and Mr. Ballard transitioned to a consultant of the Company. Additionally, Mr. Ballard voluntarily resigned as a member of the Company’s Board of Directors. Under the release and consulting agreement, the Company will pay Mr. Ballard separation pay of $1.0 million, paid in equal or near equal installments over atwelve* month period, and additional pay of $41 thousand representing an amount equal to a prorated bonus at "target" performance that Mr. Ballard would have received for his2025 performance. Additionally, Mr. Ballard will receive a payment of $49 thousand per month for the remainder of2025 for his consulting services. The Company and Mr. Ballard agreed that 7,765 unvested restricted stock units and 147,525 unvested stock options granted under the Company's long-term incentive plan would vest as of the date of separation of employment, and that the period during which all of Mr. Ballard's stock options* maybe exercised shall expire December 31,*2025. Mr. Ballard will remain in a consulting role for the Company through the end of2025.

Mr. Ballard’s termination resulted in his forfeiture of approximately $0.5 million of2024 non-equity incentive plan compensation which isnot included in the financial statements as of and for the year ended* December 31, 2024.The Company anticipates that it will record additional expense of approximately $1.6 million related to Mr. Ballard’s cumulative separation pay, additional pay and consulting pay as well an estimated$.4 million in additional non-cash stock compensation expense related to the adjustment of the exercise period of his options to December 31, 2025during2025* related to the release and consulting agreement.

Related Party Lease

Subsequent to* December 31, 2024,the Company amended its month-to-month lease with The Modern Group, a related party, to increase its rent to $28 thousand per month effective March 1, 2025and to extend the lease term to June 30, 2026.See Note11* for further discussion of the Company’s related parties.

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