BDCO

MKT CAP $190.1MP/E 7.2DIV YIELD —FCF YIELD 21.83%REV TTM $364.9M +22.8%NET INCOME $26.3MNET CASH $28.6M52W 1.10 – 24.00SEC XBRL · TTM TO Invalid Date

How BDCO rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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Critical Accounting Policies and Estimates Critical Accounting Policies.
Our critical accounting policies relate to revenue recognition; inventory; property and equipment; income taxes; asset retirement obligations.
Financial Statements and Supplementary Data - Note (2), which summarized our significant accounting policies.
The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expense, and the disclosures of contingent assets and liabilities.
We consider our critical accounting estimates to be those estimates that require complex or subjective judgment in the application of the accounting policy and that could significantly impact our financial results based on changes in those judgments.
Changes in facts and circumstances may result in revised estimates and actual results may differ materially from those estimates.
Our management has identified the following critical accounting estimates.
Our significant accounting policies are described in "Part II, Item 8.
Financial Statements and Supplementary Data - Note (2).
We evaluate long-lived assets, including property, plant, and equipment and finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.
Recoverability is assessed by comparing the carrying value of the asset group to the undiscounted future cash flows expected to result from its use and eventual disposition.
If the carrying value exceeds these undiscounted cash flows, an impairment loss is recognized based on the excess of carrying value over fair value.
The determination of future cash flows and fair value requires significant management judgment, including estimates of future revenues, operating costs, capital expenditures, and appropriate discount rates.
These estimates are based on internal forecasts, market conditions, and other factors.
Changes in these assumptions, particularly with respect to projected cash flows or discount rates, could materially affect the amount and timing of impairment charges.
We recognize asset retirement obligations associated with the retirement of tangible long-lived assets in the period in which the legal obligation is incurred, if a reasonable estimate of fair value can be made.
The ARO liability is initially measured at fair value and subsequently accreted over time to reflect the passage of time, while the associated asset retirement cost is capitalized as part of the carrying amount of the related asset and depreciated over its useful life.
The estimation of ARO liabilities involves significant judgment, including the timing and method of settlement, cost estimates for dismantlement, removal, site restoration, and the selection of appropriate discount rates.
These estimates are subject to change based on regulatory requirements, technological advances, and market conditions.
Revisions to these assumptions could result in material adjustments to the recorded obligation and related asset.
Valuation Allowance for Deferred Tax Assets.
We recognize deferred tax assets and liabilities based on temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities, as well as net operating loss and tax credit carryforwards.
Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized.
In assessing the need for a valuation allowance, we consider both positive and negative evidence, including historical operating results, forecasts of future taxable income, the reversal of existing temporary differences, and tax planning strategies.
Significant judgment is required in evaluating the weight of this evidence, particularly in estimating future taxable income.
Changes in our assumptions regarding future profitability or tax strategies could materially impact the valuation allowance and our effective tax rate.
Management believes that the estimates and assumptions used in preparing the consolidated financial statements are reasonable; however, actual results could differ from these estimates, and such differences could be material to the financial statements.
During the twelve months ended December 31, 2025 we adopted the following ASU: On January 1, 2025, as the result of a new accounting pronouncement, we adopted ASU 2023 - 09, "Improvements to Income Tax Disclosures," which aments Topic 740 primarily through enhanced income tax disclosures, improving transparency in the the factors affecting income tax.
The adoption of the accounting pronouncement has related in incremental disclosures within the notes to our Consolidated Financial Statements.
Blue Dolphin Energy Company December 31, 2025 | Page 34 Management Discussion and Analysis (Continued) New Pronouncements Issued, Not Yet Effective .
We are evaluating the provisions of ASU 2024 - 03 and the incremental disclosures that will be required in our consolidated financial statements. ● ASU 2025 - 11 — Interim Reporting (Topic 270 ): Narrow-Scope Improvements.
In December 2025, the FASB issued ASU 2025 - 11 which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting.
The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have had a material impact on the company.
ASU 2025 - 11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted.
We are currently evaluating the impact of adopting ASU 2025 - 11.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Blue Dolphin Energy Company Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Blue Dolphin Energy Company and Subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved especially challenging, subjective, or complex judgments.
In addition, there is a director and executive officer and various related parties in common between the Company and LEH.
Each of these entities and individuals have been identified as a related party as of and for the year ended December 31, 2025.

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Critical Accounting Policies and Estimates Significant Accounting Policies .
Our significant accounting policies relate to use of estimates; cash, cash equivalents, and restricted cash; accounts receivable and allowance for credit losses; financial instruments and fair value measurements; inventory; property and equipment; leases; revenue recognition; income taxes; impairment or disposal of long-lived assets; asset retirement obligations; contract balances; and computation of earnings per share.
We assessed certain accounting matters that require consideration of forecasted financial information in context with information reasonably available to us as of December 31, 2024 and through the filing date of this report.
The accounting matters assessed included, but not limited to, our allowance for credit losses, inventory, and related reserves, and the carrying value of long-lived assets.
During the twelve months ended December 31, 2024 we adopted the following ASU: ● ASU 2023 - 07 — Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures (ASU 2023 - 07 ) .
In November 2023, the FASB issued Accounting Standards Update 2023 - 07, Segment Reporting — Improvements to Reportable Segment Disclosures (“ASU 2023 - 07” ), which requires incremental disclosures related to a public entity’s reportable segments.
Required disclosures include, on an annual and interim basis: (i) significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss), and a description of its composition, (ii) the title and position of the CODM, and (iii) an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.
ASU 2023 - 07 permits disclosure of more than one measure of segment profit.
ASU 2023 - 07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.
The adoption of ASU 2023 - 07 did not have a significant impact on our financial statements.
Blue Dolphin Energy Company December 31, 2024 | Page 35 Management Discussion and Analysis (Continued) New Pronouncements Issued, Not Yet Effective .
We are evaluating the provisions of ASU 2024 - 03 and the incremental disclosures that will be required in our consolidated financial statements. ● ASU 2023 - 09 — Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures ("ASU 2023 - 09" ) .
In December 2023, the FASB issued ASU 2023 - 09, requiring us to disclose specified additional information in our income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.
ASU 2023 - 09 will also require us to disaggregate our income taxes paid disclosure by federal and state taxes, with further disaggregation required for significant individual jurisdictions.
ASU 2023 - 09 allows for adoption using either a prospective or retrospective transition method.
We will adopt ASU 2023 - 09 for our financial statements covering the fiscal year ending December 31, 2025.
We are currently evaluating the impact of adopting this ASU.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Blue Dolphin Energy Company Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Blue Dolphin Energy Company and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved especially challenging, subjective, or complex judgments.
In addition, there is a director and executive officer in common between the companies.
Each of these entities and individuals have been identified as a related party as of and for the year ended December 31, 2024.
Blue Dolphin Energy Company December 31, 2024 | Page 36 Report of Independent Registered Public Accounting Firm (Continued) Our audit procedures included (i) inquiring of executive officers, key members of management, the Audit Committee of the Board of Directors, and others within the Company regarding the existence of related party relationships and transactions, (ii) gaining an understanding of the Company’s process for identifying, authorizing, accounting for and disclosing related parties and related party transactions, (iii) confirming related party balances, (iv) reading agreements and contracts with related parties and evaluating whether authorization and approvals were obtained and if the terms and other information about the transactions are consistent with management’s responses from inquiries and other audit evidence obtained about the business purpose of the transactions, (v) reading the Company’s minutes from meetings of the Board of Directors, and (vi) evaluating the completeness and accuracy of disclosures in the consolidated financial statements.
Assessing the Company’s assertion on its ability to continue as a going concern is complex and involves a high degree of subjectivity and judgment as it relates to the reasonableness of the assumptions used and judgements made in the determination.
We have served as the Company's auditor since 2002. /s/ UHY LLP UHY LLP Sterling Heights, Michigan April 1, 2025 PCAOB Number: 0 1195 Blue Dolphin Energy Company December 31, 2024 | Page 37 Consolidated Balance Sheets December 31, 2024 2023 (in thousands, except share amounts) ASSETS CURRENT ASSETS Cash and cash equivalents $ 81 $ 18,713 Restricted cash, current 1,000 - Accounts receivable, net 713 116 Accounts receivable, related party 5,247 4,184 Prepaid expenses and other current assets 1,874 1,591 Deposits 185 110 Inventory 35,662 24,576 Total current assets 44,762 49,290 LONG-TERM ASSETS Total property and equipment, net 52,433 54,958 Operating lease right-of-use assets, net 456 158 Restricted cash, noncurrent - 5 Surety bonds 1,255 230 Deferred tax assets, net 2,990 1,436 Total long-term assets 57,134 56,787 TOTAL ASSETS $ 101,896 $ 106,077 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Long-term debt less unamortized debt issue costs, current portion (in default) $ 35,920 $ 39,440 Line of credit, related party 3,250 - Long-term debt, related party, current portion 1,459 - Interest payable 235 2,596 Interest payable, related party 1,437 - Accounts payable 11,630 1,814 Accounts payable, related party - 889 Current portion of lease liabilities 264 147 Income taxes payable 18 951 Asset retirement obligations, current portion 2,999 4,504 Accrued expenses and other current liabilities 6,689 5,084 Total current liabilities 63,901 55,425 LONG-TERM LIABILITIES Long-term lease liabilities, net of current 191 - Long-term debt, net of current portion 2,300 3,745 Long-term debt, related party, net of current portion 2,541 4,000 Long-term interest payable, related party, net of current portion - 1,308 Total long-term liabilities 5,032 9,053 TOTAL LIABILITIES 68,933 64,478 Commitments and contingencies (Note 15) STOCKHOLDERS' EQUITY Common stock ($ 0.01 par value, 20,000,000 shares authorized; 14,921,968 shares issued and outstanding at December 31, 2024 and 2023, respectively) (1) 149 149 Additional paid-in capital 39,758 39,758 Retained earnings (deficit) ( 6,944 ) 1,692 TOTAL STOCKHOLDERS' EQUITY 32,963 41,599 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 101,896 $ 106,077 (1) Blue Dolphin has 2,500,000 shares of preferred stock, par value $0.10 per share, authorized.
At both December 31, 2024 and 2023, there were no shares of preferred stock issued and outstanding.
Blue Dolphin Energy Company December 31, 2024 | Page 38 Consolidated Statements of Operations Twelve Months Ended December 31, 2024 2023 (in thousands, except share and per-share amounts) REVENUE FROM OPERATIONS Refinery operations $ 313,579 $ 390,016 Tolling and terminaling 3,940 6,032 Total revenue from operations 317,519 396,048 COSTS AND EXPENSES Crude oil, fuel use, and chemicals 292,255 339,210 Other conversion costs 17,010 10,148 Tolling and terminaling costs 1,790 2,012 Depreciation and amortization 2,574 2,579 Total cost of goods sold 313,629 353,949 Other operating costs LEH operating fee, related party 811 533 Other operating expenses 640 208 General and administrative expenses 6,443 3,134 Depreciation and amortization 232 219 Impairment of fixed assets - 1,558 Bad debt expense 70 - Accretion of asset retirement obligations - 59 Total cost of operations 321,825 359,660 Income (loss) from operations ( 4,306 ) 36,388 OTHER INCOME (EXPENSE) Interest and other income 205 241 Interest and other expense ( 6,064 ) ( 6,103 ) Total other expense ( 5,859 ) ( 5,862 ) Income (loss) before income taxes ( 10,165 ) 30,526 Income tax benefit 1,529 485 Net income (loss) $ ( 8,636 ) $ 31,011 Income (loss) per common share: Basic $ ( 0.58 ) $ 2.08 Diluted $ ( 0.58 ) $ 2.08 Weighted average number of common shares outstanding: Basic 14,921,968 14,921,968 Diluted 14,921,968 14,921,968 The accompanying notes are an integral part of these consolidated financial statements.
Blue Dolphin Energy Company December 31, 2024 | Page 39 Consolidated Statements of Stockholders ’ Equity (Deficit) Common Stock Shares Issued and Additional Paid-In Retained Earnings Total Stockholders' Outstanding Par Value Capital (Deficit) Equity (Deficit) (in thousands except share amounts) Balance at December 31, 2022 14,921,968 $ 149 $ 39,758 $ ( 29,319 ) $ 10,588 Net income - - - 31,011 31,011 Balance at December 31, 2023 14,921,968 $ 149 $ 39,758 $ 1,692 $ 41,599 Net loss - - - ( 8,636 ) ( 8,636 ) Balance at December 31, 2024 14,921,968 $ 149 $ 39,758 $ ( 6,944 ) $ 32,963 The accompanying notes are an integral part of these consolidated financial statements.
Blue Dolphin Energy Company December 31, 2024 | Page 40 Consolidated Statements of Cash Flows Twelve Months Ended December 31, 2024 2023 (in thousands) OPERATING ACTIVITIES Net income (loss) $ ( 8,636 ) $ 31,011 Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 2,806 2,798 Accretion of asset retirement obligations - 59 Deferred income tax ( 1,554 ) ( 1,436 ) Amortization of debt issue costs 203 204 Bad debt (recovery of bad debt) 70 - Impairment of fixed assets - 1,558 Changes in operating assets and liabilities Restricted cash - 1,032 Accounts receivable ( 667 ) ( 4,184 ) Accounts receivable, related party ( 1,063 ) ( 1,140 ) Prepaid expenses and other current assets ( 358 ) 1,875 Inventory ( 11,086 ) ( 4,732 ) Long-term bond assets ( 1,025 ) - Asset retirement obligations ( 1,505 ) - Accounts payable, accrued expenses and other liabilities 8,030 ( 7,774 ) Accounts payable, related party ( 889 ) 734 Net cash provided by (used in) operating activities ( 15,674 ) 20,005 INVESTING ACTIVITIES Capital expenditures ( 46 ) ( 102 ) Net cash used in investing activities ( 46 ) ( 102 ) FINANCING ACTIVITIES Proceeds from related-party debt 3,250 - Payments on debt principal ( 5,167 ) ( 1,495 ) Net activity on related-party debt - ( 1,211 ) Net cash used in financing activities ( 1,917 ) ( 2,706 ) Net change in cash, cash equivalents, and restricted cash ( 17,637 ) 17,197 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD 18,718 1,521 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD $ 1,081 $ 18,718 Supplemental Information: Non-cash investing and financing activities: Right of use assets financed via operating leases $ 497 $ 215 Interest paid $ 6,911 $ 11,288 The accompanying notes are an integral part of these consolidated financial statements.
Blue Dolphin Energy Company December 31, 2024 | Page 41 Notes to Consolidated Financial Statements ( 1 ) Organization Company Overview .
Jonathan Carroll, our Chief Executive Officer, and an Affiliate together controlled 83.7 % of the voting power of our Common Stock as of the filing date of this report.
See “Note ( 3 )” to our consolidated financial statements for additional disclosures related to Affiliate agreements, arrangements, and risks associated with working capital deficits.
As of December 31, 2024 and the filing date of this report, certain conditions and events existed, in the aggregate, that caused management to evaluate Blue Dolphin's ability to continue as a going concern.
Those conditions and events included historical working capital deficits and significant debt in current liabilities, certain of which was in default.
We had a working capital deficit of $ 19.1 million at December 31, 2024 compared to a working capital deficit of $ 6.1 million at December 31, 2023 , representing a $ 13.0 million decrease.
Our significant debt in current liabilities at December 31, 2024 consisted of bank debt to Veritex and GNCU and related-party debt.
Excluding accrued interest, we had current related-party and third -party debt of $ 40.6 million and $ 39.4 million as of December 31, 2024 and 2023 , respectively.
The $ 1.2 million increase in current debt between the periods primarily related to a $ 3.3 million draw under the Affiliate Revolving Credit Agreement offset by loan payments.
Our current assets totaled $ 44.8 million at December 31, 2024 compared to $ 49.3 million at December 31, 2023 , representing a $ 4.5 million decrease.
Our current liabilities totaled $ 63.9 million at December 31, 2024 compared to $ 55.4 million at December 31, 2023 , representing a $ 8.5 million increase.

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