STABILIS SOLUTIONS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (form 10-Q)

The following discussion should be read in conjunction with the Condensed
Consolidated Financial Statements and notes thereto included elsewhere in this
Form 10-Q ("this Report") and the consolidated financial statements included in
the 2021 Annual Report on Form 10-K filed on March 10, 2022 with the U.S.
Securities and Exchange Commission (the "SEC"). Historical results and
percentage relationships set forth in the Condensed Consolidated Statements of
Operations and Cash Flows, including trends that might appear, are not
necessarily indicative of future operations or cash flows.

Overview


Stabilis Solutions, Inc. and its subsidiaries is an energy transition company
that provides turnkey clean energy production, storage, transportation and
fueling solutions primarily using liquefied natural gas ("LNG") to multiple end
markets across North America. We provide LNG solutions to customers in diverse
end markets, including aerospace, agriculture, energy, industrial, marine
bunkering, mining, pipeline, remote clean power and utility markets. LNG can be
used to deliver natural gas to locations where pipeline service is not
available, has been interrupted, or needs to be supplemented. Our customers use
LNG as a partner fuel for renewable energy, and as a cleaner alternative to
traditional fuel sources, such as distillate fuel oil (including diesel fuel and
other fuel oils) and propane, among others to provide both environmental and
economic benefits. We believe that these alternative fuel markets are large and
provide significant opportunities for LNG substitution.

We believe that LNG as well as other clean energy solutions will provide an
important balance between environmental sustainability, security and
accessibility, and economic viability when compared to both renewables and other
traditional hydrocarbon-based fuels and will play a key role in the energy
transition.


Our LNG operations generate revenue by selling and delivering LNG to our
customers, renting cryogenic equipment and providing engineering and field
support services. We sell our products and services separately or as a bundle
depending on the customer's needs. LNG pricing depends on market pricing for
natural gas and competing fuel sources (such as diesel, fuel oil, and propane
among others), as well as the customer's purchased volume, contract duration and
credit profile. Stabilis' customers use LNG for fuel in their operations for
multiple reasons, including lower and more stable fuel costs, reduced
environmental emissions, and improved operating performance.

LNG Production and Sales-Stabilis builds and operates cryogenic natural gas
processing facilities, called "liquefiers," which convert natural gas into LNG
through a purification and multiple stage cooling process. We currently own and
operate a liquefier that can produce up to 100,000 LNG gallons per day in George
West, Texas and a liquefier that can produce up to 30,000 LNG gallons per day in
Port Allen, Louisiana, which was purchased on June 1, 2021. We also purchase LNG
from third-party production sources which allows us to support customers in
markets where we do not own liquefiers. We make the determination of LNG and
transportation supply sources based on the cost of LNG, the transportation cost
to deliver to regional customer locations, and the reliability of the supply
source.

Transportation and Logistics Services-Stabilis offers our customers a "virtual
natural gas pipeline" by providing turnkey LNG transportation and logistics
services in North America. We deliver LNG to our customers' work sites from both
our own production facilities and our network of third-party production sources
located throughout North America. We own a fleet of cryogenic trailers to
transport and deliver LNG. We also outsource similar equipment and
transportation services from qualified third-party providers as required to
support our customer base.

Cryogenic Equipment Rental-Stabilis owns and operates a rental fleet of mobile
LNG storage and vaporization assets, including: transportation trailers,
electric and gas-fired vaporizers, ambient vaporizers, storage tanks, and mobile
vehicle fuelers. We also own several stationary storage and regasification
assets. We believe this is one of the largest fleets of small-scale LNG
equipment in North America. Our fleet consists primarily of trailer-mounted
mobile assets, making delivery to and between customer locations more efficient.
We deploy these assets on job sites to provide our customers with the equipment
required to transport, store, and consume LNG in their 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 believe improve our
customers' use of LNG in their operations. Our engineers help our customers
design and integrate LNG and hydrogen into their fueling operations and our
field service technicians help our customers mobilize, commission and reliably
operate on the job site.
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Biofuels and Hydrogen-We believe that our technical expertise, production,
transportation and storage asset capabilities are favorable for other
alternative fuels, such as renewable natural gas, synthetic natural gas and
hydrogen.

Additionally, we build power and control systems for the energy industry in
China through our 40% interest in our Chinese joint venture, BOMAY Electric
Industries, Inc
(“BOMAY”).

Inflationary Pressures:


We continue to experience inflationary pressures for increasing costs for
natural gas, liquefaction and transportation at least for the near-term. While
we pass a significant portion of the cost of natural gas and transportation on
to our customers, we are not able to pass through all costs which has resulted
in margin pressure. Recent global events, which include Russia's invasion of
Ukraine, are exacerbating these trends. The ultimate extent and effects of
recent events are difficult to estimate, but we expect them to continue to place
pressure on the price of natural gas in the near-term. For a more complete
discussion of the risks we encounter in our business, please refer to Risk
Factors in Part I, Item 1A of the Company's Annual Report on Form 10-K filed
with the SEC on March 10, 2022 and Part II, Item 1A of the Company's Quarterly
Reports on Form 10-Q filed with the SEC on May 5, 2022 and August 11, 2022.

Recent Developments:

U.S. Department of Energy (“DOE”) Approval to Export LNG

During the quarter, Stabilis received authorization from the DOE to export
domestically produced LNG to all free trade and non-free trade countries,
including Asian, European, and Latin American importing nations for up to 51.75
billion cubic feet per year. The authorization is for a term of 28 years.
Stabilis did not make any exports under this approval during the quarter.

Sale of Brazil Operations and Discontinued Operations


At September 30, 2022, the Company determined that it would exit its Brazil
Operations. This decision resulted in discontinued operations presentation for
its Brazil Operations and an impairment charge of $1.3 million measured as the
estimated fair value of $0.9 million (calculated as the estimated net proceeds
that would be received in an orderly and timely sale of the operations) less the
carrying value of the Brazil net assets at September 30, 2022. On October 31,
2022, the Company entered into a sales agreement and closed on the sale of its
Brazil Operations to its Brazil management team for approximately $.9 million
See also Notes 2 and 15 in the Notes to Condensed Consolidated Financial
Statements for further discussion of the Company's discontinued operations and
sale of the Brazil Operations.
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Results of Operations


The Company supplies LNG to multiple end markets in North America and provides
turnkey fuel solutions to help users of propane, diesel and other crude-based
fuel products convert to LNG. The anticipated sale of the Brazil Operations
represent all of the revenue and expenses previously reported within the
Company's Power Delivery segment with the exception of the Company's equity
method investment in BOMAY. Further, the Company also believes that the decision
to exit the Brazil Operations at September 30, 2022 meets the criteria to be
reported as discontinued operations. As a result, the Company believes that it
has one reporting segment and the operating results presented in the tables
below have been recast to separately present the revenues and expenses related
to the Brazil Operations as discontinued operations for all periods presented.

Three Months Ended September 30, 2022 Compared to Three Months Ended September
30, 2021


The comparative tables below reflect our consolidated operating results for the
three months ended September 30, 2022 (the "Current Quarter") as compared to the
three months ended September 30, 2021 (the "Prior Year Quarter") (unaudited,
amounts in thousands, except for percentages). Corporate allocations of $0.1
million previously reported within the Company's Power Delivery Segment have
been reclassified to continuing operations for the Prior year Quarter and
$0.5 million for the Prior Year Quarter was reclassified from selling, general
and administrative expense to costs of rental, service and other in the table
below to conform to current period presentation.

                                                     Three Months Ended
                                                        September 30,
                                                   2022                 2021              $ Change             % Change
Revenues:

Revenues                                         25,819                17,779               8,040                   45.2  %
Operating expenses:

Cost of revenues                                 19,904                14,369               5,535                   38.5
Change in unrealized gain on natural gas
derivatives                                        (926)                    -                (926)                 n/a
Selling, general and administrative expenses      3,658                 5,286              (1,628)                 (30.8)
Gain from disposal of fixed assets                   46                     -                  46                  n/a
Depreciation expense                              2,115                 2,284                (169)                  (7.4)
Impairment of right-of-use lease asset                -                   376                (376)                (100.0)
Total operating expenses                         24,797                22,315               2,482                   11.1
Income (loss) from operations before equity
income                                            1,022                (4,536)              5,558                  122.5
Net equity income from foreign joint venture
operations                                          114                   246                (132)                 (53.7)
Income (loss) from operations                     1,136                (4,290)              5,426                  126.5
Other income (expense):
Interest expense, net                              (150)                 (119)                (31)                 (26.1)
Interest expense, net - related parties             (49)                 (120)                 71                   59.2
Other income (expense)                              (28)                   37                 (65)                 n/a
Total other income (expense)                       (227)                 (202)                (25)                 n/a
Net income (loss) from continuing operations
before income tax expense                           909                (4,492)              5,401                  120.2
Income tax (benefit) expense                       (115)                   89                (204)                (229.2)
Net income (loss) from continuing operations      1,024                (4,581)              5,605                  122.4
Loss from discontinued operations, net of
tax                                              (1,301)                  (44)             (1,257)                      n/a
Net loss                                     $     (277)            $  (4,625)         $    4,348                   94.0


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Revenues


During the Current Quarter, revenues increased $8.0 million, or 45%, compared to
the Prior Year Quarter related to an increase in LNG product revenue of $7.2
million and an increase in rental, service and other revenue of $0.8 million.
The increase in LNG product revenue was primarily related to:

•Additional LNG gallons delivered during the Current Quarter compared to the
Prior Year Quarter;

•Increased natural gas prices during the Current Quarter compared to the Prior
Year Quarter; and

•Increased pricing charged to our customers in response to increased costs from
inflationary pressures.

The increase in rental, service and other revenue related to additional projects
(primarily for marine bunkering) with equipment and increased labor revenues.

Operating Expenses


Costs of revenues. Cost of revenues increased $5.5 million, or 39%. due to an
increase in the cost of LNG product of $4.8 million and an increase in the costs
of rental, service and other of $0.7 million in the Current Quarter compared to
the Prior Year Quarter. The increased costs related to LNG product were
attributable to:

•Additional LNG gallons delivered during the Current Quarter compared to the
Prior Year Quarter;

•Increased natural gas prices during the Current Quarter compared to the Prior
Year Quarter;

•Inflationary pressures, including increased transportation costs and increased
liquefaction costs; and

•Increased electricity prices, particularly in Texas and Louisiana due to higher
than average temperatures.


As a percentage of LNG product revenue, these costs decreased from 83% in the
Prior Year Quarter to 74% in the Current Quarter. The decrease is primarily due
to increased pricing charged to our customers. The increase in the costs of
rental, service and other was primarily due to additional projects (primarily
for marine bunkering) and increased costs for rental equipment to service
additional contracts and increased service personnel to support increased
services work.

Change in unrealized gain on natural gas derivatives. The Company incurred an
unrealized gain of $0.9 million in the Current Quarter on its natural gas
derivatives. The unrealized gain was due to higher future natural gas prices at
September 30, 2022 as compared to June 30, 2022. The Company had no derivatives
in the Prior Year Quarter. See also Note 4 in the Notes to the Condensed
Consolidated Financial Statements for a further discussion of our derivatives.

Selling, general and administrative expenses. Selling, general and
administrative expense decreased $1.6 million, or 31%, during the Current
Quarter compared to the Prior Year Quarter. During the Prior Year Quarter, we
recorded $2.2 million for the immediate vesting of restricted common stock
related to our executive transition occurring in the Prior Year Quarter in
addition to $0.8 million in severance and legal costs. Savings from the
non-recurrence of these Prior Year Quarter expenses were partially offset during
the Current Quarter by higher stock-based compensation expenses and increased
compensation related to additional headcount to support our operations.

Gain from disposal of fixed assets. There were no significant gains or losses
from disposal of fixed assets in either the Current Quarter or the Prior Year
Quarter.

Depreciation. Depreciation expense decreased 7% during the Current Quarter as
compared to the Prior Year Quarter due to assets reaching the end of their
depreciable lives.


Net equity income from foreign joint venture operations. Income from investments
the Company's foreign joint venture decreased $0.1 million during the Current
Quarter due to supply chain challenges as well as foreign exchange losses
resulting from a strong U.S. dollar compared to the Prior Year Quarter.

Interest expense, net. Interest expense increased $31 thousand during the
Current Quarter as compared to the Prior Year Quarter primarily related to
interest on additional borrowings from the Company’s loan with AmeriState Bank.


Interest expense, net - related parties. Related party interest expense
decreased $0.1 million during the Current Quarter as compared to the Prior Year
Quarter primarily related to repayment of related party debt and due to
amendments to the M/G Finance note payable which lowered the interest rate from
12% to 6%.
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Other income (expense). Other expense was $28 thousand during the Current
Quarter
compared to other income of $37 thousand in the Prior Year Quarter.


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

Discontinued Operations. Operating loss from discontinued operations, net of tax
was $1.3 million and $44 thousand for the Current Quarter and the Prior Year
Quarter, respectively. The Current Quarter operating loss from discontinued
operations increased in the Current Quarter compared to the Prior Year Quarter
due to the impairment of $1.3 million recorded as a result of the anticipated
sale of the Brazil Operations. See Note 2 in the Notes to Condensed Consolidated
Financial Statements for further discussion of the Company's discontinued
operations.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30,
2021


The following table reflects line items from the accompanying Condensed
Consolidated Statements of Operations for the nine months ended September 30,
2022 (the "Current Year") as compared to the nine months ended September 30,
2021 (the "Prior Year") (unaudited, amounts in thousands, except for
percentages). Corporate allocations of $0.6 million previously reported within
the Company's Power Delivery Segment have been reclassified to continuing
operations for the Prior Year and $1.5 million for the Prior Year was
reclassified from selling, general and administrative expense to costs of
rental, service and other, and $0.3 million was reclassified from costs of LNG
product to costs of rental, service and other to conform to current period
presentation.

                                                     Nine Months Ended
                                                       September 30,
                                                  2022                2021             $ Change             % Change
Revenues:

Revenues                                          69,236             48,291             20,945                   43.4  %
Operating expenses:

Cost of revenues                                  54,945             37,301             17,644                   47.3
Change in unrealized gain on natural gas
derivatives                                          (27)                 -                (27)                 n/a
Selling, general and administrative expenses       9,643             10,558               (915)                  (8.7)
Gain from disposal of fixed assets                   (34)               (24)               (10)                 (41.7)
Depreciation expense                               6,589              6,653                (64)                  (1.0)
Impairment of right-of-use lease asset                 -                376               (376)                (100.0)
Total operating expenses                          71,116             54,864             16,252                   29.6
Loss from operations before equity income         (1,880)            (6,573)             4,693                   71.4
Net equity income from foreign joint venture
operations                                           887              1,075               (188)                 (17.5)
Loss from operations                                (993)            (5,498)             4,505                   81.9
Other income (expense):
Interest expense, net                               (437)              (189)              (248)                (131.2)
Interest expense, net - related parties             (129)              (441)               312                   70.7
Other income (expense)                               (99)             1,031             (1,130)                 n/a
Total other income (expense)                        (665)               401             (1,066)                 n/a
Net loss from continuing operations before
income tax expense                                (1,658)            (5,097)             3,439                  (67.5)
Income tax (benefit) expense                        (248)               229               (477)                (208.3)
Loss from continuing operations                   (1,410)            (5,326)             3,916                   73.5
Loss from discontinued operations, net of tax     (1,441)              (128)            (1,313)                      n/a
Net loss                                      $   (2,851)         $  (5,454)         $   2,603                   47.7


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Revenues


During the Current Year, revenues increased $20.9 million, or 43%, due to
increased LNG product revenue of $20.8 million and increased rental, service and
other revenue of $0.1 million compared to the Prior Year. The increase in LNG
product revenue was primarily due to:

•Additional LNG gallons delivered during the Current Year compared to the Prior
Year;

•Increased natural gas prices compared to the Prior Year; and

•Increased pricing charged to our customers.

The increase in rental, service and other revenue was primarily due to
additional projects (primarily for marine bunkering) with additional equipment
and labor revenues compared to the Prior Year.

Operating Expenses


Cost of revenues. Cost of revenues increased $17.6 million, or 47%, in the
Current Year compared to the Prior Year due to and increase in the cost of LNG
product of $16.5 million and an increase in the cost of rental, service and
other revenue of $1.1 million. The increase in the cost of LNG product was due
to:

•Additional LNG gallons delivered during the Current Year compared to the Prior
Year;

•Increased natural gas prices during the Current Year compared to the Prior
Year;

•Inflationary pressures including increased transportation costs and increased
liquefaction costs; and

•Increased electricity prices, particularly in Texas and Louisiana due to higher
than average temperatures.


As a percentage of LNG product revenue, these costs decreased from 79% in the
Prior Year to 78% in the Current Year. The decrease is primarily due to
increased pricing charged to our customers. The increase in cost of rental,
service, and other was primarily due to additional projects (primarily for
marine bunkering) and increased costs for rental equipment to service additional
contracts and increased service personnel to support increased services work.

Change in unrealized gain on natural gas derivatives. We incurred an unrealized
gain of $27 thousand in the Current Year on our natural gas derivatives. The
unrealized gain was due to higher future natural gas prices at September 30,
2022 as compared to the time of purchase of the derivatives. We had no
derivatives in the Prior Year. See Note 4 in the Notes to Condensed Consolidated
Financial Statements for a further discussion of our derivatives.

Selling, general and administrative expenses. Selling, general and
administrative expenses decreased $0.9 million or 9% in the Current Year
compared to the Prior Year. During the Prior Year, we recorded $2.2 million for
the immediate vesting of restricted common stock related to our executive
transition occurring in the Prior Year in addition to $0.8 million in severance
and legal costs. Savings from the non-recurrence of these Prior Year expenses
were partially offset during the Current Year by higher stock-based compensation
expenses and increased compensation related to additional headcount to support
our operations.

Gain from disposal of fixed assets. There were no significant gains or losses
from disposal of fixed assets in either the Current Year or the Prior Year.


Depreciation. Depreciation expense decreased $0.1 million in the Current Year
compared to the Prior Year primarily due to assets reaching the end of their
depreciable lives.

Net equity income from foreign joint venture operations. Income from investments
in the Company's foreign joint venture decreased $0.2 million during the Current
Year compared to the Prior Year primarily due to supply chain challenges as well
as foreign exchange losses resulting from a strong U.S. dollar compared to the
Prior Year.

Other Income (Expense)

Interest expense, net. Interest expense increased $0.2 million during the
Current Year as compared to the Prior Year primarily related to interest on the
additional funding of the Company’s loan with AmeriState Bank.

Interest expense, net – related parties. Related party interest expense
decreased $0.3 million during the Current Year compared to the Prior Year
primarily related to repayment of related party debt and due to amendments to
the M/G Finance note payable which lowered the interest rate from 12% to 6%.

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Other Income (Expense). Other expense was $0.1 million during the Current Year
compared to other income of $1.0 million in the Prior Year due to Paycheck
Protection Program loan forgiveness of $1.1 million recognized in the Prior
Year.


Income tax (benefit) expense. The Company incurred an income tax benefit in the
Current Year of $0.2 million compared to income tax expense of $0.2 million in
the Prior Year. The benefit in the Current Year was due to a favorable income
tax result upon filing the Mexico income tax return. No U.S. federal income tax
benefit was recorded for the Current Year or Prior Year as any net U.S. deferred
tax assets generated from operating losses were offset by a change in the
Company's valuation allowance on net deferred tax assets.

Discontinued Operations. Operating loss from discontinued operations was $1.4
million and $0.1 million for the Current Year and the Prior Year, respectively.
The Current Year operating loss from discontinued operations increased compared
to the Prior Year due to the impairment of $1.3 million recorded as a result of
the anticipated sale of the Brazil Operations. See Note 2 in the Notes to
Condensed Consolidated Financial Statements for further discussion of the
Company's discontinued operations.

Liquidity and Capital Resources


Historically, our principal sources of liquidity have consisted of cash on hand,
cash provided by our operations, proceeds received from borrowings under our
AmeriState Loan, and distributions from our BOMAY joint venture. In prior years,
the Company also obtained equipment financing from M/G Finance, a related party.
During the Current Year, our principal sources of liquidity were cash provided
by our operations, cash generated from sales of assets and deposits received
from customers. We have used cash flows generated from operations to invest in
fixed assets and increased working capital to support growth as well as to pay
interest and principal amounts outstanding under our debt borrowings. The
Company's decision to exit its Brazil Operations is not anticipated to adversely
impact the Company's future cash flows.

As of September 30, 2022, we had $11.1 million in cash and cash equivalents on
hand and 13.1 million in outstanding debt (net of debt issuance costs) and lease
obligations (of which $3.6 million is due in the next twelve months). The
Company has a $10.0 million loan facility with $1.0 million available for future
draws under the loan facility at September 30, 2022. The Company has also filed
a shelf registration statement (described below) which provides the Company the
flexibility to raise capital to fund working capital requirements, repay debt
and/or fund future transactions.

The Company is subject to substantial business risks and uncertainties inherent
in the LNG industry. The Company has implemented a number of cost control
measures and increased pricing to customers in response to inflationary costs;
however, 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. We have experienced a significant increase in sales since mid-2021.
Accordingly, management believes the business will generate sufficient cash
flows from its operations along with availability under our loan facility that
is sufficient to fund the business for the next twelve months. As we continue to
grow, management continues to evaluate additional financing alternatives,
however, there is no guarantee that additional financing will be available or
available at terms that would be beneficial to shareholders.
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Cash Flows

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

                                                                    Nine Months Ended September 30,
                                                                       2022                     2021

Net cash provided by (used in):
Operating activities                                           $           11,538          $     5,429
Investing activities                                                           69               (6,690)
Financing activities                                                       (1,422)               2,451
Effect of exchange rate changes on cash                                         7                  (76)
Net increase in cash and cash equivalents                      $           10,192          $     1,114


Operating Activities

Net cash provided by operating activities totaled $11.5 million for the nine
months ended September 30, 2022 compared to $5.4 million for the same period in
2021. The increase in net cash provided by operating activities of $6.1 million
as compared to the Prior Year was primarily attributable to deposits received
from customers and improved profitability in the Current Year when excluding the
impacts of non-cash expenses and gains included in net loss such as
depreciation, stock-based compensation, unrealized loss on natural gas
derivatives and gain on extinguishment of debt compared to the Prior Year.

Investing Activities


Net cash provided by investing activities totaled $0.1 million for the nine
months ended September 30, 2022 compared to cash used of $6.7 million for the
nine months ended September 30, 2021. The decrease in net cash used in the
Current Year was primarily due to the acquisition of our Port Allen liquefaction
facility on June 1, 2021, which included $5.0 million in cash paid.
Additionally, proceeds of $2.0 million were received for assets held for sale
during 2022.

Financing Activities

Net cash used in financing activities totaled $1.4 million for the nine months
ended September 30, 2022, compared to net cash provided by financing activities
totaling $2.5 million for the Prior Year primarily from proceeds received from
borrowings under the AmeriState Loan of $7.0 million, partially offset by
repayments of debt.

Future Cash Requirements


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, obtaining new debt, or debt or equity offerings to provide
flexibility with our cash management. Certain of these alternatives may require
the consent of current lenders or stockholders, and there is no assurance that
we will be able to execute any of these alternatives on acceptable terms or at
all.

Capital expenditures for the nine months ended September 30, 2022 were $1.7
million and primarily related to capital expenditures for our operations in
Mexico and the addition of rolling stock and replacement assets. The Company had
open purchase orders of approximately $1.5 - $2.0 million at September 30, 2022
for capital expenditures over the next twelve months.

Shelf Registration Statement


On April 11, 2022, the Company filed a registration statement on Form S-3 (the
"Shelf Registration") which was declared effective on April 26, 2022 and will
permit the Company to issue up to $100.0 million in either common stock,
preferred stock, warrants or a combination of the above, and gives the Company
the flexibility to raise capital to fund working capital requirements, repay
debt and/or fund future transactions. As a smaller reporting company, we are
subject to General Instruction I.B.6 of Form S-3, which limits the amounts that
we may sell under the Shelf Registration to no more than one-third of our public
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float in any twelve month period as measured in accordance with such
instruction. There is no assurance that we will be able to raise capital
pursuant to the Shelf Registration on acceptable terms or at all.

Off-Balance Sheet Arrangements

As of September 30, 2022, we had no transactions that met the definition of
off-balance sheet arrangements that may have a current or future material effect
on our consolidated financial position or operating results.

Critical Accounting Policies and Estimates


The discussion and analysis of our financial condition and results of operations
are based on our Condensed Consolidated Financial Statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America ("U.S. GAAP") which requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosures of contingent assets and liabilities known to exist at the date of
the Condensed Consolidated Financial Statements and the reported amounts of
revenues and expenses during the reporting period. We evaluate our estimates on
an ongoing basis, based on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances. There
can be no assurance that actual results will not differ from those estimates.

There have been no significant changes in the Company's "Critical Accounting
Policies and Estimates" during the three and nine months ended September 30,
2022 from those disclosed within the Company's Annual Report on Form 10-K for
the year ended December 31, 2021 as filed with the SEC on March 10, 2022.

New Accounting Standards

See Note 1 to the Notes to Condensed Consolidated Financial Statements included
elsewhere in this report for information on new accounting standards.

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