~~1250 Wood Branch Park Drive,~~10375 Richmond Avenue, Suite ~~600,~~700, Houston, TX ~~77079~~77042

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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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. (Check one):~~Act:

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 ~~July 31, 2018 the registrant had 8,916,139~~August 13, 2019, there were 14,644,842 outstanding shares of ~~its Common Stock outstanding.~~our common stock, par value $.001 per share.

	June 30,			December 31,			June 30,			December 31,
	2018			2017			2019			2018
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	477		$	243		$	1,080		$	2,124
Restricted short-term investments		-			-
Accounts receivable-trade, net		516			794
Accounts receivable, net								1,217			911
Inventories, net		201			2			63			69
Cost and estimated earnings in excess of billings on uncompleted contracts		1,419			592
Contract assets								1,161			344
Prepaid expenses and other current assets		280			151			436			433
Current portion of assets held for sale		11,871			14,912
Total current assets		14,764			16,694			3,957			3,881
Property, plant and equipment, net		578			598			532			552
Advances to and investments in foreign joint ventures		9,869			10,947
Deferred tax benefit		40			-
Investments in foreign joint venture								9,889			9,980
Right-of-use assets								145			-
Other assets		246			116			51			146
Assets held for sale, less current portion		6,506			7,566
Total assets	$	32,003		$	35,921		$	14,574		$	14,559
Liabilities, Convertible Preferred Stock and Stockholders’ Equity
Current liabilities:
Current portion of long-term note payable	$	360		$	270
Short-term note payable		5,629			203		$	338		$	202
Accounts payable and other accrued expenses		2,023			1,058
Accrued payroll and benefits		613			574
Current portion of liabilities held for sale		13,710			13,558
Accounts payable and accrued liabilities								2,805			2,478
Lease liabilities, current portion								63			-
Total current liabilities		22,335			15,663			3,206			2,680
Long-term note payable, net		-			5,524
Deferred compensation		188			213			138			163
Liabilities held for sale, less current portion		-			-
Lease liabilities, long-term portion								84			-
Total liabilities		22,523			21,400			3,428			2,843
Commitments and contingencies (Note 8)
Convertible preferred stock:
Redeemable convertible preferred stock, Series A, net of discount of $532 at June 30, 2018 and $562 at December 31, 2017; $0.001 par value, 1,000,000 shares authorized, issued and outstanding at June��30, 2018 and December 31, 2017		4,468			4,438
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, 50,000,000 shares authorized, 9,078,837 and 8,850,532 shares issued and 8,884,862 and 8,669,650 shares outstanding at June 30, 2018 and December 31, 2017		9			9
Treasury stock, at cost 193,975 and 180,882 shares at June 30, 2018 and December 31, 2017		(934	)		(916	)
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		14,331			13,811			14,172			14,022
Accumulated other comprehensive income		(90	)		401
Accumulated Deficit; including accumulated statutory reserves in equity method investments of $2,809 at June 30, 2018 and December 31, 2017		(8,304	)		(3,222	)
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		5,012			10,083			6,616			7,218
Total liabilities, convertible preferred stock and stockholders’ equity	$	32,003		$	35,921		$	14,574		$	14,559

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

Three Months Ended June 30,

Six Months Ended June 30,

2018

2017

2018

2017

Net sales
$
2,075

$
1,331

$
3,951

$
2,546

Cost of sales

1,566

972

3,114

2,042

Gross margin

509

359

837

504

Operating expenses:

Research and development

-

-

-

-

Selling and marketing

98

127

190

264

General and administrative

469

499

936

1,016

Total operating expenses

567

626

1,126

1,280

Loss from continuing operations

(58
)

(267
)

(289
)

(776
)
Net equity income from foreign joint ventures’ operations:

Equity income from foreign joint ventures’ operations

284

134

455

186

Foreign joint ventures’ operations related expenses

(50
)

(64
)

(110
)

(128
)
Net equity income from foreign joint ventures’ operations

234

70

345

58

Income (loss) from continuing operations and net equity income from foreign joint ventures’ operations

176

(197
)

56

(718
)
Other income (expense):

Interest expense and other, net

(6
)

(8
)

68

40

Income (loss) from continuing operations before income taxes

170

(205
)

124

(678
)
Provision for (benefit from) income taxes on continuing operations

129

(90
)

189

(73
)
Net income (loss) from continuing operations

41

(115
)

(65
)

(605
)
Loss from discontinued operations

(1,979
)

(944
)

(4,838
)

(2,949
)
Provision for (benefit from) income taxes on discontinued operations

-

-

-

-

Net loss from discontinued operations

(1,979
)

(944
)

(4,838
)

(2,949
)
Net loss before dividends on redeemable convertible preferred stock

(1,938
)

(1,059
)

(4,903
)

(3,554
)
Dividends on redeemable convertible preferred stock

(90
)

(89
)

(179
)

(178
)
Net loss attributable to common stockholders
$
(2,028
)

$
(1,148
)

$
(5,082
)

$
(3,732
)
Loss per common share - basic:

Continuing operations
$
(0.01
)

$
(0.02
)

$
(0.03
)

$
(0.09
)
Discontinued operations
$
(0.22
)

$
(0.11
)

$
(0.55
)

$
(0.35
)
Consolidated operations
$
(0.23
)

$
(0.13
)

$
(0.58
)

$
(0.44
)
Loss per common share - diluted:

Continuing operations
$
(0.01
)

$
(0.02
)

$
(0.03
)

$
(0.09
)
Discontinued operations
$
(0.22
)

$
(0.11
)

$
(0.55
)

$
(0.35
)
Consolidated operations
$
(0.23
)

$
(0.13
)

$
(0.58
)

$
(0.44
)

	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

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

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

	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

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

Six Months Ended June 30,

2018

2017

Cash flows from operating activities:

Net loss
$
(4,903
)

$
(3,554
)
Adjustments to reconcile net loss to net cash used in
   operating activities:

Deferred income tax provision (benefit)

-

(151
)
Equity income from foreign joint ventures’ operations

(455
)

(186
)
Depreciation and amortization

377

436

Stock based compensation

284

186

Bad debt expense

30

(157
)
Obsolete inventory expense

-

66

Deferred compensation costs

(25
)

(23
)
Amortization of debt issuance costs

55

31

Change in operating assets and liabilities:

Accounts receivable

268

159

Inventories

(107
)

9

Costs and estimated earnings in excess of billings on uncompleted contracts

3,247

(1,031
)
Prepaid expenses and other current assets

48

(12
)
Accounts payable

(1,992
)

807

Billings in excess of costs and estimated earnings on uncompleted contracts

2,009

4,179

Accrued liabilities and other current liabilities

1,514

(331
)
Net cash provided by operating activities

350

428

Cash flows from investing activities:

Dividends received from joint ventures

1,127

780

Purchases of property, plant and equipment and other
   assets

(165
)

(133
)
Net cash provided by from investing activities

962

647

Cash flows from financing activities:

Proceeds from sale of common stock, preferred stock, and
   warrants

8

8

Treasury stocks purchase

(18
)

(30
)
Proceeds from long-term notes payable

-

7,000

Proceeds from short-term notes payable

-

200

Payments on revolving credit facility

-

(1,500
)
Payments on long-term notes payable

-

(4,200
)
Payments on short-term notes payable

(60
)

(500
)
Payments of debt issuance costs

-

(427
)
Other financial activities, net

(146
)

-

Net cash provided by (used in) by financing activities

(216
)

551

Effect of exchange rate changes on cash

(50
)

(2
)
Net decrease in cash and cash equivalents

1,046

1,624

Cash and cash equivalents, beginning of period

2,289

1,618

Cash and cash equivalents, end of period

3,335

3,242

Supplemental disclosures of cash flow information:

Interest paid
$
506

$
332

Non-cash investing and financing transactions:

Issuance of shares of common stock on accrued preferred dividends payables
$
225

$
300

	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

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

American Electric Technologies, Inc. and its subsidiaries (the “Company”, “AETI”, “our”, “us” or “we”) consists of American Electric Technologies, Inc., which owns 100% of M&I Electric Industries, Inc., including its wholly-owned subsidiary, South Coast Electric Systems, LLC (“SCES”) and M&I Electric Brazil Sistemas e Servicios em Energia LTDA (“M&I Brazil”). The operations of AETI consisted of our Brazilian subsidiary, our interest in our Chinese joint venture and our corporate office in Bellaire, Texas.

As previously announced, on July 26, 2019, the proposed share exchange transaction (the “Transaction”) with Stabilis Energy LLC (“Stabilis”) and its subsidiaries was completed. 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 unaudited condensed consolidated financial statements and related notes give retroactive effect to the reverse stock split. For further 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 information included in this Form 10-Q is that of AETI prior 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 ~~American Electric Technologies, Inc. and its wholly-owned subsidiaries (“AETI”, “the Company”, “our”, “we”, “us”)~~AETI have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and 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 interim condensed consolidated financial statements have been included. The results of operations for the interim periods are not necessarily indicative of the results ~~to be expected~~ for ~~a full~~the entire fiscal year. ~~Certain information and footnote disclosures normally included in the~~We believe that these financial statements ~~prepared in accordance with U.S. GAAP have been~~contain all adjustments necessary so that they are not misleading. These unaudited condensed ~~or omitted. The~~financial statements should be read in conjunction with the Company’s consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, which was filed on ~~March 29, 2018. The December 31, 2017 balance sheet was derived from the audited financial statements contained in our 2017 Form 10-K.~~April 16, 2019.

~~Adoption~~For a detailed list of our critical accounting policies, please see our Annual Report on Form 10-K for the year ended December 31, 2018, which was filed on April 16, 2019.

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying footnotes. The most significant estimates used in our condensed 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.

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU No. 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU No. 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU No. 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). In July 2015, the FASB issued ASU No. 2015-14 which delayed the effective date of ASU No. 2014-09 by one year (effective for annual periods beginning after December 15, 2017). The Company adopted ASU 2014-09, effective January 1, 2018, using the modified retrospective method. The adoption of the standard did not have a material impact on the Company’s revenue recognition policies, other than enhanced disclosures related to the disaggregation of revenues from contracts with customers, the Company’s performance obligations and any significant judgments.

In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, to clarify two aspects of Topic 606: (i) identifying performance obligations; and (ii) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. The effective date and transition requirements for ASU No. 2016-10 are the same as the effective date and transition requirements for ASU No. 2014-09. This standard was adopted effective January 1, 2018.

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. ASU No. 2016-12 provides narrow-scope improvements to the guidance on collectability, noncash consideration, and completed contracts at transition. The amendment also provides a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers and are expected to reduce the judgment necessary to comply with Topic 606. The effective date and transition requirements for ASU No. 2016-12 are the same as the effective date and transition requirements for ASU No. 2014-09. This standard was adopted effective January 1, 2018.

In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. ASU No. 2016-20 allows entities not to make quantitative disclosures about remaining performance obligations in certain cases and require entities that use any of the new or previously existing optional exemptions to expand their qualitative disclosures. The amendment also clarifies narrow aspects of ASC 606, including contract modifications, contract costs, and the balance sheet classification of items as contract assets versus receivables, or corrects unintended application of the guidance. The effective date and transition requirements for ASU No. 2016-20 are the same as the effective date and transition requirements for ASU No. 2014-09.

The Company recognizes revenue when or as it satisfies a performance obligation by transferring promised goods or service to a customer using the over-time method to account for certain long-term contracts and point in time method for non-time and material jobs. The non-time and material jobs are of a short-term nature (typically less than one month) and are determined after considering the attributes of such contracts. This method is used because these contracts are typically completed in a short period of time and the financial position and results of operations do not vary materially from those which would result from use of the percentage-of-completion method. Earnings are accrued based on the ratio of costs incurred to total estimated costs. Costs include direct material, direct labor, and job related overhead. For our manufacturing activities we have determined that labor incurred, rather than total costs incurred, provides an improved measure of percentage-of-completion. For contracts with anticipated losses, the

estimated losses are charged to operations in the period such losses are determined. The asset, “Work-in-process,” which is included in inventories, represents the cost of labor, material, and overhead on jobs accounted for using the point in time method for non-time and material jobs. The contract asset, “Costs and estimated earnings in excess of billings on uncompleted contracts,” represents revenue recognized in excess of amounts billed and the contract-liability, “Billings in excess of costs and estimated earnings on uncompleted contracts,” represents billings in excess of revenue recognized under the percentage-of-completion method. Due to the nature of these projects, the estimation of total revenue and cost at completion is subject to many variables and requires significant judgement. Progress billings are generally issued upon completion of certain milestones of the project as specified in the contract.

Costs and estimated earnings in excess of billings on uncompleted contracts related to our continuing operations was $1.4 million at June 30, 2018 and $0.6 million at December 31, 2017. Costs and estimated earnings in excess of billings on uncompleted contracts related to our discontinued operations was $2.0 million and $5.8 million at June 30, 2018 and 2017, respectively, and included in current assets held for sale.

~~The order backlog at June 30, 2018 and December 31, 2017 was $2.1 million and $2.2 million, respectively. This backlog is expected to be recognized in revenue during the remainder of 2018 and 2019.~~

~~The table below shows the revenue by geographic area for the three and six months ended June 30, 2018 and 2017 (dollars in thousands):~~

~~The table below shows North America and International revenue disaggregated by sectors for the three and six months ended June 30, 2018 and 2017 (dollars in thousands):~~

Three Months Ended June 30, 2018 and 2017

(in thousands)

2018
Oil & Gas

Power Generation
& Distribution

Marine & Other
Industrial

Total

North America
$
-

$
-

$
-

$
-

International

1,390

228

457

$
2,075

$
1,390

$
228

$
457

$
2,075

2017

North America
$
-

$
-

$
-

$
-

International

1,188

133

10

$
1,331

$
1,188

$
133

$
10

$
1,331

Six Months Ended June 30, 2018 and 2017

(in thousands)

2018
Oil & Gas

Power Generation
& Distribution

Marine & Other
Industrial

Total

North America
$
-

$
-

$
-

$
-

International

2,572

322

1,057

$
3,951

$
2,572

$
322

$
1,057

$
3,951

2017

North America
$
-

$
-

$
-

$
-

International

2,209

230

107

$
2,546

$
2,209

$
230

$
107

$
2,546

The Company’s primary need for liquidity is to fund working capital requirements of the Company’s businesses, capital expenditures and for general corporate purposes, including debt repayment. The Company has incurred losses and experienced negative 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.

During 2017, the Company refinanced its outstanding loans which at that time provided approximately $1.0 million of working capital. In addition, the Board of Directors of the Company created a special committee to address strategic initiatives that include addressing liquidity.

The Company expects to continue to optimize its international operations including expansion of its service business in Brazil and diversification of its joint venture operations in China. The Company also has the ability to raise additional capital through its shelf registration; however, there is no assurance that additional capital can be obtained or that it can be obtained at terms that are favorable to the Company and its existing stockholders.

Based on the Transaction noted in Note 11, the Company believes it has sufficient liquidity to operate in the near term. As further described in Note 11 in August 2018, the Company has agreed to sell its operations in the United States of America “U.S.” to a third-party. Management believes the funds received from the sale will be sufficient to pay-off the secured term note and fund operations in the near term.

Basic earnings per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding for the three months and six months ended June 30, 2018 and 2017.

Diluted earnings per share is computed by dividing net income (loss) attributable to common stockholders, by the sum of (1) the weighted-average number of shares of common stock outstanding during the period, (2) the dilutive effect of the assumed exercise of convertible instruments and (3) the dilutive effect of the exercise of stock options and other stock units to our common stock.

For the three months and six months ended June 30, 2018, common stock equivalents from convertible instruments, stock options and other stock units have been excluded from the calculation of weighted average diluted shares because all such instruments were anti-dilutive.

~~The following table sets forth the computation of basic and diluted weighted average common shares.~~

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU No. 2016-01 requires (1) an entity to measure equity instruments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) at fair value with changes in fair value recognized in net income; (2) entities to use the exit price notation when measuring the fair value of financial instruments for disclosure purposes; (3) separate presentation of financial assets and financial liabilities by measurement category and form of financial asset; and (4) elimination of the requirement to disclose the methods and significant assumptions used to estimate fair value that is required to be disclosed for financial instruments measured at amortized cost. ASU No. 2016-01 is effective for fiscal years beginning after December 15, 2017 with early adoption permitted. The adoption of ASU No. 2016-01, effective January 1, 2018 had no significant impact on the Company’s consolidated financial position, results of operations or disclosures.

~~In February 2016, the FASB issued ASU~~ No. 2016-02, Leases, which requires lessees to recognize 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 use of, a specified asset for the lease term. Under ASU No. 2016-02, lessor accounting 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. ~~Management is currently reviewing the Company’s various leases to identify those affected~~ASU 2016-02 was subsequently amended by ASU No. ~~2016-02.~~

~~In June 2016, the FASB issued~~2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. ~~2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.~~2018-10, Codification Improvements to Topic 842; ASU No. ~~2016-13 eliminates~~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 ~~probable initial recognition threshold in current U.S. GAAP and, instead, requires the measurement of all expected credit losses for financial assets held~~new lease standard at the ~~reporting~~adoption date ~~based on historical experience, current conditions,~~ and reasonable and supportable forecasts. In addition, ASU No. 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU No. 2016-13 is effective for annual periods beginning after December 15, 2019, with early application permitted in annual periods beginning after December 15, 2018. The amendments of ASU No. 2016-13 should be applied throughrecognize 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 ~~the beginning of the first reporting period in which the guidance is effective. Management is currently evaluating the future impact~~January 1, 2019 for real and personal property operating leases. The adoption of ASU ~~No. 2016-13~~2016-02 did not have a material impact on ~~the Company’s~~our consolidated ~~financial position,~~ results of operations and ~~disclosures.~~

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU No. 2016-15 addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU No. 2016-15 is effective for reporting periods beginning after December 15, 2017. Early adoption is permitted. The adoption of ASU No. 2016-15 effective January 1, 2018 did not have a significant impact on the Company’s consolidated financial position, results of operations and disclosures.

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. The amendments of ASU No. 2017-01 should be applied prospectively as of the beginning of the period of adoption. ~~Management is currently evaluating the future impact of~~The Company adopted ASU No. 2017-01 on January 1, 2019. The adoption of this standard had no impact on our consolidated financial position or results of operations, as the adoption is applied on a prospective basis.

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. Such reclassifications had no effect on the Company’s ~~consolidated~~ financial position, results of operations or cashflows.

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

5.Revenues from contracts with customers are disaggregated into 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 by the hour for services performed. The majority of 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 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 product 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. The Company has no other material contract assets or liabilities and contract costs.

Taxes assessed by a governmental authority that are directly imposed on revenue-producing transactions between the Company and its customers, such as sales, use and value-added taxes, are excluded from revenue.

The table below presents revenue disaggregated by source, for the three and six months ended June 30, 2019 and 2018 (in thousands):

~~We have interests~~The Company holds a 40% interest in ~~one joint venture, outside of the United States of America (“U.S.”) which is accounted for using the equity method:~~

BOMAY Electric Industries Company, Ltd. (“BOMAY”), which builds electrical systems for sale in ~~which the Company holds a 40% interest,~~China. The majority partner in this foreign joint venture is Baoji Oilfield Machinery Co., Ltd. (a subsidiary of China National Petroleum Corporation) ~~holds a 51% interest, and AA Energies, Inc., holds a 9% interest.~~. 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 2006 in China with a term of 12 years and was set to expire in 2018. In March 2018, an agreement was approved by the BOMAY Board of Directors extending the joint venture agreement beyond the 2018 expiration date.

~~The Company disposed of its M&I Electric Far East (“MIEFE”) joint venture interest during the quarter.~~2007.

The Company made no sales to its joint venture ~~for~~in the ~~three months and~~ six months ended June 30, ~~2018~~2019 and ~~2017.~~2018.

~~Summary (unaudited)~~Below is summary financial information ~~of our foreign joint venture in U.S. dollars was as follows~~for BOMAY at June 30, ~~2018~~2019 and December 31, ~~2017~~2018 and operational results for the three and six months ended June 30, 2019 and 2018 ~~and 2017~~in U.S. dollars (in ~~thousands)~~thousands, unaudited):

	Three Months Ended June 30,
	BOMAY				MIEFE				Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017		2019		2018		2019		2018

Revenue	$	12,231	$	6,928	$	-	$	34	$	17,284	$	12,231	$	28,784	$	20,309
Gross Profit	$	1,912	$	1,311	$	-	$	11	$	2,479	$	1,912	$	4,440	$	3,697
Earnings	$	710	$	335	$	-	$	40	$	1,097	$	710	$	1,759	$	1,137


	Six Months Ended June 30,
	BOMAY				MIEFE
	2018		2017		2018		2017

Revenue	$	20,309	$	11,149	$	-	$	34
Gross Profit	$	3,697	$	2,646	$	-	$	11
Earnings	$	1,137	$	465	$	-	$	40

The following is a summary of activity in investments in foreign joint ventures for the six months ended June ~~31, 2018 (unaudited)~~30, 2019 in U.S. dollars (in thousands, unaudited):

June 30, 2018

BOMAY*

MIEFE

TOTAL

(in thousands)

Investments in foreign joint ventures:

Balance at December 31, 2017
$
10,736

$
211

$
10,947

Equity in earnings (loss) in 2018

455

-

455

Dividend paid in 2018

(1,127
)

-

(1,127
)
Foreign currency translation adjustment

(195
)

(211
)

(406
)
Investments, end of period
$
9,869

$
-

$
9,869

Components of investments in foreign joint ventures:

Investment in joint ventures
$
2,033

$
-

$
2,033

Undistributed earnings

7,294

-

7,294

Foreign currency translation

542

-

542

Investments, end of period
$
9,869

$
-

$
9,869

	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

~~Under~~The Company accounts for its investment in BOMAY using the equity method of ~~accounting,~~accounting. Under the equity method, the Company’s share of the joint ~~ventures’ operations’~~venture operations earnings or ~~loss~~losses is recognized in the ~~condensed~~ consolidated statements of operations as equity income (loss) from foreign joint ~~ventures’~~ventures operations. Joint venture income increases the carrying value of the joint ~~venture investment~~ventures and joint venture losses ~~as well as dividends~~reduce the carrying value. Dividends received from the joint venture reduce the carrying ~~value of the investment.~~

~~The Company reviews its equity method investment for impairment whenever~~value. In accordance with our long-lived asset policy, when events or ~~changes in~~ circumstances indicate ~~that~~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 ~~investment may not~~long-lived asset which exceeds the present value of estimated expected future cash flows) would be ~~recoverable or the inability~~recorded as a period expense. In making this evaluation, a variety of ~~the investee to sustain an earnings capacity that would justify the carrying amount of the investment.~~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 ~~analysis, there was no indication of~~evaluation for this reporting period, the Company does not believe an impairment adjustment is necessary at June 30, ~~2018 and December 31, 2017.~~2019.

On ~~March 23,~~June 6, 2017, the Company and its subsidiaries, M&I Electric Industries, Inc. and South Coast Electric Systems, LLC (collectively, the “Sellers”) issued and sold to HD Special-Situations III, L.P. (the “Purchaser”) a $7.00 million principal amount Senior Secured Term Note (the “Note”) with principal of $0.50 million due and paid on June 30, 2017, with the remaining balance

due 48 months after issuance for cash at par pursuant to a Note Purchase Agreement (the “Purchase Agreement”). Proceeds from the sale of the Note were used to fully repay and terminate the Company’s prior revolving credit facilities with approximately $1.00 million being available for the Company’s working capital and general business purposes.

The Note bears interest at 11.5% per annum payable monthly in arrears. The Note is secured by a first-priority lien on substantially all existing and after-acquired personal property assets and real estate owned by the Sellers (with certain exceptions) and is subject to covenants restricting the Company’s ability to incur debt, grant liens, pay dividends, engage in transactions with affiliates and other customary covenants for financing of this type (subject to certain exceptions). The Note is subject to an interest “make-whole” provision such that any prepayment of the principal thereunder in excess of $1.50 million (the “Prepayment Threshold”) within one year of the date of issuance (the “Make-Whole Period”) shall be subject to prepayment premium. No prepayments were made during the Make-Whole Period which expired on March 28, 2018. After the one year Make- Whole Period the Note may be prepaid in part or in full with no penalty.

The Purchase Agreement contains representations and affirmative, negative and financial covenants usual and customary for financing of this type, including covenants that place conditions upon the Company’s ability to merge or consolidate with other companies, sell any material part of their business or property, incur liens, and pay dividends on, make distributions on or redeem their equity interests. Other covenants in the Purchase Agreement require the Company to maintain minimum monthly revenue, maintain minimum monthly EBITDA, maintain minimum monthly cash on hand, maintain a minimum monthly debt service coverage ratio, maintain a maximum debt-to-EBITDA ratio, maintain a minimum monthly collateral coverage ratio and obtain consent of the Purchaser for certain capital expenditures.

On November 13, 2017, the Company entered into an agreement modifying the terms of its Senior Secured Term Note. The modification included revisions to the original revenue and EBITDA covenants along with the requirement of minimum principal reductions of $30,000 per month beginning in April 2018. In consideration for the modified terms, the Company issued 500,000 warrants to purchase the Company’s common stock at an exercise price of $2.26 which expire in November 2023.

The fair valve of the warrants of approximately $0.37 million was recognized as additional paid-in capital with a corresponding discount to long-term notes payable. The discount is accreted to interest expense through Note’s maturity. Discount accretion totaled $0.01 million and $0.03 for the three months and six months ended June 30 for both 2018 and 2017.

As of June 30, 2018, the Company was not in compliance with certain financial covenants. However, as a condition to the Transaction referenced in Note 11, the Company subsequently paid off the debt in full with the Purchaser.

~~On March 29, 2018,~~ the Company’s subsidiary, M&I Brazil, ~~extended the terms of its~~entered into a Loan Agreement with the former chairman of ~~AETI to June 7, 2019.~~AETI. The Loan Agreement provides the Company with a $0.30 million loan facility of which $0.20 million is drawn and is outstanding as of June 30, ~~2018 and with any balance~~2019. All outstanding amounts, including accrued but unpaid interested, are due in June ~~7, 2019.~~2020. Under 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.

~~7. Inventories~~In March 2019, Brazil financed project expenditures with short-term financing of approximately $0.2 million from Santander bank. The loan is due March 2020, with an interest rate of 11.88%.

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 ~~following at~~new lease standard. Operating lease costs were less than $50,000 for the three and six months ended June 30, ~~2018 (unaudited)~~2019. The weighted-average remaining lease term is 2 years and ~~December 31, 2017~~the weighted-average discount rate is 6.75%.

Maturities of our operating lease liabilities as of June 30, 2019 are as follows (in thousands):

The tax provision for the three and six months ended June 30, 2019 and 2018 reflects the provision from taxes on our earnings from our Brazilian subsidiary and dividends received from BOMAY. The Company has established a ~~full~~ valuation allowance on its deferred tax assets due to uncertainty regarding future realization.

The ~~carrying amounts~~Company received notification of ~~cash and cash equivalents, short-term investments, trade accounts receivable and accounts payable approximate fair value as~~a potential liability of ~~June 30, 2018 and December 31, 2017 because~~$4.3 million associated with the asset purchase agreement completed in August 2018. Please see Note 10 for further explanation of ~~the relatively short maturity of these instruments.~~this possible obligation.

~~The carrying amount of our long-term note payable approximates fair value as the interest rate on the note is based on a market rate.~~

In conjunction with the issuance of ~~the~~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.

The initial value allocated to the Warrants was recognized as a discount on the Series A Convertible Preferred Stock, with a corresponding charge to additional paid-in capital. The discount related to the Warrants is accreted to retained earnings through the scheduled redemption date of the redeemable Series A Convertible Preferred Stock. Discount accretion ~~totaled $0.01 million for both the three months ended June 30 for both 2018 and 2017. Discount accretion totaled $0.03 million~~was approximately $30,000 for both the six months ended June 30, ~~for 2018~~2019 and ~~2017.~~2018.

The Series A Convertible Preferred Stock ~~accrues~~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, based on the then current liquidation market price value of the Series A Convertible Preferred Common Stock, which is currently $5.00 per share. Quarterly dividends not paid in cash or Common Stock accumulate without interest and must be fully paid before any dividend or other distribution can be paid on or declared and set apart for the Common Stock or conversion of the Series A Convertible Preferred Stock to Common Stock.Company. At June 30, ~~2018~~2019 and December 31, ~~2017,~~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 ~~sheet.~~sheets. During the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, the Company issued ~~182,025~~21,506 and ~~149,422~~22,753 shares of common stock as payment of dividends, respectively.

~~On or after April 30, 2017,~~Prior to the ~~holders of a majority~~completion of the ~~outstanding shares~~Share Exchange discussed in Note 11, the holders of the Series A Convertible Preferred Stock ~~may require~~elected to convert all 1,000,000 shares outstanding into 276,549 shares of common stock (includes effect of 1-for-8 stock split).

On August 12, 2018 the Company sold substantially all of the U.S. business assets and operations of M&I Electric (“M&I) to ~~redeem~~a newly formed subsidiary of Myers Power Products, Inc. (“Buyer”). The newly formed subsidiary was established by the ~~Series A Convertible Preferred Stock at a redemption price equal~~Buyer to

acquire the assets of M&I pursuant to the ~~lessor~~Asset Purchase Agreement (the “Transaction”) between the Company and the Buyer. The Transaction included a total purchase price of ~~(i)~~approximately $18.5 million based on $10.1 million of cash consideration plus debt assumed by the ~~liquidation preference per share (initially $5.00 per share, subject~~buyer of $8.4 million.

The contractual terms of the Transaction include a provision for true-up of the net working capital, estimated as of the date of closing, to ~~adjustments for certain future equity transactions defined~~actual working capital as calculated by the Buyer and agreed to by the Seller. Any difference in the ~~Securities Purchase Agreement) and (ii)~~actual (conclusive) net working capital in relation to the ~~fair market value~~estimated working capital at closing results in an adjustment to the purchase price. In October 2018, the Company received notification from the Buyer of their actual working capital calculation. In the notification, the Buyer has 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 ~~Series A Convertible Preferred Stock per share, as determined~~Transaction provide that in ~~good faith by~~ the ~~Company’s Board of Directors. As of June 30, 2018~~event the Buyer and ~~December 31, 2017, the redemption price per share was $5.00~~Seller cannot agree to a conclusive net working capital adjustment, then all items remaining in ~~both years. The redemption price, plus any accrued and unpaid dividends,~~dispute shall be ~~payable in 36 equal monthly installments plus interest at an annual rate of 6%.~~

~~In connection with the issuance~~submitted by either one of the Company’s senior secured term note, described in Note 6, the Company has agreed with the Purchaser of the Note and the holder of the Preferred Stock (the “Holder”) not to declare, authorize or pay any cash dividends on the Preferred Stock until the earlier of (i) March 22, 2018, or (ii) the date the obligations under the Note Purchase Agreement have been paid in full (the “Standstill Period”), without the prior written consent of the Purchaser. Followingparties within thirty (30) calendar days after the expiration of the ~~Standstill Period, for so long~~resolution period to a national or regional independent accounting firm mutually acceptable to Buyer and Seller (the "Neutral Arbitrator"). The Neutral Arbitrator shall act as an arbitrator to determine the ~~obligations under~~conclusive net working capital. The conclusive net working capital, once determined, may result in a purchase price adjustment due to the ~~Note remain outstanding,~~Buyer or to the Company ~~may, at its sole discretion, declare, authorize or pay dividends~~as Seller.

The Company and the Buyer of M&I Electric currently 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 ~~cash~~determining the gain on the ~~Preferred Stock so long as no event~~sale of ~~default exists under~~assets reported at December 31, 2018. Any purchase price adjustment related to the ~~Term Note or would result therefrom. The Holder also agreed that it shall not exercise its rights to require the Company to redeem any~~conclusive determination of the ~~Preferred Stock during~~net working capital adjustment, if any, will be reflected at the ~~Standstill Period. Following~~date of such determination. Any legal fees incurred related to this disagreement will be expensed as incurred.

At June 30, 2018, the ~~expiration~~related operating results were reflected as discontinued operations in the Company’s Condensed Statement of the Standstill Period, so long as the obligations under the Note remain outstanding, the Holder may compel the Company to redeem shares of Preferred Stock provided no event of default exists under the Note or would result from such redemption. In considerationOperations. Summary financial results for the ~~Holder’s consent to the foregoing restrictions on the payment of cash dividends~~three and redemption of the Preferred Stock, the Company entered into an agreement with the Holder (the “Repricing Agreement”) on August 1, 2017. Pursuant to the Repricing Agreement, each share of Series A Preferred Stock will be initially convertible, at the option of the holder, into one (1) share of common stock at a conversion price of $2.26 per share of common stock, so that the Series A Preferred Stock sold to the Holder are currently convertible into an aggregate of 2,212,389 shares of common stock. In addition, pursuant to the Repricing Agreement, the Series A Warrants sold to the Holder will be exercisable for 125,000 shares of common stock at an initial exercise price of $2.72 per share and the Series B Warrants sold to the Holder will be exercisable for 200,000 shares of common stock at an initial exercise price of $3.17 per share.

~~This agreement was approved by a committee of the Board of Directors comprised solely of independent directors.~~

~~For the~~ six months ended June 30, 2018 ~~the Company issued a total of 228,305 shares of common stock. The Company issued 182,025 shares of common stock~~are as payment of accrued preferred dividends, as noted above, with the remaining 46,280 shares issued in connection with the Company’s Employee Stock Purchase Plan and upon vesting of restricted stock units.

On August 6, 2018, the Company announced it had agreed to sell its U.S. business operated by its wholly owned subsidiary, M&I Electric Industries, Inc. to an affiliate of Myers Power Products, Inc. pursuant to an Asset Purchase Agreement (Transaction). The purchase price for the assets will be $17.3 million resulting in cash proceeds at closing of approximately $10.8 million after working capital and other closing adjustments. The buyer is also assuming approximately $12.8 million of liabilities related to the assets being sold. The Company will pay off its long term debt of $6.5 million and certain other expenses in connection with the sale resulting in additional working capital of approximately $4.3 million upon completion of the transaction.

Although the assets sold do not constitute a majority portion of the company’s net assets, the M&I Electric US operations does represent a significant portion of the company’s consolidated revenue and so is accounted for as held for sale and discontinued operations. This Transaction closed August 12th, 2018.

Based on the transaction noted in Note 11, the operating results of M&I Electric Industries Inc. in the United States are classified as discontinued operation and its assets and associated liabilities are carried as assets and liabilities held for sale. Future periods will continue to report M&I Electric Industries Inc. in the United States results as discontinued in all comparative periods.

~~The following tables summarize the M&I Electric Industries Inc. United States assets and liabilities held for sale and operating results.~~

Three Months Ended June 30,

Six Months Ended June 30,

2018

2017

2018

2017

Net sales
$
7,750

$
11,629

$
14,163

$
18,444

Cost of sales

8,301

11,172

16,032

18,688

Gross margin

(551
)

457

(1,869
)

(244
)
Operating expenses:

Research and development

42

78

85

183

Selling and marketing

641

568

1,231

1,042

General and administrative

618

399

1,273

975

Total operating expenses

1,301

1,045

2,589

2,200

Loss from discontinued operations

(1,852
)

(588
)

(4,458
)

(2,444
)
Other income (expense):

Interest expense and other, net

(127
)

(356
)

(380
)

(505
)
Loss from discontinued operations before income taxes

(1,979
)

(944
)

(4,838
)

(2,949
)
Provision for (benefit from) income taxes on discontinued operations

-

-

-

-

Loss from discontinued operations
$
(1,979
)

$
(944
)

$
(4,838
)

$
(2,949
)

	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 ~~provided by operating activities of discontinued operations for the six months ended June 30, 2017 was $1.1 million. Cash~~ used in investing activities of discontinued operations for the six months ended June 30, 2018 was $0.2 million. ~~Cash used~~

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 ~~investing activities~~the accompanying unaudited condensed consolidated financial statements and related notes give retroactive effect to both the transaction and the reverse stock split.

As a result of ~~discontinued operations~~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 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 ~~six months ended June~~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 shares of Common Stock in Stabilis Energy, Inc. This transaction is expected to close within 30 ~~2017 was $0.1 million.~~days, subject to both parties meeting certain closing conditions.

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

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in the Form 10-Q and the consolidated financial statements included in the ~~2017~~2018 Annual Report on Form 10-K filed on ~~March 29, 2018.~~April 16, 2019. 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.

Except for historical and factual information, this document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements that address activities, events or developments that we expect, believe or anticipate will or may occur 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 ~~2017~~2018 Annual Report on Form 10-K filed on ~~March 29, 2018.~~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.

The Company was incorporated on October 21, 1996 as a Florida corporation. On May 15, 2007, we completed a business combination (the “M&I Merger”) with M&I Electric Industries, Inc. (“M&I”), a Texas corporation, and changed our name to American Electric Technologies, Inc. (“AETI”). M&I Electric was originally founded in 1946. Our principal executive offices are located at 1250 Wood Branch Park Drive, Suite 600, Houston, Texas 77079 and our telephone number is 713-644-8182.BUSINESS

Our corporate structure ~~currently consists~~consisted of American Electric Technologies, Inc., which owns 100% of M&I Electric Industries, Inc. ~~including~~(“M&I), its wholly-owned ~~subsidiaries,~~subsidiary, South Coast Electric Systems, LLC ~~(“SCES”)~~ and M&I Electric Brazil Sistemas e Servicios em Energia LTDA (“M&I Brazil”). As a result of the sale of South Coast 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.

~~During~~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 ~~Asset Purchase~~amendment to the Share Exchange Agreement. On July 17, 2019, the stockholders of AETI approved the proposals related to the Share Exchange Agreement ~~(“Transaction”)~~with the holders of Stabilis, an amendment to ~~sell certain portions~~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.

With the 2018 sale of its U.S. operations, the Company’s activities consist solely of operations in Brazil and our interest in the ~~United States as further~~foreign joint venture BOMAY described below. ~~As a result,~~The financial results of Stabilis are not included in this report as the assets and liabilities to be sold are reported in assets and liabilities held for sale in the Condensed Consolidated Balance Sheet for all periods presented. Additionally, the current and historical operating results associated with these assets and liabilities have been reclassified to give effect to these changes and are reported as discontinued operations in the Condensed Consolidated Statement of Operations for all periods presented.

~~The second quarter financials reflects a company in transition. The announced sale~~closing of the U.S. operations of its wholly owned subsidiary, M&I Electric Industries Inc., ends months of uncertainty for its stakeholders and is a result of the strategic initiatives previously reported in last quarter. The sale will provide AETI greater financial flexibility as it considers further strategic options along with maintaining its international investments and operations. Transaction occurred subsequent to June 30, 2019.

We have provided custom-designed power distribution, power conversion, and automation and control systems for our customers since 1946. Our products are used to safely distribute and control the flow of electricity from a power generation source (e.g. a diesel generator, turbine or the utility grid) to whatever mechanical device utilizes the power (drilling machinery, motors, other process equipment, the utility grid, etc.) at low and medium voltages.

Our power distribution products include low and medium voltage switchgear that provides power distribution and protection for electrical systems from electrical faults. Our products include traditional low voltage and medium voltage switchgear, and our IntelliSafe™ medium voltage arc-resistant switchgear designed to increase end-user safety in case of an arc-flash explosion. IntelliSafe™ is designed for the downstream oil & gas sector, process industries and the power generation market, and was designed to be the safest arc-resistant product on the market. IntelliSafe™ meets key industry specifications and certifications. Our products are suitable for both American National Standards Institute (“ANSI”) and International Electrotechnical Commission (“IEC”) markets. Other power distribution products in our solution set include low voltage and medium voltage motor control centers, bus ducts, fuse and switch products, and other related power distribution equipment. We also purchase and integrate third party products into turnkey solutions per our customer specifications including items such as battery backup power systems and transformers.

Our power conversion solutions include alternating current variable frequency drive (“AC VFD”) systems, analog systems and digital silicon controlled rectifier (“SCR”) products , that are used to adjust the speed and torque of an electric motor to match various user applications, primarily in the land and offshore drilling and marine vessel markets.

~~Our power distribution and control products are generally custom-designed to our customers’ specific requirements, and we do not maintain an inventory of such products.~~

We have the technical expertise to provide our solutions in compliance with a number of applicable industry standards such as National Electrical Manufacturers Association (“NEMA”) and ANSI or IEC equipment to meet American Bureau of Shipping (“ABS”), United States Coast Guard (“USCG”), Lloyd’s Register, a provider of marine certification services, and Det Norske Veritas (a leading certification body/registrar for management systems certification services) standards.

Our automation and control solutions are designed for the management and control of power in a customer’s application. The DrillAssist™ is a control system that enables the management of a land and offshore drilling rig’s operations. DrillAssist™ includes auto-drill capabilities and a driller’s chair and cabin where the drilling rig operator manages the rig. The Company’s Vessel Management system is a packaged control platform for management of vessel operations.

Our Power Distribution Centers (“PDC”) are used to house our power distribution and power conversion products. Our PDCs can be manufactured over 100 ft. long and 40 ft. wide. The Company also manufactures VFD and SCR houses for land drilling and driller’s cabins for land and offshore deployment.

We provide a variety of electrical services including the commissioning and maintenance of our customers’ full electrical power infrastructure. We provide low and medium voltage start-up/commissioning, preventative maintenance, emergency call out services, and breaker and switchgear refurbishment services.

We offer a full range of electrical and instrumentation construction and installation services to our markets. These services include new construction as well as electrical and instrumentation turnarounds, maintenance and renovation projects. Applications include installation of switchgear, AC and DC motors, drives, motor controls, lighting systems and high voltage cable.

~~We have three primary models for conducting our international business.~~Brazil

~~First, in~~ Brazil ~~we have a wholly-owned subsidiary, M&I Electric Brazil, with~~has offices in Rio de Janeiro, Macaé and Belo Horizonte to serve ~~this market. The M&I Electric Brazil team focuses primarily on~~the local market and provides services and products for the oil and gas, marine vessel, power generation and broad industrial market segments in Brazil.

Second, in certain international markets, we sell through foreign sales agents that we have appointed in energy regions around the world. Many of these international partners also provide local service and support for our products in those overseas markets.

Finally, where local market conditions dictate, we have formed joint venture operations with local partners in markets such as China, where we can partner with the primary end-customer in that market, or there are local content requirements orThe Company holds a ~~competitive advantage to using local manufacturing.~~

~~We currently have ownership~~40% interest in ~~one joint ventures outside of the U. S. which is accounted for on the equity method.~~

~~Our Company headquarters are located in Houston, Texas.~~. We ~~have domestic facilities and sales offices in Houston and Beaumont, Texas. We also have a service operation in Houma, Louisiana.~~

~~We operate M&I Electric Brazil as a wholly-owned subsidiary with three locations (Macaé, Rio de Janiero and Belo Horizonte) in Brazil to offer~~account for our ~~services to the Brazil oil and gas, marine vessel, power generation and broad industrial markets.~~

~~We also have a 40%~~ interest in ~~a foreign joint venture with facilities in Xian, China.~~

We have adopted various critical accounting policies that govern the application of accounting principles generally accepted in the United States of America (“U.S. GAAP”) in the preparation of our condensed consolidated financial statements. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results.

Certain accounting policies involve significant estimates and assumptions by us that have a material impact on our condensed consolidated financial condition or operating performance. Management believes the following critical accounting policies reflect its most significant estimates and assumptions used in the preparation of our condensed consolidated financial statements. We do not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities”, nor do we have any “variable interest entities”.

~~Inventories~~ – Inventories are stated at the lower of cost or market, with material value determined using an average cost method. Inventory costs for work-in-process include direct material, direct labor, production overhead and outside services. Indirect overhead is apportioned to work-in-process based on direct labor incurred.

~~Allowance for Obsolete and Slow-Moving Inventory~~ – The Company regularly reviews the value of inventory on hand using specific aging categories, and records a provision for obsolete and slow-moving inventory based on historical usage and estimated future usage. As actual future demand or market conditions may vary from those projected, adjustments to our inventory reserve may be required. ~~Based on this assessment at June 30, 2018 and December 31, 2017, management believes the inventory reserve is adequate.~~

~~Allowance for Doubtful Accounts~~ – The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make required payments. The estimate is based on management’s assessment of the collectability of specific customer accounts and includes consideration for credit worthiness and the financial condition of those specific customers. The Company also reviews historical experience with the customer, the general economic environment and the aging of receivables. The Company records an allowance to reduce receivables to the amount that is reasonably believed to be collectible. Based on this assessment ~~at June 30, 2018 and December 31, 2017, management believes the allowance for doubtful accounts is adequate.~~

~~Revenue Recognition~~ ~~– See Note 2 for new accounting policy on revenue recognition.~~

~~Foreign Currency Gains and Losses~~ – Foreign currency translations are included as a separate component of comprehensive income. The Company has determined the local currency of its foreign joint venture and foreign subsidiary, M&I Brazil, to be the functional currency. In accordance with ASC 830, the assets and liabilities of the foreign equity investees and M&I Brazil, denominated in foreign currency, are translated into United States dollars at exchange rates in effect at the consolidated balance sheet date and net sales and expenses are translated at the average exchange rate for the period. Related translation adjustments are reported as comprehensive income, net of deferred income taxes, which is a separate component of stockholders’ equity, whereas gains and losses resulting from foreign currency transactions are included in results of operations.

~~Federal Income Taxes~~ – The liability method is used in accounting for federal income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Our ability to

realize the deferred tax assets are evaluated annually and a valuation allowance is provided if it is more likely than not that the deferred tax assets will not give rise to future benefits in the Company’s tax returns.

~~Contingencies~~ – The Company records an estimated loss from a loss contingency when information indicates that it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. Contingencies are often resolved over long time periods, are based on unique facts and circumstances, and are inherently uncertain. The Company regularly evaluates the current information that is available to determine whether such accruals should be adjusted or other disclosures related to contingencies are required. The ultimate resolution of these matters, individually or in the aggregate, is not likely to have a material impact on the Company’s consolidated financial position or results of operations.

~~Equity Income from Foreign Joint Ventures’ Operations~~ ~~– The Company accounts for its investments in foreign joint venture~~BOMAY using the equity method. Under the equity method, the Company records its pro-rata share of foreign joint venture income or losses and adjusts the basis of its investment accordingly. Dividends received from the joint venture, if any, are recorded as reductions to the investment balance.

~~Carrying Value of Joint Venture Investment~~ – The Company reviews its equity method investment for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable or the inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment. ~~Based on the most recent review~~ ~~at June 30, 2018 and December 31, 2017, management believes the carrying value of the investment in its foreign joint venture is recoverable.~~

~~Through the first and second quarter of 2018, the Company saw increasing signs of a rebound in its traditional international drilling business.~~

In Brazil, the Company is forecasting global energy market growth due to stabilization of oil prices and the return of major oil and gas companies to the Brazilian market. The rebound in investments in some of the key Brazilian industrial markets could result in growth opportunities for the Company as well.

In China, the Company’s Joint Venture BOMAY, is anticipating market growth for the remainder of 2018 as the Chinese government is trying to move away from coal-fired power generation to natural gas which would increase Chinese shale drilling opportunities for the remainder of 2018 and beyond.

~~The following table represents revenue and income (loss) from continuing operations and net equity income from foreign joint ventures’ operations, for the periods indicated (in thousands):~~

A non-U.S. GAAP financial measure is generally defined as one that purports to measure historical or future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable U.S. GAAP measure. Please see the Company’s Annual Report on Form 10-K for 2017 filed on March 29, 2018 for a more in-depth discussion of this indicator, earnings before interest, taxes, depreciation and amortization (“EBITDA”). Management believes it is useful in evaluating operating performance.

~~Non-U.S. GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for our financial results prepared in accordance with U.S. GAAP.~~

~~The table below shows the reconciliation of net loss attributable to common stockholders to “EBITDA” for the three months and six months ended June 30, 2018 and 2017 (dollars in thousands):~~

~~The order backlog at June 30, 2018 and December 31, 2017 was $2.1 million and $2.2 million, respectively. This backlog is expected to be recognized in revenue during the remainder 2018 and 2019.~~

Our financial results are reported in our three major market sectors. These sectors are Oil & Gas; Power Generation & Distribution and Marine & Other Industrial. The products we manufacture and the services we provide are consistent in application within all the sectors. This information is supplemental and provided to allow investors to follow our future trends in marketing to various customer groups.

Our continuing operations constitute the electric distribution, conversion, automation and control systems manufactured and sold by our wholly own Brazilian subsidiary. Our interest in our Chinese joint venture is accounted for by the equity method.

Three Months Ended June 30, 2018 and 2017

(in thousands)

2018
Oil & Gas

Power Generation
& Distribution

Marine & Other
Industrial

Total

Revenue
$
1,390

$
228

$
457

$
2,075

Gross Profit

371

64

74

509

Gross Profit as % of Revenue

27
%

28
%

16
%

25
%

2017

Revenue
$
1,188

$
133

$
10

$
1,331

Gross Profit

319

36

4

359

Gross Profit as % of Revenue

27
%

27
%

40
%

27
%

Six Months Ended June 30, 2018 and 2017

(in thousands)

2018
Oil & Gas

Power Generation
& Distribution

Marine & Other
Industrial

Total

Revenue
$
2,572

$
322

$
1,057

$
3,951

Gross Profit

578

80

179

837

Gross Profit as % of Revenue

22
%

25
%

17
%

21
%

2017

Revenue
$
2,209

$
230

$
107

$
2,546

Gross Profit

441

48

15

504

Gross Profit as % of Revenue

20
%

21
%

14
%

20
%

Three Months Ended June 30, ~~2018 as~~2019 Compared ~~with the~~to Three Months Ended June 30, ~~2017~~2018 (unaudited)

Revenues ~~increased 56%~~decreased 6%, or ~~$0.74~~$0.1 million, to ~~$2.08~~$2.0 million for the three months ended June 30, ~~2018,~~2019, compared to the three months ended June 30, ~~2017. This growth was driven by~~2018, primarily due to the ~~Company’s continued sales progress~~completion of a large project in ~~penetrating~~Brazil in the ~~industrial market and increased orders from a repeat customer.~~prior year.

Gross margin ~~increased 42%~~decreased 18%, or ~~$0.15~~less than $0.1 million, to ~~$0.51~~$0.4 million for the three months ended June 30, ~~2018,~~2019, compared to the three months ended June 30, ~~2017.~~2018. Gross margin as a percentage of revenues decreased to 21% in the three months ended June 30, 2019, compared to 25% in the three months ended June 30, ~~2018, compared~~2018. The decrease in margins was primarily attributable to ~~27%~~higher project costs in 2019.

General and administrative expenses increased by 67%, or $0.3 million, to $0.8 million during the three months ended June 30, ~~2017. This decrease~~2019, compared to the three months ended June 30, 2018. The increase in general and administrative expenses was primarily ~~attributable~~due to ~~continued competitive pricing pressure mainly~~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 ~~industrial section.~~fourth quarter of 2018.

Selling and marketing costs ~~decreased~~increased by ~~23%~~43%, or ~~$0.03 million, to $0.01~~$0.04 million for the three months ended June 30, ~~2018,~~2019 compared to the three months ended June 30, ~~2017.~~2018. This ~~decrease~~increase was primarily ~~attributable~~due to ~~a layoff~~the addition of ~~sales employee not replaced.~~personnel to grow the business in Brazil. Selling and marketing expenses, as a percentage of revenues, ~~decreased~~increased to ~~5% during~~7% for the three months ended June 30, ~~2018~~2019, compared to ~~10% in~~5% for the three months ended June 30, ~~2017.~~2018.

General and administrative expenses decreased by 6%, or $0.03 million, to $0.47 million during the three months ended June 30, 2018, when compared to the three months ended June 30, 2017. General and administrative expenses, as a percentage of revenues, decreased to 23% during the three months ended June 30, 2018, compared to 37% during the three months ended June 30, 2017.

Net equity income from our foreign joint venture ~~operations~~BOMAY increased ~~by $0.16~~54%, or $0.15 million, to ~~$0.23~~$0.4 million during the three months ended June 30, ~~2018, when~~2019, compared to the three months ended June 30, ~~2017.~~2018. The increase is primarily due to ~~an increase in performance by~~a previously announced rig order for a major Chinese customer at our BOMAY joint ~~venture in China.~~venture.

~~Interest expense and other income (expense) remained at $0.01 million during the three months ended June 30, 2018 when compared to the three months ended June 30, 2017.~~

The provision ~~from~~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, ~~was $0.06 million~~ which reflects the provision of taxes on our earnings from our Brazilian subsidiary and the tax on ~~the~~dividends from our BOMAY ~~dividend.~~joint venture in that period.

Six Months Ended June 30, ~~2018 as~~2019 Compared ~~with the~~to Six Months Ended June 30, ~~2017~~2018 (unaudited)

Revenues ~~increased 55%~~decreased 20%, or ~~$1.41~~$0.8 million, to ~~$3.95~~$3.2 million for the six months ended June 30, ~~2018,~~2019, compared to the six months ended June 30, ~~2017. This growth was driven by~~2018, primarily due to the ~~Company’s continued sales progress~~completion of a large project in ~~penetrating~~Brazil in the ~~power generation market and increased orders for field services.~~prior year.

Gross margin ~~increased 66%~~decreased 30%, or ~~$0.33~~$0.2 million, to ~~$0.84~~$0.6 million for the six months ended June 30, ~~2018,~~2019, compared to the six months ended June 30, ~~2017.~~2018. Gross margin as a percentage of revenues ~~increased to 21% in~~was 19% for the six months ended June 30, ~~2018,~~2019 compared to ~~20% in~~21% at June 30, 2018.

General and administrative expenses increased by 67%, or $0.6 million, to $1.6 million during the six months ended June 30, ~~2017. This increase was primarily attributable~~2019, compared to the six months ended June 30, 2018. The increase in ~~revenue.~~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 costs ~~decreased~~increased by ~~28%~~45%, or ~~$0.07 million, to $0.19~~$0.08 million, for the six months ended June 30, ~~2018,~~2019 compared to the six months ended June 30, ~~2017.~~2018. This ~~decrease~~ was primarily ~~attributable~~due to ~~a layoff of sales employee not replaced.~~the increase in personnel mentioned above. Selling and marketing expenses, as a percentage of revenues, ~~decreased~~increased to ~~5% during the three months ended June 30, 2018 compared to 10% during~~9% for the six months ended June 30, ~~2017.~~

~~General and administrative expenses decreased by 8%, or $0.08 million,~~2019, compared to ~~$0.94 million during~~5% for the six months ended June 30, 2018, when compared to the six months ended June 30, 2017. This decrease was primarily attributable to fines and interest paid to suppliers and taxes due to delays on payments less than 60 days, due cash flow issues and moving an employee to indirect cost center without replacement. General and administrative expenses, as a percentage of revenues, decreased to 24% during the six months ended June 30, 2018, compared to 40% during the six months ended June 30, 2017.2018.

Net equity income from our foreign joint venture ~~operations~~BOMAY increased ~~by $0.29~~55%, or $0.2 million, to ~~$0.35~~$0.7 million during the six months ended June 30, ~~2018, when~~2019, compared to the six months ended June 30, ~~2017.~~2018. The increase is primarily due to ~~an increase in performance by~~a previously announced rig order for a major Chinese customer at our BOMAY joint ~~venture in China.~~venture.

Interest expense and other income (expense) increased $0.03 million to $0.07 million during the six months ended June 30, 2018, when compared to the six months ended June 30, 2017. Interest expense and other income (expense), as a percentage of revenues, remained at 2% during the six months ended June 30, 2018 compared to the six months ended June 30, 2017.

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, ~~was $0.19 million~~ which reflects the provision of taxes on our earnings from our Brazilian subsidiary and the tax on ~~the~~dividends from our BOMAY ~~dividend.~~joint venture in that period.

On March 23, 2017, the Company entered into a $7.00 million Senior Secured Term Note with a third-party lender. The Note is payable in monthly interest only payments in arrears at a fixed rate of 11.5%. Principal of $0.50 million was paid on June 30, 2017 with the balance due March 23, 2021. On November 13, 2017, the Note was modified to revise certain financial covenants and requires monthly principal payments of $0.03 million which commenced in April 2018.

~~The Company continues to monitor~~ its liquidity position closely and depending on the business needs may raise cash in the form of debt, equity or a combination of both, subject to lender approval. However, there can be no assurance that additional capital can be obtained or that it can be obtained at terms that are favorable to us and our existing stockholders.

~~The Company’s~~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 ~~the Company’s~~our businesses, capital expenditures and for general corporate ~~purposes, including debt repayment. The Company has~~purposes. We have incurred losses and experienced negative 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.

~~During 2017,~~In 2018, we concluded the ~~Company refinanced its outstanding loans which at that time provided approximately $1.0 million~~sale of ~~working capital. In addition, the Board~~our U.S. operations to a subsidiary of ~~Directors of the Company created a special committee to address strategic initiatives that include addressing liquidity.~~

~~The Company expects~~Myers Power Products, Inc. We expect to continue to optimize ~~both~~our international ~~and domestic~~ operations including ~~expansion of its~~our service business in Brazil and ~~diversification of its~~our joint venture ~~operations~~operation in China.

During the six months ended June 30, ~~2018, the Company provided cash of $0.35~~2019, we used $1.0 million in operations as compared to ~~providing $0.43~~$1.5 million of cash provided by operations for the same period in ~~2017.~~2018. This decrease was primarily the result of ~~advanced payments on two projects as of June 30, 2018~~the change in net contract assets and ~~accounted for~~dividend from our foreign joint venture, partially offset by the related reductions in ~~billings in excess of costs and estimated earnings on uncompleted contracts.~~the Company’s net working capital.

During the six months ended June 30, ~~2018, the Company’s~~2019, we used cash for investing activities ~~provided cash~~ of ~~$0.96~~$0.1 million compared to ~~providing cash of $0.65~~$0.2 million for the comparable period in ~~2017.~~2018. This ~~was primarily the result of the dividend received from BOMAY.~~change reflects a reduction in equipment purchases in 2019.

During the six months ended June 30, ~~2018, the Company’s~~2019, cash provided by financing activities ~~used cash of $0.22~~was $0.1 million compared to ~~providing $0.55~~using cash of $0.2 million in the comparable period in ~~2017.~~2018. This was primarily due to Brazil’s borrowing of short-term notes in the ~~result~~first quarter of ~~financing costs related~~2019.

See Note 2 to ~~insurance.~~the Notes to Condensed Consolidated Financial Statements included elsewhere in this report for information on new accounting standards.

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.

The markets in which we participate are capital intensive and cyclical in nature. The volatility in customer demand ~~in several of these markets~~ is greatly driven by the change in the price of oil and gas. These factors influence the release of new capital projects by our customers, which are traditionally awarded in competitive bid situations. Coordination of project start dates is matched to the customer requirements and projects may take a number of months to ~~complete. Schedules~~complete; schedules also may change during the course of any particular project. ~~For more information please see Item 2 of the Management Discussion and Analysis – Business Outlook.~~

Our inability to borrow additional funds could negatively impact future working capital, capital expenditures, and acquisitions in addition to fulfilling our obligations and operating the business. While we would seek alternative funding sources through both debt and equity raises, there is no assurance that additional capital can be obtained or that it can be obtained at terms that are favorable to us and our existing stockholders.

As of June 30, 2018, we had cash and cash equivalents of $0.48 million and total outstanding debt of $6.11 million. The Company had no availability for additional borrowings under its credit agreement. As disclosed in Note 11, the Company closed its Transaction and paid off the term note.

Our interest rate sensitive items do not subject us to material risk exposures. Our senior secured term Note has a fixed interest rate of 11.5%, with monthly interest only payments of $0.07 million. Required of minimum principal reductions of $30,000 per month began in April 2018.

~~The Company operates~~We operate a subsidiary in Brazil and ~~maintains~~maintain an equity method investment in ~~its~~our Chinese joint venture, BOMAY. The functional currencies of the ~~Brazil~~Brazilian subsidiary and the joint ~~ventures~~venture are the Brazilian Real and ~~the~~ Chinese ~~Yuan, respectively.~~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 ~~income,~~loss, net of ~~tax,~~taxes, in our ~~condensed~~ consolidated balance ~~sheets. In the current six months, this item decreased from $0.40 million at December 31, 2017 to ($0.09) million~~sheet at June 30, ~~2018 due principally to~~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 ~~strengthening of the United States Dollar versus the Chinese Yuan and the disposal of the MIEFE joint venture.~~

~~Other than the aforementioned items, we do not believe we are exposed to significant~~underlying foreign currency exchange ~~risk because most of~~rate would reduce our ~~net sales and purchases are denominated in United States Dollars.~~working capital balance by approximately $70,000.

We are subject to ~~commodity price~~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.

~~An evaluation was carried out under the supervision~~Evaluation of Disclosure Controls and ~~with~~Procedures

With the participation of our ~~management, including our Principal~~Chief Executive Officer and ~~our Principal Accounting~~Chief Financial Officer, ofmanagement evaluated the effectiveness 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”)) as of June 30, ~~2018.~~2019. Based on ~~this~~their evaluation, our ~~Principal Executive Officer~~principal executive officer and ~~Principal Accounting Officer~~principal financial officer concluded that the Company’s disclosure controls and procedures were not effective in providing reasonable assurance that material information required to be disclosed in the reports that we file or submit under the Exchange Act 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, ~~2018.~~2019 solely because of the existence of the material weakness in internal controls over financial reporting described below.

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:

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.

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

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.

During the quarter ended June 30, 2019, there were no changes in our internal ~~controls~~control over financial reporting ~~that occurred during~~other than the ~~quarter ended June 30, 2018 that has materially affected, or is reasonably likely~~controls to ~~materially affect, our internal control over financial reporting.~~address the material weakness identified above.

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.

~~There~~Important factors that could have ~~been no~~a material ~~changes during the period ended June 30, 2018 in the risk~~impact on our financial position and results of operations include:

During the quarter ended June 30, ~~2018~~2019, the Company issued ~~182,025~~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 1933 and contained a restriction on transfer legend. The Company issued the shares under the exemption from registration under Sect. 4(2) of the Securities Act and other exemptions from registration may also be applicable.

~~Our loan agreement prohibits the payment of cash dividends on our common stock.~~

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.

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

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

		Page
	Part I. Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets ~~at June 30, 2018 and December 31, 201~~7	3
	Condensed Consolidated Statements of Operations ~~for the Three Months and Six Months Ended June 30, 2018 and 201~~7	4
	Condensed Consolidated Statements of Comprehensive ~~Income (Loss) for the Three Months and Six Months Ended June 30, 2018 and 2017~~Loss	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows ~~for the Six Months Ended June 30, 2018 and 201~~7	67
	Notes to Condensed Consolidated Financial Statements	78
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1615
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2419
Item 4.	Controls and Procedures	2419
	Part II. Other Information
Item 1.	Legal Proceedings	2521
Item 1A.	Risk Factors	2521
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
~~Item 3.~~	~~Defaults upon Senior Securities~~	25
~~Item 4.~~	~~Mine Safety Disclosures~~	2521
Item 5.	Other Information	2521
Item 6.	Exhibits	2521
Signatures		2622

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Weighted average basic shares		8,801,657		8,504,240		8,855,444		8,420,680
Dilutive effect of preferred stock, warrants, stock options and restricted stock units		-		-		-		-
Total weighted average diluted shares		8,801,657		8,504,240		8,855,444		8,420,680

	BOMAY				MIEFE
	2018		2017		2018		2017			June 30, 2019		December 31, 2018
Assets:
Total current assets	$	51,572	$	50,000	$	-	$	121		$	67,322	$	59,124
Total non-current assets		3,322		3,457		-		15			3,337		5,742
Total assets	$	54,894	$	53,457	$	-	$	136		$	70,659	$	64,866
Liabilities and equity:
Total liabilities	$	29,104	$	25,598	$	-	$	198		$	44,685	$	38,732
Total joint ventures’ equity		25,790		27,859		-		(62	)		25,974		26,134
Total liabilities and equity	$	54,894	$	53,457	$	-	$	136		$	70,659	$	64,866

	Three Months Ended June 30,
	(in thousands)
	2018		2017
North America	$	-	$	-
International		2,075		1,331
	$	2,075	$	1,331

	Six Months Ended June 30,
	(in thousands)
	2018		2017
North America	$	-	$	-
International		3,951		2,546
	$	3,951	$	2,546

	June 30, 2018
	BOMAY*			MIEFE			TOTAL
	(in thousands)
Investments in foreign joint ventures:
Balance at December 31, 2017	$	10,736		$	211		$	10,947
Equity in earnings (loss) in 2018		455			-			455
Dividend paid in 2018		(1,127	)		-			(1,127	)
Foreign currency translation adjustment		(195	)		(211	)		(406	)
Investments, end of period	$	9,869		$	-		$	9,869

Components of investments in foreign joint ventures:
Investment in joint ventures	$	2,033		$	-		$	2,033
Undistributed earnings		7,294			-			7,294
Foreign currency translation		542			-			542
Investments, end of period	$	9,869		$	-		$	9,869

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

Continuing Operations
	June 30, 2018		December 31, 2017
Raw materials	$	201	$	2
Work-in-process		-		-
		201		2
Less: allowance		-		-
Total inventories	$	201	$	2

	June 30, 2018 (unaudited)			December 31, 2017			June 30, 2019			December 31, 2018
	(in thousands except percentages and ratios)						(in thousands except percentages and ratios)
Working capital	$	(7,571	)	$	752		$	751		$	1,201
Current ratio	0.7 to 1			1 to 1			1.2 to 1			1.4 to 1
Debt as a percent of total capitalization		0	%		35	%		5	%		3	%

Exhibit No.		Exhibit Description
~~10.1~~2.1		2007 Employee Stock Incentive Plan, as ameded.*Amendment dated May 8, 2019 to the Share Exchange Agreement concerning the business combination with Stabilis Energy LLC (incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K filed May 5, 2019).
31.1		Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive ~~Officer.~~Officer.
31.2		Rule 13a-14(a) / 15d-14(a) Certification of Principal ~~Accounting Officer.~~Financial Officer.
32.1		Section 1350 Certifications of Principal Executive Officer and Principal Financial ~~Officer.~~Officer.
101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

AMERICAN ELECTRIC TECHNOLOGIES, INC.

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

By:	/s/ ~~William B. Brod~~Andrew L. Puhala
~~William B. Brod~~Andrew L. Puhala
Chief Financial Officer (Principal Financial Officer)

Large accelerated filer

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Non-accelerated filer

Smaller reporting company

Emerging growth company