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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 10-Q
____________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 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. 001-40364
____________________
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 November 10, 2021, there were 17,691,268 outstanding shares of our common stock, par value $.001 per share.



STABILIS SOLUTIONS, INC. AND SUBSIDIARIES
FORM 10-Q Index
For the Quarterly Period Ended September 30, 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;
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)
September 30,
2021
December 31, 2020
Assets
Current assets:
Cash and cash equivalents$2,938 $1,814 
Accounts receivable, net7,328 5,620 
Inventories, net424 226 
Prepaid expenses and other current assets4,298 3,111 
Due from related parties 42 
Total current assets14,988 10,813 
Property, plant and equipment:
Cost100,758 90,422 
Less accumulated depreciation(44,900)(38,384)
Property, plant and equipment, net55,858 52,038 
Right-of-use assets128 786 
Goodwill4,453 4,453 
Investments in foreign joint ventures11,923 11,897 
Other noncurrent assets319 326 
Total assets$87,669 $80,313 
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of notes payable$1,379 $1,112 
Current portion of notes payable - related parties2,580 3,351 
Current portion of finance lease obligation16  
Current portion of finance lease obligation - related parties 648 
Current portion of operating lease obligations 206 362 
Accrued liabilities7,432 4,361 
Accounts payable5,163 4,395 
Total current liabilities16,776 14,229 
Long-term notes payable, net of current portion6,772 682 
Long-term notes payable, net of current portion - related parties919 2,726 
Long-term portion of finance lease obligations68  
Long-term portion of operating lease obligations314 490 
Other noncurrent liabilities98 156 
Total liabilities24,947 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 September 30, 2021 and December 31, 2020, respectively
  
Common stock; $0.001 par value, 37,500,000 shares authorized, 17,691,268 and 16,896,626 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
18 17 
Additional paid-in capital97,373 91,278 
Accumulated other comprehensive income172 122 
Accumulated deficit(34,841)(29,387)
Total stockholders’ equity62,722 62,030 
Total liabilities and stockholders’ equity
$87,669 $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
September 30,
Nine Months Ended
September 30,
2021202020212020
Revenue
LNG product
$14,420 $6,594 $37,927 $18,609 
Rental, service and other
3,359 1,073 10,364 5,613 
Power delivery1,925 1,352 5,129 3,638 
Total revenues
19,704 9,019 53,420 27,860 
Operating expenses:
Costs of LNG product11,988 5,044 30,154 13,692 
Costs of rental, service and other1,917 808 5,649 3,381 
Costs of power delivery1,542 996 3,994 3,131 
Selling, general and administrative expenses
6,155 2,338 13,195 7,892 
Gain from disposal of fixed assets
  (24)(11)
Depreciation expense
2,324 2,266 6,767 6,802 
Impairment of right-of-use lease asset376  376  
Total operating expenses
24,302 11,452 60,111 34,887 
Loss from operations before equity income(4,598)(2,433)(6,691)(7,027)
Net equity income from foreign joint ventures' operations:
Income from equity investments in foreign joint ventures308 642 1,267 1,529 
Foreign joint ventures' operations related expenses(62)(69)(192)(182)
Net equity income from foreign joint ventures' operations246 573 1,075 1,347 
Loss from operations(4,352)(1,860)(5,616)(5,680)
Other income (expense):
Interest expense, net
(130)(2)(224)(28)
Interest expense, net - related parties
(120)(199)(441)(681)
Other income (loss)70 (31)1,183 (6)
Total other income (expense)
(180)(232)518 (715)
Loss before income tax expense(4,532)(2,092)(5,098)(6,395)
Income tax expense93 41 356 251 
Net loss$(4,625)$(2,133)$(5,454)$(6,646)
Common Stock Data:
Net loss per common share:
Basic and diluted
$(0.26)$(0.13)$(0.32)$(0.39)
Weighted average number of common shares outstanding:
Basic and diluted
17,578,653 16,896,626 17,202,631 16,867,939 

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
September 30,
Nine Months Ended
September 30,
2021202020212020
Net loss$(4,625)$(2,133)$(5,454)$(6,646)
Foreign currency translation adjustment(150)424 50 (111)
Total comprehensive loss$(4,775)$(1,709)$(5,404)$(6,757)

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 StockAdditional
Paid-in Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
SharesAmount
Balance at December 31, 202016,896,626 $17 $91,278 $122 $(29,387)$62,030 
Stock-based compensation— — 162 — — 162 
Net income— — — — 175 175 
Other comprehensive loss— — — (202)— (202)
Balance at March 31, 202116,896,626 17 91,440 (80)(29,212)62,165 
Common stock issued101,284 — — — — — 
Stock-based compensation— — 122 — — 122 
Shares issued in asset acquisition500,000 1 3,794 — — 3,795 
Net loss— — — — (1,004)(1,004)
Other comprehensive income— — — 402 — 402 
Balance at June 30, 202117,497,910 18 95,356 322 (30,216)65,480 
Common stock issued250,000 — — — — — 
Stock-based compensation— — 2,447 — — 2,447 
Employee tax payments from restricted stock withholdings(56,642)— (430)— — (430)
Net loss— — — — (4,625)(4,625)
Other comprehensive loss— — — (150)— (150)
Balance at September 30, 202117,691,268 $18 $97,373 $172 $(34,841)$62,722 
Common StockAdditional
Paid-in Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
SharesAmount
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 loss— — — (619)— (619)
Balance at March 31, 202016,835,318 17 90,767 (910)(23,681)66,193 
Common stock issued61,308 — — — — — 
Stock-based compensation— — 139 — — 139 
Net loss— — — — (3,463)(3,463)
Other comprehensive income— — — 84 — 84 
Balance at June 30, 202016,896,626 17 90,906 (826)(27,144)62,953 
Stock-based compensation— — 186 — — 186 
Net loss— — — — (2,133)(2,133)
Other comprehensive income— — — 424 — 424 
Balance at September 30, 202016,896,626 $17 $91,092 $(402)$(29,277)$61,430 
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)
Nine Months Ended
September 30,
20212020
Cash flows from operating activities:
Net loss$(5,454)$(6,646)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation6,767 6,802 
Stock-based compensation expense2,731 344 
Bad debt expense 144 
Gain on disposal of fixed assets(24)(11)
Gain on extinguishment of debt(1,086) 
Income from equity investment in joint venture
(1,267)(1,529)
Distributions from equity investment in joint venture1,387 2,054 
Impairment of right-of-use lease asset376  
Change in operating assets and liabilities, net of acquisitions:
Accounts receivable(1,708)3,629 
Due to (from) related parties42  
Inventories(173)48 
Prepaid expenses and other current assets91 (396)
Accounts payable and accrued liabilities3,878 (2,085)
Other(82)113 
Net cash provided by operating activities5,478 2,467 
Cash flows from investing activities:
Acquisition of fixed assets(6,948)(327)
Proceeds on sales of fixed assets258 12 
Net cash used in investing activities(6,690)(315)
Cash flows from financing activities:
Proceeds from borrowings on short- and long-term notes payable7,228 1,856 
Payments on short- and long-term notes payable(650)(644)
Payments on notes payable and financed leases from related parties(3,277)(3,776)
Payment of debt issuance costs(420) 
Employee tax payments from restricted stock withholdings(430) 
Net cash provided by (used in) financing activities2,451 (2,564)
Effect of exchange rate changes on cash(115)(157)
Net increase (decrease) in cash and cash equivalents1,124 (569)
Cash and cash equivalents, beginning of period1,814 3,979 
Cash and cash equivalents, end of period$2,938 $3,410 
Supplemental disclosure of cash flow information:
Interest paid$645 $834 
Income taxes paid228 210 
Non-cash investing and financing activities:
Common stock issued to acquire fixed assets$3,795 $ 
Insurance premium financing1,278  
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 an improved environmental footprint. Stabilis is vertically integrated from LNG production through distribution including cryogenic equipment rental and field services. 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.
On June 1, 2021 the Company acquired a third LNG production facility in Port Allen, Louisiana. The plant is capable of producing 30,000 gpd.
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 unaudited, interim condensed consolidated financial statements ("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 consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted. We believe that the presentation and disclosures herein are adequate to prevent the information presented herein from being misleading. The Condensed Consolidated Financial Statements reflect all adjustments (consisting of normal recurring adjustments) for a fair presentation of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the results of operations to be expected for the full year. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 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, all dollar amounts in tabulations are in thousands, unless otherwise indicated.
The accompanying 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 the Company is subject to business risks and uncertainties inherent in the current LNG industry. 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.
The Company's working capital and business risks within the LNG industry 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 year-to-date revenue, including a resumption of activity with existing customers as well as new revenue opportunities, particularly in Mexico and with power generation customers. On April 8, 2021, the Company obtained a new advancing loan facility, pursuant to the United States Department of Agriculture, Business & Industry Loan Program, in the aggregate principal amount of up to $10.0 million, of which $7.0 million was drawn and outstanding as of September 30, 2021.
9


The Company's management believes that current working capital, access to its advancing loan facility and revenue growth of the business will generate sufficient cash flows to fund the business for the next 12 months.
Reclassifications
Presentation of certain prior year amounts have been condensed on the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows herein to conform to current period presentation. Such reclassifications had no impact on the consolidated financial position, results of operations or cash flows.
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.
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 nine months ended September 30, 2021 and 2020 was 7.0% and 3.9%, respectively. The 2021 rate reflects state and foreign income taxes. No U.S. federal income tax benefit was recorded for the periods presented as any net U.S. deferred tax assets generated from operating losses were offset by a change in the Company's valuation allowance on net deferred tax assets.
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 interim 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 consolidated financial position and results of operations.

10


3. Revenue Recognition
Disaggregated Revenues
The table below presents revenue disaggregated by source, for the three and nine months ended September 30, 2021 and 2020 (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
Revenues2021202020212020
LNG Product$14,420 $6,594 $37,927 $18,609 
Rental2,712 737 8,039 4,012 
Service334 187 957 593 
Power Delivery1,925 1,352 5,129 3,638 
Other313 149 1,368 1,008 
$19,704 $9,019 $53,420 $27,860 
The table below presents revenue disaggregated by geographic location, for the three and nine months ended September 30, 2021 and 2020 (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
Revenues2021202020212020
Brazil$1,925 $1,352 $5,129 $3,638 
Mexico3,501 2,729 7,198 2,778 
United States14,278 4,938 41,093 21,444 
$19,704 $9,019 $53,420 $27,860 
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 table below presents the changes in the Company’s contract liabilities for the nine months ended September 30, 2021 and December 31, 2020 (in thousands):
September 30,
2021
December 31,
2020
Balance at beginning of period$357 $185 
Cash received, excluding amounts recognized as revenue283 777 
Amounts recognized as revenue(352)(605)
Balance at end of period$288 $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 in Brazil and through our BOMAY joint venture in China. The tables below present operating results by segment for the three and nine months ended September 30, 2021 and 2020 as well as their respective total assets at September 30, 2021 and December 31, 2020 (in thousands):
11


Three Months Ended
September 30, 2021
Nine Months Ended
September 30, 2021
LNGPower DeliveryTotalLNGPower DeliveryTotal
Revenues$17,779 $1,925 $19,704 $48,291 $5,129 $53,420 
Depreciation2,284 40 2,324 6,653 114 6,767 
Loss from operations before equity income(4,441)(157)(4,598)(6,013)(678)(6,691)
Net equity income from foreign joint ventures' operations 246 246  1,075 1,075 
Income (loss) from operations(4,441)89 (4,352)(6,013)397 (5,616)
Interest expense, net118 12 130 188 36 224 
Interest expense, net - related parties120  120 441  441 
Income tax expense93  93 356  356 
Net income (loss)(4,735)110 (4,625)(5,967)513 (5,454)
September 30, 2021
LNGPower DeliveryTotal
Total assets$71,450 $16,219 $87,669 
Three Months Ended
September 30, 2020
Nine Months Ended
September 30, 2020
LNGPower DeliveryTotalLNGPower DeliveryTotal
Revenues$7,667 $1,352 $9,019 $24,222 $3,638 $27,860 
Depreciation2,237 29 2,266 6,706 96 6,802 
Loss from operations before equity income(2,179)(254)(2,433)(5,898)(1,129)(7,027)
Net equity income from foreign joint ventures' operations 573 573  1,347 1,347 
Income (loss) from operations(2,179)319 (1,860)(5,898)218 (5,680)
Interest expense, net11 (9)2 16 12 28 
Interest expense, net - related parties199  199 681  681 
Income tax expense41  41 41 210 251 
Net income (loss)(2,458)325 (2,133)(6,678)32 (6,646)
December 31, 2020
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.
12


5. Prepaid Expenses and Other Current Assets
The Company’s prepaid expenses and other current assets at September 30, 2021 and December 31, 2020 consisted of the following (in thousands):
September 30,
2021
December 31,
2020
Prepaid LNG$51 $90 
Prepaid insurance1,385 734 
Prepaid supplier expenses326 299 
Other receivables1,923 1,521 
Deposits360 285 
Other253 182 
Total prepaid expenses and other current assets$4,298 $3,111 
6. Property, Plant and Equipment
The Company’s property, plant and equipment at September 30, 2021 and December 31, 2020 consisted of the following (in thousands):
September 30,
2021
December 31,
2020
Liquefaction plants and systems$47,225 $40,841 
Real property and buildings2,373 1,649 
Vehicles and tanker trailers and equipment49,556 47,179 
Computer and office equipment609 532 
Construction in progress964 191 
Leasehold improvements31 30 
100,758 90,422 
Less: accumulated depreciation(44,900)(38,384)
$55,858 $52,038 
Depreciation expense for the nine months ended September 30, 2021 and 2020 both totaled $6.8 million respectively, of which all is included in the unaudited Condensed Consolidated Statements of Operations as its own and separate line item.
On June 1, 2021 the Company closed on the purchase of an LNG production facility in Port Allen, Louisiana. The acquisition included the LNG liquefaction facility, the related assets and real property. The Company paid consideration of $5.0 million in cash and 500,000 shares of Company common stock, subject to a registration rights agreement, which shares were valued at $3.8 million.
7. Investments in Foreign Joint Ventures
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 during the three and nine months ended September 30, 2021 and 2020.
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 Condensed Consolidated Statements of Cash flows.
13


The tables below present a summary of BOMAY's assets and liabilities and equity at September 30, 2021 and December 31, 2020, and its operational results for the three and nine months ended September 30, 2021 and 2020 in U.S. dollars (in thousands, unaudited):
September 30,
2021
December 31, 2020
Assets:
Total current assets
$60,707 $51,811 
Total non-current assets
6,690 7,136 
Total assets
$67,397 $58,947 
Liabilities and equity:
Total liabilities
$34,779 $26,355 
Total joint ventures’ equity
32,618 32,592 
Total liabilities and equity
$67,397 $58,947 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Revenue
$10,040 $17,641 $43,261 $44,844 
Gross Profit
3,420 3,224 8,111 7,456 
Earnings
688 1,663 2,923 3,662 
The table below presents a summary of activity in our investment in BOMAY for the periods ended September 30, 2021 and December 31, 2020 in U.S. dollars (in thousands, unaudited):
September 30,
2021
December 31, 2020
Investment in BOMAY (1)(2)
Initial investment$9,333 $9,333 
Undistributed earnings:
Balance at the beginning of the period1,908 1,257 
Equity in earnings1,267 2,705 
Dividend distributions(1,387)(2,054)
Balance at end of period1,788 1,908 
Foreign currency translation:
Balance at the beginning of the period656 (69)
Change during the period146 725 
Balance at end of period802 656 
Total investment in BOMAY at end of period$11,923 $11,897 
(1)Accumulated statutory reserves in equity method investments of $2.66 million at September 30, 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 seven year life of the joint venture. The Company accreted $97 thousand for both the nine months ended September 30, 2021 and 2020, which is included in income from equity investments in foreign joint ventures in the accompanying unaudited interim condensed consolidated statements of operations. As of September 30, 2021 and December 31, 2020, accumulated accretion totaled $280 thousand and $183 thousand, respectively.
14


In accordance with our long-lived asset policy, when events or circumstances indicate the carrying amount of an asset may not be recoverable, management tests long-lived assets for impairment. If the estimated future cash flows are projected to be less than the carrying amount, an impairment write-down (representing the carrying amount of the long-lived asset which exceeds the present value of estimated expected future cash flows) would be recorded as a period expense. In making this evaluation, a variety of quantitative and qualitative factors are considered including national and local economic, political and market conditions, industry trends and prospects, liquidity and capital resources and other pertinent factors. Based on this evaluation for this reporting period, the Company does not believe an impairment of our investment in BOMAY is necessary for the period ending September 30, 2021.
8. Accrued Liabilities
    The Company’s accrued liabilities at September 30, 2021 and December 31, 2020 consisted of the following (in thousands):
September 30,
2021
December 31,
2020
Compensation and benefits$3,134 $1,745 
Professional fees623 408 
LNG fuel and transportation2,507