CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q (“this Report”) includes statements that constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements represent intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks and uncertainties and other factors. These statements may relate to, but are not limited to, information or assumptions about us, our capital and other expenditures, dividends, financing plans, capital structure, cash flow, pending legal and regulatory proceedings and claims, including environmental matters, future economic performance, operating income, cost savings, and management’s plans, strategies, goals and objectives for future operations and growth. These forward-looking statements generally are accompanied by words such as “intend,” “anticipate,” “believe,” “estimate,” “expect,” “should,” “seek,” “project,” “plan” or similar expressions. Any statement that is not a historical fact is a forward-looking statement. It should be understood that these forward-looking statements are necessary estimates reflecting the best judgment of senior management, not guarantees of future performance. Many of the factors that impact forward-looking statements are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements as described in Part I. “Item 1A. Risk Factors” of the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("the SEC") on March 5, 2026, as well as any additional risk factors identified and described in Part II. “Item 1A. Risk Factors” of this Report.

 

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

 

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

 

 

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS. (Unaudited)

 

Stabilis Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

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

 

 

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

 

 

Stabilis Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

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

 

 

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

 

 

Stabilis Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited, in thousands)

 

 

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

 

 

Stabilis Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited, in thousands, except share data)

 

 

 

 

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

 

 

Stabilis Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

 

 

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

 

 

STABILIS SOLUTIONS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

 

Description of Business

 

Stabilis Solutions, Inc. and its subsidiaries (the “Company”, “Stabilis”, “our”, “us” or “we”) provide turnkey clean energy production, storage, transportation and fueling solutions using liquefied natural gas (“LNG”) to multiple end markets. 

 

The Company serves customers in diverse end markets, including aerospace, agriculture, industrial, marine bunkering, mining, oil and gas, 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.

 

Basis of Presentation and Consolidation

 

The accompanying unaudited, interim condensed consolidated financial statements (the “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 within this report 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, 2025 included in the Company's Annual Report on Form 10-K, as filed on March 5, 2026. 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.

 

Reclassification

 

Beginning in the second quarter of 2026, the Company presents time charter expense as a separate line item on its Condensed Consolidated Statements of Operations. The Company previously entered into a time charter agreement (the "time charter") for a marine bunkering vessel (“the Garibaldi”) commencing March 1, 2026. During the three months ended March 31, 2026, the Company reported $1.5 million of time charter expense related to the Garibaldi within cost of revenues as the Company expected to earn future revenues from the Garibaldi. On June 24, 2026, the time charter was terminated. See additional discussion in Note 7 – Leases. The Garibaldi was never placed into operation and never generated any revenues for the Company. The Company does not expect future costs for the Garibaldi. Accordingly, the Company no longer presents time charter expense within cost of revenues and instead presents this cost as a separate line item on its Condensed Consolidated Statement of Operations beginning in the second Quarter 2026. The Company has reclassified the $1.5 million of time charter expense previously reported within cost of revenues for the three months ended March 31, 2026 to conform to current presentation for the six months ended June 30, 2026. The reclassification had no effect on total costs and expenses, operating loss, net loss, financial condition, or net cash flows from operating, investing, or financing activities for any period presented.

 

Use of Estimates in the Preparation of the Consolidated Financial Statements.

 

The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include the determination of fair value of equity-based awards, fair value of natural gas derivatives, 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.

 

Segment Reporting

 

In accordance with ASC Topic 280 - "Segment Reporting (ASC 280)" 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 does not 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 are not 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 Condensed Consolidated Balance Sheets as "total assets" and the significant segment expenses are listed on the accompanying Condensed Consolidated Statements of Operations.

 

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Restricted Cash and Cash Equivalents

 

Restricted cash and cash equivalents consist of funds that are contractually restricted as to usage or withdrawal and have been presented separately from cash and cash equivalents on our Condensed Consolidated Balance Sheets. Our restricted cash relates to $20.0 million of advance payments, received from a customer, related to a customer project scheduled to commence during the first quarter of 2027 and continuing through the first quarter of 2029. The use of the advance payments is restricted to the purchase of equipment, securing LNG supply and commissioning expenses incurred by the Company specific to the customer project. The advance payments will offset a percentage of each future invoice over the term of the contract until fully offset at which time the credit will cease. The Company believes the advance payments constitute deferred revenue, as presented on the Condensed Consolidated Balance Sheets as of June 30, 2026. See Note 6 - Deferred Revenue for additional information.

 

Other noncurrent assets

 

Other noncurrent assets consist of legal costs incurred to obtain customer contracts and legal costs associated with obtaining financing for the Company’s proposed Galveston LNG liquefaction facility that have been capitalized and will be expensed over the term of the contract or financing term. During the first quarter, the Company impaired contract costs of $0.1 million associated with a customer contract that was cancelled by the Company. 

 

Recent Accounting Pronouncements

 

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" which requires companies to disclose disaggregated information about certain costs and expenses in the notes to the financial statements. ASU 2024-03 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 intends to adopt the pronouncement when the pronouncement becomes effective on January 1, 2027. The Company does not expect the adoption of ASU 2024-03 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 of third 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 does not 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 may meet the criteria of a derivative in the event delivery is not made. These contracts are accounted for under the normal purchase normal sales exclusion under U.S. GAAP and are not measured at fair value each reporting period. Our LNG contracts are generally one to 24 months in duration.

 

Rental revenues

 

Rental revenues are generated from the rental of cryogenic equipment to our customers. Rental revenues are not 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 Topic 606 and not ASC 842: 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.

 

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 are not 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. 

 

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Disaggregated Revenues

 

The table below presents revenue disaggregated by source, for the three and six months ended June 30, 2026 and 2025 (in thousands):

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
Revenues:		2026				2025				2026				2025
LNG product		$	11,036			$	14,628			$	19,733			$	28,574
Rental			683				1,296				1,540				2,846
Service			9				1,169				832				2,874
Other			188				216				190				353
Total revenues		$	11,916			$	17,309			$	22,295			$	34,647

 

The table below presents revenue disaggregated by geographic location, for the three and six months ended June 30, 2026 and 2025 (in thousands):

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
Revenues:		2026				2025				2026				2025
United States		$	11,024			$	16,435			$	20,559			$	32,958
Mexico			892				874				1,736				1,689
Total revenues		$	11,916			$	17,309			$	22,295			$	34,647

 

Variable and Other Revenue Components

 

Certain of our contracts may include rental or services that may vary based on customer demand 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 are 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.

 

3. PREPAID EXPENSES AND OTHER CURRENT ASSETS

 

The Company’s prepaid expenses and other current assets at  June 30, 2026 and  December 31, 2025 consisted of the following (in thousands):

 

		June 30,				December 31,
		2026				2025
Prepaid insurance		$	335			$	999
Prepaid supplier expenses			147				254
Other receivables			384				447
Deposits			83				99
Other			395				177
Total prepaid expenses and other current assets		$	1,344			$	1,976

  

4. PROPERTY, PLANT AND EQUIPMENT

 

The Company’s property, plant and equipment at June 30, 2026 and  December 31, 2025 consisted of the following (in thousands):

 

		June 30,				December 31,
		2026				2025
Liquefaction plants and systems		$	57,480			$	57,341
Real property and buildings			2,082				2,082
Vehicles and tanker trailers and equipment			49,227				50,316
Computer and office equipment			1,233				897
Construction in progress			23,698				14,946
Leasehold improvements			31				31
Total			133,751				125,613
Less: accumulated depreciation			(75,270	)			(72,666	)
Net		$	58,481			$	52,947

 

Depreciation expense totaled $1.8 million and $1.9 million for the three months ended  June 30, 2026 and 2025, respectively, and  $3.6 million and $3.7 million for the six months ended June 30, 2026 and 2025, respectively, all of which is included in the Condensed Consolidated Statements of Operations as a separate line item.

 

Construction in progress of $23.7 million and $14.9 million at  June 30, 2026 and December 31, 2025, respectively, primarily relate to the deployment and build-out of liquefaction assets and the purchase of additional liquefaction assets for the Company’s contract for power generation for a data center that begins in 2027 and its proposed Galveston LNG liquefaction facility.

  

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5. ACCRUED LIABILITIES

 

The Company’s accrued liabilities at  June 30, 2026 and  December 31, 2025 consisted of the following (in thousands):

 

		June 30,				December 31,
		2026				2025
Compensation and benefits		$	3,362			$	2,573
Other taxes payable			124				158
Other accrued liabilities			125				127
Total accrued liabilities		$	3,611			$	2,858

 

6. DEFERRED REVENUE

 

The Company records deferred revenue if we receive consideration, prior to transferring the goods or services, required under the terms of the sales contract, to the customer.

 

Multi-year, On-site Power Generation for a Data Center

 

In February 2026, the Company was awarded a multi-year contract to supply LNG for power generation at a data center. During the three and six months ended June 30, 2026, the Company received advance payments of $5.0 million and $20.0 million, respectively. Under the contract, the Company received an additional $5.0 million advance payment in the third quarter of 2026. LNG deliveries are expected to commence during the first quarter of 2027 and continue through the first quarter of 2029. The advance payments will offset a percentage of each future invoice over the term of the contract, or until fully offset, at which time credit will cease. Under the contract, the Company will utilize the advance payments for the purchase of equipment, securing LNG supply and commissioning expenses incurred by the Company specific to the customer project. The portion of the $20.0 million the Company has received through the six months ended June 30, 2026 that has not been utilized related to the customer project has been classified as restricted cash and cash equivalents and the full amount of the advance payment has been presented as deferred revenue on the Company's Condensed Consolidated Balance Sheet at June 30, 2026.

 

The Company's deferred revenue at  June 30, 2026 and December 31, 2025 was $20.0 million and $0.0 million, respectively, with $0.7 million classified as current and  $19.3 million of deferred revenue classified as non-current at  June 30, 2026.

7. LEASES

 

Our leases primarily consist of operating leases for certain facilities and office spaces in Houston, Texas and Monterrey, Mexico, and financing leases for certain equipment. The Company also leases a marine bunkering site in Galveston, Texas, along with certain equipment on a short-term basis. Leases which are less than twelve months or have no cancellation penalties are not recorded on the Condensed Consolidated Balance Sheets.

 

For the three months ended  June 30, 2026 and 2025, lease expense that relates to the Company's operating leases, was approximately $2.4 million and $0.1 million, respectively. For the six months ended June 30, 2026 and 2025, lease expense that relates to the Company's operating leases, was approximately $3.9 million and $0.2 million, respectively.

 

Termination of Time Charter Agreement - Marine Bunkering Vessel

 

On December 12, 2025, the Company entered into a time charter agreement for a marine bunkering vessel (the "Garibaldi") commencing March 1, 2026 (the "time charter"). The Company determined that the time charter represented an operating lease and the Company recorded a right-of-use ("ROU") asset and lease liability of $22.4 million and $21.8 million, respectively on March 1, 2026. On June 11, 2026, the Company and the owners of the Garibaldi entered into a termination option granting the owners an option to terminate the time charter. On June 24, 2026, the owners exercised that option, and the time charter was terminated. In connection with the termination, the Company incurred a loss on lease cancellation of $1.3 million which is included in "Time charter expense" on the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2026. The loss on lease cancellation includes an early termination fee of $0.8 million payable  January 1, 2027 and write-off of the remaining balance of the ROU asset of $0.6 million after derecognizing the Company's ROU asset equal to the cancellation of $18.4 million of lease obligations. The Company also expensed $1.1 million of deferred rent and operating costs for the Garibaldi, payable during the third quarter of 2026. At  June 30, 2026, the Company no longer has any ROU asset related to the Garibaldi and the remaining payments and termination fee totaling $1.9 million are included in accounts payable on the Company's Condensed Consolidated Balance Sheet at June 30, 2026.

 

The following table summarizes the supplemental cash flow information related to leases for the six months ended June 30, 2026 and 2025 (in thousands):

 

		June 30,				June 30,
Other information		2026				2025
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases		$	1,724			$	147
Financing cash flows from finance leases			210				49
Interest paid			—				10

 

 

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8. DEBT

 

During the three months ended  June 30, 2026 and 2025, interest expense was $0.1 million and $0 million, respectively, and the Company capitalized interest of $0.2 million and $0.1 million, respectively. During the six months ended June 30, 2026 and 2025, interest expense was $0.1 million and $0.1 million, respectively, and the Company capitalized interest of $0.3 million and $0.2 million, respectively.

 

Revolving Credit Facility

 

On June 29, 2026, the Company, along with its subsidiaries, Stabilis LNG Eagle Ford LLC, Stabilis GDS, Inc. and Stabilis LNG Port Allen, LLC (collectively, the "Borrower") entered into a Second Modification Agreement and Amendment to Other Loan Documents (the “Second Modification Agreement”) with The Huntington National Bank, as successor by merger to Cadence Bank (the “Bank”), amending that certain Loan Agreement dated as of June 9, 2023, by and among the Borrowers and the Bank (the “Loan Agreement”).

 

The Second Modification Agreement amends the Loan Agreement to, among other things: (i) revise the financial covenant under the Loan Agreement to require the Borrowers to maintain a minimum Fixed Charge Coverage Ratio of 1.20 to 1.00, tested as of the last day of each fiscal quarter on a trailing twelve-month basis, commencing with the fiscal quarter ending March 31, 2027; and (ii) establish a segregated, blocked deposit account maintained with and under the control of the Bank (the “Cash Collateral Account”), funded with at least $5,000,000, as collateral security for the obligations under the Loan Agreement. Until the Borrowers demonstrate compliance with the minimum Fixed Charge Coverage Ratio for two consecutive fiscal quarters, commencing with the fiscal quarter ending March 31, 2027, availability under the revolving credit facility is limited to the amount on deposit in the Cash Collateral Account (subject to a cap of $10,000,000), after which availability will be determined by the borrowing base, up to a maximum of $10,000,000, and the Cash Collateral Account will be terminated and released to the Borrowers. In connection with the Second Modification Agreement, the Borrowers paid the Bank an upfront fee of $15,000.

 

Secured Term Note

 

On April 8, 2021, the Company entered into a loan agreement (the “AmeriState Loan Agreement”) with AmeriState Bank (“Lender”) to provide for an advancing loan facility in the aggregate principal amount of up to $10.0 million (the “AmeriState Loan”). The AmeriState Loan Agreement is secured by specific equipment owned by the Company. On September 19, 2023, the AmeriState Loan Agreement was amended (the "First Amendment") for the purpose of substituting certain items of collateral under the AmeriState Loan Agreement. The AmeriState Loan is a term loan facility, matures on April 8, 2031 and bears interest at the U.S. prime lending rate plus 2.5% per annum, 9.25% at June 30, 2026. The AmeriState Loan provides that proceeds from borrowings may be used for working capital purposes at the Company’s liquefaction plant in George West, Texas and related fees and costs associated with the AmeriState Loan. As of June 30, 2026, all available amounts had been drawn under the AmeriState loan with $7.6 million remaining outstanding.

 

The AmeriState Loan Agreement requires the Company to meet certain financial covenants which include a debt-to-net-worth ratio of not more than 9.1 to 1.0 and a debt service coverage ratio of not less than 1.2 to 1.0 as of the last day of each calendar year. During the three months ended June 30, 2026, the Company amended its AmeriState Loan Agreement to clarify that compliance with its financial covenants is measured and calculated only on an annual basis at December 31, of each year.

 

Upon an Event of Default (as defined in the AmeriState Loan Agreement), the Lender may (i) terminate its commitment, (ii) declare the outstanding principal amount of the Advancing Notes (as defined in the AmeriState Loan Agreement) due and payable, or (iii) exercise all rights and remedies available to Lender under the AmeriState Loan Agreement. 

 

9. RELATED PARTY TRANSACTIONS

 

Casey Crenshaw (our Executive Chairman of the Board and interim President and Chief Executive Officer) is the beneficial owner of 50% of The Modern Group and is deemed to jointly control The Modern Group with family members. From time to time, the Company purchases supplies and services from subsidiaries of The Modern Group.

 

For the three months ended  June 30, 2026 and 2025, the Company had purchases of $0.0 and $0.1 million with The Modern Group, respectively. For the six months ended June 30, 2026 and 2025, the Company had purchases of $1 thousand and $0.1 million, respectively. The Company had no sales to The Modern Group during the three and six months ended June 30, 2026 and 2025. As of  June 30, 2026 and December 31, 2025, the Company had no accounts receivable due from The Modern Group and no accounts payable due to The Modern Group.

 

Chart Energy and Chemicals, Inc. ("Chart E&C") beneficially owns 7.9% of our outstanding common stock at June 30, 2026. For the three months ended  June 30, 2026 and 2025, the Company had total purchases from Chart E&C of $2.0 million and $13 thousand, respectively. For the six months ended June 30, 2026 and 2025, the Company had purchases of $2.0 million and $0.1 million, respectively. The Company had no sales to Chart E&C during the three and six months ended June 30, 2026 and 2025. The Company had no accounts receivable due from Chart E&C at June 30, 2026 and December 31, 2025. The Company had accounts payable due to Chart E&C at June 30, 2026 of $1.0 million and an immaterial amount of accounts payable due to Chart E&C at  December 31, 2025.

 

 

10. COMMITMENTS AND CONTINGENCIES

 

Environmental Matters

 

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

 

Litigation, Claims and Contingencies

 

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

 

11. SUPPLEMENTAL CASH FLOW INFORMATION

 

The Company's supplemental disclosure of cash flow information for the six months ended June 30, 2026 and 2025 is as follows (in thousands):

 

		Six Months Ended
		June 30,
Supplemental Disclosure of Cash Flow Information:		2026				2025
Interest paid		$	290			$	285
Income taxes paid (received)			105				191
Significant non-cash investing and financing activities:
Acquisition of fixed assets included within accounts payable and accrued expenses		$	2,776			$	675
ROU assets acquired under operating leases			21,758				425
ROU assets and operating lease obligations forgiven upon lease termination			18,400				—

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included elsewhere in this Form 10-Q (“this Report”) and the consolidated financial statements included in the 2025 Annual Report on Form 10-K filed on March 5, 2026 with the U.S. Securities and Exchange Commission (the “SEC”). Historical results and percentage relationships set forth in the Condensed Consolidated Statements of Operations and Cash Flows, including trends that might appear, are not necessarily indicative of future operations or cash flows.

 

Overview

 

Stabilis Solutions, Inc. and its subsidiaries provide turnkey clean energy production, storage, transportation and fueling solutions, using liquefied natural gas (“LNG”), to multiple end markets. We provide LNG solutions to customers in diverse end markets, including aerospace, agriculture, industrial, marine bunkering, mining, oil and gas, 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. LNG can also be used to replace a variety of fuels, including distillate fuel oil, such as diesel and marine gas oil, and propane, among others, to provide environmental and economic benefits. Increasingly, LNG is being utilized as a transportation fuel in the marine industry and as a propellant in the private rocket launch sector. We believe that these fuel markets are large and provide significant opportunities for LNG usage.

 

The Company generates revenue by selling and delivering LNG to our customers, renting cryogenic equipment and providing engineering and field support services. We sell our products and services separately or as a bundle depending on the customer’s needs. Pricing depends on market pricing for natural gas and competing fuel sources (such as diesel, fuel oil, and propane among others), as well as the customer’s purchased volume, contract duration and credit profile.

 

LNG Production and Sales—Stabilis builds and operates cryogenic natural gas processing facilities, called “liquefiers,” which convert natural gas into LNG through a purification and multiple stage cooling process. We currently own and operate a liquefier that can produce up to 100,000 LNG gallons per day in George West, Texas and a liquefier that can produce up to 30,000 LNG gallons per day in Port Allen, Louisiana. The Company continues to seek expansion of its own liquefaction capacity as described in "Expanding Markets and Expansion Efforts" below. We also purchase LNG from third-party production sources which allows us to support customers in markets where we do not own liquefiers. We make the determination of LNG supply sources based on the cost of LNG, the transportation cost to deliver to customer locations, and the reliability of the supply source. Revenues earned from the production and sales of LNG are included within LNG product revenue.

 

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

 

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

 

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

 

Expanding Markets and Strategic Expansion Efforts

 

Multi-year On-site Power Generation for a Data Center

 

In February 2026, the Company was awarded a multi-year take-or-pay contract to supply LNG for behind-the-meter power generation for a world-leading provider of remote and temporary power generation at a data center. LNG deliveries are expected to commence during the first quarter of 2027 and continue through the first quarter of 2029. Total revenue under the initial multi-year term of the contract is estimated to be approximately $200 million. This contract represents the Company’s first contract in support of data center behind-the-meter power generation, consistent with the Company's strategic focus on growing, high-value vertical markets. The Company will receive $25.0 million in advance payments from the customer; of which, $20.0 million has been received at June 30, 2026 and an additional $5.0 million advance payment was received in the third quarter of 2026. Advance payments will offset a percentage of each future invoice over the term of the contract, until fully offset, at which time the credit will cease. The Company may utilize the advance payments for the purchase of equipment, securing LNG supply and commissioning expenses incurred by the Company specific to the customer project. The portion of the $20.0 million that has not been utilized related to the customer project has been classified as restricted cash and cash equivalents. The full amount of the advance payment has been presented as deferred revenue on the Company's Condensed Consolidated Balance Sheet at June 30, 2026. See additional discussion in Note 1 and Note 6 of the Notes to Condensed Consolidated Financial Statements.

 

On July 9, 2026, the Company signed a contract commencing in the third quarter of 2026 to fuel temporary power generation at a data center that is anticipated to replace a significant portion of lost volumes from prior periods.  This contract represents the second contract in support of power generation at a data center.

 

Proposed Galveston LNG Liquefaction Facility and Jones Act-compliant LNG Bunkering Vessel

 

In 2025, the Company announced development of a proposed new 350,000 gallon-per-day, waterfront LNG liquefaction facility in Galveston, Texas. The Company has entered into a ten-year LNG supply bunkering agreement, commencing in 2027, with a global marine cruise vessel operator to supply LNG for approximately 16% of the proposed project's planned capacity and to anchor development of the proposed facility. The Company continues to advance development of the facility and is engaged in discussions with multiple potential customers to secure the remaining offtake and to advance the project toward an expected Final Investment Decision ("FID") later in 2026. The total capital required for the project is estimated at $350 million to $400 million. The proposed Galveston LNG liquefaction facility is expected to be strategically located to support and expand the Company's marine bunkering services to additional marine markets. With the construction of the facility, the Company plans to commission a dedicated Jones Act-compliant LNG bunkering vessel to serve the Port of Galveston, Port of Houston and surrounding Gulf Coast markets. This vessel would transport LNG from the facility directly to customer vessels. Together, the proposed new LNG facility and new bunkering vessel are expected to create a fully integrated, last-mile LNG delivery solution for customers.

 

 

Termination of Leased LNG Bunkering Vessel

Geopolitical events in the Middle East with the U.S. and Iran conflict

 

Recent geopolitical developments in the Middle East, including the U.S. conflict with Iran, may contribute to an increase in energy related costs and related market uncertainties. The Company's customer pricing structure for natural gas is primarily based off a monthly index and may absorb most, if not all, volatility associated with the price of natural gas; however, there can be no assurance that the Company will not be adversely impacted by resulting energy cost and market uncertainties resulting from the Iran conflict. The Company continues to monitor the developments.

 

 

Results of Operations

 

Stabilis supplies LNG to multiple end markets in North America and provides turnkey fuel solutions to help users of propane, diesel and other crude-based fuel products convert to LNG. 

 

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

 

During the fourth quarter of 2025, two multi-year customer contracts concluded in accordance with their terms. The completed contracts were for temporary remote power in Louisiana, and the Company’s truck-to-vessel LNG marine bunkering services in Galveston, Texas. The two contracts accounted for approximately 19% and 32% of 2025 revenues, respectively. As a result, the second quarter of 2026 results were lower for the period. The comparative tables below reflect our consolidated operating results for the three months ended June 30, 2026 (the “Current Quarter”) as compared to the three months ended June 30, 2025 (the “Prior Year Quarter”) (unaudited, amounts in thousands, except for percentages).

  

		Three Months Ended
		June 30,
		2026				2025				$ Change				% Change
Revenues:
LNG product		$	11,036			$	14,628			$	(3,592	)			(24.6	)
Increase / (decrease) in gallons delivered			(2,820	)											n/a
Rental			683				1,296				(613	)			(47.3	)
Service			9				1,169				(1,160	)			(99.2	)
Other			188				216				(28	)			(13.0	)
Total revenues			11,916				17,309				(5,393	)			(31.2	)
Operating expenses:
Cost of revenues			9,569				12,724				(3,155	)			(24.8	)
Time charter expense			2,851				—				2,851				n/a
Change in unrealized loss on natural gas derivatives			—				60				(60	)			n/a
Selling, general and administrative expenses			2,501				3,131				(630	)			(20.1	)
Depreciation expense			1,777				1,860				(83	)			(4.5	)
Total operating expenses			16,698				17,775				(1,077	)			(6.1	)
Loss from operations before equity income			(4,782	)			(466	)			(4,316	)			n/a
Net equity income from foreign joint venture operations			215				50				165				n/a
Loss from operations			(4,567	)			(416	)			(4,151	)			997.8
Other income (expense):
Interest income, net			116				24				92				n/a
Other expense, net			(37	)			(24	)			(13	)			54.2
Total other income (expense)			79				—				79				n/a
Net loss before income tax expense			(4,488	)			(416	)			(4,072	)			978.8
Income tax expense			149				197				(48	)			n/a
Net loss		$	(4,637	)		$	(613	)		$	(4,024	)			656.4

 

Revenue

 

During the Current Quarter, revenues decreased  $5.4 million, or 31%, compared to the Prior Year Quarter. The change in revenue primarily related to:

 

●

Decreased gallons of LNG delivered in the Current Quarter due to the conclusion of two contracts, compared to the Prior Year Quarter resulting in a decrease in revenues of $2.9 million;

 

●

Decreased rental, service and other revenues in the Current Quarter compared to the Prior Year Quarter, resulting in a decrease in revenues of $1.8 million; and

 

●

Decreased average natural gas prices in the Current Quarter compared to the Prior Year Quarter resulting in a decrease in revenues of $0.8 million.

 

These decreases were partially offset by increased revenues of $0.1 million related to higher average pricing from a favorable customer mix in the Current Quarter compared to the Prior Year Quarter.

 

Operating Expenses

 

Cost of revenues. Cost of revenues decreased $3.2 million, or 25%, compared to the Prior Year Quarter. As a percentage of revenue, these costs were 80% and 74% in the Current Quarter and the Prior Year Quarter, respectively. The change in cost of revenues was primarily attributable to:

 

●

Decreased gallons of LNG delivered in the Current Quarter compared to the Prior Year Quarter resulting in a decrease in cost of revenues of $2.0 million;

 

●

Decreased average natural gas prices in the Current Quarter compared to the Prior Year Quarter resulting in a decrease in cost of revenues of $0.6 million; and

 

●

Decreased field services labor and demobilization costs totaling $0.6 million.

 

 

Time charter expense. The Company recognized time charter expense and cancellation charges of $2.9 million in the Current Quarter related to the time charter of the Garibaldi which was terminated on June 24, 2026. See also Note 7 of the Notes to Condensed Consolidated Financial Statements.

 

Change in unrealized loss on natural gas derivatives. In the Prior Year Quarter, the Company had an unrealized loss of $0.1 million on change in unrealized loss on natural gas derivatives. The Company had no unrealized gain or loss in the Current Quarter, and did not hold any natural gas derivatives during the Current Quarter.

 

Selling, general and administrative expenses. Selling, general and administrative expenses decreased $0.6 million in the Current Quarter compared to the Prior Year Quarter. The decrease is primarily related to lower professional fees and compensation expense.

 

Depreciation. Depreciation expense decreased $0.1 million during the Current Quarter as compared to the Prior Year Quarter primarily due to assets reaching the end of their depreciable lives partially offset by recent acquisitions of fixed assets.

 

Net equity income from foreign joint venture operations. Equity income from the Company's foreign joint venture increased by $0.2 million in the Current Quarter compared to the Prior Year Quarter due to increased net profits by the joint venture.

 

Interest income. Interest income, net was $0.1 million in the Current Quarter compared to $24 thousand in the Prior Year Quarter. In both periods, interest income, net related to interest earned on the Company's cash balances.

 

Other income (expense). Other expense was $37 thousand during the Current Quarter compared to $24 thousand in the Prior Year Quarter related to, in both periods, transactional foreign exchange gains (losses).

 

Income tax expense. The Company incurred state and foreign income tax expense of $0.1 million during the Current Quarter compared to $0.2 million during the Prior Year Quarter. Income tax expense for the Current Quarter and Prior Year Quarter primarily related to foreign taxes incurred on dividends received from the Company's joint venture. No U.S. federal income taxes were recorded for the Current Quarter or Prior Year Quarter as any net U.S. deferred tax assets generated from operating losses or used from operating income were offset by a change in the Company's valuation allowance on net deferred tax assets.

 

 

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

 

During the the fourth quarter of 2025, two multi-year customer contracts concluded in accordance with their terms. The completed contracts were for temporary remote power in Louisiana, and the Company’s truck-to-vessel LNG marine bunkering services in Galveston, Texas. The two contracts accounted for approximately 19% and 32% of 2025 revenues, respectively. As a result, the first six months ended June 30, 2026 results were lower for the period. Beginning in the second quarter of 2026, the Company presents time charter expense as a separate line item on its Condensed Consolidated Statements of Operations. See Note 1 of the Notes to Condensed Consolidated Financial Statements. The Company has reclassified $1.5 million of time charter expense previously reported within cost of revenues for the three months ended March 31, 2026 to conform to current presentation for the six months ended June 30, 2026. The Company previously disclosed cost of revenues as 96% of revenues for the three months ended March 31, 2026. Cost of revenues for the three months ended March 31, 2026 are now 82% of revenues with this reclassification. The reclassification had no effect on total costs and expenses, operating loss, net loss, financial condition, or net cash flows from operating, investing, or financing activities for any period presented.

 

The comparative tables below reflect our consolidated operating results for the six months ended June 30, 2026 (the “Current Year”) as compared to the six months ended June 30, 2025 (the “Prior Year”) (unaudited, amounts in thousands, except for percentages).

  

		Six Months Ended
		June 30,
		2026				2025				$ Change				% Change
Revenues:
LNG product		$	19,733			$	28,574			$	(8,841	)			(30.9	)
Increase / (decrease) in gallons delivered			(8,095	)											n/a
Rental			1,540				2,846				(1,306	)			(45.9	)
Service			832				2,874				(2,042	)			(71.1	)
Other			190				353				(163	)			(46.2	)
Total revenues			22,295				34,647				(12,352	)			(35.7	)
Operating expenses:
Cost of revenues			18,090				25,512				(7,422	)			(29.1	)
Time charter expense			4,342				—				4,342				n/a
Change in unrealized gain on natural gas derivatives			—				(24	)			24				n/a
Selling, general and administrative expenses			5,297				8,064				(2,767	)			(34.3	)
Gain from disposal of fixed assets			—				(103	)			103				n/a
Impairment			71				—				71				n/a
Depreciation expense			3,562				3,727				(165	)			(4.4	)
Total operating expenses			31,362				37,176				(5,814	)			(15.6	)
Loss from operations before equity income			(9,067	)			(2,529	)			(6,538	)			n/a
Net equity income from foreign joint venture operations			442				418				24				5.7
Loss from operations			(8,625	)			(2,111	)			(6,514	)			n/a
Other income (expense):
Interest income, net			141				45				96				213.3
Other expense, net			(74	)			(36	)			(38	)			n/a
Total other income (expense)			67				9				58				644.4
Net loss before income tax expense			(8,558	)			(2,102	)			(6,456	)			n/a
Income tax expense			155				109				46				42.2
Net loss		$	(8,713	)		$	(2,211	)		$	(6,502	)			n/a

 

Revenue

 

During the Current Year, revenues decreased $12.4 million, or 36%, compared to the Prior Year. The change in revenue primarily related to:

 

●

Decreased gallons of LNG delivered in the Current Year due to the conclusion of two contracts, compared to the Prior Year resulting in a decrease in revenues of $8.6 million;

 

●

Decreased rental, service and other revenues in the Current Year compared to the Prior Year, resulting in a decrease in revenues of $3.5 million; and

 

●

Decreased average natural gas prices in the Current Year compared to the Prior Year resulting in a decrease in revenues of $0.7 million.

 

These decreases were partially offset by increased revenues of $0.4 million related to higher average pricing from a favorable customer mix in the Current Year compared to the Prior Year.

 

Operating Expenses

 

Cost of revenues. Cost of revenues decreased $7.4 million, or 29% compared to the Prior Year. As a percentage of revenue, these costs were 81% and 74% in the Current Year and the Prior Year, respectively. The change in cost of revenues was primarily attributable to:

 

●

Decreased gallons of LNG delivered in the Current Year compared to the Prior Year resulting in a decrease in cost of revenues of $5.9 million;

 

●

Decreased field services and operations labor and demobilization costs totaling $1.0 million, as well as lower repair and maintenance and other costs totaling $0.3 million.

 

●

Decreased average natural gas prices in the Current Year compared to the Prior Year resulting in a decrease in cost of revenues of $0.9 million; and

 

The decrease was partially offset by increased cost of revenues of $0.7 million related to an increase in net transportation and liquefaction costs in the Current Year compared to the Prior Year.

 

 

Time charter expense. The Company recognized time charter expense and cancellation charges of $4.3 million in the Current Year related to the time charter of the Garibaldi which was terminated on June 24, 2026. See also Note 7 of the Notes to Condensed Consolidated Financial Statements.

 

Change in unrealized gain on natural gas derivatives. In the Prior Year, the Company had an unrealized gain of $24 thousand on change in unrealized gain on natural gas derivatives. The Company had no unrealized gain or loss in the Current Year, and did not hold any natural gas derivatives during the Current Year.

 

Selling, general and administrative expenses. Selling, general and administrative expenses decreased $2.8 million in the Current Year compared to the Prior Year. Mr. Ballard's severance related expenses were $2.1 million in the Prior Year in addition to higher compensation expense incurred in the Prior Year related to incentive compensations and bonus.

 

Depreciation. Depreciation expense decreased $0.2 million during the Current Year as compared to the Prior Year primarily due to assets reaching the end of their depreciable lives partially offset by recent acquisitions of fixed assets.

 

Gain on disposal of assets. The Company recognized a gain on disposal of assets of $0.1 million in the Prior Year related to the sale of certain assets in which proceeds of $0.1 million were received. The Company did not have a gain or loss in the Current Year.

 

Impairment. The Company recognized impairment charges of $0.1 million in the Current Year which related to capitalized costs from a cancelled contract. The Company did not incur any impairment charges in the Prior Year.

 

Net equity income from foreign joint venture operations. Equity income from the Company's foreign joint venture was $0.4 million in both the Current Year and the Prior Year due from net profits of the joint venture.

 

Interest income. Interest income, net was $0.1 million in the Current Year compared to $45 thousand in the Prior Year. In both periods, interest income, net related to interest earned on the Company's cash balances. 

 

Other income (expense). Other expense was $0.1 million during the Current Year compared to $36 thousand in the Prior Year primarily related to, in both periods, transactional foreign exchange gains (losses).

 

Income tax expense. The Company incurred state and foreign income tax expense of $0.2 million during the Current Year compared to $0.1 million during the Prior Year. Income tax expense for the Current Year and Prior Year primarily related to foreign taxes incurred on dividends received from the Company's joint venture. No U.S. federal income taxes were recorded for the Current Year or Prior Year as any net U.S. deferred tax assets generated from operating losses or used from operating income were offset by a change in the Company's valuation allowance on net deferred tax assets.

 

 

Liquidity and Capital Resources

 

The Company's principal sources of liquidity in the Current Quarter consisted of cash provided by our operations, dividends received from its joint venture, borrowings under its AmeriState loan, cash on hand, and customer advance payments. The Company used its liquidity to invest in fixed assets to support growth, as well as to pay interest and principal amounts outstanding under our debt agreements.

 

As of June 30, 2026, we had $4.5 million in unrestricted cash and cash equivalents on hand and $14.3 million in restricted cash, $8.2 million in outstanding debt (net of debt issuance costs) and operating lease obligations (of which $1.6 million is due in the next twelve months). The Company has availability under its debt agreements of $5.0 million. Additionally, the Company has successfully exited from its time charter of the Garibaldi significantly alleviating future cash requirements associated with the time charter.

 

The Company is subject to substantial business risks and uncertainties inherent in the LNG industry and there is no assurance that the Company will be able to generate sufficient cash flows in the future to sustain itself or to support future growth. Management believes the business will generate sufficient cash flows from its operations along with availability under the Company's debt agreements to fund its ongoing business for the next twelve months. While we believe we have sufficient liquidity and capital resources to fund our ongoing operations and repay our debt, we will require additional capital to fund business expansion. Our current expansion efforts include the construction of the proposed Galveston LNG liquefaction facility and commencement of operations to service our multi-year data center power generation contract beginning in 2027 which will require engineering expenditures, additional equipment, rolling stock, commissioning and near-term working capital as the Company commissions operations.

 

As of June 30, 2026, the Company was in compliance with all financial covenants under its debt agreements. The Company’s efforts to expand its business include anticipated significant capital expenditures and a successful financing transaction associated with the proposed Galveston LNG liquefaction facility, all of which are yet to occur. The Company believes it is probable that it will continue to maintain compliance with its covenants, however, in the event the Company is unable to maintain minimum profitability in accordance with its forecast and historical trends, it is reasonably possible that the Company could fail to maintain compliance with its consolidated debt service ratio which, if not cured or waived, would give AmeriState Bank the right to accelerate repayment of outstanding borrowings under the AmeriState Secured Term Loan Facility, which totaled $7.6 million as of June 30, 2026. Such acceleration could adversely affect our liquidity, our ability to continue expansion efforts and continue normal operations.

 

We will continue to monitor covenant compliance closely and evaluate additional actions which may include reducing discretionary capital expenditures, delaying certain growth initiatives, or seeking alternative sources of financing if needed. The Company believes that its relations with its lenders are good and that a waiver could be obtained in the event a violation occurred; however, there can be no assurance that additional actions taken by the Company, if required, could prevent a possible covenant violation or that the Company would be successful in obtaining a covenant waiver in the event a covenant violation occurred.

 

Cash Flows

 

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

 

		Six Months Ended June 30,
		2026				2025
Net cash provided by (used in):
Operating activities		$	19,486			$	5,540
Investing activities			(7,561	)			(911	)
Financing activities			(534	)			(1,410	)
Effect of exchange rate changes on cash			2				14
Net increase in cash, cash equivalents and restricted cash and cash equivalents			11,393				3,233
Cash, cash equivalents and restricted cash and cash equivalents, beginning of period			7,459				8,987
Cash, cash equivalents and restricted cash and cash equivalents, end of period		$	18,852			$	12,220

 

Operating Activities

 

Net cash provided by operating activities totaled $19.5 million for the six months ended June 30, 2026 compared to $5.5 million for the same period in 2025. The increase in net cash provided by operating activities of $13.9 million as compared to the Prior Year was attributable to $20.0 million of advance payments received on the multi-year data center power generation contract to begin in the first quarter of 2027. The advance payments represent deferred revenue and is classified in restricted cash. These amounts were partially offset by the higher net loss incurred for the six months ended June 30, 2026 compared to the same period in 2025.

 

Investing Activities

 

Net cash used in investing activities totaled $7.6 million for the six months ended June 30, 2026 compared to $0.9 million for the six months ended June 30, 2025. The increase in net cash used in investing activities in the Current Year of $6.7 million was primarily due to cash paid for capital expenditures to support growth including the multi-year data center power generation contract to begin in the first quarter of 2027.

 

Financing Activities

 

Net cash used in financing activities totaled $0.5 million for the six months ended June 30, 2026, compared to $1.4 million for the six months ended June 30, 2025. The decrease in cash used in financing activities in the Current Year compared to the Prior Year is due to proceeds received under the AmeriState Loan of $1.0 million partially offset by increased loan payments in the Current Year under the AmeriState Loan.

 

 

Future Cash Requirements

 

We believe we have sufficient liquidity and capital resources to fund our operations and repay our debt.

 

We require cash to fund our operating expenses and working capital requirements, including costs associated with gas purchases, capital expenditures, debt repayments, equipment purchases, maintenance of LNG production facilities, mergers and acquisitions (if any), pursuing market expansion, supporting sales and marketing activities and other general corporate purposes. During the six months ended, the Company incurred a net loss of $8.7 million as a result of vessel charter costs and loss of customer volume as compared to prior periods. However, the Company anticipates its future profitability and operating cash flow to improve due to the following:

 

On June 24, 2026, the time charter of the Garibaldi was terminated. The Company owes a termination fee of $0.8 million payable January 1, 2027, as well as payment of $1.1 million of previously deferred rent and operating costs during the third quarter of 2026: however the termination of the lease significantly alleviates future cash requirements. See also Note 7 within the Notes to Consolidated Condensed Financial Statements for further information regarding the termination of the time charter. The Company does not expect future costs as a result of the termination.

 

Our current expansion efforts include the construction of the proposed new Galveston LNG liquefaction facility and Jones Act-compliant marine bunkering vessel and the commencement of operations for the multi-year data center power generation contract beginning in 2027 (discussed below). We may elect to pursue additional financing activities such as refinancing existing debt, obtaining new debt, or debt or equity offerings to provide flexibility with our cash management. Certain of these alternatives may require the consent of current lenders or stockholders, and there is no assurance that we will be able to execute any of these alternatives on acceptable terms or at all.

 

Capital expenditures for the six months ended June 30, 2026 were $7.6 million and primarily related to preliminary work and ordering of long lead time items, related to the Company's proposed new Galveston LNG liquefaction facility and Jones Act-compliant marine bunkering vessel, and its multi-year data center power generation contract. Capital expenditures also related to refurbishments and upgrades to existing assets and rolling stock. Other future capital expenditures will be dependent upon business needs, as well as the availability of additional capital at favorable terms which is difficult to predict. At June 30, 2026, the Company had open purchase orders and commitments related to capital expenditures of approximately $7.0 million and the Company continues to advance the proposed new Galveston LNG liquefaction facility and Jones Act-compliant marine bunkering vessel, and scale for its multi-year data center power generation contract. See additional discussion regarding the Company's potential expansion efforts below.

 

Expansion Efforts

 

Multi-year, On-site Power Generation for a Data Center

 

In February 2026, the Company was awarded a multi-year contract to supply LNG for power generation at a data center. LNG deliveries are expected to commence during the first quarter of 2027 and continue through the first quarter of 2029. The supply agreement will require investment of approximately $25.0 million in capital additions and working capital needed to secure LNG supply and fund the commissioning of the project. The Company received advance payments totaling $20.0 million during the six months ended June 30, 2026, and received an additional $5.0 million during the third quarter of 2026. 

 

On July 9, 2026, the Company signed a contract commencing in the third quarter of 2026 to fuel temporary power generation at a data center that is anticipated to replace a significant portion of lost volumes from prior periods.  This contract represents the second contract in support of power generation at a data center.

 

Proposed New Galveston LNG Liquefaction Facility and Jones Act-compliant Bunkering Vessel
 

The Company continues to advance its proposed Galveston liquefaction facility along with a Jones Act-compliant LNG bunkering vessel toward an expected FID later in 2026. The Company has secured customer commitments for approximately 16% of the project’s proposed 350,000 gallons-per-day capacity and remains engaged in discussions with multiple potential customers to secure the remaining offtake. Total investment in the Company’s proposed Galveston liquefaction facility is estimated at $350 million to $400 million. The financing and structure of the proposed Galveston liquefaction facility is anticipated to be in the form of a separate entity with a combination of third-party equity and debt that would be nonrecourse to the Company. The Company does not intend to commit to the use of significant additional funds related to the proposed Galveston LNG liquefaction facility without first securing the financing. There is no guarantee that additional financing will be available or available at terms that would be beneficial to the Company. 

 

Shelf Registration Statement

 

The Company filed a registration statement on Form S-3 (the "Shelf Registration"), which was declared effective on March 26, 2026. The Shelf Registration is for a period of three years, expiring on March 25, 2029, and permits the Company to issue up to $100.0 million (subject the limitations described below) in either common stock, preferred stock, warrants or a combination of the above. On April 17, the Company filed a prospectus supplement to the Shelf Registration pursuant to which the Company may offer and sell shares of common stock directly to the public “at the market” (the "ATM") as permitted in Rule 415 under the Securities Act pursuant to an Equity Distribution Agreement entered into between the Company and Johnson Rice & Company L.L.C., as sales agent. The Company is subject to General Instruction I.B.6. of Form S-3 that limits the amount of securities that the Company may sell under the Shelf Registration to no more than one-third of the Company’s public float (currently $10.2 million) in any twelve-month period. The Company has made no issuances under the Shelf Registration and related ATM at June 30, 2026.

 

Off-Balance Sheet Arrangements

 

As of June 30, 2026, we had no transactions that met the definition of off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our consolidated financial position, operating results, liquidity, cash requirements or capital resources.

 

Critical Accounting Policies and Estimates

 

The discussion and analysis of our financial condition and results of operations are based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities known to exist at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates on an ongoing basis, based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. There can be no assurance that actual results will not differ from those estimates.  There have been no significant changes in the Company's “Critical Accounting Policies and Estimates” during the three and six months ended June 30, 2026 from those disclosed within the Company's Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on March 5, 2026.

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

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

 

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at June 30, 2026.

 

Changes in Internal Control over Financial Reporting

 

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

 

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

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

 

 

ITEM 1A. RISK FACTORS.

 

Our operations and financial results are subject to various risks and uncertainties, including those described in the Part I. “Item 1A. Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 5, 2026 (“Form 10-K”), which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. During the six months ended June 30, 2026, there have been no material changes in our risk factors disclosed in our 2025 Form 10-K; except for the addition of the following risk factors.

 

Geopolitical events in the Middle East with the U.S. and Iran conflict could have some adverse impact on our business and results of operations

 

Recent geopolitical developments in the Middle East, including the U.S. conflict with Iran, may contribute to an increase in energy related costs and related market uncertainties. The Company's pricing structure related to LNG product revenues may absorb most, if not all, volatility associated with the price of natural gas. However, failure to absorb the full impact of any price increases could adversely impact the Company's business and results of operations. The Company continues to monitor the risk associated with the Middle East conflicts.

 

Failure to secure additional off-take from the proposed Galveston LNG liquefaction facility, could adversely affect the Company's ability to secure financing for the project

 

Financing for the proposed new Galveston LNG liquefaction facility may be based on having firm contractual LNG off-take from the facility prior to closing on the financing. Failure to obtain additional contractual off-take could prevent the Company from being able to finance the project, adversely impacting potential profits, results of operations, cash flows and financial condition. At June 30, 2026, the Company has capitalized $9.4 million of costs related to the proposed new Galveston LNG liquefaction facility and related dedicated Jones Act-compliant LNG bunkering vessel.

ITEM 5. OTHER INFORMATION.

 

None of the Company's officers or directors adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company's fiscal quarter ended June 30, 2026, as such terms are defined under Item 408(a) of Regulation S-K.

 

ITEM 6. EXHIBITS.

 

(a) Index to Exhibits

 

Exhibit No.		Exhibit Description
3.1		Amended and Restated Articles of Incorporation of the Registrant (Incorporated by Reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed October 15, 2020)
3.2		Amended and Restated Bylaws of the Registrant (Incorporated by Reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed September 18, 2020)
4.1		Registration Rights Agreement dated July 26, 2019, by and among Registrant, LNG Investment Company, LLC, and AEGIS NG LLC (Incorporated by Reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed August 1, 2019)
4.2		Registration Rights Agreement dated as of August 20, 2019, by and among Registrant and the Investors named therein (Incorporated by Reference to Exhibit 4.9 to Registrant's Registration Statement on Form S-1 filed September 11, 2019)
4.3		Registration Rights Agreement, dated June 1, 2021, among TGB Equipment Leasing, LLC and Stabilis (Incorporated by reference to Exhibit 10.5 to Registrant's Quarterly Report on Form 10-Q filed on August 5, 2021)
4.5		Description of Securities (incorporated by reference to Exhibit 4.5 to Registrant's Annual Report on Form 10-K filed February 25, 2025)
10.1		First Amending Agreement (dated February 6, 2026) to Time Charter Agreement, dated December 12, 2025, by and between the Registrant with Seaspan Energy Ltd. (Incorporated by Reference to Exhibit 10.1 to Registrant’s Form 10-Q filed May 6, 2026).
10.2		Second Amending Agreement (dated March 19, 2026) to Time Charter Agreement, dated December 12, 2025, by and between the Registrant with Seaspan Energy Ltd. (Incorporated by Reference to Exhibit 10.1 to Registrant’s Form 10-Q filed May 6, 2026).
10.3		Amended and Restated Third Amending Agreement (dated April 17, 2026) to Time Charter Agreement, dated December 12, 2025, by and between the Registrant with Seaspan Energy Ltd. (Incorporated by Reference to Exhibit 10.1 to Registrant’s Form 10-Q filed May 6, 2026).
10.4		*Termination Option Agreement (dated June 11, 2026) between Seaspan Energy Ltd. and Stabilis GDS, Inc. of Time Charter Party (dated December 12, 2025) for the LNG bunker vessel Seaspan Garibaldi
10.5		*Option Exercise Notice (dated June 24, 2026) - Exercise of Termination Option Agreement of Time Charter Party (dated December 12, 2025) for the LNG bunker vessel Seaspan Garibaldi
10.6		*Second Modification Agreement and Amendment to other loan documents (dated June 29, 2026) between Stabilis Solutions, Inc., Stabilis LNG Eagle Ford LLC, Stabilis GDS, Inc. Stabilis LNG Port Allen, LLC and Huntington National Bank (successor by merger of to Cadence Bank)
10.7		*Second Amendment to Loan Agreement (dated March 31, 2026) between Stabilis Solutions, Inc. and AmeriState Bank
31.1		*Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer.
31.2		*Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer.
32.1		*Section 1350 Certifications of Principal Executive Officer and Principal Financial Officer.
101.INS		*Interactive XBRL Instance Document (XBRL tags are embedded within the Inline XBRL document)
101.SCH		*Inline XBRL Taxonomy Extension Schema Document
101.CAL		*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		*Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		*Inline XBRL Taxonomy Extension Definition Linkbase Document
104		* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*         Filed herewith

 

 

SIGNATURES

 

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

 

Date: August 11, 2026
STABILIS SOLUTIONS, INC.
By:	/s/ J. Casey Crenshaw
	J. Casey Crenshaw
	Interim President, Chief Executive Officer and Director (Principal Executive Officer)
By:	/s/ Andrew L. Puhala
	Andrew L. Puhala
	Chief Financial Officer (Principal Financial Officer)