UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DCD.C. 20549

____________________

FORM 10-Q

____________________

☒

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

FOR THE QUARTERLY PERIOD ENDED ~~June 30, 2019~~

March 31, 2020

☐

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

FOR THE TRANSITION PERIOD FROM TO

Commission File No. 000-24575

____________________

STABILIS ENERGY, INC.

(Exact name of registrant as specified in its charter)

____________________

~~Florida~~			~~59-3410234~~

Florida	59-3410234
(State or other jurisdiction of ~~incorporation)~~ incorporation or organization)		(I.R.S. Employer Identification No.)

10375 Richmond Avenue, Suite 700, Houston, TX 77042

(Address of principal executive ~~offices)~~

offices, including zip code)

(832) 456-6500

(Registrant’s telephone ~~number)~~

number, including area code)



Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $.001 par value per share	SLNG	The ~~NASDAQ Stock~~OTCQX Best Market

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 (S. 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 Exchange Act:



Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☐ ☒	Smaller reporting company	☒

		Emerging growth company	☐

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

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

As of ~~August 13, 2019,~~April 30, 2020, there were ~~14,644,842~~16,896,626 outstanding shares of our common stock, par value $.001 per share.

~~AMERICAN ELECTRIC TECHNOLOGIES,~~

STABILIS ENERGY, INC. AND SUBSIDIARIES

FORM 10-Q Index

For the Quarterly Period Ended ~~June 30, 2019~~

March 31, 2020

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 obtain additional financing to affect our strategy;

loss of one or more of our customers;

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 COVID-19 outbreak beginning in early 2020, which could impact economic conditions;

dependence on contractors for successful completions of our energy related infrastructure;

reliance on third party engineers;

competition from third parties in our business;

failure of LNG to be a competitive source of energy in the markets in which we operate, and seek to operate;

increased labor costs, and the unavailability of skilled workers or our failure to attract and retain qualified personnel;

major health and safety incidents relating to our business;

failure to obtain and maintain approvals and permits from governmental and regulatory agencies including with respect to our planned operational expansion in Mexico;

changes to health and safety, environmental and similar laws and governmental regulations that are adverse to our operations;

volatility of the market price of our common stock;

our ability to integrate successfully acquisitions in the expected timeframe; 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.

P~~ART~~

PART I – FINANCIAL INFORMATION

I~~TEM 1. FINANCIAL STATEMENTS~~

~~American Electric Technologies,~~

ITEM 1. FINANCIAL STATEMENTS.

Stabilis Energy, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share data)

June 30,

December 31,

2019

2018

Assets

Current assets:

Cash and cash equivalents
$
1,080

$
2,124

Accounts receivable, net

1,217

911

Inventories, net

63

69

Contract assets

1,161

344

Prepaid expenses and other current assets

436

433

Total current assets

3,957

3,881

Property, plant and equipment, net

532

552

Investments in foreign joint venture

9,889

9,980

Right-of-use assets

145

-

Other assets

51

146

Total assets
$
14,574

$
14,559

Liabilities, Convertible Preferred Stock and Stockholders’ Equity

Current liabilities:

Short-term note payable
$
338

$
202

Accounts payable and accrued liabilities

2,805

2,478

Lease liabilities, current portion

63

-

Total current liabilities

3,206

2,680

Deferred compensation

138

163

Lease liabilities, long-term portion

84

-

Total liabilities

3,428

2,843

Commitments and contingencies (Note 8)

Convertible preferred stock:

Redeemable convertible preferred stock, Series A, net of discount of $470 at June 30, 2019 and $502 at December 31, 2018; $0.001 par value, 1,000,000 shares authorized, issued and outstanding at June 30, 2019 and December 31, 2018, respectively (Note 9)

4,530

4,498

Stockholders’ equity:

Common stock; $0.001 par value, 6,250,000 shares authorized, 1,202,115 and 1,180,610 shares issued and 1,173,914 and 1,152,409 shares outstanding at June 30, 2019 and December 31, 2018, respectively (Note 11)

1

1

Treasury stock, at cost, 28,201 shares at both June 30, 2019 and December 31, 2018

(965
)

(965
)
Additional paid-in capital

14,172

14,022

Accumulated other comprehensive loss

(475
)

(417
)
Accumulated deficit; including accumulated statutory reserves in equity method investments of $2,809 at June 30, 2019 and December 31, 2018

(6,117
)

(5,423
)
Total stockholders’ equity

6,616

7,218

Total liabilities, convertible preferred stock and stockholders’ equity
$
14,574

$
14,559



	March 31, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	3,162		$	3,979
Accounts receivable, net	6,158			5,945
Inventories, net	127			209
Prepaid expenses and other current assets	2,379			3,583
Due from related parties	19			—
Total current assets	11,845			13,716
Property, plant and equipment, net	58,177			60,363
Right-of-use assets	849			965
Goodwill	4,453			4,453
Investments in foreign joint ventures	10,120			10,521
Other noncurrent assets	301			308
Total assets	$	85,745		$	90,326
Liabilities and Equity
Current liabilities:
Current portion of long-term notes payable - related parties	$	1,000		$	1,000
Current portion of finance lease obligation - related parties	3,319			3,440
Current portion of operating lease obligations	334			364
Short-term notes payable	321			558
Accrued liabilities	4,490			5,018
Accounts payable	3,283			4,728
Total current liabilities	12,747			15,108
Long-term notes payable, net of current portion - related parties	6,077			6,077
Finance lease obligations, net of current portion - related parties	1			648
Long-term portion of operating lease obligations	586			650
Deferred compensation	113			—
Deferred income taxes	28			—
Total liabilities	19,552			22,483
Commitments and contingencies (Note 13)
Equity:
Preferred Stock; $0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively	—			—
Stockholders’ equity:
Common stock; $0.001 par value, 37,500,000 shares authorized, 16,835,318 and 16,800,612 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively (Note 14)	17			17
Additional paid-in capital	90,767			90,748
Accumulated other comprehensive loss	(910		)	(291		)
Accumulated deficit	(23,681		)	(22,631		)
Total stockholders’ equity	66,193			67,843
Total liabilities and equity	$	85,745		$	90,326

The accompanying notes are an integral part of the condensed consolidated financial statements.

~~American Electric Technologies,~~

Stabilis Energy, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

Net Revenues
$
1,955

$
2,075

$
3,171

$
3,951

Cost of revenue

1,537

1,566

2,583

3,114

Gross profit

418

509

588

837

Operating expenses:

General and administrative

784

469

1,562

936

Selling

140

98

275

190

Total operating expenses

924

567

1,837

1,126

Foreign joint venture:

Equity income from joint venture

437

284

703

455

Joint venture operation's related expenses

(41
)

(50
)

(95
)

(110
)
Net equity income from foreign joint venture operations

396

234

608

345

Income (loss) from continuing operations

(110
)

176

(641
)

56

Other income (expense):

Interest income (expense)

17

(6
)

(4
)

68

Other income

149

-

207

-

Total other income (expense)

166

(6
)

203

68

Income (loss) from continuing operations before income tax expense

56

170

(438
)

124

Provision for income taxes on continuing operations

73

129

73

189

Net income (loss) from continuing operations

(17
)

41

(511
)

(65
)
Loss from discontinued operations

-

(1,979
)

-

(4,838
)
Net loss

(17
)

(1,938
)

(511
)

(4,903
)
Dividend and accretion of discount on redeemable convertible preferred stock

(91
)

(90
)

(182
)

(179
)
Net loss attributable to common stockholders
$
(108
)

$
(2,028
)

$
(693
)

$
(5,082
)
Loss per common share - basic and diluted:

Continuing operations
$
(0.09
)

$
(0.04
)

$
(0.59
)

$
(0.22
)
Discontinued operations

-

(1.80
)

-

(4.37
)
Consolidated operations
$
(0.09
)

$
(1.84
)

$
(0.59
)

(4.59
)
Weighted average number of common shares outstanding:

Basic and diluted

1,171,420

1,100,207

1,165,866

1,106,931



	Three Months Ended March 31,
	2020			2019
Revenue
LNG product	$	9,131		$	10,254
Rental, service and other	4,707			2,721
Total revenues	13,838			12,975
Operating expenses:
Cost of LNG product	6,097			7,482
Cost of rental, service and other	2,918			1,414
Selling, general and administrative expenses	3,186			1,992
Depreciation expense	2,270			2,290
Total operating expenses	14,471			13,178
Loss from operations before equity income	(633		)	(203		)
Net equity loss from foreign joint ventures' operations:
Loss from equity investments in foreign joint ventures	(114		)	—
Foreign joint ventures' operations related expenses	(60		)	—
Net equity loss from foreign joint ventures' operations	(174		)	—
Loss from operations	(807		)	(203		)
Other income (expense):
Interest expense, net	(11		)	(3		)
Interest expense, net - related parties	(240		)	(309		)
Other income (expense)	38			(44		)
Gain from disposal of fixed assets	11			—
Total other income (expense)	(202		)	(356		)
Loss before income tax expense	(1,009		)	(559		)
Income tax expense	41			—
Net loss	(1,050		)	(559		)
Net income attributable to noncontrolling interests	—			179
Net loss attributable to Stabilis Energy, Inc.	$	(1,050	)	$	(738	)

Common Stock Data:
Net loss per common share:
Basic and diluted	$	(0.06	)	$	(0.06	)
Weighted average number of common shares outstanding:
Basic and diluted	16,819,681			13,178,750

The accompanying notes are an integral part of the condensed consolidated financial statements.

~~American Electric Technologies,~~

Stabilis Energy, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

(in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

Net loss
$
(17
)

$
(1,938
)

$
(511
)

$
(4,903
)
Foreign currency translation adjustment

(262
)

(866
)

(58
)

(491
)
Total comprehensive loss
$
(279
)

$
(2,804
)

$
(569
)

$
(5,394
)



	Three Months Ended March 31,
	2020			2019
Net loss	$	(1,050	)	$	(559	)
Foreign currency translation adjustment	(619		)	—
Total comprehensive loss	(1,669		)	(559		)
Total comprehensive income attributable to noncontrolling interest	—			179
Total comprehensive loss attributable to Stabilis Energy, Inc.	$	(1,669	)	$	(738	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

~~American Electric Technologies,~~

Stabilis Energy, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share data)

Common Stock

Shares

Amount

Treasury Stock

Additional
Paid-in Capital

Accumulated
Other
Comprehensive
Loss

Accumulated
Deficit

Total
Stockholders’
Equity

Balance at December 31, 2018

1,152,409

$
9

(965
)
$
14,014

$
(417
)
$
(5,423
)
$
7,218

Common stock issued as dividends on preferred stock

10,695

-

-

75

-

(75
)

-

Accretion of discount on preferred stock

-

-

-

-

-

(16
)

(16
)
Net loss

-

-

-

-

-

(495
)

(495
)
Other comprehensive income

-

-

-

-

204

-

204

Balance at March 31, 2019

1,163,104

$
9

(965
)
$
14,089

$
(213
)
$
(6,009
)
$
6,911

Common stock issued as dividends on preferred stock

10,810

-

-

75

-

(75
)

-

Accretion of discount on preferred stock

-

-

-

-

-

(16
)

(16
)
Net loss

-

-

-

-

-

(17
)

(17
)
Other comprehensive loss

-

-

-

-

(262
)

-

(262
)
Balance at June 30, 2019

1,173,914

$
9

(965
)
$
14,164

$
(475
)
$
(6,117
)
$
6,616

Common Stock

Shares

Amount

Treasury Stock

Additional
Paid-in Capital

Accumulated
Other
Comprehensive
Income

Accumulated
Deficit

Total
Stockholders’
Equity

Balance at December 31, 2017

1,083,706

$
9

(916
)
$
13,811

$
401

$
(3,222
)
$
10,083

Common stock issued as dividends on preferred stock

6,350

-

-

75

-

(75
)

-

Accretion of discount on preferred stock

-

-

-

-

-

(15
)

(15
)
Treasury stock purchase

-

-

(18
)

-

-

-

(18
)
Restricted stock units

3,873

-

-

166

-

-

166

Net loss

-

-

-

-

-

(2,964
)

(2,964
)
Other comprehensive income

-

-

-

-

375

-

375

Balance at March 31, 2018

1,093,929

$
9

(934
)
$
14,052

$
776

$
(6,276
)
$
7,627

Common stock issued as dividends on preferred stock

16,403

-

-

150

-

(75
)

75

Accretion of discount on preferred stock

-

-

-

-

-

(15
)

(15
)
Restricted stock units

276

-

-

129

-

-

129

Net loss

-

-

-

-

-

(1,938
)

(1,938
)
Other comprehensive loss

-

-

-

-

(866
)

-

(866
)
Balance at June 30, 2018

1,110,608

$
9

(934
)
$
14,331

$
(90
)
$
(8,304
)
$
5,012



	Common Stock
	Shares	Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Non-controlling Interest		Total
Balance at December 31, 2019	16,800,612	$	17	$	90,748	$	(291	)	$	(22,631	)	$	—	$	67,843
Common stock issued	34,706	—		—		—			—			—		—
Stock-based compensation	—	—		19		—			—			—		19
Net loss	—	—		—		—			(1,050		)	—		(1,050		)
Other comprehensive loss	—	—		—		(619		)	—			—		(619		)
Balance at March 31, 2020	16,835,318	$	17	$	90,767	$	(910	)	$	(23,681	)	$	—	$	66,193



	Common Stock
	Shares	Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit			Non-controlling Interest		Total
Balance at December 31, 2018	13,178,750	$	13	$	68,244	$	—	$	(16,916	)	$	1,323	$	52,664
Net income (loss)	—	—		—		—		(738		)	179		(559		)
Balance at March 31, 2019	13,178,750	$	13	$	68,244	$	—	$	(17,654	)	$	1,502	$	52,105

The accompanying notes are an integral part of the condensed consolidated financial statements.

~~American Electric Technologies,~~

Stabilis Energy, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

Six Months Ended June 30,

2019

2018

Cash flows from operating activities:

Net loss
$
(511
)

$
(4,903
)
Adjustments to reconcile net loss to net cash used in operating activities:

Distributions in excess of equity income from foreign joint venture operations

96

672

Depreciation and amortization

50

377

Stock-based compensation

-

284

Bad debt expense

-

30

Deferred compensation costs

(25
)

(25
)
Amortization of debt issuance costs

-

55

Change in operating assets and liabilities:

Accounts receivable

(201
)

268

Inventories

7

(107
)
Contract assets

(817
)

3,247

Prepaid expenses and other current assets

13

48

Accounts payable and accrued liabilities

340

(478
)
Contract liabilities

-

2,009

Net cash used in (provided by) operating activities

(1,048
)

1,477

Cash flows from investing activities:

Purchases of property, plant and equipment and other assets

(117
)

(165
)
Net cash provided by investing activities

(117
)

(165
)
Cash flows from financing activities:

Proceeds from sale of common stock, preferred stock and warrants

-

8

Treasury stocks purchase

-

(18
)
Proceeds from short-term notes payable

175

-

Payments on short-term notes payable

(48
)

(60
)
Other financing activities, net

-

(146
)
Net cash provided by (used in) financing activities

127

(216
)
Effect of exchange rate changes on cash

(6
)

(50
)
Net decrease in cash and cash equivalents

(1,044
)

1,046

Cash and cash equivalents, beginning of period

2,124

2,289

Cash and cash equivalents, end of period
$
1,080

$
3,335



	Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net loss	$	(1,050	)	$	(559	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	2,270			2,290
Deferred income tax expense	41			—
Stock-based compensation expense	19			—
Bad debt expense	144			—
Gain on disposal of fixed assets	(11		)	—
Loss from equity investment in joint venture	114			—
Change in operating assets and liabilities, net of acquisitions:
Accounts receivable	(356		)	(2,697		)
Due to (from) related parties	(19		)	482
Inventories	82			46
Prepaid expenses and other current assets	991			903
Accounts payable and accrued liabilities	(1,902		)	777
Other	26			(41		)
Net cash provided by operating activities	349			1,201
Cash flows from investing activities:
Acquisition of fixed assets	(112		)	(293		)
Proceeds on sales of fixed assets	11			—
Net cash used in investing activities	(101		)	(293		)
Cash flows from financing activities:
Payments on long-term borrowings from related parties	(768		)	(893		)
Proceeds from short-term notes payable	—			77
Payments on short-term notes payable	(237		)	—
Net cash used in financing activities	(1,005		)	(816		)
Effect of exchange rate changes on cash	(60		)	—
Net increase (decrease) in cash and cash equivalents	(817		)	92
Cash and cash equivalents, beginning of period	3,979			1,247
Cash and cash equivalents, end of period	$	3,162		$	1,339

Supplemental disclosure of cash flow information:
Interest paid	$	251		$	309
Income taxes paid	—			—

The accompanying notes are an integral part of the condensed consolidated financial statements

~~AMERICAN ELECTRIC TECHNOLOGIES,~~

STABILIS ENERGY, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Overview and Basis of Presentation

~~American Electric Technologies,~~

Overview

Stabilis Energy, Inc. and its subsidiaries (the “Company”, ~~“AETI”~~“Stabilis”, “our”, “us” or “we”) ~~consists~~produce, market, and sell liquefied natural gas (“LNG”). The Company also resells liquefied natural gas from third parties and provides services, transportation, and equipment to customers.

The Company is a supplier of ~~American Electric Technologies, Inc.,~~LNG to the industrial, midstream, and oilfield sectors in North America and provides turnkey fuel solutions to help industrial users of propane, diesel and other crude-based fuel products convert to LNG, which may result in reduced fuel costs and improved environmental footprint. Stabilis opened its 100,000 gallons per day ("gpd") LNG production facility in George West, Texas in January 2015 to service industrial and oilfield customers in Texas and the greater Gulf Coast region. The Company owns ~~100%~~a second liquefaction plant capable of ~~M&I Electric Industries, Inc.,~~producing 25,000 gpd that is being relocated and currently not in operation. Stabilis is vertically integrated from LNG production through distribution including ~~its wholly-owned~~cryogenic equipment rental and field services.

We also provide power delivery solutions through our subsidiary ~~South Coast Electric Systems, LLC (“SCES”) and~~in Brazil, M&I Electric Brazil Sistemas e Servicios em Energia LTDA (“M&I Brazil”). ~~The operations of AETI consisted of~~ and our ~~Brazilian subsidiary, our~~40% interest in ~~our Chinese~~a joint venture ~~and our corporate office~~ in ~~Bellaire, Texas.~~

~~As previously announced, on July 26, 2019, the proposed share exchange transaction (the “Transaction”~~China, BOMAY Electric Industries Co., Ltd. (“BOMAY”) ~~with Stabilis Energy LLC (“Stabilis”) and its subsidiaries was completed.~~ .

Basis of Presentation

The Transaction and its related proposals, which included a company name change and a reverse stock split, were approved by our stockholders at a Special Meeting of Stockholders on July 17, 2019. On July 29, 2019, the company began operating under the name Stabilis Energy, Inc. and our common stock began trading on the Nasdaq Capital Market under the ticker symbol “SLNG”. In addition, the company’s shares outstanding now reflect a one-for-eight reverse split. ~~Unless otherwise noted, any share or per share amounts in the~~ accompanying interim unaudited condensed consolidated financial statements include our accounts and ~~related notes give retroactive effect~~those of our subsidiaries and, have been prepared pursuant to the ~~reverse stock split.~~ ~~For further~~rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information ~~regarding this Transaction, see Note 11.~~

These financial statements reflect AETI’s operations prior to the Transaction because the Transaction was consummated after the period covered by these financial statements. Accordingly, the historical financial informationand disclosures normally included in ~~this Form 10-Q is that of AETI prior~~the notes to ~~the Transaction.~~ ~~All subsequent quarterly and annual filings will present the current and historical financial statements of Stabilis’ operations post-transaction~~. ~~The accompanying unaudited~~ condensed consolidated financial statements ~~of AETI have been~~ 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 make the ~~rules of the Securities and Exchange Commission (“SEC”) for interim financial~~ information ~~and include all adjustments which, in the opinion of management, are necessary for fair financial statement presentation.~~All adjustments are of a normal recurring nature. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows with respect to the interimnot misleading. The unaudited condensed consolidated financial statements ~~have been included.~~reflect all adjustments (consisting of normal recurring adjustments) for a fair presentation of the interim periods. The results of operations for the interim ~~periods~~period are not necessarily indicative of the results of operations to be expected for the ~~entire fiscal~~full year. ~~We believe that these financial statements contain all adjustments necessary so that they are not misleading. These~~The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the ~~Company’s~~audited consolidated financial statements ~~included in our Annual Report on Form 10-K~~as of and for the year ended December 31, ~~2018, which was filed on April 16, 2019.~~

~~2. Summary of Certain Significant Accounting Policies~~

~~For a detailed list of our critical accounting policies, please see our~~2019 included in the Company's Annual Report on Form 10-K, as filed on March 16, 2020.

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

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is required to make certain disclosures if it concludes that there is substantial doubt about the entity’s ability to continue as a going concern within one year from the date of the issuance of these financial statements. The Company has incurred recurring operating losses and has negative working capital. The Company is subject to substantial business risks and uncertainties inherent in the current LNG industry. Additionally, the impact of the COVID-19 pandemic has created additional uncertainties regarding the future demand for LNG from our customers. There is no assurance that the Company will be able to generate sufficient revenues in the future to sustain itself or to support future growth.

These factors were reviewed by management to determine if there was substantial doubt as to the Company’s ability to continue as a going concern. Management concluded that its plan to address the Company’s liquidity issues would allow it to continue as a going concern. A number of cost control measures have been implemented, including headcount reductions, temporary salary reductions and other measures to adjust to anticipated activity levels and maintain adequate liquidity. Management concluded positive cash flows are attainable and are supported by the recent increase in utility and pipeline sales, the reduction of operating costs as a percent of sales, improved plant utilization, and the August 2019 cancellation of $7.0 million of Chart Industries indebtedness in exchange for Stabilis common stock. Accordingly, management believes the business will generate sufficient cash flows from its operations to fund the business for the ~~year ended December 31, 2018, which was filed on April 16, 2019.~~

next 12 months.

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 ~~reported in~~of assets and liabilities and disclosure of contingent assets and liabilities at the ~~condensed consolidated~~date of the financial statements and ~~accompanying footnotes. The most significant~~the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates ~~used~~include the carrying amount of contingencies, valuation allowances for receivables, inventories, and deferred income tax assets, valuations assigned to assets and liabilities in ~~our condensed~~business combinations, and impairments of long-lived assets. Actual results could differ from those estimates, and these differences could be material to the consolidated financial statements affect revenue recognition and estimated cost recognition on our customer contracts and income taxes. The amounts recorded for warranties, legal, income taxes, impairment of long-lived assets (when applicable) and other contingent liabilities require judgments regarding the amount of expenses that will ultimately be incurred. We base our estimates on historical experience and on various other assumptions, as well as the specific circumstances surrounding these contingent liabilities, in evaluating the amount of liability that should be recorded. Additionally, the recognition of deferred tax assets requires estimates related to future income and other assumptions regarding timing and future profitability because the ultimate realization of net deferred tax assets is dependent on the generation of future taxable income during the periods in which temporary differences become deductible. Estimates routinely change as new events occur, additional information becomes available or operating environments change. Actual results may differ from our prior estimates.

~~New~~statements.

2. Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In ~~February 2016,~~January 2017, the Financial Accounting Standards Board ~~(“FASB”)~~(FASB) issued Accounting Standards Update ~~(“ASU”)~~(ASU) No. ~~2016-02, Leases, which~~2017-04, “Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment”. The new guidance simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires ~~lessees~~an entity to ~~recognize~~perform its annual or interim goodwill impairment test by comparing the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the usefair value of a ~~specified asset~~reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the ~~lease term. Under ASU No. 2016-02, lessor accounting~~quantitative impairment test is largely unchanged. ASU No. 2016-02 is effective for fiscal years beginning after December 15, 2018 with early application permitted. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases expiring before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. ASU 2016-02 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842; ASU No. 2018-11, Leases (Topic 842) - Targeted Improvements; ASU No. 2018-20, Narrow-Scope Improvements for Lessors; and ASU No. 2019-01, Leases (Topic 842) - Codification Improvements. ASU No. 2018-11 provides an additional transition method allowing entities to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

We adopted the new standard effective January 1, 2019 using the optional transition method in ASU No. 2018-11. Under this method, we have not adjusted our comparative period financial statements for the effects of the new standard or made the new, expanded required disclosures for periods prior to the effective date. We elected the package of practical expedients permitted under the transition guidance in ASU 2016-02 to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. We also elected the practical expedient not to separate the non-lease components of a contract from the lease component to which they relate.

The adoption of the new lease standard resulted in the recognition of lease liabilities and corresponding right-of-use assets of $0.2 million, on the condensed consolidated balance sheet as of January 1, 2019 for real and personal property operating leases. The adoption of ASU 2016-02 did not have a material impact on our consolidated results of operations and cash flows.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU No. 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of a business or as acquisitions (or disposals) of assets. ASU No. 2017-01 is effective for annual periods beginning after December 15, 2018, with early adoption permitted under certain circumstances.necessary. The amendments of ASU No. ~~2017-01 should be applied prospectively as of~~2017-04 were adopted by the ~~beginning of the period of adoption. The~~ Company ~~adopted ASU No. 2017-01 on~~effective January 1, ~~2019.~~2020. The adoption of this standard had no impact on our condensed consolidated financial position or results of operations, as the adoption is applied on a prospective basis.

~~Reclassifications~~

~~Certain amounts~~

Recently Issued Accounting Standards

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” (ASU 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 2019-12 is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this guidance on our condensed consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting", 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 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 2020-04 are optional and are effective from March 12, 2020 through December 31, 2022. We are currently evaluating the impact of ASU 2020-04 on our condensed consolidated financial statements.

3. Acquisitions

American Electric. On July 26, 2019, we completed the Share Exchange with American Electric and its subsidiaries and began operating under the name Stabilis Energy, Inc. Because the former owners of Stabilis LLC owned approximately 88.4% of the voting stock of the combined company immediately following the Effective Date and certain other factors, including that directors designated by LNG Investment, parent of Stabilis LLC, constituted a majority of the board of directors, Stabilis is treated as the acquiror of American Electric in the ~~prior period financial statements have been reclassified~~Share Exchange for accounting purposes. As a result, the Share Exchange is treated by American Electric as a reverse acquisition under the purchase method of accounting in accordance with US GAAP.

The aggregate consideration paid in connection with the Share Exchange was allocated to ~~conform to~~American Electric’s tangible and intangible assets and liabilities based on their fair market values at the ~~current period presentation. Such reclassifications had no effect on~~time of the ~~Company’s financial position,~~completion of the Share Exchange. The assets and liabilities and results of operations of American Electric are consolidated into the results of operations of Stabilis as of the completion of the Share Exchange.

Diversenergy, LLC (“Diversenergy"). On August 20, 2019, we completed our acquisition of privately held Diversenergy and its subsidiaries. We purchased all of the issued and outstanding membership interests of Diversenergy for total consideration of 684,963 shares of Company common stock valued as of the closing date and $2.0 million in cash, subject to adjustments for Diversenergy’s net working capital as of the closing date. Diversenergy specializes in virtual LNG distribution systems, providing LNG to customers which use it as a fuel in mobile high horsepower applications and to customers which do not have natural gas pipeline access. The completion of the acquisition will expand the Company's presence in the distributed LNG and compressed natural gas (“CNG”) markets in Mexico.

Consistent with the purchase method of accounting, the total purchase price is allocated to the acquired tangible and intangible assets and assumed liabilities of Diversenergy based on their estimated fair values as of the closing date. The excess of the purchase price over the fair value of the acquired assets and liabilities assumed is reflected as goodwill and is attributable to the strategic opportunities to grow the Company's LNG and CNG business in Mexico. All of the goodwill is assigned to the LNG segment and is not expected to be deductible for income tax purposes.

The assets and liabilities and results of operations of Diversenergy are consolidated into the results of operations of Stabilis as of the acquisition date.

Proforma Results from Acquisitions (unaudited)

The following unaudited consolidated pro forma information is presented as if the above acquisitions had occurred on January 1, 2019 (in thousands):



	Three Months Ended March 31,
	2019
Revenue	$	14,370
Net loss	(1,054		)

This unaudited pro forma amounts above have been compiled from current and historical financial statements and is not necessarily indicative of the results that actually would have been achieved had the transaction occurred as of January 1, 2019 or ~~cashflows.~~

3.of future operating results.

4. Revenue Recognition

Disaggregated Revenues

~~Revenue is measured as consideration specified in a contract with a customer~~

The table below presents revenue disaggregated by source, for the three months ended March 31, 2020 and ~~excludes any sales incentives and amounts collected on behalf~~2019 (in thousands):



	Three Months Ended March 31,
	2020		2019
LNG Product	$	9,131	$	10,254
Rental	2,890		2,244
Service	1,310		291
Other	507		186
	$	13,838	$	12,975

See Note 5—Business Segments, below, for additional disaggregation of ~~third parties.~~ revenue.

Contract Liabilities

The Company recognizes ~~revenue when it satisfies a~~contract liabilities upon receipt of payments for which the performance ~~obligation by transferring control over a product or service to a customer. Amounts~~obligations have not been fulfilled at the reporting date, resulting in deferred revenue. Contract liabilities are ~~billed upon completion of service or transfer of a product and are generally due within 30 days.~~

~~Revenues from contracts with customers are disaggregated into~~included in accrued liabilities in the accompanying unaudited condensed consolidated balance sheets. The following ~~primary sources: services and products.~~

Service revenue is generated from time and material projects and consulting services. The Company generally establishes a master services agreement with each customer and provides associated services on a work order basis, generally bytable presents the ~~hour for services performed. The majority of~~changes in the Company’s contracts with customers are short-term in nature and are recognized as the services are performed, as the transfer of control to the customer and the Company’s right to payment corresponds directly to the services performed to date, at all times throughout completion of the contract.

~~Product revenue is generated from the resale of electrical and instrumentation equipment. Product contracts are established by agreeing on a sales price or transaction price~~contract liabilities for the related item. Payment terms for product contracts are generally thirty days from the receipt of the invoice. Product revenue is recognized upon delivery of the related item to the customer, at which point the customer controls the productperiods ended March 31, 2020 and ~~the Company has an unconditional right to payment.~~

All outstanding accounts receivable, net of allowance, on the consolidated balance sheet are typically due and collected within the next 12 months. Additionally, each month end the Company records unbilled revenue (a contract asset) based upon completed and partially completed performance obligations through month end providing the Company an unconditional right to payment for the services performed or products sold for the related period. December 31, 2019 (in thousands):



	March 31, 2020			December 31, 2019
Balance at beginning of period	$	185		$	93
Cash received, excluding amounts recognized as revenue	153			185
Amounts recognized as revenue	(117		)	(93		)
Balance at end of period	$	221		$	185

The Company has no other material contract assets or liabilities and contract costs.

~~Taxes assessed by a governmental authority that~~

5. Business Segments

The Company’s revenues are ~~directly imposed~~derived from two operating segments: LNG and Power Delivery. The LNG segment supplies LNG to the industrial, midstream, and oilfield sectors 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 solutions through our subsidiary in Brazil and in China through our 40% interest in BOMAY.



	Three Months Ended March 31, 2020
				(in thousands)
	LNG			Power Delivery			Total

Revenues	$	12,528		$	1,310		$	13,838
Depreciation	2,235			35			2,270
Loss from operations before equity income	(199		)	(434		)	(633		)
Net equity income from foreign joint ventures' operations	—			(174		)	(174		)
Loss from operations	(199		)	(608		)	(807		)
Net loss	(480		)	(570		)	(1,050		)



	March 31, 2020
			(in thousands)
	LNG		Power Delivery		Total
Total Assets	$	72,647	$	13,098	$	85,745



	Three Months Ended March 31, 2019
				(in thousands)
	LNG			Power Delivery		Total
Revenues	$	12,975		$	—	$	12,975
Depreciation	2,290			—		2,290
Loss from operations before equity income	(203		)	—		(203		)
Net loss	(559		)	—		(559		)



	December 31, 2019
			(in thousands)
	LNG		Power Delivery		Total
Total Assets	$	75,883	$	14,443	$	90,326

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 ~~revenue-producing transactions between~~foreign currency remeasurement, and interest and dividend income, are included in the ~~Company~~segments’ results.

6. Prepaid Expenses and ~~its customers, such as sales, use~~Other Current Assets

The Company’s prepaid expenses and ~~value-added taxes, are excluded from revenue.~~

other current assets consisted of the following (in thousands):



	March 31, 2020		December 31, 2019
Prepaid LNG	$	66	$	189
Prepaid insurance	458		698
Prepaid supplier expenses	318		229
Other receivables	1,209		1,655
Deposits	193		347
Other	135		465
Total prepaid expenses and other current assets	$	2,379	$	3,583

7. Property, Plant and Equipment

The ~~table below presents revenue disaggregated by source,~~Company’s property, plant and equipment consisted of the following (in thousands):



	March 31, 2020			December 31, 2019

Liquefaction plants and systems	$	40,830		$	40,617
Real property and buildings	1,689			1,794
Vehicles and tanker trailers and equipment	46,490			46,597
Computer and office equipment	431			453
Construction in progress	410			409
Leasehold improvements	31			31
	89,881			89,901
Less: accumulated depreciation	(31,704		)	(29,538		)
	$	58,177		$	60,363

Depreciation expense for both the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 totaled $2.3 million, of which all is included in the unaudited condensed consolidated statements of operations as its own and ~~2018 (in thousands):~~

separate line item.

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

Services

1,317

1,720

2,430

3,578

Products

638

355

741

373

$
1,955

$
2,075

$
3,171

$
3,951

8. Investments in Foreign Joint ~~Venture~~

Ventures

BOMAY.The Company holds a 40% interest in BOMAY Electric Industries Company, Ltd. (“BOMAY”) which builds electrical systems for sale in China. The majority partner in this foreign joint venture is Baoji Oilfield Machinery Co., Ltd. (a subsidiary of China National Petroleum Corporation), who owns 51%. The ~~Company made an initial investment of $1.0 million in 2006 when BOMAY was formed, then a second investment of $1.0 million in 2007.~~

remaining 9% is owned by AA Energies, Inc.

The Company made no sales to its joint venture in the ~~six~~three months ended ~~June 30, 2019 and 2018.~~

March 31, 2020.

Below is summary financial information for BOMAY at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 and operational results for the three ~~and six~~ months ended ~~June 30, 2019 and 2018~~March 31, 2020 in U.S. dollars (in thousands, unaudited):

June 30, 2019

December 31, 2018

Assets:

Total current assets
$
67,322

$
59,124

Total non-current assets

3,337

5,742

Total assets
$
70,659

$
64,866

Liabilities and equity:

Total liabilities
$
44,685

$
38,732

Total joint ventures’ equity

25,974

26,134

Total liabilities and equity
$
70,659

$
64,866

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

Revenue
$
17,284

$
12,231

$
28,784

$
20,309

Gross Profit
$
2,479

$
1,912

$
4,440

$
3,697

Earnings
$
1,097

$
710

$
1,759

$
1,137



	March 31, 2020		December 31, 2019
Assets:
Total current assets	$	66,465	$	81,247
Total non-current assets	5,646		5,775
Total assets	$	72,111	$	87,022
Liabilities and equity:
Total liabilities	$	43,971	$	58,176
Total joint ventures’ equity	28,140		28,846
Total liabilities and equity	$	72,111	$	87,022



	Three Months Ended March 31,
	2020
Revenue	$	8,556
Gross Profit	896
Earnings	(284		)

The following is a summary of activity in ~~investments~~our investment in ~~foreign joint ventures~~BOMAY for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 in U.S. dollars (in thousands, unaudited):

June 30, 2019

Investments in BOMAY*

Balance at the beginning of the year
$
2,033

Undistributed earnings:

Balance at beginning of year

7,793

Equity in earnings

703

Dividend distributions

(799
)
Balance at end of period

7,697

Foreign currency translation:

Balance at beginning of year

154

Change during the period

5

Balance at end of period

159

Total investment in BOMAY at June 30, 2019
$
9,889



	March 31, 2020
Investments in BOMAY (1) (2)
Balance at the beginning of the year	$	9,333
Undistributed earnings:
Balance at the beginning of the year	1,257
Equity in earnings	(114		)
Dividend distributions	—
Balance at end of period	1,143
Foreign currency translation:
Balance at the beginning of the year	(69		)
Change during the period	(287		)
Balance at end of period	(356		)
Total investment in BOMAY at March 31, 2020	$	10,120

________

(1)

Accumulated statutory reserves in equity method investments of ~~$2.81~~$2.71 million at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018, respectively, are~~2019 is included in ~~AETI’s consolidated retained earnings.~~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 $1.0 million will be accreted over the remaining nine year life of the joint venture. The Company accreted $43 thousand during the three months ended March 31, 2020 which is included in loss from equity investments in foreign joint ventures in the accompanying condensed consolidated statement of operations. As of March 31, 2020, accumulated accretion totaled $97 thousand.

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 ~~ventures~~venture operations. Joint venture income increases the carrying value of the joint ~~ventures~~ venture

and joint venture losses reduce the carrying value. Dividends received from the joint venture reduce the carrying value. In accordance with our long-lived asset policy, when events or circumstances indicate the carrying amount of an asset may not be recoverable, management tests long-lived assets for impairment. If the estimated future cash flows are projected to be less than the carrying amount, an impairment write-down (representing the carrying amount of the long-lived asset which exceeds the present value of estimated expected future cash flows) would be recorded as a period expense. In making this evaluation, a variety of quantitative and qualitative factors are considered including national and local economic, political and market conditions, industry trends and prospects, liquidity and capital resources and other pertinent factors. Based on this evaluation for this reporting period, the Company does not believe an impairment adjustment is necessary at ~~June 30, 2019.~~

5~~. Notes Payable~~

~~On June 6, 2017,~~March 31, 2020.

9. Accrued Liabilities

The Company’s accrued liabilities consisted of the following (in thousands):



	March 31, 2020		December 31, 2019

Compensation and benefits	$	2,359	$	2,641
Professional fees	234		131
LNG fuel and transportation	1,366		1,582
Accrued interest	59		134
Contract liabilities	221		185
Other taxes payable	192		163
Other operating expenses	59		182
Total accrued liabilities	$	4,490	$	5,018

10. Debt

The Company’s ~~subsidiary, M&I Brazil, entered into a Loan Agreement with~~carrying value of debt consisted of the ~~former chairman of AETI. The Loan Agreement provides~~following (in thousands):



	March 31, 2020			December 31, 2019

Secured term note payable - related party	$	2,077		$	2,077
Secured promissory note - related party	5,000			5,000
Insurance and other notes payable	321			558
Less: amounts due within one year	(1,321		)	(1,558		)
Total long-term debt	$	6,077		$	6,077

During the three months ended March 31, 2020, the Company recorded interest expense of $25 thousand, $215 thousand and $11 thousand related to the secured term note payable - related party, secured promissory note - related party and insurance and other notes payable, respectively.

Certain of the agreements governing our outstanding debt have certain covenants with ~~a $0.30 million loan facility~~which we must comply. As of ~~which $0.20 million is drawn~~March 31, 2020, we were in compliance with all of these covenants.

11. Leases

The following table summarizes the supplemental balance sheet information related to lease assets and ~~is outstanding~~lease liability obligations as of ~~June 30, 2019. All outstanding amounts, including accrued but unpaid interested, are due in June 2020. Under~~March 31, 2020 and December 31, 2019 (in thousands):



	Classification	March 31, 2020		December 31, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	849	$	965
Finance lease assets	Property and equipment, net of accumulated depreciation	9,009		9,302
Total lease assets		$	9,858	$	10,267
Liabilities
Current
Operating	Current portion of operating lease obligations	$	334	$	364
Finance	Current portion of finance lease obligation	3,319		3,440
Noncurrent
Operating	Operating lease liabilities	586		650
Finance	Finance lease obligations—related parties, net of current portion	1		648
Total lease liabilities		$	4,240	$	5,102

The following table summarizes the ~~loan agreement, the interest rate on the loan facility is 10.0%, per annum, payable each quarter. The loan facility is secured by the assets held by M&I Brazil.~~

~~In March 2019, Brazil financed project expenditures with short-term financing~~components of ~~approximately $0.2 million from Santander bank. The loan is due March 2020, with an interest rate of 11.88%.~~

6~~. Leases~~

~~M&I Brazil leases offices and facilities in three cities in Brazil that are under operating~~ lease agreements. The leases expire at various dates through January 2022. Our operating leases are included in right-of-use assets, current and long-term liabilities in the accompanying Condensed Consolidated Balance Sheet. The assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments based on Brazil’s General Market Price Index rate. Brazil also has multiple short-term equipment leases which are less than twelve months and have no cancellation penalties, therefore they are not recorded in the balance sheet.

~~Lease~~ expense for operating leases is recognized on a straight-line basis over the lease term. Lease expense is recognized in the period for which the obligation for those payments is incurred and is included in general and administrative expense in the Condensed Consolidated Statement of Operations.

~~An initial right-of-use asset of approximately $0.2 million was recognized as a non-cash asset addition with the adoption of the new lease standard. Operating lease costs were less than $50,000~~ for the three ~~and six~~ months ended ~~June 30, 2019.~~ March 31, 2020 and 2019 (in thousands, unaudited):



Lease Cost	Classification	Three Months Ended March 31,
Lease Cost	Classification	2020		2019
Operating lease cost	Cost of sales	$	39	$	39
Operating lease cost	Selling, general and administrative expenses	91		67
Finance lease cost
Amortization of leased assets	Depreciation	293		934
Interest on lease liabilities	Interest expense	161		174
Net lease cost		$	584	$	1,214

The ~~weighted-average remaining~~following schedule presents the future minimum lease ~~term is 2 years and the weighted-average discount rate is 6.75%.~~

~~Maturities of~~payments for our operating and finance obligations at March 31, 2020 (in thousands):



	Operating Leases			Finance Leases			Total
Remainder 2020	$	321		$	2,919		$	3,240
2021	237			651			888
2022	176			—			176
2023	145			—			145
2024	149			—			149
Thereafter	25			—			25
Total lease payments	1,053			3,570			4,623
Less: Interest	(133		)	(250		)	(383		)
Present value of lease liabilities	$	920		$	3,320		$	4,240

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



Lease Term and Discount Rate	March 31, 2020
Weighted-average remaining lease term (years)
Operating leases	3.5
Finance leases	0.8
Weighted-average discount rate
Operating leases	7.3	%
Finance leases	9.1	%

The following table summarizes the supplemental cash flow information related to leases as of ~~June 30, 2019 are as follows (in thousands):~~

March 31, 2020:

2019

$
36

2020

67

2021

49

2022

4

Total undiscounted operating lease payments

156

Less: imputed interest

��
(9
)
Present value of operating lease liabilities

$
147

~~7. Income Taxes~~

~~The tax provision for~~



Other information	March 31, 2020
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	109
Financing cash flows from finance leases	768
Interest paid	131
Noncash activities from right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	1,172

12. Related Party Transactions

Other Purchases and Sales

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, the Company paid Applied Cryo Technologies, Inc. (“ACT”), a company owned 51% by Crenshaw Family Holdings International, Inc., $33 thousand and ~~2018 reflects the provision from taxes on our earnings from our Brazilian subsidiary~~$49 thousand, respectively, for equipment repairs and ~~dividends received from BOMAY.~~services. The Company ~~has established a valuation allowance~~had no sales of LNG to ACT during the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020 and December 31, 2019, the Company had $4 thousand and $4 thousand, respectively, due from ACT included in accounts receivable on ~~its deferred tax assets~~the condensed consolidated balance sheets. As of March 31, 2020 and December 31, 2019 the Company had $28 thousand and $24 thousand, respectively, due to ~~uncertainty regarding future realization.~~

8.ACT included in accounts payable on the condensed consolidated balance sheets.

The Company purchases supplies and services from a subsidiary of The Modern Group. Casey Crenshaw is the beneficial owner of 25% of the Modern Group and is deemed to jointly control The Modern Group with family members. During the three months ended March 31, 2020 and 2019, the Company made purchases of supplies and services from a subsidiary of The Modern Group totaling $33 thousand and $14 thousand, respectively. There was no receivable due from The Modern Group as of March 31, 2020 and December 31, 2019. As of March 31, 2020 and December 31, 2019 the Company had $125 thousand and $22 thousand, respectively, due to The Modern Group included in accounts payable on the condensed consolidated balance sheets.

During the three months ended March 31, 2020, purchases from Chart E&C totaled $10 thousand. The Company made no purchases during the three months ended March 31, 2019. As of March 31, 2020 and December 31, 2019 the Company had $10 thousand and $8 thousand, respectively, due to Chart E&C included in accounts payable on the condensed consolidated balance sheets.

13. Commitments and Contingencies

Environmental Matters

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

Litigation, Claims and Contingencies

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

In October 2018, American Electric received notification of a potential liability of $4.3 million associated with ~~the~~an asset purchase agreement ~~completed in August 2018. Please see Note 10 for further explanation of this possible obligation.~~

9~~. Redeemable Convertible Preferred Stock~~

~~In conjunction with the issuance of 1,000,000 shares of Redeemable Convertible Preferred Stock, Series A in May 2012, warrants~~ to ~~purchase 325,000 shares of our common stock (the “Warrants”) were issued. Discount accretion was approximately $30,000 for both the six months ended June 30, 2019 and 2018.~~

The Series A Convertible Preferred Stock accrued cumulative dividends at a rate of 6% per annum payable quarterly in cash or in shares of Common Stock, at the option of the Company. At June 30, 2019 and December 31, 2018, the company had accrued but unpaid dividends totaling $0.08 million which is included in accounts payable and other accrued expenses in the condensed consolidated balance sheets. During the six months ended June 30, 2019 and 2018, the Company issued 21,506 and 22,753 shares of common stock as payment of dividends, respectively.

Prior to the completion of the Share Exchange discussed in Note 11, the holders of the Series A Convertible Preferred Stock elected to convert all 1,000,000 shares outstanding into 276,549 shares of common stock (includes effect of 1-for-8 stock split).

~~10. Discontinued Operations~~

~~On August 12, 2018 the Company sold~~sell substantially all of ~~the~~its U.S. business assets and operations ~~of M&I Electric (“M&I)~~ to ~~a newly formed subsidiary of~~ Myers Power Products, Inc. ~~(“Buyer”~~("Myers"). ~~The newly formed subsidiary was established by the Buyer to~~

acquire the assets of M&I pursuant to the Asset Purchase Agreement (the “Transaction”) between the Company and the Buyer. The Transaction included a total purchase price of approximately $18.5 million based on $10.1 million of cash consideration plus debt assumed by the buyer of $8.4 million.

The contractual terms of the ~~Transaction include~~agreement included a provision for true-up of the net working capital, estimated as of the date of closing, to actual working capital as calculated by ~~the Buyer~~Myers and agreed to by ~~the Seller.~~American Electric. Any difference in the actual (conclusive) net working capital in relation to the estimated working capital at closing results in an adjustment to the purchase price. ~~In October 2018, the Company~~American Electric received notification from ~~the Buyer~~Myers of their actual working capital calculation. In the notification, ~~the Buyer has~~Myers communicated a decrease of approximately $4.3 million ~~dollars~~ in net working capital, in comparison to the estimated working capital used at contract closing. The contractual terms of the ~~Transaction provide~~transaction provided that in the event ~~the Buyer~~Myers and ~~Seller cannot~~American Electric could not agree to a conclusive net working capital adjustment, then all items remaining in dispute shall be submitted by either one of the parties within thirty (30) calendar days after the expiration of the resolution period to a national or regional independent accounting firm mutually acceptable to ~~Buyer~~Myers and ~~Seller~~American Electric (the "Neutral Arbitrator"). The Neutral Arbitrator shall act as an arbitrator to determine the conclusive net working capital. The conclusive net working capital, once determined, may result in a purchase price adjustment due to ~~the Buyer~~Myers or to the ~~Company as Seller.~~

Company. As of March 31, 2020, there have not been any updates to the potential liability. The Company ~~and~~is working with legal counsel to resolve the ~~Buyer~~matter.

In January of 2020, the Company received notification that its Subsidiary, M&I Electric ~~currently~~Industries, Inc. (“M&I”) has been named as a defendant in a class action lawsuit “Pelton Ray Barrett, et al. v. Arkema, Inc., et al.” as the result of a fire on August 31, 2017, on a site owned or operated by Arkema, Inc. allegedly resulting in chemical exposure. Other defendants in the suit, including M&I are alleged to have been responsible for the installation, repair, design, and/or maintenance of the electrical, refrigeration and environmental systems required to mitigate damages from the release of chemicals. The Company, through its insurance providers, has engaged outside legal counsel to defend against these claims. The Company believes the ultimate resolution of this matter will not have a significant disagreement with regard to the working capital adjustment calculation and the Company has not received documentation sufficient to support the Buyer’s position. As such, no adjustments have been made in determining the gain on the sale of assets reported at December 31, 2018. Any purchase price adjustment related to the conclusive determinationmaterial adverse impact of the ~~net working capital adjustment, if any, will be reflected at the date of such determination. Any legal fees incurred related to this disagreement will be expensed as incurred.~~

~~At June 30, 2018, the related operating results were reflected as discontinued operations in the~~ Company’s ~~Condensed Statement of Operations. Summary financial results for the three and six months ended June 30, 2018 are as follows (in thousands, except per share data):~~

Three Months Ended June 30, 2018

Six Months Ended June 30, 2018

Net sales
$
7,750

$
14,163

Loss from discontinued operations
$
(1,979
)

$
(4,838
)

Loss per share, basic and diluted
$
(1.80
)

$
(4.37
)

Cash provided by operating activities of discontinued operations for the six months ended June 30, 2018 was $0.4 million. Cash used in investing activities of discontinued operations for the six months ended June 30, 2018 was $0.2 million.

~~11. Subsequent Events~~

On July 26, 2019, the share exchange transaction (the “Transaction”) with Stabilis Energy LLC (“Stabilis”) and its subsidiaries was completed. The Transaction and its related proposals, including a company name change and a reverse stock split, were approved by our stockholders at a Special Meeting of Stockholders on July 17, 2019. On July 29, 2019, the company began operating under the name Stabilis Energy, Inc. and our common stock began trading on the Nasdaq Capital Market under the ticker symbol “SLNG”. In addition, the company’s shares outstanding will reflect a one-for-eight reverse split.

As a result of the reverse stock split, every eight shares of American Electric common stock outstanding immediately prior to the reverse stock split were combined into one share of Stabilis Energy, Inc. common stock. No fractional shares were issued. In lieu of fractional shares, cash was issued based on the closing price of American Electric common stock on the Nasdaq Capital Market on July 26, 2019. ~~Unless otherwise noted, any share or per share amounts in the accompanying unaudited~~ condensed consolidated financial ~~statements and related notes give retroactive effect~~position, results of operations, or liquidity.

14. Stockholders’ Equity

Issuances of Common Stock

The Company is authorized to ~~both the transaction and the reverse stock split.~~

As a result of the completion of the share exchange, the former holders of Stabilis and its subsidiaries own 90% of the combined company and the former American Electric stockholders own 10% of the combined company. Approximately 14,645,917 shares of Stabilis Energy, Inc. common stock were issued and outstanding as a result of the completion of the share exchange and reverse stock split.

~~Stabilis is a vertically integrated provider of small-scale liquefied natural gas (“LNG”) production, distribution and fueling services~~issue up to multiple end markets in North America. Stabilis has safely delivered over 200 million gallons of LNG through more than 20,000 truck deliveries during its 15-year operating history, which it believes makes it one of the largest and most experienced small-scale LNG providers in North America. Stabilis’ customers use LNG as a fuel source in a variety of applications in the industrial, energy, mining, utilities and pipelines, commercial, and high horsepower transportation markets. Stabilis’ customers use LNG as an

alternative to traditional fuel sources, such as distillate fuel oil and propane, to lower fuel costs and reduce harmful environmental emissions. Stabilis’ customers also use LNG as a “virtual pipeline” solution when natural gas pipelines are not available or are curtailed. Stabilis is headquartered in Houston, Texas.

On August 5, 2019, the Company entered into an exchange agreement with Chart Energy & Chemicals, Inc., a Delaware corporation and subsidiary of Chart Industries, Inc. for the exchange of indebtedness of Stabilis LNG, a Company subsidiary, to Chart E&C in the principal amount of up ~~to $7.0 million~~ ~~owed pursuant to a secured promissory note issued by Stabilis LNG to Chart E&C in September 2013, for~~37,500,000 shares of Common Stock, $0.001 par value per share.

In February 2020, the Company issued 34,706 shares of common stock to former directors as payment for services rendered as members of the American Electric Board of Directors (see Note 15—Stock-Based Compensation for further discussion).

Issuances of Warrants

As of March 31, 2020, the Company had outstanding Warrants to purchase 103,125 shares of our common stock as follows:



Date of Issuance	No. of Warrants	Exercise Price	Expiration Date
May 2, 2012	15,625	$21.76	May 22, 2020
May 2, 2012	25,000	$25.36	May 22, 2020
Nov. 13, 2017	62,500	$18.08	Nov. 13, 2022

15. Stock-Based Compensation

Independent directors receive 50% of their retainer fee as Restricted Stock Awards ("RSAs"). The RSAs are issued immediately upon grant and are subject to a one year vesting period and other restrictions.

During the three months ended March 31, 2020, the Company granted 61,308 Restricted Stock Awards (“RSAs”) to independent directors under the 2019 Plan. The fair value of the RSAs on the date of grant was $225 thousand based on the previous day closing price of our common stock as reported on the OTCQX Best Market on the grant date. The Company recognized $19 thousand in ~~Stabilis Energy, Inc.~~ ~~This transaction~~stock-based compensation costs, which is included in general and administrative expenses in the condensed consolidated statements of operations.

As of March 31, 2020, the Company had $131 thousand of unrecognized compensation costs related to our Board of Directors grants, which is expected to ~~close within 30 days, subject~~be recognized over a weighted average period of one year.

16. 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 ~~both parties meeting certain closing conditions.~~

changes in forecasted annual operating income, positive or negative changes to the valuation allowance for net deferred tax assets, and changes to actual or forecasted permanent book to tax differences.

The Company’s effective tax rate for the three months ended March 31, 2020 and 2019 was 4.7% and 0.0%, respectively, which reflects state income taxes and the Company’s deferred federal income tax benefit generated from an expected net operating loss, offset by a change in the valuation allowance on net deferred tax assets.

17. Subsequent Events

The impact of the COVID-19 crisis in the current quarter was largely limited to operations in our Power Delivery segment. Our Chinese joint venture, BOMAY, closed its manufacturing facility for approximately four weeks. The shut down of BOMAY’s manufacturing facility and related supply chain disruptions contributed to a $0.2 million loss in the current quarter, compared to $1.1 million net income in the preceding quarter. BOMAY has resumed operations. Our Brazilian subsidiary experienced activity declines beginning in March and we anticipate these will continue at least through mid-2020.

Our LNG segment, which is focused on North America, did not experience a material impact from the crisis during the current quarter. However, we anticipate a significant activity decline with our upstream oil and gas customers, including hydraulic fracturing, frac sand mines, and related activities beginning in the second quarter due to current oil prices. We have redeployed sales personnel to non-oilfield related opportunities and are seeing some success in replacing oilfield related revenues with other projects. To what extent we will be able to replace all oilfield revenues in the short-term remains uncertain.

We have implemented a number of cost control measures including headcount reductions, temporary salary reductions and other measures to adjust to anticipated activity levels and maintain adequate liquidity.

I~~TEM~~

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

OPERATIONS.

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in ~~the~~this Form 10-Q and the consolidated financial statements included in the ~~2018~~2019 Annual Report on Form 10-K filed on ~~April~~March 16, ~~2019.~~2020. 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.

~~FORWARD-LOOKING STATEMENTS~~

~~Except for historical~~

Overview

Stabilis is a vertically integrated provider of small-scale LNG production, distribution and ~~factual information,~~fueling services to multiple end markets in North America. Our diverse customer base utilizes LNG as a fuel source in a variety of applications in the industrial, energy, mining, utilities and pipelines, commercial, and high horsepower transportation markets. Our customers use LNG as an alternative to traditional fuel sources, such as diesel, fuel oil, and propane, and as a means to lower fuel costs and reduce their environmental footprint. Our customers also use LNG as a “virtual pipeline” solution when natural gas pipelines are not available or are curtailed.

Stabilis seeks to provide our customers with safe, reliable and cost effective LNG fueling and power delivery solutions. We provide multiple products and services to our customers, including:

LNG Production and Sales—Stabilis builds and operates cryogenic natural gas processing facilities, called “liquefiers”, that convert natural gas into LNG through a multiple stage cooling process. We currently own and operate a liquefier that can produce up to 100,000 LNG gallons (379 cubic meters) per day. We also purchase LNG from third-party production sources which allows us to support customers in markets where we do not own liquefiers. We define “small-scale” LNG production to include liquefiers that produce less than 1,000,000 LNG gallons per day (3,788 cubic meters per day).

Transportation and Logistics Services—Stabilis offers our customers a “virtual natural gas pipeline” by providing them with turnkey LNG transportation and logistics services in North America. We deliver LNG to our customers’ work sites from both our own production facility and our network of 25 third-party production sources located throughout North America. We own a fleet of LNG fueled trucks and cryogenic trailers to transport and deliver LNG. We also outsource similar equipment and transportation services from qualified third-party providers as required to support our customer base. We define “small-scale” LNG distribution to include distribution by trailer or tank container (up to 15,000 LNG gallons) or marine vessels that carry less than 8,000,000 LNG gallons (approximately 30,000 cubic meters).

Cryogenic Equipment Rental—Stabilis owns and operates a rental fleet of approximately 150 mobile LNG storage and vaporization assets, including: transportation trailers, electric and gas-fired vaporizers, ambient vaporizers, storage tanks, and mobile vehicle fuelers. We also own several stationary storage and regasification assets. We believe this ~~document contains “forward-looking statements” within the meaning~~is one of the ~~Private Securities Litigation Reform Act~~largest fleets of ~~1995. These forward-looking statements include statements that address activities, events or developments~~small-scale LNG equipment in North America. Our fleet consists primarily of trailer-mounted mobile assets, making delivery to and between customer locations more efficient. We deploy these assets on job sites to provide our customers with the equipment required to transport, store, and consume LNG in their fueling operations.

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

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

Stabilis’ customers use natural gas in their operations for multiple reasons, including lower fuel cost, more stable fuel costs, reduced environmental emissions, and improved operating performance. We serve customers in a variety of end markets, including industrial, energy, mining, commercial, utilities and pipelines, and high horsepower transportation. We believe that LNG consumption will ~~or may occur~~continue to increase in these end markets in the future, such as predictions of business outlook and future financial performance. All forward-looking statements are based on assumptions made by us based on our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances.

These statements, including statements regarding our capital needs, business strategy, expectations and intentions, are subject to numerous risks and uncertainties, many of which are beyond our control, including our ability to maintain key products’ sales or effectively react to other risks including those discussed in Part I, Item 1A, Risk Factors, of our 2018 Annual Report on Form 10-K filed on April 16, 2019. We urge you to consider that statements that use the terms “believe,” “do not believe,” “anticipate,” “expect,” “plan,” “estimate,” “intend” and similar expressions are intended to identify forward-looking statements. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

~~BUSINESS~~

Our corporate structure consisted of American Electric Technologies, Inc., which owns 100% of M&I Electric Industries, Inc. (“M&I), its wholly-owned subsidiary, South Coast Electric Systems, LLC and M&I Electric Brazil Sistemas e Servicios em Energia LTDA (“M&I Brazil”). future.

Power Delivery Solutions—As a result of the ~~sale of South Coast~~business combination with American Electric, Systems operations in 2016 and M&I’s operations in 2018, results from continuing operations consisted of our Brazilian subsidiary, our interest in our Chinese joint venture and our corporate office in Bellaire, Texas. Our foreign joint venture is accounted for by the equity method.

On August 12, 2018 the Company’s wholly-owned subsidiary, M&I completed its previously announced sale of its U.S. based assets to M&I Electric, LLC, an unrelated party. For further discussion of this sale, see Note 11 in the Notes to Condensed Consolidated Financial Statements.

~~On December 17, 2018, the Company entered into a Share Exchange Agreement for the acquisition of~~ Stabilis Energy, LLC and its subsidiaries (“Stabilis), a Texas-based, privately held small-scale liquefied natural gas producer and distributor (the “Transaction”). On May 8, 2019, the Company entered into an amendment to the Share Exchange Agreement. On ~~July 17, 2019, the~~ ~~stockholders of AETI approved the proposals related to the Share Exchange Agreement with the holders of Stabilis,~~ an amendment to the Articles of Incorporation to increase the authorized number of shares of common stock from 50,000,000 to 300,000,000, and a reverse stock split of between 1:2 and 1:8. The transaction closed on July 26, 2019. On July 29, 2019, the Company effected a 1:8 reverse stock split and commenced trading on the Nasdaq Capital Market under the symbol SLNG.

~~Overview~~

With the 2018 sale of its U.S. operations, the Company’s activities consist solely of operations in Brazil and our interest in the foreign joint venture BOMAY described below. The financial results of Stabilis are not included in this report as the closing of the Transaction occurred subsequent to June 30, 2019.

~~Foreign Operations~~

~~Brazil~~

~~Brazil has offices in Rio de Janeiro, Macaé and Belo Horizonte to serve the local market and~~ provides power delivery services and products for the oil and gas, marine vessel, power generation and broad industrial market segments in ~~Brazil.~~

~~China~~

~~The Company holds a 40% interest in BOMAY Electric Industries Company, Ltd. (“BOMAY”), which~~Brazil, and builds electrical systems for sale in ~~China.~~China through our 40% interest in BOMAY.

Recent Developments

On July 26, 2019, the Share Exchange transaction with American Electric and its subsidiaries was completed. The Share Exchange and its related proposals, which included a company name change and a reverse stock split, were approved by American Electric stockholders at a Special Meeting of Stockholders on July 17, 2019. On July 29, 2019, the Company began operating under the name Stabilis Energy, Inc. and our common stock began trading under the ticker symbol “SLNG”. Because the former owners of Stabilis LLC owned approximately 90% of the voting stock of the combined company at the completion of the Share Exchange and certain other factors including that directors designated by LNG Investment constitute a majority ~~partner~~of the board of directors, Stabilis LLC was treated as the acquiror of American Electric in ~~this foreign~~the Share Exchange for accounting purposes. As a result, the Share Exchange was treated by American Electric as a reverse acquisition under the purchase method of accounting in accordance with United States generally accepted accounting principles (“US GAAP”). In addition, the Company’s shares outstanding now reflect a one-for-eight reverse split. Unless otherwise noted, any share or per share amounts give retroactive effect to the reverse stock split.

The financial information represents the historical results of Stabilis for periods prior to the Share Exchange. The operations of American Electric are included in our financial statements from the completion of the Share Exchange on July 26, 2019.

On August 5, 2019, we entered into an exchange agreement (the “Exchange Agreement”) with Chart Energy & Chemicals, Inc. (“Chart E&C”), Stabilis LLC, and Stabilis LNG EF for the satisfaction of indebtedness of Stabilis LNG to Chart E&C in the principal amount of $7 million (the “Exchanged Indebtedness”) in exchange for unregistered shares of our common stock (such transactions, the “Chart Transaction”). We issued to Chart E&C 1,470,807 shares of Company common stock, based on the per share price of Company common stock of 90% of the average of the dollar volume-weighted average prices per share of the common stock as calculated by Bloomberg for each of the five consecutive trading days ending on and including the third trading day immediately preceding the closing date, which took place on August 30, 2019. At closing, Stabilis LNG EF also paid to Chart E&C an amount in cash equal to the accrued and unpaid interest on the Exchanged Indebtedness due through the closing, plus a cash amount to be paid in lieu of the issuance of fractional shares of our Common Stock.

On September 11, 2019, we entered into Amendment No. 1 to the Exchange Agreement, which eliminated the right of Chart E&C to elect an additional exchange of all or any portion of the balance of the unpaid principal amount of the Note. The Exchange Agreement previously provided for Chart E&C to elect an additional exchange, on a second closing date, of all or any portion of the balance of the unpaid principal amount of the Note, for additional shares of our common stock based on the foregoing pricing calculation related to the closing date.

On August 20, 2019, we completed our acquisition of Diversenergy, LLC (“Diversenergy”) and its subsidiaries, creating what we believe will be one of the leading LNG marketing and distribution companies in Mexico. Diversenergy specializes in virtual LNG distribution systems, providing LNG to customers who use it as a fuel in mobile high horsepower applications and to customers who do not have natural gas pipeline access. We purchased all of the issued and outstanding membership interests of Diversenergy for total consideration of 684,963 shares of Company common stock and $2.0 million in cash. The completion of the acquisition will expand the Company's presence in the distributed LNG and compressed natural gas (“CNG”) markets in Mexico.

On August 20, 2019, we established Energía Superior Gas Natural LLC (“Energía Superior”) as a joint venture with CryoMex Investment Group LLC (“CryoMex”), to pursue investments in distributed natural gas production and distribution assets in Mexico (the “Joint Venture”). CryoMex is ~~Baoji Oilfield Machinery Co., Ltd. (a~~led by Grupo CLISA, a Monterrey, Mexico-based developer and operator of businesses in multiple end markets including energy.

The Joint Venture plans to invest in LNG and compressed natural gas production, transportation, storage, and regasification assets that serve multiple end markets throughout Mexico, including the industrial, mining, pipeline, utility, marine, and over-the-road transportation markets.

The market in which we operate has been impacted by the recent downturn in the energy market as well as the outbreak of COVID-19 and its progression into a pandemic in March 2020. As the COVID-19 pandemic develops, governments, corporations and other authorities may continue to implement restrictions or policies that adversely impact consumer spending, the economy and our business, operations and share price. The ultimate extent and long-term effects of the pandemic are difficult to determine, but a prolonged period of market fluctuations and weak general economic conditions may have a material adverse effect on the Company’s financial results.

We have implemented a number of ~~China National Petroleum Corporation).~~ ~~We account~~cost control measures including headcount reductions, temporary salary reductions and other measures to adjust to anticipated activity levels and maintain adequate liquidity.

On March 27, 2020, the President of the United States signed into law the CARES Act. The CARES Act among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improved property.

The Company continues to examine the impact that the CARES Act and other relief measures taken by the U.S. may have on our ~~interest in BOMAY using~~business. Currently, the ~~equity method.~~

Company is unable to determine the impact that the CARES Act will have on its financial condition, results of operations, or liquidity.

Results of Operations

Three Months Ended ~~June 30, 2019~~March 31, 2020 Compared to Three Months Ended ~~June 30, 2018 (unaudited)~~

March 31, 2019

The following table reflects line items from the accompanying Consolidated Statements of Operations for the three months ended March 31, 2020 (the “Current Quarter”) as compared to the three months ended March 31, 2019 (the “Prior Year Quarter”):

Stabilis Energy, Inc.

Condensed Consolidated Statements of Operations



	Three Months Ended March 31,						Change			% Change
	2020			2019			Change			% Change
	(unaudited)
	(In thousands, excluding percentages)
Revenue:
LNG product	$	9,131		$	10,254		$	(1,123	)	(11.0	)%
Rental, service and other	4,707			2,721			1,986			73.0
Total revenues	13,838			12,975			863			6.7
Operating expenses:
Costs of LNG product	6,097			7,482			(1,385		)	(18.5	)
Costs of rental, service and other	2,918			1,414			1,504			106.4
Selling, general and administrative	3,186			1,992			1,194			59.9
Depreciation	2,270			2,290			(20		)	(0.9	)
Total operating expenses	14,471			13,178			1,293			9.8
Loss from operations before equity income	(633		)	(203		)	(430		)	211.8
Net equity loss from foreign joint ventures' operations:
Loss from investments in foreign joint ventures	(114		)	—			(114		)	100.0
Foreign joint venture's operations related expenses	(60		)	—			(60		)	100.0
Net equity income from foreign joint ventures' operations	(174		)	—			(174		)	100.0
Loss from operations	(807		)	(203		)	(604		)	297.5
Other income (expense):
Interest expense, net	(11		)	(3		)	(8		)	266.7
Interest expense, net - related parties	(240		)	(309		)	69			(22.3	)
Other income (expense)	38			(44		)	82			(186.4	)
Gain (loss) from disposal of assets	11			—			11			100.0
Total other income (expense)	(202		)	(356		)	154			(43.3	)
Loss before income tax expense	(1,009		)	(559		)	(450		)	80.5
Income tax expense	41			—			41			100
Net loss	(1,050		)	(559		)	(491		)	87.8
Net income (loss) attributable to noncontrolling interests	—			179			(179		)	(100.0	)
Net loss attributable to Stabilis Energy, Inc.	$	(1,050	)	$	(738	)	$	(312	)	42.3	%

Segment Results

The Company’s revenues are derived from two operating segments: LNG and Power Delivery. The Company evaluates the performance of its segments based primarily on segment operating income.

LNG Segment

Our LNG segment supplies LNG to the industrial, midstream, and oilfield sectors in North America and provides turnkey fuel solutions to help users of propane, diesel and other crude-based fuel products convert to LNG.



	Three Months Ended March 31,						Change			% Change
	2020			2019			Change			% Change
	(unaudited)
	(In thousands, excluding percentages)
Revenue:
LNG product	$	9,131		$	10,254		$	(1,123	)	(11.0	)%
Rental, service and other	3,397			2,721			676			24.8
Total revenues	12,528			12,975			(447		)	(3.4	)
Operating expenses:
Costs of LNG product	6,097			7,482			(1,385		)	(18.5	)
Costs of rental, service and other	1,671			1,414			257			18.2
Selling, general and administrative	2,724			1,992			732			36.7
Depreciation	2,235			2,290			(55		)	(2.4	)
Total operating expenses	12,727			13,178			(451		)	(3.4	)
Loss from operations before equity income	$	(199	)	$	(203	)	$	4		2.0	%

Power Delivery Segment

Our Power Delivery segment provides power delivery solutions to the global energy industry through our subsidiary in Brazil and our joint venture in China.



	Three Months Ended March 31,					Change			% Change
	2020			2019		Change			% Change
	(unaudited)
	(In thousands, excluding percentages)
Revenue:
Rental, service and other	$	1,310		$	—	$	1,310		—	%
Total Revenues	1,310			—		1,310			—
Operating Expenses:
Costs of revenue (exclusive of depreciation as shown separately):
Costs of rental, service and other	1,247			—		1,247			—
Selling, general and administrative	462			—		462			—
Depreciation	35			—		35			—
Total operating expenses	1,744			—		1,744			—
Loss from operations before equity income	(434		)	—		(434		)	—
Net equity loss from foreign joint ventures' operations:
Loss from equity investments in foreign joint ventures	(114		)	—		(114		)	—
Foreign joint venture's operations related expenses	(60		)	—		(60		)	—
Net equity loss from foreign joint ventures' operations	(174		)	—		(174		)	—
Loss from operations	$	(608	)	$	—	$	(608	)	—	%

Revenue

LNG Product Revenue. During the Current Quarter LNG Product revenues decreased $1.1 million or 11.0% versus the Prior Year Quarter primarily due to reduced activity levels with certain oil and gas customers and lower average gas prices.

Rental, Service, and Other Revenue. Rental, service and other revenues increased by $2.0 million or 73.0% in the Current Quarter compared to Prior Year Quarter primarily due to the completion of the Share Exchange transaction with American Electric, which contributed $1.3 million, and higher equipment rentals with peaking customers.

Operating Expenses

Cost of LNG Product. Cost of LNG Product in the Current Quarter decreased $1.4 million or 18.5%. As a percentage of LNG Product Revenue, overall cost of product decreased from 73% to 67% due to improved utilization of the George West Plant and ~~Gross Margin~~

~~Revenues decreased 6%,~~a higher percentage of total gallons sold being sourced from the plant.

Cost of Rental, Service, and Other Revenue. This cost increased $1.5 million or 106.4% in the Current Quarter. The increase in costs is primarily a result of the completion of the Share Exchange with American Electric. Costs related to the acquired business of $1.2 million are included in our results of operations in the Current Quarter. Costs related to the LNG segment also increased by $0.3 million, consistent with the increased equipment rental to winter peaking customers.

Selling, general and administrative. Selling, general and administrative expense increased $1.2 million or 59.9% during the Current Quarter as compared to the Prior Year Quarter. The increase results primarily from the consolidation of American Electric and Diversenergy and additional costs related to the Company’s transition to a public company, all of which occurred subsequent to the Prior Year Quarter.

Depreciation. Depreciation expense was $2.3 million during both the Current Quarter and Prior Year Quarter.

Net Equity Loss From Foreign Joint Ventures' Operations

Loss from Investments in Foreign Joint Ventures. Loss from investments in foreign joint ventures was $0.1 million in the Current Quarter as a result of the Share Exchange with American Electric which occurred subsequent to ~~$2.0~~the Prior Year Quarter. There was no income or loss from investment in foreign joint ventures in the Prior Year Quarter.

Operating expenses related to foreign joint ventures. Operating expenses related to BOMAY were $0.1 million in the Current Quarter. There were no Operating Expenses in the Prior Year Quarter.

Other Income (Expense)

Interest expense, net. Interest expense in the Current Quarter was consistent with the Prior Year Quarter.

Interest expense, net - related parties. Interest expense decreased $0.1 million during the Current Quarter as compared to the Prior Year Quarter primarily due to the cancellation of Chart Industries indebtedness in exchange for Stabilis common stock subsequent to the Prior Year Quarter.

Other income. Other income increased $0.1 million in the Current Quarter.

Gain / (loss) on the disposal of fixed assets. The gain from disposal of rolling stock was $11 thousand in the Current Quarter. No assets were disposed in the Prior Year Quarter.

Income tax expense. The Company incurred state income tax expense of $41 thousand during the Current Quarter. No income tax expense was incurred in the Prior Year Quarter.

Liquidity and Capital Resources

Overview

As of March 31, 2020, we had $3.2 million in cash and cash equivalents on hand and $10.7 million in outstanding debt and finance lease obligations (of which $4.6 million is due in the next twelve months).

We have historically funded the business primarily through cash flows from operations, short-term notes payable, debt from finance companies and related parties, and capital contributions. We have used a portion of our cash flows to invest in fixed assets to support growth. We have also used cash to pay interest and principal amounts outstanding under our borrowings.

The Company is subject to substantial business risks and uncertainties inherent in the LNG industry. Additionally, the impact of the COVID-19 pandemic has created additional uncertainties regarding the future demand for LNG from our customers. There is no assurance that the Company will be able to generate sufficient cash flows in the future to sustain itself or to support future growth.

Management concluded positive cash flows from operations are supported by the recent increase in utility and pipeline sales, the reduction of operating costs as a percent of sales, improved plant utilization, and the August 2019 cancellation of $7.0 million

of Chart Industries indebtness in exchange for Stabilis common stock. Accordingly, management believes the business will generate sufficient cash flows from its operations to fund the business for the next 12 months.

Cash Flows

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



	Three Months Ended March 31,
	2020			2019
	(unaudited)
	(In thousands)
Net cash provided by (used in):
Operating activities	$	349		$	1,201
Investing activities	(101		)	(293		)
Financing activities	(1,005		)	(816		)
Effect of exchange rate changes on cash	(60		)	—
Net increase (decrease) in cash and cash equivalents	(817		)	92
Cash and cash equivalents, beginning of period	3,979			1,247
Cash and cash equivalents, end of period	$	3,162		$	1,339

Operating Activities

Net cash provided by operating activities totaled $0.3 million for the three months ended ~~June 30, 2019,~~March 31, 2020 compared to $1.2 million for the same period 2019. The decrease in net cash provided by operating activities of $0.9 million as compared to the ~~three months ended June 30, 2018,~~Prior Year Quarter was primarily ~~due~~attributable to ~~the completion of~~increased net working capital and a ~~large project~~higher net loss.

Investing Activities

Net cash used in ~~Brazil in the prior year.~~

~~Gross margin decreased 18%, or less than~~investing activities totaled $0.1 million ~~to $0.4~~and $0.3 million for the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~compared to the three months ended June 30, 2018. Gross margin as~~respectively. The change was driven by a ~~percentage~~reduction of ~~revenues decreased to 21%~~equipment purchases in ~~the three months ended June 30, 2019, compared to 25%~~2020.

Financing Activities

Net cash used in ~~the three months ended June 30, 2018. The decrease in margins was primarily attributable to higher project costs in 2019.~~

~~General~~financing activities totaled $1.0 million and ~~Administrative Expenses~~

~~General and administrative expenses increased by 67%, or $0.3 million, to~~ $0.8 million during the three months ended June 30, 2019, compared to the three months ended June 30, 2018. The increase in general and administrative expenses was primarily due to the financial, legal and advisory fees incurred during the three months ended June 30, 2019 in connection with the Share Exchange Agreement the Company entered into with Stabilis in the fourth quarter of 2018.

~~Selling and Marketing Expenses~~

~~Selling and marketing costs increased by 43%, or $0.04~~ million for the three months ended ~~June 30,~~March 31, 2020 and 2019, respectively. The increase of $0.2 million compared to the ~~three months ended June 30, 2018. This increase~~Prior Year Quarter was primarily due to the addition of personnel to grow the business in Brazil. Selling and marketing expenses, as a percentage of revenues, increased to 7% for the three months ended June 30, 2019, compared to 5% for the three months ended June 30, 2018.

~~Foreign Joint Venture Equity Income~~

Net equity income from our foreign joint venture BOMAY increased 54%, or $0.15 million, to $0.4 million during the three months ended June 30, 2019, compared to the three months ended June 30, 2018. The increase is primarily dueattributable to a ~~previously announced rig order for a major Chinese customer at~~$0.2 million net increase in payments on short-term notes payable.

Sources of Liquidity and Capital Resources

Our principal sources of liquidity have consisted of cash on hand, cash provided by our ~~BOMAY joint venture.~~

~~Income Tax Provision~~

The provision for income taxes was less than $0.1 million for the three months ended June 30, 2019 compared to $0.1 million for the three months ended June 30, 2018, which reflects the provision of taxes on our earningsoperations, proceeds from ~~our Brazilian subsidiary~~asset sales and ~~the tax on dividends~~distributions from our BOMAY joint ~~venture~~venture. In addition, the Company secured financing from a key vendor and obtained equipment financing from MG Finance, a related party.

Future Cash Requirements

Uses of Liquidity and Capital Resources

We require cash to fund our operating expenses and working capital requirements, including costs associated with fuel sales, capital expenditures, debt repayments and repurchases, equipment purchases, maintenance of LNG production facilities, mergers and acquisitions (if any), pursuing market expansion, supporting sales and marketing activities, support of legislative and regulatory initiatives, and other general corporate purposes. While we believe we have sufficient liquidity and capital resources to fund our operations and repay our debt, we may elect to pursue additional financing activities such as refinancing existing debt, or debt or equity offerings to provide flexibility with our cash management.

Debt Level and Debt Compliance

We had total indebtedness of $7.4 million in ~~that period.~~

~~Six Months Ended June 30, 2019 Compared~~principal as of March 31, 2020 with the expected maturities as follows.



	March 31, 2020
Remainder 2020	$	1,321
2021	3,428
2022	2,649
2023	—
2024	—
Thereafter	—
Total long-term debt, including current maturities	$	7,398

We expect our total interest payment obligations relating to ~~Six Months Ended June 30, 2018 (unaudited)~~

~~Revenue and Gross Margin~~

~~Revenues decreased 20%, or $0.8 million,~~our indebtedness to ~~$3.2~~be approximately $0.9 million for the ~~six months ended June 30, 2019, compared to~~year ending December 31, 2020. Certain of the ~~six months ended June 30, 2018, primarily due to~~agreements governing our outstanding debt have certain covenants with which we must comply. As of March 31, 2020, we were in compliance with all of these covenants.

Off-Balance Sheet Arrangements

As of March 31, 2020, we had no transactions that met the ~~completion~~definition of off-balance sheet arrangements that may have a ~~large project in Brazil in the prior year.~~

~~Gross margin decreased 30%,~~current or $0.2 million, to $0.6 million for the six months ended June 30, 2019, compared to the six months ended June 30, 2018. Gross margin as a percentage of revenues was 19% for the six months ended June 30, 2019 compared to 21% at June 30, 2018.

~~General and Administrative Expenses~~

General and administrative expenses increased by 67%, or $0.6 million, to $1.6 million during the six months ended June 30, 2019, compared to the six months ended June 30, 2018. The increase in general and administrative expenses is primarily due to the financial, legal and advisory fees incurred during the six months ended June 30, 2019 in connection with the Share Exchange Agreement the Company entered into with in the fourth quarter of 2018.

~~Selling and Marketing Expenses~~

Selling and marketing costs increased by 45%, or $0.08 million, for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. This was primarily due to the increase in personnel mentioned above. Selling and marketing expenses, as a percentage of revenues, increased to 9% for the six months ended June 30, 2019, compared to 5% for the six months ended June 30, 2018.

~~Foreign Joint Venture Equity Income~~

Net equity income from our foreign joint venture BOMAY increased 55%, or $0.2 million, to $0.7 million during the six months ended June 30, 2019, compared to the six months ended June 30, 2018. The increase is primarily due to a previously announced rig order for a major Chinese customer at our BOMAY joint venture.

~~Income Tax Provision~~

~~The provision for income taxes was $0.1 million for the six months ended June 30, 2019 compared to $0.2 million for the six months ended June 30, 2018, which reflects the provision of taxes~~future material effect on our ~~earnings from our Brazilian subsidiary and the tax on dividends from our BOMAY joint venture in that period.~~

~~LIQUIDITY AND CAPITAL RESOURCES~~

June 30, 2019

December 31, 2018

(in thousands except percentages and ratios)

Working capital
$
751

$
1,201

Current ratio
1.2 to 1

1.4 to 1

Debt as a percent of total capitalization

5
%

3
%

~~Uses and Sources of Liquidity~~

~~As of June 30, 2019, we had cash and cash equivalents of approximately $1.0 million and outstanding debt in Brazil totaling $0.3 million.~~

~~Our primary need for liquidity is to fund working capital requirements of our businesses, capital expenditures and for general corporate purposes. We have incurred losses and experienced negative~~consolidated financial position or operating ~~cash flows for the past several years, and accordingly, the Company has taken a number of actions to continue to support its operations and meet its obligations.~~

In 2018, we concluded the sale of our U.S. operations to a subsidiary of Myers Power Products, Inc. We expect to continue to optimize our international operations including our service business in Brazil and our joint venture operation in China.

~~Operating Activities~~

During the six months ended June 30, 2019, we used $1.0 million in operations as compared to $1.5 million of cash provided by operations for the same period in 2018. This decrease was primarily the result of the change in net contract assets and dividend from our foreign joint venture, partially offset by the related reductions in the Company’s net working capital.

~~Investing Activities~~

During the six months ended June 30, 2019, we used cash for investing activities of $0.1 million compared to $0.2 million for the comparable period in 2018. This change reflects a reduction in equipment purchases in 2019.

~~Financing Activities~~

During the six months ended June 30, 2019, cash provided by financing activities was $0.1 million compared to using cash of $0.2 million in the comparable period in 2018. This was primarily due to Brazil’s borrowing of short-term notes in the first quarter of 2019.

results.

NEW ACCOUNTING STANDARDS

See Note 22—Recent Accounting Pronouncements to the Notes to Condensed Consolidated Financial Statements included elsewhere in this report for information on new accounting standards.

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 U.S. GAAP. The preparation of these condensed consolidated financial statements 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.

Critical Accounting Policies

Revenue Recognition

The Company recognizes revenue associated with the sale of LNG at the point in time when the customer obtains control of the asset. In evaluating when a customer has control of the asset, the Company primarily considers whether the transfer of legal title and physical delivery has occurred, whether the customer has significant risks and rewards of ownership, and whether the customer accepted delivery and a right of payment exists. Revenues from the providing of services, transportation and equipment to customers is recognized as the service is performed.

Revenue is measured as consideration specified in a contract with a customer and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Amounts are billed upon completion of service or transfer of a product and are generally due within 30 days.

Revenues from contracts with customers are disaggregated into (1) LNG product and (2) rental, service, and other.

I~~TEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

~~Market Risk~~

LNG product revenue generated includes the revenue from the product and delivery of the LNG to our customer’s location. The ~~markets~~Company acts as a principal when using third party transportation companies and therefore recognizes the gross revenue for the delivery of LNG. Product contracts are established by agreeing on a sales price or transaction price for the related item. Revenue is recognized when the customer has taken control of the product. Payment terms for product contracts are generally within thirty days from the receipt of the invoice. Product revenue is recognized upon delivery of the related item 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 delivery of LNG.

Rental and service revenue generated by the Company includes equipment and people provided to the customer to support the use of LNG and power delivery solutions in their application. Rental contracts are established by agreeing on a rental price or transaction price for the related piece of equipment and the rental period which is generally daily or monthly. The Company maintains control of the equipment that the customer uses and can replace the rented equipment with similar equipment should the rented equipment become inoperable or the Company chooses to replace the equipment for maintenance purposes. Revenue is recognized as the rental period is completed and for periods that cross month end, revenue is recognized for the portion of the rental period that has been completed to date. Payment terms for rental contracts are generally within thirty days from the receipt of the invoice. Performance obligations for rental revenue are considered to be satisfied as the rental period is completed based upon the terms of the related contract. LNG service revenue generated by the Company consists of mobilization and demobilization of equipment and onsite technical support while customers are consuming LNG in their applications. Power Delivery service revenue is generated from time and material projects and consulting services. Service revenue is billed based on contractual terms that can be based on an event (i.e. mobilization or demobilization) or an hourly rate. Revenue is recognized as the event is completed or work is done. Payment terms for service contracts are generally within thirty days from the receipt of the invoice. Performance obligations for service revenue are considered to be satisfied as the event is completed or work is done per the terms of the related contract. Other revenues include the resale of electrical and instrumentation equipment billed upon delivery and are generally due within thirty days from the receipt of the invoice.

All outstanding accounts receivable, net of allowance, on the consolidated balance sheet are typically due and collected within the next 30 days for our LNG business and 12 months for our Power Delivery business.

Impairment of Long-Lived Assets and Goodwill

LNG liquefaction facilities, and other long-lived assets held and used by the Company are reviewed periodically for potential impairment whenever events or changes in circumstances indicate that a particular asset’s carrying value may not be recoverable. Recoverability generally is determined by comparing the carrying value for the asset to the expected undiscounted future cash flows of the asset. If the carrying value of the asset is not recoverable, the amount of impairment loss is measured as the excess, if any, of the carrying value of the asset over its estimated fair value. The estimated undiscounted future cash flows are based on projections of future operating results; these projections contain estimates of the value of future contracts that have not yet been obtained, future commodity pricing and our future cost structure, among others. Projections of future operating results and cash flows may vary significantly from actual results. Management reviews its estimates of cash flows on an ongoing basis using historical experience, business plans, overall market conditions, and other factors.

Goodwill represents the excess of the cost of an acquired entity over the fair value of the assets acquired less liabilities assumed. Intangible assets are assets that lack physical substance (excluding financial assets). Goodwill acquired in a business combination and intangible assets with indefinite useful lives are not amortized, and intangible assets with finite useful lives are amortized. Goodwill and intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate the assets carrying value may not be recoverable. We currently test goodwill for impairment annually in the third quarter unless we determine that a triggering event has occurred requiring an earlier test.

Income Taxes

Deferred income taxes are accounted for under the asset-and-liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which ~~we participate~~those temporary differences are ~~capital intensive~~expected to be recovered or settled. The effect on deferred tax assets and ~~cyclical~~liabilities of a change in ~~nature.~~ tax rates is recognized in income in the period that includes the enactment date.

The ~~volatility~~Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in ~~customer demand is greatly driven by~~

recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general and administrative expenses.

Fair Value Measurements

The Company utilizes valuation techniques that maximize the ~~price~~use of ~~oil~~observable inputs and ~~gas. These factors influence~~minimize the ~~release~~use of ~~new capital projects by our customers,~~unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in the fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are ~~traditionally awarded~~categorized in ~~competitive bid situations. Coordination~~one of ~~project start dates is matched~~the following levels in accordance with US GAAP:

Level 1 Inputs—Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the ~~customer requirements and projects may take a number of months to complete; schedules also may change during~~reporting entity at the ~~course of any particular project.~~

~~Interest Rate Risk~~

~~Our interest rate sensitive items do not subject us to material risk exposures.~~

~~Foreign Currency Transaction Risk~~

~~We operate a subsidiary~~measurement date.

Level 2 Inputs—Other than quoted prices included in ~~Brazil and maintain an equity method investment in our Chinese joint venture, BOMAY. The functional currencies~~Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the ~~Brazilian subsidiary~~asset or liability.

Level 3 Inputs—Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby, allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

Recently Adopted Accounting Changes and Recently Issued and Adopted Accounting Standards.

For descriptions of recently adopted and issued accounting standards, see Note 2—Recent Accounting Pronouncements to the joint venture are the Brazilian Real and Chinese Yuan. Investments are translated into United States Dollars at the exchange rate in effect at the end of each quarterly reporting period. The resulting translation adjustment has been an accumulated loss of $0.3 million and is recorded as accumulated other comprehensive loss, net of taxes, in our consolidated balance sheet at June 30, 2019.

As of June 30, 2019, we had a non-U.S. dollar denominated working capital balance of approximately $0.7 million. An adverse change of 10% in the underlying foreign currency exchange rate would reduce our working capital balance by approximately $70,000.

~~Commodity Price Risk~~

~~We are subject~~Notes to market risk from fluctuating market prices of certain raw materials. While such materials are typically available from numerous suppliers, commodity raw materials are subject to price fluctuations. We endeavor to recoup these price increases from our customers on an individual contract basis to avoid operating margin erosion. Although historically we have not entered into any contracts to hedge commodity risk, we may do so in the future. Commodity price changes can have a material impact on our prospective earnings and cash flows. Copper, steel and aluminum represent a significant element of our material cost. Significant increases in the prices of these materials could reduce our estimated operating margins if we are unable to recover such increases from our customers.

Condensed Consolidated Financial Statements.

ITEM 4. CONTROLS AND ~~PROCEDURES~~

PROCEDURES.

Evaluation of Disclosure Controls and Procedures

~~With~~

As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our ~~Chief Executive Officer~~management, including our principal executive officer and ~~Chief Financial Officer, management evaluated~~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 ~~Securities~~ Exchange ~~Act of 1934, as amended (the “Exchange Act”))~~Act) as of ~~June 30, 2019. Based on their evaluation, our principal executive officer and principal financial officer concluded that~~ the ~~Company’s~~end of the period covered by this report. Our disclosure controls and procedures ~~were not effective in providing~~are designed to provide reasonable assurance that ~~material~~the information required to be disclosed by us in ~~the~~ 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 ~~Securities and Exchange Commission’s~~ rules and forms including ensuring that such material information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure, as of June 30, 2019 solely because of the ~~existence of~~SEC. Based upon the ~~material weakness in internal~~evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls ~~over financial reporting described below.~~

~~Material Weakness~~and procedures were effective at March 31, 2020 at the reasonable assurance level.

Changes in Internal Control ~~Over~~over Financial Reporting

In connection with its evaluation of the internal control over financial reporting for the year ended December 31, 2018, management identified the following deficiencies which collectively represent a material weakness in our internal controls over financial reporting:

In connection with the sale of the U.S. assets of our M&I Electric Industries in the third quarter of 2018, the majority of our accounting employees and systems transferred to the purchaser of the assets.

•

~~In December 2018, our Chief Financial Officer announced his resignation.~~

As a result of the above, we determined that the Company’s accounting personnel was reduced to a level that did not provide for sufficient segregation of duties, oversight of work performed and compensating controls in the Company’s accounting department. While these issues did not result in any material misstatements on our consolidated financial statements, they did collectively represent a material weakness in internal control over financial reporting.

~~Remediation Process~~

~~Management is in the process of remediating the material weakness and has implemented additional controls, including:~~

~~Hiring additional accounting personnel to provide additional supervision, approval and review of accounting transactions and perform supervisory and oversight functions.~~

~~At the conclusion of the share exchange, we now~~There have ~~a full complement of accounting staff under the leadership of an experienced Chief Financial Officer which we believe will remediate the material weakness described above.~~

While we believe the remediation measures described above will remediate this material weakness going forward, the implementation of these controls is ongoing, and as we continue to evaluate and work to improve our internal control over financial reporting, management may determine to take additional measures to address this material weakness or determine to modify the remediation steps described above.

We expect the remediation and testing of the additional controls noted above to be completed by the end of 2019 and believe the remediation measures will strengthen our internal control over financial reporting and remediate the material weakness identified.

~~Changes in internal control over financial reporting~~

~~During the quarter ended June 30, 2019, there were~~been no changes in our internal control over financial reporting ~~other than~~(as defined in Rule 13a-15(f) under the ~~controls~~Exchange Act) that occurred during our last fiscal quarter that have materially affected or are reasonably likely to ~~address the material weakness identified above.~~

materially affect our internal control over financial reporting.

P~~ART~~

PART II. OTHER INFORMATION

ITEM 1. LEGAL ~~PROCEEDINGS~~

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~~

~~Important factors that could have a material impact on our~~FACTORS.

Our operations and financial ~~position~~results are subject to various risks and ~~results of operations include:~~

uncertainties, including those described in the Part I. “Item 1A. Risk ~~factors as set forth in item 1A~~Factors” section of our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 filed with the Securities and Exchange Commission on ~~April~~March 16, ~~2019.~~

2020 ("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 three months ended March 31, 2020, there have been no material changes in our risk factors disclosed in our Form 10-K, except for the following:

~~Any material adjustments~~The rapid spread of a contagious illness such as a novel coronavirus, or fear of such an event, may adversely affect our business, operations and financial condition.

Our business could be adversely affected by the effects of a widespread outbreak of contagious disease, including the recent outbreak of respiratory illness caused by a novel coronavirus. As the COVID-19 outbreak is still evolving, much of its impact remains unknown.

Effects of the current pandemic include, or may include, among others:

deterioration of worldwide, regional or national economic conditions and activity, which could further reduce or prolong the recent significant declines in energy prices, or adversely affect global demand for LNG and natural gas;

disruptions to our operations as a result of the potential health impact on our employees and crew, and on the workforces of our customers and business partners;

potential reduced cash flows and financial condition, including potential liquidity constraints;

negative impact on the credit worthiness of our customers and contractual counterparties;

reduced access to capital, including the ability to refinance any existing obligations, as a result of any credit tightening generally or due to continued declines in global financial markets;

disruptions, delays or cancellations in the construction of new LNG and natural gas projects, which could limit or adversely affect our ability to pursue future growth opportunities; and

potential deterioration in the financial condition and prospects of our customers or joint venture partners, or attempts by customers or third parties to invoke force majeure contractual clauses as a result of delays or other disruptions.

Many uncertainties remain with respect to the ~~Purchase Price~~COVID-19 pandemic, and we continue to monitor the rapidly evolving situation. Given the dynamic nature of these circumstances and the international nature of our business and operations, the duration of any business disruption and the related financial impact to us cannot be reasonably estimated at this time. The COVID-19 pandemic alone or coupled with continued volatility in the energy markets may materially and adversely affect our business, financial condition, operating results, cash flow, liquidity and prospects or have the effect of heightening many of the ~~Asset Purchase Agreement that may arise from changes~~other risks described herein and in our Form 10-K. The extent to which our business, contracts, financial condition, operating results, cash flow, liquidity and prospects are affected by the ~~Net Working Capital which were estimated at closing (August 12, 2018)~~COVID-19 outbreak or volatility in ~~comparison to actual.~~

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

~~During~~ the ~~quarter ended June 30, 2019,~~energy markets will depend on various factors beyond our control and are highly uncertain, including the Company issued 10,811 shares of its common stock to the holder of its Series A Convertible Preferred Stock in lieu of cash dividends. The common stock was not registered under the Securities Act of 1933duration and ~~contained a restriction on transfer legend. The Company issued the shares under the exemption from registration under Sect. 4(2)~~scope of the ~~Securities Act~~outbreak, decreased demand for LNG and ~~other exemptions from registration may also be applicable.~~

the resulting economic effects of the outbreak of COVID-19.

ITEM 5. OTHER ~~INFORMATION~~

INFORMATION.

None.

ITEM 6. ~~EXHIBITS~~

EXHIBITS.

(a) Index to Exhibits

~~Exhibit No.~~		~~Exhibit Description~~
~~2.1~~
Exhibit No.	Exhibit Description

2.1	Share Exchange Agreement, dated December 17, 2018, by and among American Electric Technologies, Inc., LNG Investment Company, LLC, AEGIS NG LLC, Stabilis Energy, LLC, and PEG Partners, LLC (Incorporated by reference to Registrant’s Current Report on Form 8-K filed December 24, 2018)

2.2	Amendment dated May 8, 2019 to the Share Exchange Agreement concerning the business combination with Stabilis ~~Energy LLC (incorporated~~(Incorporated by reference to Exhibit 2.1 ~~of our~~to Registrant’s Current Report on Form 8-K filed May 5,9, 2019).
~~31.1~~
3.1	Restated Articles of Incorporation of the Registrant (Incorporated by Reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed December 11, 2019)

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 February 9, 2009)

4.1	Warrant to purchase 125,000 shares of Registrant’s common stock dated May 2, 2012 (Incorporated by reference to Exhibit 4.1 to Registrant’s Quarterly Report on Form 10-Q filed on August 14, 2012)

4.2	Warrant to purchase 200,000 shares of Registrant’s common stock dated May 2, 2012 (Incorporated by reference to Exhibit 4.2 to Registrant’s Quarterly Report on Form 10-Q filed on August 14, 2012)

4.3	Investors Rights Agreement between Registrant and JCH Crenshaw Holdings, LLC dated May 2, 2012 (Incorporated by reference to Exhibit 4.3 to Registrant’s Quarterly Report on Form 10-Q filed on August 14, 2012)

4.4	Registration Rights Agreement between Registrant and JCH Crenshaw Holdings, LLC dated May 2, 2012 (Incorporated by reference to Exhibit 4.4 to Registrant’s Quarterly Report on Form 10-Q filed on August 14, 2012)

4.5	Warrant to Purchase Common Stock dated November 13, issued to HD Special-Situations III, LP (Incorporated by reference to Exhibit 10.3 to Registrant’s Quarterly Report on Form 10-Q filed on November 14, 2017)

4.6	Registration Rights Agreement dated November 13, 2017 between Registrant and HD Special-Situations III, LP (Incorporated by reference to Exhibit 10.4 to Registrant’s Quarterly Report on Form 10-Q filed on November 14, 2017)

4.7	Voting Agreement, dated as of December 17, 2018, by and among JCH Crenshaw Holdings, LLC and certain stockholders of Registrant (Incorporated by reference to Exhibit B of Amendment No. 8 to Schedule 13D filed by JCH Crenshaw Holdings, LLC and J. Casey Crenshaw on December 28, 2018)

4.8	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)

4.9	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)

31.1	*Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive ~~Officer~~Officer..
~~31.2~~
31.2	*Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial ~~Officer~~Officer..
~~32.1~~
32.1	*Section 1350 Certifications of Principal Executive Officer and Principal Financial ~~Officer~~Officer..
~~101.INS~~
101.INS	XBRL Instance Document.
~~101.SCH~~
101.SCH	XBRL Taxonomy Extension Schema Document.
~~101.CAL~~
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
~~101.DEF~~



Exhibit No.		Exhibit Description
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
~~101.LAB~~
101.LAB		XBRL Taxonomy Extension Labels Linkbase Document.
~~101.PRE~~
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.


(1)	Exhibits and schedules to the Share Exchange Agreement and Amendment have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Registrant hereby undertakes to furnish supplemental copies of any of the omitted exhibits and schedules upon request by the U.S. Securities and Exchange Commission.

* 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 14, 2019~~

~~AMERICAN ELECTRIC TECHNOLOGIES, INC.~~

~~By:~~ Date: May 7, 2020

STABILIS ENERGY, INC.

By:	/s/ James C. Reddinger
	James C. Reddinger
	President and Chief Executive Officer (Principal Executive Officer)

By:	/s/ Andrew L. Puhala
	Andrew L. Puhala
	Chief Financial Officer (Principal Financial Officer)

					~~Page~~

		Page
	Part I. Financial Information
Item 1.		Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets		3 4
		Condensed Consolidated Statements of Operations		4 5
		Condensed Consolidated Statements of Comprehensive Loss		5 6
		Condensed Consolidated Statements of Stockholders’ Equity		6 7
		Condensed Consolidated Statements of Cash Flows		7 8
		Notes to Condensed Consolidated Financial Statements		8 9
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		15 20
~~Item 3.~~		~~Quantitative and Qualitative Disclosures about Market Risk~~		19
Item 4.		Controls and Procedures		19 31
		Part II. Other Information
Item 1.		Legal Proceedings		21 32
Item 1A.		Risk Factors		21 32
~~Item 2.~~		~~Unregistered Sales of Equity Securities and Use of Proceeds~~		21
Item 5.		Other Information		21 32
Item 6.		Exhibits		21 33
Signatures			22 35

	June 30,			December 31,
	2019			2018
Assets
Current assets:
Cash and cash equivalents	$	1,080		$	2,124
Accounts receivable, net		1,217			911
Inventories, net		63			69
Contract assets		1,161			344
Prepaid expenses and other current assets		436			433
Total current assets		3,957			3,881
Property, plant and equipment, net		532			552
Investments in foreign joint venture		9,889			9,980
Right-of-use assets		145			-
Other assets		51			146
Total assets	$	14,574		$	14,559
Liabilities, Convertible Preferred Stock and Stockholders’ Equity
Current liabilities:
Short-term note payable	$	338		$	202
Accounts payable and accrued liabilities		2,805			2,478
Lease liabilities, current portion		63			-
Total current liabilities		3,206			2,680
Deferred compensation		138			163
Lease liabilities, long-term portion		84			-
Total liabilities		3,428			2,843
Commitments and contingencies (Note 8)
Convertible preferred stock:
Redeemable convertible preferred stock, Series A, net of discount of $470 at June 30, 2019 and $502 at December 31, 2018; $0.001 par value, 1,000,000 shares authorized, issued and outstanding at June 30, 2019 and December 31, 2018, respectively (Note 9)		4,530			4,498
Stockholders’ equity:
Common stock; $0.001 par value, 6,250,000 shares authorized, 1,202,115 and 1,180,610 shares issued and 1,173,914 and 1,152,409 shares outstanding at June 30, 2019 and December 31, 2018, respectively (Note 11)		1			1
Treasury stock, at cost, 28,201 shares at both June 30, 2019 and December 31, 2018		(965	)		(965	)
Additional paid-in capital		14,172			14,022
Accumulated other comprehensive loss		(475	)		(417	)
Accumulated deficit; including accumulated statutory reserves in equity method investments of $2,809 at June 30, 2019 and December 31, 2018		(6,117	)		(5,423	)
Total stockholders’ equity		6,616			7,218
Total liabilities, convertible preferred stock and stockholders’ equity	$	14,574		$	14,559

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net Revenues	$	1,955		$	2,075		$	3,171		$	3,951
Cost of revenue		1,537			1,566			2,583			3,114
Gross profit		418			509			588			837
Operating expenses:
General and administrative		784			469			1,562			936
Selling		140			98			275			190
Total operating expenses		924			567			1,837			1,126

Foreign joint venture:
Equity income from joint venture		437			284			703			455
Joint venture operation's related expenses		(41	)		(50	)		(95	)		(110	)
Net equity income from foreign joint venture operations		396			234			608			345
Income (loss) from continuing operations		(110	)		176			(641	)		56
Other income (expense):
Interest income (expense)		17			(6	)		(4	)		68
Other income		149			-			207			-
Total other income (expense)		166			(6	)		203			68
Income (loss) from continuing operations before income tax expense		56			170			(438	)		124
Provision for income taxes on continuing operations		73			129			73			189
Net income (loss) from continuing operations		(17	)		41			(511	)		(65	)
Loss from discontinued operations		-			(1,979	)		-			(4,838	)
Net loss		(17	)		(1,938	)		(511	)		(4,903	)
Dividend and accretion of discount on redeemable convertible preferred stock		(91	)		(90	)		(182	)		(179	)
Net loss attributable to common stockholders	$	(108	)	$	(2,028	)	$	(693	)	$	(5,082	)
Loss per common share - basic and diluted:
Continuing operations	$	(0.09	)	$	(0.04	)	$	(0.59	)	$	(0.22	)
Discontinued operations		-			(1.80	)		-			(4.37	)
Consolidated operations	$	(0.09	)	$	(1.84	)	$	(0.59	)		(4.59	)
Weighted average number of common shares outstanding:
Basic and diluted		1,171,420			1,100,207			1,165,866			1,106,931

	June 30, 2019		December 31, 2018
Assets:
Total current assets	$	67,322	$	59,124
Total non-current assets		3,337		5,742
Total assets	$	70,659	$	64,866
Liabilities and equity:
Total liabilities	$	44,685	$	38,732
Total joint ventures’ equity		25,974		26,134
Total liabilities and equity	$	70,659	$	64,866

	June 30, 2019
Investments in BOMAY*
Balance at the beginning of the year	$	2,033
Undistributed earnings:
Balance at beginning of year		7,793
Equity in earnings		703
Dividend distributions		(799	)
Balance at end of period		7,697
Foreign currency translation:
Balance at beginning of year		154
Change during the period		5
Balance at end of period		159
Total investment in BOMAY at June 30, 2019	$	9,889

	Three Months Ended June 30, 2018			Six Months Ended June 30, 2018

Net sales	$	7,750		$	14,163
Loss from discontinued operations	$	(1,979	)	$	(4,838	)

Loss per share, basic and diluted	$	(1.80	)	$	(4.37	)

	June 30, 2019			December 31, 2018
	(in thousands except percentages and ratios)
Working capital	$	751		$	1,201
Current ratio	1.2 to 1			1.4 to 1
Debt as a percent of total capitalization		5	%		3	%