American Electric Technologies Inc (Form: 10-Q, Received: 08/14/2012 10:46:43)

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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

x	QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES

EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED June 30, 2012

¨	TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES

EXCHANGE

ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File No. 000-24575

AMERICAN ELECTRIC TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Florida

59-3410234

(State or other jurisdiction

of incorporation)

(I.R.S. Employer

Identification No.)

6410 Long Drive, Houston, TX 77087

(Address of principal executive offices)

(713) 644-8182

(Registrant’s telephone number)

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 x

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 x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company in Rule 12b-2 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 x

As of August 6, 2012, the registrant had 7,914,685 shares of its Common Stock outstanding.

AMERICAN ELECTRIC TECHNOLOGIES, INC. AND SUBSIDIARIES

FORM 10-Q Index

For the Quarterly Period Ended June 30, 2012


		Page
	Part I. Financial Information

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets at June 30, 2012 and December 31, 2011		3

	Condensed Consolidated Statements of Operations for the Three Months and Six Months ended June 30, 2012 and 2011		4

	Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2012 and 2011		5

	Notes to Condensed Consolidated Financial Statements		6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		20

Item 4.	Controls and Procedures		20

	Part II. Other Information

Item 1.	Legal Proceedings		20

Item 1A.	Risk Factors		20

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		21

Item 3.	Defaults upon Senior Securities		21

Item 4.	Mine Safety Disclosures		21

Item 5.	Other Information		21

Item 6.	Exhibits		21

Signatures			22

PART I – FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS

American Electric Technologies, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)


	June 30, 2012 (unaudited)			December 31, 2011
Assets
Current assets:
Cash and cash equivalents	$	3,945		$	3,749
Accounts receivable-trade, net of allowance of $215 and $393 at June 30, 2012 and December 31, 2011, respectively		10,073			11,291
Inventories, net		4,752			4,945
Costs and estimated earnings in excess of billings on uncompleted contracts		2,449			2,026
Prepaid expenses and other current assets		228			336

Total current assets		21,447			22,347
Property, plant and equipment, net		4,370			4,489
Investments in foreign joint ventures		10,257			9,308
Other assets		362			87

Total assets	$	36,436		$	36,231

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,416		$	5,772
Accrued payroll and benefits		1,220			1,414
Other accrued expenses		587			855
Billings in excess of costs and estimated earnings on uncompleted contracts		2,213			2,909
Short-term notes payable		132			154

Total current liabilities		7,568			11,104
Notes payable		2,000			5,057
Deferred income taxes		2,706			2,433
Deferred compensation		119			116

Total liabilities		12,393			18,710

Convertible preferred stock
Mandatorily redeemable convertible preferred stock – Series A, net of discount of $825 and $0 at June 30, 2012 and December 31, 2011; $0.001 par value, 1,000,000 shares authorized, issued and outstanding at June 30, 2012, none at December 31,2011		4,175			—

Common stockholders’ equity:
Common stock; $0.001 par value, 50,000,000 shares authorized, 7,913,535 and 7,828,509 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively		8			8
Additional paid-in capital		9,422			8,171
Treasury stock; 20,222 shares at cost		(92	)		—
Accumulated other comprehensive income, foreign currency translation, net		941			849
Retained earnings; including accumulated statutory reserves in equity method investments of $1,620 and $1,284 at June 30, 2012 and December 31, 2011, respectively		9,589			8,493

Total common stockholders’ equity		19,868			17,521

Total liabilities, preferred stock and stockholders’ equity	$	36,436		$	36,231

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

American Electric Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

Unaudited

(in thousands, except share and per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Revenue	$	12,872		$	11,427		$	27,304		$	23,495
Cost of sales		10,700			9,921			23,359			20,792

Gross profit		2,172			1,506			3,945			2,703
Operating expenses:
Research and development		10			313			35			436
Selling and marketing		639			614			1,360			1,225
General and administrative		1,355			1,859			2,580			2,916

Total operating expenses		2,004			2,786			3,975			4,577

Income (loss) from domestic operations		168			(1,280	)		(30	)		(1,874	)
Net equity income from foreign joint ventures’ operations:
Equity income from foreign joint ventures’ operations		1,054			261			1,825			498
Foreign joint ventures’ operations related expenses		(123	)		(117	)		(223	)		(246	)

Net equity income from foreign joint ventures’ operations		931			144			1,602			252

Income (loss) from domestic operations and net equity income from foreign joint ventures’ operations		1,099			(1,136	)		1,572			(1,622	)

Interest expense and other, net		(38	)		(55	)		(88	)		(102	)

Total other income (expense)		(38	)		(55	)		(88	)		(102	)
Income (loss) before income taxes		1,061			(1,191	)		1,484			(1,724	)
Provision for (benefit from) income taxes		245			(464	)		334			(675	)

Net income (loss) before dividends on mandatorily convertible preferred stock		816			(727	)		1,150			(1,049	)

Dividends on mandatorily redeemable preferred stock		(55	)		—			(55	)		—

Net income attributable to common stockholders	$	761		$	(727	)	$	1,095		$	(1,049	)

Earnings (loss) per common share: Basic	$	0.10		$	(0.09	)	$	0.14		$	(0.13	)

Diluted	$	0.09		$	(0.09	)	$	0.13		$	(0.13	)

Weighted-average number of common shares outstanding:
Basic		7,913,266			7,821,646			7,885,458			7,800,060

Diluted		8,247,031			7,821,646			8,242,975			7,800,060

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

American Electric Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Unaudited

(in thousands)


	Six Months Ended June 30,
	2012			2011
Cash flows from operating activities:
Net Income (loss)	$	1,150		$	(1,049	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Deferred income tax provision (benefit)		334			(675	)
Equity income from foreign joint ventures’ operations		(1,825	)		(498	)
Depreciation and amortization		467			382
Stock based compensation		215			112
Provision for bad debt		60			167
Allowance for obsolete inventory		17			16
Gain on sale of property, plant and equipment		(17	)		(6	)
Deferred compensation costs		3			15
Change in operating assets and liabilities:
Accounts receivable		1,254			696
Inventories		177			(1,028	)
Costs and estimated earnings in excess of billings on uncompleted contracts		(423	)		827
Accounts payable and accrued liabilities		(2,818	)		488
Billings in excess of costs and estimated earnings on uncompleted contracts		(695	)		22
Other, net		10			(17	)

Net cash (used in) provided by operating activities		(2,091	)		(548	)

Cash flows from investing activities:
Purchases of property, plant and equipment		(300	)		(139	)
Proceeds from disposal of property, plant and equipment		17			6
Proceeds from joint venture dividends		907			1,052
Investment in joint venture		—			(69	)
Purchase of intangible assets		(104	)		—

Net cash provided by investing activities		520			850

Cash flows from financing activities:
Proceeds from issuance of common stock		17			16
Proceeds from sale of preferred stock and warrants-net		4,961			—
Dividends on mandatorily redeemable preferred stock		(41	)		—
Treasury stock purchase, in accordance with the employee stock incentive plan		(92	)		—
Capital lease obligation payment		(57	)		(76	)
Principal payments on short-term notes payable		(21	)		(50	)
Principal (payments on) advances from revolving credit facility		(3,000	)		1,000

Net cash provided by financing activities		1,767			890

Net increase (decrease) in cash and cash equivalents		196			1,192
Cash and cash equivalents, beginning of period		3,749			1,364

Cash and cash equivalents, end of period	$	3,945		$	2,556

Supplemental disclosures of cash flow information:
Interest paid	$	76		$	68

Income taxes paid	$	—		$	24

Non-cash investing and financing activities:
Common stock issuance to acquire intangible assets	$	219		$	—

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

AMERICAN ELECTRIC TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(in thousands, except share and per share amount)

1.	Basis of Presentation

The accompanying condensed unaudited consolidated financial statements of American Electric Technologies, Inc. and Subsidiaries (“AETI”, “the Company”, “our”, “we”, “us”) as of June 30, 2012 and for the three months and six months then ended have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and include all adjustments which, in the opinion of management, are necessary for a fair presentation of financial position as of June 30, 2012 and results of operations for the three months and six months ending June 30, 2012 and June 30, 2011. All adjustments are of a normal recurring nature. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full year. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The statements should be read in conjunction with the Company’s financial statements included in on our Annual Report on Form 10-K for the year ended December 31, 2011, which was filed on March 30, 2012.

2.	Earnings (Loss) Per Common Share

Basic earnings (loss) per common share is based on the weighted average number of common shares outstanding for the three months and six months ended June 30, 2012 and 2011. Diluted earnings (loss) per share is based on the weighted average number of common shares outstanding, plus the incremental shares that would have been outstanding upon the assumed exercise of all potentially dilutive stock options and other stock units subject to anti-dilution limitations.

The following table sets forth the computation of basic and diluted earnings (loss) per common share (in thousands, except share and per share data.):

Three Months Ended June 30,

Six Months Ended June 30,

2012

2011

2012

2011

Net income (loss) attributable to common stockholders

761

(727)

1,095

(1,049)

Weighted average basic shares

7,913,266

7,821,646

7,885,458

7,800,060

Dilutive effect of stock options and restricted stock units (1)

333,765

—

357,517

—

Total weighted average diluted shares with assumed conversions

8,247,031

7,821,646

8,242,975

7,800,060

Earnings (loss) per common share:

Basic

0.10

(0.09)

0.14

(0.13)

Dilutive

0.09

(0.09)

0.13

(0.13)

(1)	For the three months ended and six months ended June 30, 2011, these items were excluded from diluted earnings (loss) per common share as the effect would have been anti-dilutive.

3.	Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”).” This pronouncement was issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and IFRS. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements, particularly for Level 3 fair value measurements. ASU 2011-04 is effective for reporting periods beginning after December 15, 2011 on a prospective basis. The adoption of ASU 2011-04 effective January 1, 2012 did not have a significant impact on the Company’s condensed consolidated financial statements or disclosures.

In December 2011, the FASB issued ASU No. 2011-12 Comprehensive Income (Topic 220): Deferral of the effective date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update ASU 2011-05. ASU No. 2011-12 defers the effective date for provisions of ASU No. 2011-05 requiring entities to present the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income on the face of the financial statements for all periods presented. All other requirements in ASU No. 2011-05 are not affected by ASU No. 2011-12. ASU No. 2011-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and reinstates the requirement that reclassifications must be either disclosed on the face of the financial statements or in the notes. The adoption of ASU 2011-12, effective January 1, 2012 did not have a significant impact on the Company’s condensed consolidated financial statements or disclosures.

In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. ASU no. 2011-11 was issued to provide enhanced disclosures that will enable users of the financial statements to evaluate the effects or potential effect of netting arrangements on an entity’s financial position. The amendments under ASU No. 2011-11 require enhanced disclosures by requiring entities to disclose both gross information and net information about both instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sales and repurchase agreements, reverse sale and repurchase agreements, and securities borrowing and lending arrangements. ASU No. 2011-11 is effective retrospectively for annual periods beginning on or after January 1, 2013, and interim periods within those periods. The adoption of ASU No. 2011-11 is not expected to have a significant impact on the Company’s financial position or results of operations.

In September 2011, the FASB issued ASU No. 2011-08, “Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment.” ASU No. 2011-08 permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more likely than not threshold is defined as having a likelihood of more than 50 percent. Under ASU No. 2011-08, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. ASU No. 2011-08 is effective for annual periods beginning after December 15, 2011. The adoption of ASU No. 2011-08 effective January 1, 2012 did not have a significant impact on the Company’s financial position or result of operations.

4.	Segment Information

The Company follows the guidance prescribed by ASC Topic 280, Segment Reporting , which governs the way the Company reports information about its operating segments.

Management has organized the Company around its products and services and has three reportable segments: Technical Products and Services (“TP&S”), Electrical and Instrumentation Construction (“E&I”) and American Access Technologies (“AAT”). TP&S develops, manufactures, provides and markets switchgear and variable speed drives. The service component of this segment includes retrofitting equipment upgrades, startups, testing and troubleshooting electrical substations, switchgear, drives and control systems. Equity income from foreign joint ventures and joint venture management related expenses are included in the TP&S segment because their operations are exclusively involved in TP&S activities. The E&I segment installs electrical equipment for the energy, water, industrial, marine and commercial markets. The AAT segment manufactures and markets zone cabling and formed metal products of varying designs.

The following are selected financial details regarding the Company’s reportable segments (in thousands):


	Three Months Ended June 30,										Six Months Ended June 30,
	2012					2011					2012					2011
Revenue:
Technical Products and Services	$	8,647				$	5,384				$	18,470				$	11,784
Electrical and Instrumentation Construction		2,615					4,361					5,607					8,278
American Access Technologies		1,610					1,682					3,227					3,433

	$	12,872				$	11,427				$	27,304				$	23,495

Gross profit:
Technical Products and Services	$	1,587		18	%	$	846		16	%	$	2,957		16	%	$	1,343		11	%
Electrical and Instrumentation Construction		330		13	%		318		7	%		532		9	%		616		7	%
American Access Technologies		255		16	%		342		20	%		456		14	%		744		22	%

	$	2,172		17	%	$	1,506		13	%	$	3,945		14	%	$	2,703		12	%

Income (loss) from domestic operations and net equity income from foreign joint ventures’ operations:
Technical Products and Services	$	1,448		17	%	$	371		7	%	$	2,553		14	%	$	615		5	%
Electrical and Instrumentation Construction		330		13	%		318		7	%		532		9	%		616		7	%
American Access Technologies		(115	)	-7	%		(32	)	-2	%		(303	)	-9	%		(12	)	0	%
Corporate and other unallocated expenses		(1,495	)				(1,937	)				(2,812	)				(3,093	)

Income (loss) from domestic operations		168		1	%		(1,280	)	-11	%		(30	)	0	%		(1,874	)	-8	%

Equity income from BOMAY		1,062					387					1,761					678
Equity income (loss) from MIEFE		11					(112	)				20					(138	)
Equity income (loss) from AAG		(19	)				(14	)				44					(42	)
Foreign operations expenses		(123	)				(117	)				(223	)				(246	)

Net equity income from foreign joint ventures’ operations		931					144					1,602					252

Income (loss) from domestic operations and net equity income from foreign joint ventures’ operations	$	1,099				$	(1,136	)			$	1,572				$	(1,622	)

The Company’s management does not separately review and analyze its assets on a segment basis for TP&S, E&I, and AAT and all assets for the segments are recorded within the corporate segment’s records. Unallocated general and administrative expenses include compensation costs and other expenses that cannot be meaningfully associated with the individual segments. With the exception of equity income from foreign joint ventures’ operations and foreign operations expenses, which are attributable to TP&S, all other costs, expenses and other income have been allocated to their respective segments.

5.	Investments in Foreign Joint Ventures

We have interests in three joint ventures outside of the United States which are accounted for on the equity method:

•

BOMAY Electric Industries Company, Ltd. (“BOMAY”), in which the Company holds a 40% interest, Baoji Oilfield Machinery Co., Ltd. (a subsidiary of China National Petroleum Corporation) holds a 51% interest and AA Energies, Inc., holds a 9% interest;

•

M&I Electric Far East, Ltd. (“MIEFE”), in which the Company holds a 41% interest, MIEFE’s general manager holds a 8% interest and Oakwell Engineering, Ltd., of Singapore, holds a 51% interest and;

•

AETI Alliance Group do Brazil Sistemas E Servicos Em Energia LTDA. (“AAG”), in which the Company holds a 49% interest and Five Stars De Macae Servicos De Petroleo LTDA., of Brazil, holds a 51% interest.

Sales to joint ventures are made on an arms-length basis and intercompany profits, if any, are eliminated in consolidation.

Summary financial information of our foreign joint ventures in U.S. dollars was as follows at June 30, 2012 (unaudited) and December 31, 2011 (in thousands):


	BOMAY				MIEFE				AAG
	2012		2011		2012		2011		2012		2011
Assets:
Total current assets	$	79,281	$	60,817	$	4,624	$	4,459	$	1,430	$	1,604
Total non-current assets		5,064		5,163		121		105		182		49

Total assets	$	84,345	$	65,980	$	4,745	$	4,564	$	1,612	$	1,653

Liabilities and equity:
Total liabilities	$	62,869	$	46,499	$	2,243	$	2,162	$	1,082	$	1,151
Total joint ventures’ equity		21,476		19,481		2,502		2,402		530		502

Total liabilities and equity	$	84,345	$	65,980	$	4,745	$	4,564	$	1,612	$	1,653

The following table summarizes revenues and earnings reported by our foreign joint ventures for the three and six months ended June 30, 2012 and 2011 (unaudited):


	Three Months Ended June 30, (in thousands)
	BOMAY				MIEFE					AAG
	2012		2011		2012		2011			2012			2011
Revenue	$	33,991	$	8,253	$	2,185	$	619		$	1,152		$	451
Earnings	$	2,655	$	969	$	30	$	(230	)	$	(39	)	$	(29	)

	Six Months Ended June 30, (in thousands)
	BOMAY				MIEFE					AAG
	2012		2011		2012		2011			2012			2011
Revenue	$	57,009	$	25,943	$	5,080	$	1,232		$	2,665		$	650
Earnings	$	4,401	$	1,694	$	50	$	(281	)	$	90		$	(85	)

The following is a summary of activity in investment in foreign joint ventures for the six months ended June 30, 2012:


	BOMAY*			MIEFE		AAG			TOTAL
	(in thousands)
Investment in joint ventures:
Balance at December 31, 2011	$	7,913		$	986	$	409		$	9,308
Equity in earnings (loss) in 2012		1,760			21		44			1,825
Dividend distributions in 2012		(1,008	)		—		—			(1,008	)
Foreign currency translation adjustment		95			60		(23	)		132

Investment, end of period	$	8,760		$	1,067	$	430		$	10,257

Components of investment in joint ventures:
Investment in joint ventures:	$	2,033		$	15	$	283		$	2,331
Undistributed earnings		5,592			759		202			6,553
Foreign currency translation		1,135			293		(55	)		1,373

Investments, end of period	$	8,760		$	1,067	$	430		$	10,257

Accumulated statutory reserves in equity method investments of $1.6 million at June 30, 2012 and $1.3 million at December 31, 2011 are included in AETI’s consolidated retained earnings. In accordance with the People’s Republic of China (“PRC”), regulations on enterprises with foreign owners, an enterprise established in the PRC with foreign owners is required to provide for certain statutory reserves, namely: (i) General reserve Fund, (ii) Enterprise Expansion Fund and (iii) Staff Welfare and Bonus Fund, which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A non-wholly owned foreign invested enterprise is permitted to provide for the above allocation at the discretion of its board of directors. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends.

Under the equity method, the Company’s share of the foreign joint ventures’ operations’ earnings or loss is recognized in the condensed consolidated statements of operations as equity income (loss) from foreign joint ventures’ operations. Joint venture income increases the carrying value of the joint venture investment and joint venture losses, as well as dividends received from the joint ventures, reduce the carrying value of the investment. Each reporting period, the Company evaluates the carrying value of these equity method investments as to whether an impairment adjustment may be necessary. In making this evaluation, a variety of quantitative and qualitative factors are considered including national and local economic , political and market conditions, industry trends and prospects, liquidity and capital resources and other pertinent factors. Based on this evaluation for this reporting period, the Company does not believe an impairment adjustment is necessary.

6.	Notes Payable

Revolving Credit Agreement

On August 10 the $10.0 million credit agreement was amended which extended the maturity date to July 1, 2014, modified the financial covenants to a net profitability test of $1 on a trailing six month basis, a 1.0 to 1.0 leverage test of total liabilities to total net worth and eliminated the $6.0 million limit on borrowings if the “adjusted net income” became less than $1.00 for any quarter. The current ratio test remained unchanged. The agreement is collateralized by the Company’s real estate in Houston and Beaumont, Texas, trade accounts receivable, equipment, inventories, and work-in-process, and the Company’s U.S. subsidiaries are guarantors of the borrowings.

Under the agreement, the credit facility’s interest rate is LIBOR plus 3.25% per annum and a commitment fee of 0.3% per annum of the unused portion of the credit limit each quarter. Additionally, the terms of the agreement contain covenants which provide for customary restrictions and limitations and restriction from paying dividends without prior written consent of the bank. On June 30, 2012 the interest rate was 3.48%.

On May1, 2012 the Company and Chase executed a consent and amendment to the credit agreement to allow for the $5M convertible preferred stock transaction as discussed in Note 11. Mandatorily Redeemable Convertible Preferred Stock.

7.	Inventories

Inventories consisted of the following at June 30, 2012 and December 31, 2011 (in thousands):


	June 30, 2012 (unaudited)			December 31, 2011
Raw materials	$	1,680		$	1,665
Work-in-process		2,442			2,703
Finished goods		669			672

		4,791			5,040

Less: Allowance		(39	)		(95	)

Total inventories	$	4,752		$	4,945

8.	Income Taxes

It was determined in the fourth quarter of 2011 that due to the Internal revenue Code’s Section 382 limitations on our ability to utilize the net operating losses carry forwards of approximately $9.8 million generated by American Access Technologies, Inc. prior to the Company’s merger in 2007 and subsequent net operating losses and foreign tax credit carry forwards, a full valuation allowance was warranted in the fourth quarter of 2011. As such, the tax provision on U.S. income generated in 2012 is offset by a reduction of the valuation allowance provided in 2011. The tax provision for 2012 reflects a 34% U.S. tax rate related to the income from the equity in foreign joint ventures’ operations, net of dividends paid in 2012 and dividends earned on 2012 foreign income, for an effective rate of 23% for 2012.

In the three month period ended June 30, 2011, the Company recorded a $220 write down of its deferred tax assets related to the IRS’s Section 382 net operating loss carry forward limitation resulting from an IRS audit of the Company’s December 31, 2008 federal return. After giving effect to the write down of the deferred income taxes of $220, and adjusting for the cumulative effect of the change in the estimated tax rate for fiscal 2011, the effective tax rate for the second quarter 2011 and six months ended June 30, 2011 was 39% and 39%, respectively.

9.	Fair Value of Financial Instruments and Fair Value Measurements

The carrying amounts of cash and cash equivalents, trade accounts receivable and accounts payable approximate fair value as of June 30, 2012 and December 31, 2011 because of the relatively short maturity of these instruments.

The mandatorily redeemable preferred stock and warrants were sold in an arms-length transaction on May 2, 2012. Accordingly, we believe the recorded values reflect current markets (“fair values”) for these instruments at June 30, 2012.

As discussed in Note 5. Investment in Foreign Joint Ventures, the carrying values of these investments are reviewed quarterly to ascertain that they are not impaired.

ASC Subtopic 820-10, Fair Value Measurements and Disclosures , requires us to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.

Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroborated inputs.

Level 3: Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants would price the assets or liabilities.

10.

Mandatorily Redeemable Convertible Preferred Stock

On April 13, 2012, the Company signed a securities purchase agreement (the “Securities Purchase Agreement”) with a private investor for the sale (the “Preferred Stock Financing”) of the Company’s $5,000,000 of Series A Convertible Preferred Stock (1,000,000 Shares) (the “Series A Convertible Preferred Stock”), which are initially convertible into 1,000,000 shares of the Company’s common stock at a conversion price of $5.00 per share, and Common Stock Purchase Warrants exercisable for 325,000 shares of common stock, 125,000 of such warrants at an initial exercise price of $6.00 per share and 200,000 of such warrants at an initial exercise price of $7.00 per share. On May 2, 2012 the Company completed the issuance of the $5,000,000 of Series A Convertible Preferred Stock and the Common Stock Purchase Warrants.

On April 30, 2012, the Company filed an Articles of Amendment to our Articles of Incorporation designating 1,000,000 shares of the Company’s authorized preferred stock as Series A Convertible Preferred Stock. The Company also entered into the Registration Rights Agreement and Investor Rights Agreement with the Investor on May 2, 2012.

The Series A Convertible Preferred Stock rank senior to all other equity instruments of the Company, include the Company’s common stock. The Series A Preferred Stock accrue cumulative dividends at a rate of 6% per annum, whether or not dividends have been declared by the Board of Directors and whether or not there are profits, surplus or other funds available for the payment of such dividends. The Company may pay such dividends in shares of the Company’s common stock based on the then current market price of the common stock. At any time following a material default by the Company, as defined in the Securities Purchase Agreement, or April 30, 2017, the holders of a majority of the outstanding Series A Preferred Stock may require the Company to redeem the Series A Preferred Stock at a redemption price equal to the lessor of (i) the liquidation preference per share (initially $5.00 per share, subject to adjustments for certain future equity transactions defined in the Securities Purchase Agreement) and (ii) the fair market value of the Series A Preferred Stock per share, as determined in good faith by the Company’s Board of Directors. The redemption price, plus any accrued and unpaid dividends, shall be payable in 36 equal monthly installments plus interest at an annual rate of 6% per annum.

On May 1, 2012 the Company and Chase executed a consent and amendment to our revolving credit agreement, whereby Chase as lender agreed to consent to: the Securities Purchase Agreement; the issuance and sale of the Preferred Stock and Warrants; the payment of the preferred dividends required; and the redemption of the Preferred Stock, all subject to the terms and conditions set forth in the agreements and the associated Amended Articles of Incorporation.

The preferred stock and warrants were issued for a combined consideration of $5 million This amount was allocated to the preferred stock and warrants based on their related fair values. The fair value of the warrants was calculated using the Black Scholes-Merton pricing model using the following assumptions:


Number of warrants		125,000			200,000
Exercise price	$	6.00		$	7.00
Expected volatility of underlying stock		74	%		74	%
Risk-free interest rate		1.50	%		1.70	%
Dividend yield		0.00	%		0.00	%
Expected life of warrants		8 years			8 years
Weighted-average fair value of warrants	$	3.17		$	3.07
Expiration date		May 2, 2020			May 2, 2020

Based on these calculations and the actual consideration the warrants were valued at $840 and the preferred stock was valued at $4,160.

The initial values allocated to the warrants represented the discount on the preferred and was recognized as additional paid-in capital. The preferred discount related to the warrants is accreted against common shareholders’ equity (retained earnings) through the scheduled redemption date of the mandatorily redeemable preferred stock. Since the issuance on May 2, 2012, the accretion amounted to $15 in the quarter ended June 30, 2012.

11.

Asset Acquisition

On March 8, 2012, the Company acquired certain technology from Amnor Technologies, Inc. for cash of $100,000 plus 44,000 shares of the Company’s common stock valued at $4.95 per share (the closing price on that date). One fourth of the shares were issued initially with the balance to be issued one third annually on the anniversaries over the subsequent 3 years. The purchase price was valued at $322,000 (including $4,000 of transaction costs) at March 8, 2012 and is recorded as an intangible asset and included in other assets in the condensed consolidated balance sheet at March 31, 2012. This cost is being amortized over it’s estimated useful life of 3 years. Amortization expense of $27,000 and $36,000 was recognized during the three and six months ended June 30, 2012 and is included in general and administrative expenses in the condensed consolidated statements of operations.

AMERICAN ELECTRIC TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (in thousands, except share, per share and percentages)

The following discussion should be read in conjunction with the financial statements and notes thereto included elsewhere in this Form 10-Q and the financial statements in the 2011 Annual Report on Form 10-K filed on March 30, 2012. Historical results and percentage relationships set forth in the condensed consolidated statements of operations and cash flows, including trends that might appear, are not necessarily indicative of future operations or cash flows.

FORWARD-LOOKING STATEMENTS

Except for historical 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 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 2011 Annual Report on Form 10-K filed on March 30, 2012. We urge you to consider that statements that use the terms “believe,” “do not believe,” “anticipate,” “expect,” “plan,” “estimate,” “intend” and similar expressions are intended to identify forward-looking statements. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

BUSINESS

American Electric Technologies, Inc. is a leading global supplier of custom designed power delivery solutions to the energy industry. AETI offers M&I Electric™ power distribution and control products, electrical services, and E&I Construction services, as well as American Access Technologies zone enclosures, and Omega Metals custom fabrication services. South Coast Electric Systems L.L.C. a subsidiary, services U.S. Gulf Coast marine vessel customers.

We report our business in three segments: Technical Products and Services (“TP&S”), Electrical and Instrumentation Construction (“E&I”) and American Access Technologies (“AAT”).

Foreign Joint Ventures

We have interests in three joint ventures outside of the United States which are accounted for on the equity method:

•

M&I Electric Far East, Ltd. (“MIEFE”), in which the Company holds a 41% interest, MIEFE’s general manager holds an 8% interest and, Oakwell Engineering, Ltd., of Singapore, holds a 51% interest, and;

•

AETI Alliance Group do Brazil Sistemas E Servicos Em Energia LTDA. (“AAG”), in which the Company holds a 49% interest and, Five Stars De Macae Servicos De Petroleo LTDA., of Brazil, holds a 51% interest.

Industry Conditions

Our power distribution products which support the oil and gas industry are capital intensive and cyclical in nature. The U.S. shale drilling activity continues to favorably impact the demand for our technical products and services. Our products through our joint ventures in China, Singapore and Brazil continue to experience favorable market conditions related to the energy demands in these countries. Our industrial markets remain weak and the water and wastewater sector continues to be competitive resulting in low margins and, as such, we decided in the first quarter 2012 to exit the water and wastewater construction markets as we complete our existing backlog which is expected to be substantially completed by December 31, 2012.

TP&S

The TP&S segment has three main components: power distribution equipment, power conversion equipment and electrical services.

Our power distribution equipment group designs, manufactures, markets and provides products designed to distribute the flow of electricity and protect electrical equipment such as motors, transformers and cables. The main products offered by this group include low and medium voltage ANSI (“American National Standards Institute”) certified and IEC (“International Electrotechnical Commission”) certified switchgear for generator control and power distribution applications. We also manufacture complimentary equipment including motor control centers (MCCs), bus duct, and the power control rooms that the power distribution equipment is located within for customer projects.

Our power distribution solutions are primarily sold into the marine vessel, drilling, and industrial markets. The Company provides switchgear for power generation applications up to 38,000 volts. We have recently expanded our offerings into the renewable energy marketplace with the introduction of the world’s first switchgear designed for wind farm deployment, which includes our arc-mitigation technology. Arc-mitigation technology enables power system operators to significantly reduce the risk from arc-flash explosions and the resulting downtime and liability exposure.

Our power conversion group provides products that convert AC and DC power into usable power using a variety of technologies. We provide analog (Hill Hays) DC drives, digital SCR drives, AC variable frequency drives (also known as “VFDs”), inverters, converters, programmable logic control (“PLC”) based automation systems, and human machine interface (“HMI”) systems. Our analog DC drives, digital SCR drives and AC VFDs are used in a variety of applications including land and offshore drilling, marine propulsion and pipeline applications. The Company has recently introduced a line of wind converter products that convert the AC power produced by wind turbine generators to DC, then inverts the power back to AC for delivery to the electrical grid. We also offer our ISIS ™ solution, a one MW fully integrated solar farm power station designed to integrate all of the power conversion and power distribution equipment of the solar farm. ISIS™ is the world’s first 1000V, 1MW solar inverter to be tested by TUV Rhineland, a nationally recognized test laboratory, to UL 1741 standards.

Our power distribution and power conversion products are built for application voltages from 480 volts to 40,000 volts and are used in a wide variety of industries. We have the technical expertise to provide these services in compliance with a number of applicable industry standards such as NEMA (“National Electrical Manufacturers Association”), ANSI (“American National Standards Institute”), IEC (“International Electrotechnical Commission”), ABS (“American Bureau of Shipping”), USCG (“United States Coast Guard”), Lloyd’s Register, a provider of marine certification services, and DNV (“Det Norske Veritas”), a leading certifying body/registrar for management systems certification services standards.

Our electrical services group includes both technical services and power services. Technical services include global start-up and service of AETI power conversion systems, electrical equipment retrofits and upgrades. Our power services group provides electrical infrastructure start-up and commissioning, preventative maintenance, and emergency repair services to industrial, marine and renewable projects globally. Our team of trained technicians maintains substations up to 500KV. We also offer in-shop services including refurbishment and repair services for circuit breakers and switchgear.

E&I

The E&I segment provides a full range of electrical and instrumentation construction and installation services to both land and offshore drilling, other heavy commercial and industrial markets, and the renewable energy industry. The segment’s services include new construction as well as electrical and instrumentation turnarounds, upgrades, maintenance, and renovation projects. Applications include installation of switchgear, AC and DC motors, drives, motor controls, lighting systems, and high voltage cable. Marine based contracts include complete electrical system rig-ups, modifications, start-ups and testing for vessels, drilling rigs, and production platforms.

In the first quarter 2012, we decided to complete the existing backlog related to the water and wastewater construction projects and exit this market sector based on its continued weakness.

AAT

The AAT segment manufactures and markets zone cabling enclosures and manufactures formed metal products . The zone cabling product line provides state-of-the-art flexible cabling and wireless solutions for the high-speed communication networks found throughout office buildings, hospitals, schools, industrial complexes and government buildings. Our patented enclosures mount in ceilings, walls, raised floors, and certain modular furniture to facilitate the routing of telecommunications network cabling, fiber optics and wireless solutions in a streamlined, flexible, and cost effective fashion. AAT also operates a precision sheet metal fabrication and assembly operation and provides services such as precision “CNC” (“Computer Numerical Controlled”) punching, laser cutting, bending, assembling, painting, powder coating and silk screening to a diverse client base including engineering, technology and electronics companies, primarily in the Southeast.

The Company has facilities and sales offices in Texas, Mississippi and Florida. We have minority interests in foreign joint ventures which have facilities in Singapore; Xian, China; and Macae, Rio De Janeiro, Brazil.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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 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”.

Inventory Valuation – Inventories are stated at the lower of cost or market, with material being accounted for using the average cost method. Inventory costs for finished goods and work-in-process include direct material, direct labor, production overhead and outside services. TP&S and E&I indirect overhead is apportioned to work-in-process based on direct labor incurred. AAT production overhead, including indirect labor, is allocated to finished goods and work-in-process based on material consumption, which is an estimate that could be subject to change in the near term as additional information is obtained and as our operating environment changes.

Allowance for Obsolete and Slow-Moving Inventory – We regularly review the value of inventory on hand using specific aging categories, and record 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.

Allowance for Doubtful Accounts – The Company maintains an allowance for doubtful accounts for estimated losses resulting from the failure of our 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 financial condition of those specific customers. We also review historical experience with the customer, the general economic environment and the aging of our receivables. We record an allowance to reduce receivables to the amount that we reasonably believe to be collectible. Based on our assessment, we believe our allowance for doubtful accounts is adequate.

Revenue Recognition – The Company reports earnings from fixed-price and modified fixed-price long-term contracts on the percentage-of-completion method. Earnings are accrued based on the ratio of costs incurred to total estimated costs. However, for TP&S, we have determined that labor incurred provides an improved measure of percentage-of-completion. Costs include direct material, direct labor, and job related overhead. Losses expected to be incurred on contracts are charged to operations in the period such losses are determined. A contract is considered complete when all costs except insignificant items have been incurred and the facility has been accepted by the customer. Revenue from non-time and material jobs of a short-term nature (typically less than one month) is recognized on the completed-contract method 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. The asset, “Work-in-process,” which is included in inventories, represents the cost of labor, material, and overhead on jobs accounted for under the completed-contract method. For contracts accounted for under the percentage-of-completion method, the asset, “Costs and estimated earnings in excess of billings on uncompleted contracts,” represents revenue recognized in excess of amounts billed and the liability, “Billings in excess of costs and estimated earnings on uncompleted contracts,” represents billings in excess of revenue recognized.

Foreign Currency Gains and Losses – Foreign currency translations are included as a separate component of comprehensive income. We have determined the local currency of foreign joint ventures to be the functional currency. In accordance with ASC 830, the assets and liabilities of the foreign equity investees, denominated in foreign currency, are translated into United States dollars at

exchange rates in effect at the condensed consolidated balance sheet date and revenue and expenses are translated at the average exchange rate for the period. Related translation adjustments are reported as comprehensive income 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 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. The realizability of 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 – We record 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. We regularly evaluate current information available to us to determine whether such accruals should be adjusted or other disclosures related to contingencies are required. We are a party to a number of legal proceedings in the normal course of our business for which we have made appropriate provisions where we believe an ultimate loss is probable. The ultimate resolution of these matters, individually or in the aggregate, is not likely to have a material impact on the Company’s financial position.

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

Carrying Value of Joint Venture Investments – The Company evaluates the carrying value of equity method investments as to whether an impairment adjustment may be necessary. In making this evaluation, a variety of quantitative and qualitative factors are considered including national and local economic, political and market conditions, industry trends and prospects, liquidity and capital resources and other pertinent factors.

OVERALL RESULTS OF OPERATIONS

The Company’s management does not separately review and analyze its assets on a segment basis for TP&S, E&I, and AAT and all assets for the segments are recorded within the corporate segment’s records. Corporate and other unallocated expenses include compensation costs and other expenses that cannot be meaningfully associated with the individual segments. With the exception of equity income from foreign joint ventures’ operations and foreign operations expenses, which are attributable to TP&S, all other costs, expenses and other income have been allocated to their respective segments.

Sales to foreign joint ventures are made on an arms-length basis and intercompany profits, if any, are eliminated in consolidation. See Footnote 5 in Notes to Condensed Consolidated Financial statements for detailed financial information on the foreign joint ventures.

The following table represents revenue and income (loss) from domestic operations and equity in foreign joint ventures attributable to the business segments for the period indicated (in thousands):


	Three Months Ended June 30,										Six Months Ended June 30,
	2012					2011					2012					2011
Revenue:
Technical Products and Services	$	8,647				$	5,384				$	18,470				$	11,784
Electrical and Instrumentation Construction		2,615					4,361					5,607					8,278
American Access Technologies		1,610					1,682					3,227					3,433

	$	12,872				$	11,427				$	27,304				$	23,495

Gross profit:
Technical Products and Services	$	1,587		18	%	$	846		16	%	$	2,957		16	%	$	1,343		11	%
Electrical and Instrumentation Construction		330		13	%		318		7	%		532		9	%		616		7	%
American Access Technologies		255		16	%		342		20	%		456		14	%		744		22	%

	$	2,172		17	%	$	1,506		13	%	$	3,945		14	%	$	2,703		12	%

Income (loss) from domestic operations and net equity income from foreign joint ventures’ operations:
Technical Products and Services	$	1,448		17	%	$	371		7	%	$	2,553		14	%	$	615		5	%
Electrical and Instrumentation Construction		330		13	%		318		7	%		532		9	%		616		7	%
American Access Technologies		(115	)	-7	%		(32	)	-2	%		(303	)	-9	%		(12	)	0	%
Corporate and other unallocated expenses		(1,495	)				(1,937	)				(2,812	)				(3,093	)

Income (loss) from domestic operations		168		1	%		(1,280	)	-11	%		(30	)	0	%		(1,874	)	-8	%

Equity income from BOMAY		1,062					387					1,761					678
Equity income (loss) from MIEFE		11					(112	)				20					(138	)
Equity income (loss) from AAG		(19	)				(14	)				44					(42	)
Foreign operations expenses		(123	)				(117	)				(223	)				(246	)

Net equity income from foreign joint ventures’ operations		931					144					1,602					252

Income (loss) from domestic operations and net equity income from foreign joint ventures’ operations	$	1,099				$	(1,136	)			$	1,572				$	(1,622	)

Three Months Ended June 30, 2012 Compared to Three Months Ended June 30, 2011

Consolidated net revenue increased $1,445, or 13% to $12,872 for the three months ended June 30, 2012 over the comparable period in 2011. The increase was primarily attributable to the TP&S segment’s net revenue increase of $3,263 offset by the E&I segment’s, revenue declined of $1,746. The decline was primarily due to the Company’s decision in the first quarter 2012 to exit the water/wastewater business.

Consolidated gross profit for the three months ended June 30, 2012, increased $666 to $2,172 compared to gross profit of $1,506 in the prior year period. The increase in gross profit is primarily attributable to the TP&S segment’s net revenue increase of 61%, resulting in an increase in gross profit of $741 for the segment.

The TP&S segment’s improved financial results reflect the increase in the demand for both our power conversion and distribution equipment. The decrease in indirect costs resulted from the Company’s continued cost reduction efforts.

The E&I segment reported net revenue of $2,615 in the second quarter of 2012, a decrease of $1,746 from the second quarter of 2011. The Company’s revenue for the E&I segment will continue to decline due to the decision to exit the water/wastewater business based on the water/wastewater business being non-core to the Company’s products coupled with low project margins.

The AAT segment reported net revenue of $1,610 in the second quarter of 2012, down $72 from the comparable prior year period. Gross profit decreased $87 to $255 from $342 in the prior year period. The decrease in revenue and gross profit is attributable to a shift in demand for one of it’s products. The AAT segment is examining continued cost containment for the remainder of the year and marketing efforts to increase revenue.

Selling and marketing expenses for the quarter ended June 30, 2012 were $639 compared to the prior period quarter ended June 30, 2011 of $614. The increase is related to commissions on the increased revenue.

General and administrative expenses were down for the quarter ended June 30, 2012 over the same period in 2011 by $504. In the second quarter 2011, the Company incurred expenses related to the E&I segment’s legal costs associated with a project in mediation and an additional expense for under accrued audit fees for 2011.

Research and development costs were down from the previous period based on a reduced level of ISIS development as the product development completes.

Net equity income from foreign joint ventures increased in the second quarter ended June 30, 2012 by $787 as compared to the second quarter ended June 30, 2011. The increase resulted from improved performance at BOMAY by $675 and MIEFE by $123. The BOMAY operations in China continue to reflect a strong demand for it’s products.

Consolidated net other expense declined due to the $3.0 million reduction in the revolving credit balance in May 2012 resulting from the $5.0 million convertible preferred stock transaction.

The effective tax expense (benefit) rates for the three month period ended June 30, 2012 and 2011 were 23% and 39%, respectively. It was determined in the fourth quarter of 2011 that due to the Internal revenue Code’s Section 382 limitations on our ability to utilize the net operating losses carry forwards of approximately $9.8 million generated by American Access Technologies, Inc. prior to the Company’s merger in 2007 and subsequent net operating losses and foreign tax credit carry forwards, a full valuation allowance was warranted in the fourth quarter of 2011. As such, the tax provision on U.S. income generated in 2012 is offset by a reduction of the valuation allowance provided in 2011. The tax provision for 2012 reflects a 34% U.S. tax rate related to the income from the equity in foreign joint ventures’ operations, net of dividends paid in 2012 and dividends earned on 2012 foreign income, for an effective rate of 23% for 2012

In the period ended June 30, 2011, the Company recorded a $220 write down of its deferred tax assets related to the IRS’s Section 382 net operating loss carry forward limitation resulting from an IRS audit of the Company’s December 31, 2008 federal return. After giving effect to the write down of the deferred income taxes of $220, and adjusting for the cumulative effect of the change in the estimated tax rate for fiscal 2011, the effective tax rate for the second quarter 2011 was 39%.

Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2011.

Consolidated net revenue increased $3,809, or 16%, to $27,304 for the six months ended June 30, 2012 over the comparable period in 2011. The TP&S segment recorded a $6,686 increase in net revenue, or 57%. This improvement was offset by a decline in the E&I segment which recorded a $2,671 decrease in net revenue.

Consolidated gross profit increased $1,242 to $3,945, or 14% of net revenue as compared to 12% gross profit percentage for the prior six month period. This increase was mainly attributable to the TP&S segment’s increased revenue and improvement in direct margin. This performance reflects the improving conditions in the oil & gas markets.

The TP&S segment’s revenue of $18,470 generated gross profit of $2,957 for the first six months in June 2012 compared to revenue of $11,784 and gross profit of $1,343 for the prior six month period ended June 30, 2011. This segment’s financial improvement reflects the increase in the oil and gas market.

The E&I segment reported net revenue of $5,607 for the six months ended June 30, 2012, a decrease of $2,671 over the six months ended June 30, 2011. Gross profit for the E&I segment during the six months ended June 30, 2012 was $532, compared to $616 in the corresponding prior year period. Gross profit as a percentage of net revenue increased to 9% from 7% in the comparable prior period, however the Company’s revenue for the E&I segment will continue to decline due to the decision to exit the water/wastewater business based on the water/wastewater business being non-core to the Company’s products coupled with low project margins.

The AAT segment reported revenue of $3,227 for the six months ended June 30, 2012, down $206 from the comparable prior year period. Gross profit declined by $288 driven substantially by the decrease in revenue from a shift in demand for one of it’s products.

The AAT segment is examining continued cost containment for the remainder of the year and marketing efforts to increase revenue.

Selling and marketing expenses for the six months ended June 30, 2012 were $1,360 compared to the prior six month period ended June 30, 2011 of $1,225. The increase in expenses is primarily attributed to commissions on the increased revenue.

General and administrative expenses were down for the six months ended June 30, 2012 over the same period in 2011 by $336. In the second quarter 2011, the Company incurred expenses related to the E&I segment’s legal costs associated with a project in mediation and an additional expense for under accrued audit fees for 2011.

Research and development costs for the six months ended June 30, 2012 were down to $35 from $436 in the previous period based on a reduced level of ISIS development as the product development completes.

Net equity income from foreign joint ventures increased for the six months ended June 30, 2012 by $1,350 as compared to the prior six month period ended June 30, 2011.

The increase resulted from improved performance at BOMAY by $1083, MIEFE by $158 and AAG by $86. The BOMAY operations in China continue to reflect a strong demand for it’s products.

Consolidated net other expense for the six month period was $88, a decrease of $14 from the comparable prior year due to the $3.0 million reduction in the revolving credit balance in May 2012 resulting from the $5.0 million convertible preferred stock transaction.

The effective tax expense (benefit) rates for the six month period ended June 30, 2012 and 2011 were 23% and 39%, respectively. In the period ended June 30, 2011, the Company recorded a $220 write down of its deferred tax assets related to the IRS’s Section 382 net operating loss carry forward limitation resulting from an IRS audit of the Company’s December 31, 2008 federal return.

BACKLOG

The Company’s backlog as of June 30, 2012 was $15.7 million compared to $16.1 million at March 31, 2012. The backlog for the TP&S segment was $13.7 million as of June 30, 2012, an increase of approximately $2.5 million as compared to the backlog at March 31, 2012. The backlog for the E&I water waste/water business of $2.0 million reflects the remaining projects in process and will continue to decline as the Company decided to exit this business in the first quarter 2012. Approximately 60% of this backlog is expected to be realized as revenue during the remainder of the fiscal year.

LIQUIDITY AND CAPITAL RESOURCES

Notes Payable / Revolving Credit Agreement

The Company entered into a credit agreement with JP Morgan Chase Bank, N.A. (“Chase”) in October 2007. At June 30, 2012 there was $2.0 million and at December 31, 2011 there was $5.0 million of borrowings outstanding. There were additional borrowing capacity of $5.1 million and $3.7 million at June 30, 2012 and December 31, 2011, respectively. On August 10, 2012 the $10.0 million credit agreement was amended which extended the maturity date to July 1, 2014, modified the financial covenants to a net profitability test of $1 on a trailing six month basis, a 1.0 to 1.0 leverage test of total liabilities to total net worth and eliminated the $6.0 million limit on borrowings if the “adjusted net income” became less than $1.00 for any quarter. The current ratio test remained unchanged. The agreement is collateralized by the Company’s real estate in Houston and Beaumont, Texas, trade accounts receivable, equipment, inventories, and work-in-process, and the Company’s U.S. subsidiaries are guarantors of the borrowings.

On May 1, 2012, the Company received an amendment from Chase consenting to the payment of the preferred stock dividends and other terms as discussed in the Notes to Condensed Consolidated Financial Statements as Note 10. Mandatorily Redeemable Convertible Preferred Stock.

Operating Activities

During the six months ended June 30, 2012, the Company used cash flows from operations of $2,091 as compared to a use of cash from operation of $548 for the same period in 2011. The reduction in cash flow for the 2012 period was primarily due to a decline in accounts payable of $2,818.

Investing Activities

During the six months ended June 30, 2012, the Company generated $520 in cash for investing activities compared to $850 for the comparable period in 2011. The Company received cash dividends from the BOMAY of $907 and $1,052 in June 2012 and June 2011, respectively. In the first quarter 2012, the Company acquired the net assets of Amnor Technology for cash of $104 plus 44,000 shares of our common stock.

Financing Activities

During the six months ended June 30, 2012, the Company generated $1,767 in cash from financing activities as compared $890 for the comparable period in 2011 The main source of cash in 2012 was from the issuance of the $5.0 million convertible preferred stock transaction. Subsequently, the Company paid $3,000 down on the revolving credit agreement.

The Company believes its existing cash, working capital and unused credit facility combined with operating earnings will be sufficient to meet its working capital needs for the next twelve months. The Company continues to review growth opportunities and depending on the cash needs may raise cash in the form of debt, equity, or a combination of both.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (in thousands)

Interest Rates

Our market risk sensitive items do not subject us to material risk exposures. Our revolving credit facility remains available through July 1, 2014. At June 30, 2012, the Company had $2,000 of variable-rate debt outstanding. At this borrowing level, a hypothetical 10 percent increase in interest rates would have had an insignificant, unfavorable impact on the Company’s pre-tax earnings and cash flows. The primary interest rate exposure on floating-rate debt is based on the 30 day LIBOR rate (0.23% at June 30, 2012) plus 3.25% per year. The agreement is collateralized by real estate, trade accounts receivable, equipment, inventory and work-in-process, and guaranteed by our operating subsidiaries.

Foreign Currency Transaction Risk

AETI maintains equity method investments in its Singapore, Chinese and Brazilian joint ventures, MIEFE, BOMAY, and AAG, respectively. The functional currencies of the joint ventures are the Singapore dollar, the Chinese Yuan and the Brazilian Real, respectively. 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 is recorded as accumulated other comprehensive income in AETI’s condensed consolidated balance sheet. In the current period this item increased from $849 at December 31, 2011 to $941 at June 30, 2012 due principally to the weakness of the United States Dollar against the Chinese Yuan. Each of the BOMAY investors may be required to guarantee the bank loans of BOMAY in proportion to their investment, and at this time, no guarantees have been provided by AETI.

Other than the aforementioned items, we do not believe we are exposed to foreign currency exchange risk because all of our net revenue and purchases are denominated in United States dollars.

Commodity Price Risk

We are subject to market risk from fluctuating market prices of certain raw materials. While such materials are typically available from numerous suppliers, commodity raw materials are subject to price fluctuations. We endeavor to recoup these price increases from our customers on an individual contract basis to avoid operating margin erosion. Although historically we have not entered into any contracts to hedge commodity risk, we may do so in the future. Commodity price changes can have a material impact on our prospective earnings and cash flows.

ITEM 4. CONTROLS AND PROCEDURES

An evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of June 30, 2012.

There were no changes in our internal controls over financial reporting that occurred during the quarter ended June 30, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

There have been no material changes during the period ended June 30, 2012 in the risk factors as set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2011.

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

Reference is hereby made to Note 10 to the Financial Statements herein for a description of the Preferred Stock Financing closed in May 2012.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) Index to Exhibits


Exhibit No.		Exhibit Description

3.1		Articles of Amendment to Registrant’s Articles of Incorporation filed April 30, 2012. (Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K April 4, 2012)

4.1		Warrant to purchase 125,000 shares of Registrant’s common stock dated May 2, 2012.

4.2		Warrant to purchase 200,000 shares of Registrant’s common stock dated May 2, 2012.

4.3		Investors Rights Agreement between Registrant and JCH Crenshaw Holdings, LLC dated May 2, 20 12

4.4		Registration Rights Agreement between Registrant and JCH Crenshaw Holdings, LLC dated May 2, 2012.

10.1		Securities Purchase Agreement between Registrant and JCH Crenshaw Holdings, LLC dated April 13, 2012. (Incorporated by reference to Registrant’s Current Report on Form 8-K filed April 19, 2012)

10.2		Consent and Eighth Amendment to Loan Agreement dated April 30, 2012.

10.3		Ninth Amendment to Loan Agreement dated August 10, 2012.

31.1		Rule 13a-14(a) / 15d -14(a) Certification of Principal Executive Officer.

31.2		Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer.

32.1		Section 1350 Certifications of Principal Executive Officer and Principal Financial Officer.

SIGNATURES

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

Date: August 14, 2012


AMERICAN ELECTRIC TECHNOLOGIES, INC.

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

By:		/s/ Frances Powell Hawes
		Frances Powell Hawes
		Senior Vice President and Chief Financial Officer (Principal Financial Officer)

Exhibit 4.1

THE WARRANTS REPRESENTED HEREBY AND THE SHARES OF COMMON STOCK ISSUABLE UPON ANY EXERCISE HEREOF WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THE WARRANTS REPRESENTED HEREBY AND THE COMMON STOCK ISSUABLE UPON ANY EXERCISE HEREOF MAY NOT BE SOLD OR OTHERWISE TRANSFERRED BY ANY PERSON, INCLUDING A PLEDGEE, UNLESS EITHER (1) A REGISTRATION STATEMENT WITH RESPECT THERETO SHALL BE EFFECTIVE UNDER THE SECURITIES ACT, OR (2) THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE.


May 2, 2012		Series A Warrant No. 2012-1

AMERICAN ELECTRIC TECHNOLOGIES, INC.

WARRANT TO PURCHASE SHARES OF COMMON STOCK

For value received, AMERICAN ELECTRIC TECHNOLOGIES, INC., a Florida corporation (the “ Company ”), hereby certifies that JCH Crenshaw Holdings, LLC, a Texas limited liability company, or its transferees, successors or assigns (each person or entity holding all or part of this Warrant being referred to as a “ Holder ”), is the registered holder of Series A Warrants (the “ Warrants ”) to subscribe for and purchase One Hundred Twenty-Five Thousand (125,000) shares (as may be adjusted as provided herein, the “ Warrant Shares ”) of the fully paid and nonassessable Common Stock (as defined below), at a purchase price per share initially equal to $6.00 and subject to adjustment as provided herein (the “ Warrant Price ”) on or before, 5:00 P.M., Eastern Time, on May 2, 2020 (the “ Expiration Time ”), subject to the provisions and upon the terms and conditions hereinafter set forth. As used in this Warrant, the term “ Business Day ” means any day other than a Saturday or Sunday on which commercial banks located in New York, New York are open for the general transaction of business.

Section 1. Methods of Exercise; Issuance of New Warrant .

(a) Subject to the provisions hereof, the Holder may exercise this Warrant at any time prior to the Expiration Time, in whole or in part and from time to time, by the surrender of this Warrant at the principal office of the Company, or such other office or agency of the Company as it may reasonably designate by written notice to the Holder, during normal business hours on any Business Day, with (i) the Notice of Exercise – Payment in Cash attached hereto as Appendix A duly executed and the payment by the Holder by cash, certified check payable to the Company or wire transfer of immediately available funds to an account designated to the exercising Holder by the Company of an amount equal to the then applicable Warrant Price multiplied by the number of Warrant Shares then being purchased, or (ii) in the event of a cashless exercise pursuant to Section 1(b) below, with the Notice of Exercise – Net Issuance attached hereto as Appendix B duly executed and completed. Effective as of the close of business on the date on which the Holder shall have satisfied in full the Holder’s obligations set forth herein regarding an exercise of this Warrant (the “ Exercise Date ”) ( provided such date is prior to the Expiration Time), the Holder (or such other person or persons as directed by the Holder) shall be treated for all purposes as the holder of record of the number of Warrant Shares receivable upon such exercise.

(b) In addition to and without limiting the rights of the Holder hereof under the terms of this Warrant, the Holder may elect to receive, without the payment by the Holder of the Warrant Price, Warrant Shares equal to the value of this Warrant or any portion hereof by the surrender of this Warrant (or such portion of this Warrant being so exercised) together with the Notice of Exercise – Net Issuance attached hereto as Appendix B duly executed and completed. Thereupon, the Company shall issue to the Holder such number of Warrant Shares, as is computed using the following formula:

X = Y(A-B)

where

X = the number of shares of Common Stock to be issued to the Holder (or such other person or persons as directed by the Holder) upon such exercise of the rights under this Section 1(b).

Y = the total number of shares of Common Stock covered by this Warrant which the Holder has surrendered for cashless exercise (determined as if the Warrant Price were being paid in cash).

A = the Fair Market Value (as defined below) of one share of Common Stock on the date that the Holder delivers the Notice of Exercise – Net Issuance to the Company as provided herein.

B = the Warrant Price in effect under this Warrant on the date that the Holder delivers the Notice of Exercise – Net Issuance to the Company as provided herein.

The “ Fair Market Value ” of one share of Common Stock as of a particular date (the “ Valuation Date ”) shall mean the closing sale price of one share of Common Stock or, if no closing sale price is reported, the last reported sale price of one share of Common Stock on the last trading day prior to the Valuation Date, as reported on the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or the New York Stock Exchange (an “ Approved Market ”). If the Common Stock is not then traded on an Approved Market, the “Fair Market Value” of one share of Common Stock as of the Valuation Date shall mean the closing sale price of one share of Common Stock or, if no closing sale price is reported, the last reported sale price of one share of Common Stock, on the last trading day prior to the Valuation Date as reported on the principal U.S. national or regional securities exchange on which the Common Stock is then listed or quoted. If the Common Stock is not then traded on an Approved Market or listed or quoted on a U.S. national or regional securities exchange, the “Fair Market Value” of one share of Common Stock as of the Valuation Date shall mean the last quoted bid price for one share of Common Stock on the last trading day prior to the Valuation Date as reported in the over-the-counter markets. If the Common Stock is not then traded on an Approved Market or listed or quoted on a U.S. national or regional securities exchange and the bid price on the over-the-counter markets is not available, the “Fair Market Value” of one share of Common Stock as of the Valuation Date shall be determined in good faith by the Board of

Directors of the Company (the “ Board ”). The Board shall respond promptly in writing to an inquiry by the Holder prior to the exercise hereunder as to the Fair Market Value of a share of Common Stock. Such determination shall be binding on the Holder unless the Holder objects thereto in writing within 10 Business Days after receipt of such writing. In the event the Company and the Holder cannot agree on the Fair Market Value per share within 10 Business Days after the date of the Holder’s objection, the Fair Market Value per share of Common Stock shall be determined by a disinterested appraiser (which may be a national or regional investment banking firm or national accounting firm) selected by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company. Any determination of Fair Market Value by a disinterested appraiser shall be made within 30 days after the date of selection. A “trading day” is a day during which the trading of securities generally occurs on the Approved Market on which the Common Stock is then listed or, if the Common Stock is not then listed on an Approved Market, on the principal U.S. national or regional securities exchange on which the Common Stock is then listed or quoted, or if the Common Stock is not then listed or quoted on a U.S. national or regional securities exchange, on the over-the-counter market on which the Common Stock is then quoted.

(c) In the event of any exercise of the rights represented by this Warrant, within three Business Days after the Exercise Date at the Company’s expense, the Company shall deliver to the Holder (or such other person or persons as directed by the Holder) (i) certificate(s) for the whole number of shares of Common Stock so purchased, in such name or names as the Holder may designate; (ii) unless this Warrant has been fully exercised, a new Warrant representing the whole number of Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised in such name or names as the Holder shall designate; and (iii) payment for any fractional shares in accordance with Section 6.

Section 2. Reservation of Shares; Stock Fully Paid; Listing .

(a) The Company shall keep reserved and available a sufficient number of shares of the authorized and unissued shares of Common Stock, free from all taxes, liens, charges and security interests, to provide for the exercise of the rights of purchase represented by this Warrant in compliance with its terms. The transfer agent for the Common Stock (the “ Transfer Agent ”) and every subsequent transfer agent for any shares of the Company’s capital stock issuable upon the exercise of this Warrant will be irrevocably authorized and directed at all times to reserve such number of authorized shares as shall be required for such purpose. The Company will keep a copy of this Warrant on file with the Transfer Agent and with every subsequent transfer agent for any shares of the Company’s capital stock issuable upon the exercise of this Warrant. The Company shall (i) instruct such Transfer Agent to make the appropriate book entries and (ii) requisition from time to time from such Transfer Agent the stock certificates, if any, required to honor outstanding Warrants upon exercise thereof, in each case in accordance with the terms of this Warrant. The Company will furnish such Transfer Agent a copy of all notices of adjustments and certificates related thereto transmitted to each Holder pursuant to Section 3(k) hereof.

(b) The Company covenants that all Warrant Shares which may be issued upon exercise of this Warrant will, upon issuance, be duly and validly authorized and issued, fully paid, nonassessable, free of preemptive rights and free from all taxes, liens, charges and

security interests with respect to the issuance thereof. The Company will take no action to increase the par value of the Common Stock to an amount in excess of the Warrant Price, and the Company will not enter into any agreements inconsistent with the rights of the Holder hereunder. The Company will use its reasonable best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations hereunder.

(c) The Company will from time to time use commercially reasonable efforts to ensure that the Warrant Shares, immediately upon their issuance upon the exercise of Warrants, will be listed or authorized for quotation on the principal securities exchange or quotation system within the United States of America, if any, on which the Common Stock is then listed.

Section 3. Adjustments and Distributions . The number and kind of securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows:

(a) If the Company (i) pays a dividend or otherwise distributes to holders of its Common Stock, as such, shares of its capital stock (whether Common Stock or capital stock of any other class), (ii) subdivides its outstanding shares of Common Stock into a greater number of shares of Common Stock, (iii) combines its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issues any shares of its capital stock in a reclassification of its outstanding shares of Common Stock (including any such reclassification in connection with a consolidation, merger or other business combination transaction in which the Company is the continuing or surviving corporation), then the number and kind of securities purchasable upon exercise of this Warrant immediately prior thereto will be adjusted so that the Holder thereof will be entitled to receive (A) in the case of a dividend or distribution, the sum of (1) the number of Warrant Shares that, if this Warrant had been exercised immediately prior to such adjustment, such Holder would have received upon such exercise and (2) the number and kind of additional shares of capital stock that such Holder would have been entitled to receive as a result of such dividend or distribution by virtue of its ownership of such Warrant Shares, (B) in the case of a subdivision or combination, the number of Warrant Shares that, if this Warrant had been exercised immediately prior to such adjustment, such Holder would have received upon such exercise, adjusted to give effect to such subdivision or combination as if such Warrant Shares had been subject thereto, or (C) in the case of an issuance in a reclassification, the sum of (1) the number of Warrant Shares that, if this Warrant had been exercised immediately prior to such adjustment, such Holder would have received upon such exercise and retained after giving effect to such reclassification as if such Warrants Shares had been subject thereto and (2) the number and kind of additional shares of capital stock that such Holder would have been entitled to receive as a result of such reclassification as if such Warrant Shares had been subject thereto. An adjustment made pursuant to this Section 3(a), in the case of a dividend or distribution, will be made whenever such dividend or distribution is made and, at such time, will become effective retroactive to the time that is immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and, in the case of a subdivision, combination or reclassification, will become effective immediately after the effective date of such subdivision, combination or reclassification.

(b) If the Company issues rights, options or warrants to holders of the outstanding shares of Common Stock, as such, entitling the holders of such rights, options or warrants to subscribe for or purchase shares of Common Stock at a price per share that is lower on the record date mentioned below than the Conversion Price (as defined below) per share of Series A Convertible Preferred Stock, par value $0.001 per share (the “ Series A Convertible Preferred Stock ”), of the Company as of such record date, then the number of Warrant Shares thereafter purchasable upon the exercise of this Warrant will be adjusted to the number that results from multiplying the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior to such adjustment by a fraction (not to be less than one), the numerator of which will be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock offered by such rights, options or warrants for subscription or purchase and the denominator of which will be the number of shares of Common Stock outstanding on such record date plus the number of shares of Common Stock which the aggregate subscription or purchase price of the total number of shares of Common Stock so offered would purchase at the Conversion Price per share of Series A Convertible Preferred Stock on such record date. Such adjustment will be made whenever such rights, options or warrants are issued and, at such time, will become effective retroactive to the time that is immediately after the record date for the determination of shareholders entitled to receive such rights, options or warrants. In case such subscription or purchase price may be paid in a consideration part or all of which is in a form other than cash, the fair value of such consideration will be as determined by the Board, whose determination will be conclusive if based on the financial advice of a U.S. national or regional investment banking firm or national accounting firm. Except as provided in Section 3(f), no further adjustments of the number of Warrant Shares will be made upon the actual issuance of shares of Common Stock upon exercise of such rights, options or warrants. “ Conversion Price ” means the Conversion Price as determined under the Articles of Incorporation of the Company, as amended, restated or supplemented the “ Articles of Incorporation ”); provided , however , that if shares of Series A Convertible Preferred Stock are no longer outstanding at the time of the occurrence of any event that would have required adjustment to such Conversion Price had the shares of Series A Preferred Stock been then outstanding, then “Conversion Price” means the Conversion Price per share of Series A Convertible Preferred Stock that would have been in effect had shares of the Series A Convertible Preferred Stock been outstanding at all times since the initial issuance thereof through the date of the occurrence of such event and all adjustments had been made to the Conversion Price pursuant to the Articles of Incorporation through the date of the occurrence of such event.

(c) If the Company issues shares of Common Stock, securities convertible into or exchangeable for shares of Common Stock or rights, options or warrants entitling the holders of such rights, options or warrants to subscribe for or purchase shares of Common Stock (excluding shares of Common Stock, convertible or exchangeable securities or rights, options or warrants issued in any of the transactions described in Section 3(a) or Section 3(b)) for a purchase price per share of such Common Stock, for a conversion or exchange price per share of Common Stock initially deliverable upon conversion or exchange of such securities, or for a subscription or purchase price per share of Common Stock initially deliverable upon exercise of such rights, options or warrants, that is less than the Conversion Price per share of Series A Convertible Preferred Stock on the date the purchase, conversion, exchange or subscription price

of such additional shares of Common Stock are first fixed, then the number of Warrant Shares thereafter purchasable upon the exercise of this Warrant will be adjusted to the number that results from multiplying the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior to such adjustment by a fraction (not to be less than one), the numerator of which will be the number of shares of Common Stock outstanding on such date plus the number of additional shares of Common Stock so issued or issuable upon such conversion, exchange or exercise, and the denominator of which will be the number of shares of Common Stock outstanding on such date plus the number of shares of Common Stock which the aggregate purchase, conversion, exchange or subscription price received or receivable by the Company for such additional shares of Common Stock would purchase at the Conversion Price per share of Series A Convertible Preferred Stock on such date prior to any adjustment for such event. Such adjustment will be made and become effective immediately after such shares of Common Stock or convertible or exchangeable securities are issued. In case such purchase, conversion, exchange or subscription price may be paid in a consideration part or all of which is in a form other than cash, the fair value of such consideration will be as determined by the Board, whose determination will be conclusive if based on the financial advice of a U.S. national or regional investment banking firm or national accounting firm. Except as provided in Section 3(f), no further adjustment will be made upon the actual issue of shares of Common Stock upon conversion or exchange of such securities convertible into or exchangeable for shares of Common Stock or upon exercise of rights, options or warrants entitling the holders of such rights, options or warrants to subscribe for or purchase shares of Common Stock.

(d) Whenever the number of Warrant Shares purchasable upon the exercise of this Warrant is adjusted as herein provided, the Warrant Price will be adjusted to the Conversion Price per share of Series A Convertible Preferred Stock as of such date plus $1.00. No adjustment to the Warrant Price pursuant to this Section 3 shall have the effect of increasing the Warrant Price above the Warrant Price in effect immediately prior to such adjustment.

(e) The term (“ Common Stock ”) means (i) the class of shares designated as the Common Stock of the Company as of the date hereof, (ii) all shares of any class or classes (however designated) of the Company, now or hereafter authorized, the holders of which have the right, without limitation as to amount, either to all or to a part of the balance of current dividends and liquidating dividends after the payment of dividends and distributions on any shares entitled to preference, and the holders of which are ordinarily entitled to vote generally in the election of directors of the Company, or (iii) any other class of shares resulting from successive changes or reclassifications of such shares consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. In the event that at any time, as a result of an adjustment made pursuant to Section 3(a), the Warrants become exercisable to purchase Warrant Shares other than shares of Common Stock, thereafter the number of such other shares so purchasable upon exercise of this Warrant and the Warrant Price payable in respect of such other shares upon the exercise of this Warrant will be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Warrant Shares and the Warrant Price contained in this Section 3.

(f) Upon the expiration of any rights, options, warrants or conversion or exchange privileges for which an adjustment has been made, if none thereof have been exercised, the Warrant Price and the number of Warrant Shares purchasable upon the exercise of this

Warrant will, upon such expiration, be readjusted and will thereafter each be such as it would have been had the original adjustment not been required; provided , however , that no such readjustment will have the effect of increasing the Warrant Price or decreasing the number of Warrant Shares purchasable upon the exercise of this Warrant by an amount in excess of the amount of the adjustment initially made in respect of the issuance, sale, or grant of such rights, options, warrants or conversion or exchange privileges.

(g) If any consolidation or merger of the Company with another entity in which the Company is not the survivor, or sale, transfer or other disposition of all or substantially all of the Company’s assets to another entity, shall be effected, then, as a condition of such consolidation, merger, sale, transfer or other disposition, lawful and adequate provision shall be made whereby the Holder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of this Warrant, such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of this Warrant, had such consolidation, merger, sale, transfer or other disposition not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of the Holder to the end that the provisions hereof (including, without limitation, provision for adjustment of the Warrant Price and of the number of Warrant Shares) shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or properties thereafter deliverable upon the exercise thereof. The Company shall not effect any such consolidation, merger, sale, transfer or other disposition unless prior to or simultaneously with the consummation thereof the successor entity (if other than the Company) resulting from such consolidation or merger, or the entity purchasing or otherwise acquiring such assets or other appropriate entity shall assume the obligation to deliver to the Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase, and the other obligations under this Warrant. The provisions of this Section 3(g) shall similarly apply to successive consolidations, mergers, sales, transfers or other dispositions.

(h) In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall deliver or cause to be delivered the stock, securities and assets receivable by the Holder after the effective date of the dissolution pursuant to this Section 3 to the Holder.

(i) The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against dilution or other impairment.

(j) All calculations with respect to the number of Warrant Shares will be made to the nearest one-thousandth of a share and all calculations with respect to the Warrant Price will be to the nearest whole cent. If the Company distributed to holders of its Common Stock, as such, securities of another person, evidences of indebtedness issued by the Company or

any other person, assets (excluding cash dividends) of the Company or any other person, or any rights, options or warrants to purchase any of the foregoing (excluding dividends in Section 3(b)), then the Company shall issue or distribute to each Holder the securities, evidences of indebtedness, assets, rights, options or warrants that such Holder would have been entitled to receive had the Warrants been exercised prior to the happening of such event or the record date with respect thereto. No adjustment in the number of Warrant Shares purchasable upon the exercise of a Warrant will be made on account of (i) any issuance of shares of Common Stock upon the exercise of options, rights or warrants or upon the conversion or exchange of convertible or exchangeable securities, outstanding as of the date hereof, (ii) any issuance of shares of Common Stock, or of options, rights or warrants, or of other securities, pursuant to a share purchase rights plan or any similar plan adopted by the Board, (iii) any issuance of shares of Common Stock, or of options, rights or warrants to purchase, or securities convertible into or exchangeable for, shares of Common Stock, in accordance with any plan for the benefit of the employees or directors of the Company existing as of the date hereof or any other plan hereafter adopted by the Board for the benefit of the employees or directors of the Company or any of its subsidiaries, and (iv) any issuance of shares of Common Stock in connection with a Company-sponsored plan for reinvestment of dividends or interest.

(k) Within three Business Days after each adjustment pursuant to this Section 3, the Company shall deliver a certificate signed by its chief financial officer or executive officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Warrant Price and number of Warrant Shares purchasable hereunder after giving effect to such adjustment.

Section 4. Transfer Taxes . The Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant; provided , however , that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates for Warrant Shares in a name other than that of the registered holder of this Warrant, and in such case, the Company shall not be required to issue or deliver any certificate for Warrant Shares or any Warrant until the person requesting the same has paid to the Company the amount of such tax or has established to the Company’s reasonable satisfaction that such tax has been paid.

Section 5. Mutilated or Missing Warrants . In case this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and substitution for and upon cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant mutilated, lost, stolen or destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of the Warrant, and with respect to a mutilated, lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto, if requested by the Company.

Section 6. Fractional Shares . No fractional shares of Common Stock shall be issued in connection with any exercise hereunder, and in lieu of any such fractional shares, the Company shall make a cash payment therefor to the Holder (or such other person or persons as directed by the Holder) based on the Fair Market Value of a share of Common Stock on the date of exercise of this Warrant.

Section 7. Compliance with Securities Act and Legends . The Holder, by acceptance hereof, agrees that this Warrant and the Warrant Shares are being acquired for investment. All shares of Common Stock issued upon exercise of this Warrant (unless registered under the Securities Act of 1933, as amended, or transferable without registration pursuant to the terms of such act or the rules and regulations promulgated thereunder) shall be stamped or imprinted with a legend as follows:

THIS SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY OTHER SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT COVERING THESE SECURITIES UNDER THE ACT AND ANY OTHER APPLICABLE SECURITIES LAWS OR (2) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

Section 8. Rights as Stockholders; Information . Except as expressly provided in this Warrant, no Holder, as such, shall be entitled to vote or receive dividends or be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a shareholder of the Company or any right to vote for the election of the directors or upon any matter submitted to shareholders at any meeting thereof, or to receive notice of meetings, until this Warrant shall have been exercised and the Warrant Shares purchasable upon the exercise hereof shall have become deliverable, as provided herein; provided , however , that if, at any time prior to the Expiration Time any of the following events occur:

(a) The Company declares any dividend payable in any securities upon its shares of Common Stock or makes any distribution (other than a regular cash dividend or cash distributions payable out of surplus or net profits legally available therefor) to the holders of its shares of Common Stock;

(b) The Company offers to the holders of its Common Stock any shares of capital stock of the Company or any Subsidiary or securities convertible into or exchangeable for shares of capital stock of the Company or any Subsidiary or any option, right or warrant to subscribe for or purchase any thereof;

(c) The Company distributes to the holders of its Common Stock evidences of indebtedness or assets of the Company or any Subsidiary;

(d) Any reclassification of the Common Stock, any consolidation of the Company with or merger of the Company into another corporation, any sale, transfer or lease to another corporation of all or substantially all the property of the Company, or any proposal of the Company to effect any of the foregoing transactions that has been publicly announced by the Company; or

(e) Any proposal by the Company to effect a dissolution, liquidation or winding up of the Company that has been publicly announced by the Company;

then in any one or more of such events the Company will give notice of such event to the Holder, such giving of notice to be completed at least 10 calendar days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such dividend, distribution or subscription rights, or for the determination of shareholders entitled to vote on such proposed reclassification, consolidation, merger, sale, transfer or lease, dissolution, liquidation or winding up; provided , however , that no such notice will be required in respect of any of the matters referred to in the last sentence of Section 3(j) unless such matter causes an adjustment of the Conversion Price of the Series A Convertible Preferred Stock of the Company. Such notice will specify such record date or the date of closing the transfer books, as the case may be, for such event.

Section 9. Issuance Limitation . Notwithstanding anything to the contrary contained herein, until the Company obtains the requisite shareholder approval (the “ Approval ”) under NASDAQ Corporate Governance Rule 5635 (the “ Issuance Limitation ”), under no circumstances will the number of shares of Common Stock issued upon any exercise of this Warrant, when aggregated with the number of shares of Common Stock, if any, previously issued upon conversion of the Series A Convertible Preferred Stock, upon prior exercise of this Warrant and upon the exercise of any other warrant issued pursuant to the Securities Purchase Agreement between the Company and JCH Crenshaw Holdings, LLC, dated as of April 13, 2012, exceed 19.99% of the number of shares of Common Stock outstanding immediately prior to the issuance of this Warrant (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction). Immediately after the Approval is obtained, the Issuance Limitation under this Section 9 shall no longer apply. At any time that the Issuance Limitation applies, the number of shares of Common Stock for which this Warrant may be exercised shall be limited to the maximum number of shares of Common Stock that would not require the Approval to have been obtained. The Company shall use its commercially reasonable efforts to obtain the Approval as soon as reasonably practicable after the issuance of this Warrant.

Section 10. Modification and Waiver . This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the Company and the then current Holder, and such change, waiver, discharge or termination shall be binding on all future Holders.

Section 11. Notices . Any notices or other communications required or permitted hereunder shall be in writing and be deemed to have been given if mailed, three Business Days after being deposited in the United States mail, postage prepaid and registered or certified, to the Holder at its address as shown on the books of the Company or to the Company at the address indicated therefor on the signature page of this Warrant. Any party hereto may change its address for purposes of this Section 10 by giving the other party written notice of the new address and it is the obligation of any then current Holder of this Warrant to advise the Company of any changes in its address.

Section 12. Descriptive Headings . The descriptive headings contained in this Warrant are inserted for convenience only and do not constitute a part of this Warrant.

Section 13. Governing Law . The validity, interpretation and performance of this Warrant shall be governed by, and construed in accordance with, the laws of the State of Texas applicable to contracts made and to be performed entirely within such State, regardless of the law that might be applied under principles of conflicts of law.

Section 14. Jurisdiction and Venue . The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of the State of Texas and to the jurisdiction of the United States federal courts located within the State of Texas for the purpose of any suit, action or other proceeding arising out of or based upon this Warrant, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Warrant except in the state courts of the State of Texas or the United States federal courts located within the State of Texas, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Warrant or the subject matter hereof may not be enforced in or by such court.

Section 15. Acceptance . Receipt of this Warrant by the Holder hereof shall constitute acceptance of and agreement to the foregoing terms and conditions.

Section 16. Assignment . This Warrant and all rights hereunder (including, without limitation, any registration rights) are not transferable, in whole or in part, unless such transfer or assignment is in compliance with applicable securities laws and, if so requested by the Company, the Company receives an opinion of counsel, in form and substance satisfactory to the Company, stating that such transfer or assignment is in compliance with all applicable securities laws. Subject to previous sentence, upon surrender of this Warrant at the principal office of the Company, together with a written assignment duly executed by the Holder, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned.

Section 17. Successors . All the covenants and provisions of this Warrant by or for the benefit of the Company or any Holder hereof shall bind and inure to the benefit of their respective successors and assigns hereunder.

Section 18. Certain Interpretive Matters . Unless the context otherwise requires, (i) all references to Sections or Appendices are to Sections or Appendices of or to this Warrant, (ii) each term defined in this Warrant has the meaning assigned to it, (iii) “or” is disjunctive but not necessarily exclusive, and (iv) words in the singular include the plural and vice versa . All references to “$” or dollar amounts are to lawful currency of the United States of America.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its behalf by one of its officers thereunto duly authorized.


AMERICAN ELECTRIC TECHNOLOGIES, INC.

By:		/s/ Charles M. Dauber
Name:		Charles M. Dauber
Title:		President

Address:

American Electric Technologies, Inc.
6410 Long Drive
Houston, Texas 77087

SIGNATURE PAGE TO WARRANT

APPENDIX A

Notice of Exercise - Payment in Cash

To:	American Electric Technologies, Inc.

1. The undersigned hereby irrevocably elects to purchase shares of Common Stock of American Electric Technologies, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full, by cash/certified check/wire transfer (circle one) of the originally executed Warrant.

2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name or names as are specified below and deliver said certificate(s) to the address(es) specified below:

(Printed Name)

3. Please issue a new Warrant or Warrants of equivalent form and tenor for the unexercised portion, if any, of the attached Warrant in the name of the undersigned or in such other name or names as are specified below and deliver said Warrant(s) to the address(es) specified below:

(Printed Name)

IN WITNESS WHEREOF, the undersigned has executed this Notice as of the date set forth below.


				Date:
(Printed Name of Warrantholder)

APPENDIX A

TO WARRANT

APPENDIX B

Notice of Exercise - Net Issuance

To:	American Electric Technologies, Inc.

1. The undersigned hereby elects to purchase shares of Common Stock of American Electric Technologies, Inc. pursuant to the terms of the attached Warrant and tenders herewith payment of the purchase price therefor by surrender of shares of Common Stock issuable pursuant to the attached Warrant.

2. Please issue a certificate or certificates representing the shares issuable upon such net exercise election in the name of the undersigned or in such other name or names as are specified below and deliver said certificate(s) to the address(es) specified below.

(Printed Name)

(Address)

(Printed Name)

(Address)

4. Please remit any cash in lieu of fractional shares payable in connection with this net exercise election to the undersigned or to such other person as is specified below and deliver said payment to the address specified below:

(Printed Name)

(Address)

IN WITNESS WHEREOF, the undersigned has executed this Notice as of the date set forth below.


				Date:
(Printed Name of Warrantholder)

APPENDIX B

TO WARRANT

Exhibit 4.2


May 2, 2012		Series A Warrant No. 2012-2

AMERICAN ELECTRIC TECHNOLOGIES, INC.

WARRANT TO PURCHASE SHARES OF COMMON STOCK

For value received, AMERICAN ELECTRIC TECHNOLOGIES, INC., a Florida corporation (the “ Company ”), hereby certifies that JCH Crenshaw Holdings, LLC, a Texas limited liability company, or its transferees, successors or assigns (each person or entity holding all or part of this Warrant being referred to as a “ Holder ”), is the registered holder of Series A Warrants (the “ Warrants ”) to subscribe for and purchase Two Hundred Thousand (200,000) shares (as may be adjusted as provided herein, the “ Warrant Shares ”) of the fully paid and nonassessable Common Stock (as defined below), at a purchase price per share initially equal to $7.00 and subject to adjustment as provided herein (the “ Warrant Price ”) on or before, 5:00 P.M., Eastern Time, on May 2, 2020 (the “ Expiration Time ”), subject to the provisions and upon the terms and conditions hereinafter set forth. As used in this Warrant, the term “ Business Day ” means any day other than a Saturday or Sunday on which commercial banks located in New York, New York are open for the general transaction of business.

Section 1. Methods of Exercise; Issuance of New Warrant .

X = Y(A-B)

where

X = the number of shares of Common Stock to be issued to the Holder (or such other person or persons as directed by the Holder) upon such exercise of the rights under this Section 1(b).

Y = the total number of shares of Common Stock covered by this Warrant which the Holder has surrendered for cashless exercise (determined as if the Warrant Price were being paid in cash).

A = the Fair Market Value (as defined below) of one share of Common Stock on the date that the Holder delivers the Notice of Exercise – Net Issuance to the Company as provided herein.

B = the Warrant Price in effect under this Warrant on the date that the Holder delivers the Notice of Exercise – Net Issuance to the Company as provided herein.

Section 2. Reservation of Shares; Stock Fully Paid; Listing .

(d) Whenever the number of Warrant Shares purchasable upon the exercise of this Warrant is adjusted as herein provided, the Warrant Price will be adjusted to the Conversion Price per share of Series A Convertible Preferred Stock as of such date plus $2.00. No adjustment to the Warrant Price pursuant to this Section 3 shall have the effect of increasing the Warrant Price above the Warrant Price in effect immediately prior to such adjustment.

(c) The Company distributes to the holders of its Common Stock evidences of indebtedness or assets of the Company or any Subsidiary;

(e) Any proposal by the Company to effect a dissolution, liquidation or winding up of the Company that has been publicly announced by the Company;

Section 12. Descriptive Headings . The descriptive headings contained in this Warrant are inserted for convenience only and do not constitute a part of this Warrant.

Section 15. Acceptance . Receipt of this Warrant by the Holder hereof shall constitute acceptance of and agreement to the foregoing terms and conditions.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its behalf by one of its officers thereunto duly authorized.


AMERICAN ELECTRIC TECHNOLOGIES, INC.

By:		/s/ Charles M. Dauber
Name:		Charles M. Dauber
Title:		President

Address:

American Electric Technologies, Inc.
6410 Long Drive
Houston, Texas 77087

SIGNATURE PAGE TO WARRANT

APPENDIX A

Notice of Exercise - Payment in Cash

To:	American Electric Technologies, Inc.

(Printed Name)

IN WITNESS WHEREOF, the undersigned has executed this Notice as of the date set forth below.


				Date:
(Printed Name of Warrantholder)

APPENDIX A

TO WARRANT

APPENDIX B

Notice of Exercise - Net Issuance

To:	American Electric Technologies, Inc.

(Printed Name)

(Address)

(Printed Name)

(Address)

(Printed Name)

(Address)

IN WITNESS WHEREOF, the undersigned has executed this Notice as of the date set forth below.


				Date:
(Printed Name of Warrantholder)

APPENDIX B

TO WARRANT

Exhibit 4.3

INVESTOR’S RIGHTS AGREEMENT

This INVESTOR’S RIGHTS AGREEMENT (this “ Agreement ”) dated as of May 2, 2012 (the “ Effective Date ”), is entered into by and between American Electric Technologies, Inc., a Florida corporation (the “ Company ”), and JCH Crenshaw Holdings, LLC, a Texas limited liability company (“ Investor ”). Investor together with the Company shall collectively be referred to as the “ Parties ” and each individually as a “ Party .”

RECITALS:

A. Contemporaneously with the execution and delivery of this Agreement, the Company and Investor will execute and deliver a Securities Purchase Agreement (the “ Purchase Agreement ”) pursuant to which the Company is issuing and selling to Investor and Investor is purchasing from the Company (i) 1,000,000 shares of Series A Convertible Preferred Stock of the Company, par value $.001 per share (the “ Series A Preferred Stock ”) and (ii) warrants (the “ Warrants ”) to purchase 325,000 shares of common stock of the Company, par value $.001 per share (the “ Common Stock ”) on the terms contained therein.

B. A condition to Investor’s obligations under the Purchase Agreement is that the Company and Investor enter into this Agreement in order to provide Investor with (i) certain rights to receive certain information from the Company, (ii) preemptive rights, (iii) a tag along right, (iv) rights to designate a member of the Board of Directors of the Company and (v) certain other rights as set forth in this Agreement.

AGREEMENT:

NOW , THEREFORE , in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the Parties hereto agree as follows.

1. Definitions . For purposes of this Agreement:

“ Affiliate ” of a Person means any Person that directly or indirectly through one or more intermediaries controls or is controlled by, or is under common control with, such other Person. For purposes of this definition, the term “ control ” (including the terms “ controlling ,” “ controlled by ” and “ under common control with ”) means the possession, direct or indirect, of the power to cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“ Agreement ” has the meaning set forth in the introductory paragraph of this Agreement.

“ Articles of Incorporation ” means the Articles of Incorporation of the Company as may be amended or restated from time to time.

“ Board ” or “ Board of Directors ” means the Board of Directors of the Company.

“ Business Day ” means any day except a Saturday, Sunday or other day on which banking institutions in Houston, Texas are authorized by law to close.

“ Bylaws ” means the bylaws of the Company as in effect immediately prior to the Effective Date.

“ Common Stock ” has the meaning set forth in the Recitals.

“ Company ” has the meaning set forth in the introductory paragraph of this Agreement.

“ Convertible Securities ” means any capital stock, warrants, rights, calls, options, debt or other securities exchangeable or exercisable for or convertible into Common Stock which, with or without payment of additional consideration, either immediately or upon a specified date or the happening of a specified event.

“ Effective Date ” has the meaning set forth in the introductory paragraph of this Agreement.

“ Equity Securities ” has the meaning set forth in Section 4.1 .

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Investor ” has the meaning set forth in the introductory paragraph of this Agreement.

“ Party ” and “ Parties ” has the meaning set forth in the introductory paragraph of this Agreement.

“ Person ” means an individual, corporation, general partnership, limited partnership, limited liability company, association, joint stock company, trust or trustee thereof, estate or executor thereof, tribunal, or any other legally recognizable entity.

“ Preferred Director ” has the meaning set forth in Section 5.1 .

“ Purchase Agreement ” has the meaning set forth in the Recitals.

“ Rule 144A ” means Rule 144A under the Securities Act, as such rule may be amended from time to time, or any successor rule that may be promulgated by the SEC.

“ SEC ” means the Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Selling Shareholder ” has the meaning set forth in Section 3.1 .

“ Series A Preferred Stock ” has the meaning set forth in the Recitals.

“ Tag-Along Notice ” has the meaning set forth in Section 3.1 .

“ Tag Exercise Period ” has the meaning set forth in Section 3.2(a) .

“ Transfer ” means any issuance, sale, assignment, transfer, conveyance, gift, pledge, distribution, hypothecation or other encumbrance or any other disposition, whether voluntary, involuntary or by operation of law, and whether effected directly or indirectly.

“ Warrants ” has the meaning set forth in the Recitals.

2. Information Rights . Promptly after written request to the Company made by Investor, the Company shall provide any such written information reasonably requested by Investor, including any financial statements of the Company prepared by Investor in the ordinary course, that Investor reasonably determines it requires in order to appropriately manage and evaluate its investment in the Company and to comply with its obligations under applicable securities and tax laws, including to the extent applicable, Rule 13a-15 under the Exchange Act.

3. Tag-Along Rights .

3.1 Tag Notice . In the event Charles Dauber, Arthur Dauber and/or any of their respective Affiliate(s) proposes to Transfer any shares of Common Stock and/or Convertible Securities (not including Transfers made pursuant to a written plan meeting the requirements of Rule 10b5-1 under the Exchange Act) that collectively represent more than 1% of the issued and outstanding shares of Common Stock of the Company (such Person or Persons proposing to make a Transfer, the “ Selling Shareholder ”), the Company shall promptly provide notice thereof to Investor (such notice is referred to herein as the “ Tag-Along Notice ”) disclosing in reasonable detail the identity of the prospective transferee(s), the number of shares of Common Stock to be Transferred, the price per share to be paid for such Common Stock in such Transfer and the other terms and conditions of the Transfer.

3.2 Mechanics of Tag-Along .

(a) Upon delivery of a Tag-Along Notice, Investor will have the right (but not the obligation), exercisable at any time within 20 days (the “ Tag Exercise Period ”) from the date on which the Tag-Along Notice was given, to participate in the contemplated Transfer and sell shares of Common Stock (on an as-converted basis) on the terms set forth herein.

(b) If Investor elects to participate in such Transfer, Investor will be entitled to sell in the contemplated Transfer, at the price per share of Common Stock offered by the prospective transferee to the Selling Shareholder and otherwise on the same terms and conditions as the Selling Shareholder, the number of shares of Common Stock determined by multiplying (i) the number of shares of Common Stock to be sold by the Selling Shareholder in the contemplated Transfer by (ii) a fraction, (A) the numerator of which is the number of shares of Common Stock held by Investor (on an as-converted basis), and (B) the denominator of which is the sum of (1) the number of shares of Common Stock held by Investor (on an as-converted basis) and (2) the number of shares of Common Stock held by the Selling Shareholder (on an as-converted basis) (and, if and to the extent Investor shall exercise such right, then the number of shares of Common Stock to be sold by the Selling Shareholder in such transaction shall be correspondingly reduced).

(c) If Investor has not elected to participate in the contemplated Transfer (through notice to such effect or expiration of the 15-day period after delivery of the Tag-Along Notice), then the Selling Shareholder may Transfer the Common Stock specified in the Tag-Along Notice at a price and on terms not materially more favorable to the Selling Shareholder than specified in the Tag-Along Notice during the 90-day period immediately following the date that the Tag-Along Notice was given. Any Selling Shareholder’s Common Stock not Transferred within such 90-day period shall be subject to the provisions of this Section 3 upon subsequent Transfer.

(d) The Selling Shareholder shall use its reasonable best efforts to obtain the agreement of the prospective transferee(s) to the participation of Investor in any contemplated Transfer for which Investor has elected to participate, and no Selling Shareholder shall Transfer any of its Common Stock to any prospective transferee unless concurrently with such Transfer, the prospective transferee(s) purchases from Investor the shares of Common Stock (on an as-converted basis) which Investor is entitled to sell, and has requested to be sold, to such prospective transferee(s) pursuant to this Section 3 . To the extent Investor has elected to participate in any contemplated Transfer and Investor participates in such Transfer, directly or indirectly, Investor shall bear its pro rata portion (based on the number of shares of Common Stock transferred by it in such Transfer relative to the total number of shares of Common Stock transferred in such Transfer) of the expenses incurred in connection with such Transfer to the extent such expenses are incurred for the benefit of both the Selling Shareholder and Investor.

3.3 Termination of Right . The rights set forth in this Section 3 shall terminate if the Series A Preferred Stock owned by Investor represent, on an as converted basis, less than 5% of the Company’s outstanding common stock.

4. Preemptive Rights .

4.1 Right . From and after the Effective Date, at any time the Company makes any public or nonpublic offering or sale of any equity securities or Convertible Securities of the Company (“ Equity Securities ”), Investor shall be afforded the opportunity to acquire from the Company for the same price and on the same terms as such securities are proposed to be offered to others, Equity Securities of the same type in the aggregate amount required to enable it to maintain its proportionate Common Stock-equivalent interest in the Company and/or its subsidiaries immediately prior to any such issuance of Equity Securities. Notwithstanding the foregoing, the term “Equity Securities” shall not include any issuances made: (a) to employees, officers, directors, consultants and advisors of the Company pursuant to any incentive plan, stock purchase plan, agreement or other arrangement duly adopted by the Company and approved by the compensation committee of the Board; (b) upon exercise of the Warrants; (c) upon issuance or conversion of the Series A Preferred Stock; (c) in connection with a merger, acquisition, asset acquisition, lease, joint venture or similar acquisitive transaction approved by the Board; and (d) for services to financial institutions in connection with investment banking, commercial credit transactions, equipment financing or similar transactions approved by the Board. The amount of Equity Securities that Investor shall be entitled to purchase in the aggregate shall be determined by multiplying (i) the total number or principal amount of such offered Equity Securities by (ii) a fraction, (x) the numerator of which is the number of shares of

Common Stock held by Investor (determined on an as converted basis), and (y) the denominator of which is the number of shares of Common Stock then outstanding (determined on an as converted basis with respect to the Investor’s holdings).

4.2 Notice . In the event the Company proposes to offer or sell Equity Securities, it shall give Investor written notice of its intention, describing the price (or range of prices), anticipated type and amount of securities, timing and other terms upon which the Company proposes to offer the same (including, in the case of a registered public offering and to the extent possible, a copy of the prospectus included in the registration statement filed with respect to such offering), no later than ten Business Days, as the case may be, after the initial filing of a registration statement with the SEC with respect to an underwritten public offering, after the commencement of marketing with respect to a Rule 144A offering or after the Company proposes to pursue any other offering. Investor shall have 15 Business Days from the date such a notice is given to notify the Company in writing that it intends to exercise its rights provided in this Section 4 and as to the amount of Equity Securities Investor desires to purchase, up to the maximum amount calculated pursuant to Section 4.1 .

4.3 Purchase Mechanism . If Investor exercises its rights provided in this Section 4 , the closing of the purchase of the Equity Securities with respect to which such right has been exercised shall take place within 30 days after the giving of notice of such exercise, which period of time shall be extended for a maximum of three months at the election of Investor in order to comply with applicable laws and regulations (including receipt of any applicable regulatory or shareholder approvals). The Company agrees to use its reasonable commercial efforts to secure any regulatory or shareholder approvals or other consents, and to comply with any law or regulation necessary in connection with the offer, sale and purchase of, such Equity Securities.

4.4 Failure of Purchase . In the event Investor does not exercise the rights provided in this Section 4 within the 15-Business Day period or, if so exercised, Investor is unable to consummate such purchase within the time period specified in Section 4.3, the Company shall thereafter be entitled (during the period of 90 days following the conclusion of the applicable period) to sell or enter into an agreement (pursuant to which the sale of the Equity Securities covered thereby shall be consummated, if at all, within 90 days from the date of said agreement) to sell the Equity Securities not elected to be purchased pursuant to this Section 4.4 , at a price and upon terms, taken together in the aggregate, no more favorable to the purchasers of such securities than were specified in the Company’s notice to Investor. In the event the Company has not sold the Equity Securities or entered into an agreement to sell the Equity Securities within such 90-day period (or sold and issued Equity Securities in accordance with the foregoing within 90 days from the date of said agreement), the Company shall not thereafter offer, issue or sell such Equity Securities without first offering such securities to Investor in the manner provided above.

4.5 Termination of Right . The rights set forth in this Section 4 shall terminate if the Series A Preferred Stock owned by Investor represent, on an as converted basis, less than 5% of the Company’s outstanding common stock.

5. Corporate Governance .

5.1 Board Representation . So long as the shares of Series A Preferred Stock on an as converted to Common Stock basis represent 5% or more of the Corporation’s outstanding Common Stock, holders of the Series A Preferred Stock (which initially shall be Investor) shall be entitled to elect one member of the Board (and to fill any vacancy with respect thereto). The director elected under this Section 5.1 is referred to as a “ Preferred Director ”. On or as promptly as possible after the Effective Date, the Company shall cause the Board to take or cause to be taken such corporate action as shall be necessary to increase the size of the Board to permit the election of the Preferred Director. The initial Preferred Director shall be Casey Crenshaw.

5.2 Vacancies . Any vacancy, whether resulting from the resignation, retirement, removal from office or other cause, of the Preferred Director shall be filled with a replacement Preferred Director designated by the holders of Series A Preferred Stock (which initially shall be Investor).

5.3 Committees . The Company shall, to the extent permitted by applicable laws, rules and regulations (including any requirements under the Exchange Act or the rules of Nasdaq or any other applicable securities exchange or automated inter-dealer quotation system on which the Common Stock is then listed or quoted), cause each committee of the Board to include as a member the Preferred Director, in each case as appropriate and to the extent requested by the Preferred Director.

5.4 Expenses . The Preferred Director shall be entitled to reimbursement of expenses pursuant to his or her service on the Board and committees thereof on the same basis as the Company provides such reimbursement to the other members of its Board who are not officers or employees of the Company.

5.5 Directors and Officers Insurance . The Company shall add Preferred Director as a beneficiary to the Company’s directors’ and officers’ liability insurance policy effective from the Effective Date and shall provide all other contractual or insurance director liability or indemnification coverages provided to other members of the Board.

6. General Provisions .

6.1 Articles of Incorporation and Bylaws . The Company shall take or cause to be taken all lawful action necessary or appropriate to ensure that at all times the Articles of Incorporation and the Bylaws and the corresponding constituent documents of the Company’s subsidiaries contain provisions consistent with the terms of this Agreement and do not contain any provisions inconsistent therewith or which would in any way nullify or impair the terms of this Agreement or the rights provided hereunder to any of the Parties hereto.

6.2 Notices . Any notices or other communications required or permitted hereunder shall be in writing and be deemed to have been given if mailed, three business days after being deposited in the United States mail, postage prepaid and registered or certified, to the address of such Party stated below:

To the Company:

American Electric Technologies, Inc.

6410 Long Drive

Houston, Texas 77087

Attn: Frances Powell Hawes

With a copy (which shall not constitute notice) to:

Joel Bernstein, Esq.

2666 Tigertail Avenue, Suite 104

Miami, Florida 33133

To Investor:

JCH Crenshaw Holdings, LLC

470 Orleans St., 7 ^th Floor

Beaumont, Texas 77701

Attention: Casey Crenshaw

With a copy (which shall not constitute notice) to:

Thompson & Knight, LLP

Attention: Jerry L. Metcalf

333 Clay Street, Suite 3300

Houston, Texas 77002

6.4 Specific Performance . Each Party acknowledges and agrees that the other Parties would be irreparably damaged if any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached. Accordingly, each Party agrees that the other Parties will be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to specifically enforce this Agreement and its terms and provisions in any action instituted in any court of the United States or any state thereof having jurisdiction over the Parties in addition to any other remedy to which they may be entitled, at law or in equity.

6.5 GOVERNING LAW; FORUM SELECTION; CONSENT TO JURISDICTION AND SERVICE . THIS AGREEMENT AND THE TRANSACTION DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS. IN ANY ACTION OR PROCEEDING BETWEEN INVESTOR AND THE COMPANY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE TRANSACTION DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED THEREIN, EACH OF INVESTOR AND THE COMPANY (A) IRREVOCABLY AND UNCONDITIONALLY CONSENTS AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF AND THE LAYING OF VENUE IN ANY FEDERAL COURT LOCATED IN THE SOUTHERN DISTRICT OF TEXAS (HOUSTON DIVISION) OR ANY STATE COURT IN HARRIS COUNTY, TEXAS; (B) AGREES THAT ALL

CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED EXCLUSIVELY IN ACCORDANCE WITH CLAUSE (A) OF THIS SECTION 6.5 ; (C) WAIVES ANY OBJECTION TO THE LAYING OF VENUE IN ANY SUCH ACTION OR PROCEEDING IN SUCH COURTS; (D) WAIVES ANY OBJECTION THAT SUCH COURTS ARE AN INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION OVER ANY PARTY; AND (E) AGREES THAT SERVICE OF PROCESS UPON SUCH PARTY IN ANY SUCH ACTION OR PROCEEDING SHALL BE EFFECTIVE IF SUCH PROCESS IS GIVEN AS A NOTICE IN ACCORDANCE WITH SECTION 6.2 .

6.6 WAIVER OF RIGHT TO TRIAL BY JURY . INVESTOR AND THE COMPANY EACH HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT, OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT TO THIS AGREEMENT. INVESTOR AND THE COMPANY EACH AGREE THAT THE OTHER MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

6.7 Entire Agreement . This Agreement and each of the other Transaction Documents (as defined in the Purchase Agreement) constitute the entire agreement and understanding of the Parties in respect of its subject matters and supersedes all prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby.

6.8 Confidentiality . Except as required by law, Investor agrees that it will keep confidential and will not use or disclose or divulge any confidential, proprietary or secret information which such Investor may obtain from the Company pursuant to financial statements, reports and other materials provided or made available to Investor pursuant to this Agreement or otherwise, unless such information is known by, or until such information becomes available to, the public other than as a result of a breach or violation hereof by Investor; provided, however, that Investor may disclose such information (a) to its attorneys, accountants, consultants and other professionals to the extent necessary to obtain their services in connection with its investment in the Company and who are informed by Investor in advance of the confidential nature of such information and who agree to comply with the use and confidentiality obligations contained in this agreement as if they are a party hereto and are under a legal obligation to comply with the restrictions set forth herein, (b) to any Affiliate of Investor or to a current or former member, manager, officer, representative, agent, employee, member or beneficiary of Investor who is informed by Investor in advance of the confidential nature of such information and who agrees to comply with the use and confidentiality obligations contained in this agreement as if they are a party hereto and are under a legal obligation to comply with the restrictions set forth herein, and (c) as is required to be disclosed by order of a court of competent jurisdiction, administrative body or governmental body, or by subpoena, summons or legal process, or by law, rule or regulation; provided, further, however, that if Investor becomes so compelled to disclose such information, then Investor will provide the Company with prompt

notice thereof and cooperate with the Company at the Company’s expense, to the extent the Company reasonably requests, so that the Company may seek a protective order or other appropriate remedy.

6.10 Third Parties . Nothing in this Agreement, express or implied, is intended to confer upon any Person other than the Parties and their successors and assigns, any rights or remedies under or by reason of this Agreement.

6.11 Further Assurances . All Parties agree to take such actions and execute and deliver such other documents or agreements as may be necessary or desirable for the implementation of this Agreement and the consummation of the transactions contemplated hereby and thereby.

6.12 Remedies . The Parties shall have all remedies for breach of this Agreement available to them as provided by law or equity. Without limiting the generality of the foregoing, the Parties agree that in addition to any other rights and remedies available at law or in equity, the Parties shall be entitled to obtain specific performance of the obligations of each Party and immediate injunctive relief and that, in the event any action or proceeding is brought in equity or to enforce the same, no Party will urge, as a defense, that there is an adequate remedy at law. No single or partial assertion or exercise of any right, power or remedy of a Party shall preclude any other or further assertion or exercise thereof.

6.13 Transfer; Successors and Assigns . The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties. Nothing in this Agreement, express or implied, is intended to confer upon any Party other than the Parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

6.14 Counterparts; Facsimile . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. A facsimile, telecopy or other reproduction of this Agreement may be executed by one or more Parties to this Agreement, and an executed copy of this Agreement may be delivered by one or more Parties to this Agreement by facsimile or similar electronic transmission device pursuant to which the signature of or on behalf of such Party can be seen, and such execution and delivery shall be considered valid, binding and effective for all purposes. At the request of any Party to this Agreement, all Parties to this Agreement agree to execute an original of this Agreement as well as any facsimile, telecopy or other reproduction of this Agreement.

6.15 Titles and Subtitles . The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

6.16 Fees and Expenses . All expenses incurred in connection with this Agreement shall be paid by the Party incurring such expenses.

6.17 Attorney’s Fees . If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of this Agreement, the prevailing Party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such Party may be entitled.

6.18 Amendments and Waivers . Any term of this Agreement may be amended or waived subsequent to the execution hereof only upon the mutual written consent of the Company and Investor. Any amendment or waiver effected in accordance with this Section 6.16 shall be binding upon Investor and each transferee of the shares of Series A Preferred Stock and/or the underlying securities of such Series A Preferred Stock, each future holder of all such securities and the Company.

6.19 Severability . Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is deemed to be so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

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IN WITNESS WHEREOF, the Parties have executed the Investor’s Rights Agreement as of the date first above written.


COMPANY:

American Electric Technologies, Inc.

By:
Name:		Charles M. Dauber
Title:		President

INVESTOR:

JCH Crenshaw Holdings, LLC

By:
Name:
Title:

SIGNATURE PAGE – INVESTOR’S RIGHTS AGREEMENT

Exhibit 4.4

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “ Agreement ”), dated as of May 2, 2012, is entered into by and between American Electric Technologies, Inc., a Florida corporation (the “ Company ”), and JCH Crenshaw Holdings, LLC, a Texas limited liability company (“ Investor ”).

RECITALS

WHEREAS, pursuant to that certain Securities Purchase Agreement by and between the Company and Investor executed on April 13, 2012 (the “ Purchase Agreement ”), Investor will purchase from the Company (i) 250,000 shares of Series A Convertible Preferred Stock, par value $0.001 per share (the “ Series A Preferred ”), and (ii) warrants (the “ Warrants ”) to purchase 325,000 shares of Common Stock, par value $0.001 per share (the “ Common Stock ”), on the terms contained therein.

WHEREAS, as a condition to Investor’s obligation to consummate the transactions contemplated by the Purchase Agreement, the Company has agreed to grant certain registration rights with respect to their Registrable Securities (as defined below) as set forth herein.

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Definitions.

For purposes of this Agreement, the terms set forth below shall have the respective meanings assigned to them in this Section 1. All capitalized terms used but not defined in this Agreement shall have the meanings assigned to them in the Purchase Agreement.

“ Registrable Securities ” shall mean (i) the shares of Common Stock issuable upon conversion of the Series A Preferred, (ii) the shares of Common Stock issuable upon exercise(s) of the Warrants and (iii) any securities issued or issuable with respect to the securities described in clauses (i) and (ii) by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization; provided, however , that as to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (x) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement or (y) such securities shall have been sold to the public pursuant to Rule 144 (or any successor provision) under the Securities Act.

“ Stockholders ” shall mean any Person that holds Registrable Securities.

Section 2. Demand Registration Rights .

2.1 The Company hereby grants to the Stockholders, and to each of them, the right to require the Company to use its best efforts to cause the registration for sale in a public offering of all or a portion of the Stockholders’ Registrable Securities in

accordance with this Section 2; provided, however , that the Company shall not have any obligation to effect more than a total of one (1) effective registration pursuant to this Section 2. If the Company shall have received a written request submitted by one or more Stockholders owning at least a majority of the Registrable Securities outstanding (assuming for purposes of such calculation the conversion of all Series A Preferred and exercise of all Warrants in each case then constituting Registrable Securities) at the time of such request (the “ Requisite Holders ”) that such Stockholders desire to have the Company register Registrable Securities for sale and specifying the number of Registrable Securities proposed to be sold (for the purposes of this Section 2, together with the Registrable Securities referred to in subsection 2.1.2 below, “ Covered Securities ”), which request shall in no event cover less than 25% of the Registrable Securities (assuming for purposes of such calculation the conversion of all Series A Preferred and exercise of all Warrants in each case then constituting Registrable Securities), and the proposed plan for distribution of the Covered Securities, the Company will:

2.1.1 Give prompt (but in any event within fifteen (15) days after the receipt of the Requisite Holders’ notice) notice to all other Stockholders of such request and of such other Stockholders’ rights to have their Registrable Securities included in such registration.

2.1.2 Upon the request of any such Stockholder made within fifteen (15) days after the receipt by such Stockholder of the notice given pursuant to subsection 2.1.1 (which request shall specify the Registrable Securities intended to be included in such registration by such Stockholder and the intended method or methods of disposition thereof), the Company will use its reasonable best efforts to effect the registration of all Covered Securities which the Company has been so requested to register pursuant to this Section 2.1.

2.1.3 Prepare and file as soon as practicable, but in no event later than thirty (30) days from the Company’s receipt of the last Stockholder’s request to have such Stockholder’s Registrable Securities included in such registration within the time period specified in Section 2.1.2, a registration statement under the Securities Act (inclusive of the Prospectus included therein, all supplements and amendments thereto, and all exhibits and materials incorporated by reference therein, a “ Registration Statement ”) with the Securities and Exchange Commission (“ Commission ”) on Form S-1 (or Form S-3, if the Company is entitled to use such form, or other appropriate forms available for use by the Company) and use its reasonable best efforts to cause such Registration Statement to become effective in order that the Stockholders may sell the Covered Securities in accordance with the proposed plan of distribution.

2.1.4 Prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith including any preliminary prospectus or supplemental or amended prospectus (a “ Prospectus ”) as may be necessary to keep such Registration Statement continuously effective and to comply with the provisions of the

Securities Act with respect to the offer of the Covered Securities during the period required for distribution of the Covered Securities, which period shall not be in excess of the earlier of (i) two years from the effective date of such Registration Statement and (ii) the sale or other disposition of all Covered Securities covered by such Registration Statement.

2.1.5 Furnish to each Stockholder such number of copies of the Prospectus (including any preliminary prospectus or supplemental or amended prospectus) as such Stockholder may reasonably request in order to facilitate the sale and distribution of the Covered Securities.

2.1.6 Notwithstanding the foregoing, if the Company shall furnish to each Stockholder a certificate signed by the President of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such Registration Statement to be filed and it is therefore essential to defer the filing of such Registration Statement, the Company shall have the right to defer such filing for a period of not more than sixty (60) days after receipt of the request of the Stockholder; provided , however , that the Company may not utilize this right with respect to a request under Section 2 more than once in any twelve (12) month period.

2.2 The right of each Stockholder to require the Company to register Covered Securities pursuant to the provisions of this Section 2 shall be subject to the condition that if a request for registration is made within sixty (60) days prior to the conclusion of the Company’s then current fiscal year, the Company shall have the right to delay the filing of the Registration Statement until the Company files with the Commission its audited financial statements for such fiscal year.

2.3 If the Requisite Holders intend to distribute the Registrable Securities covered by the notice pursuant to Section 2.1 by means of an underwriting, the Requisite Holders shall so advise the Company as a part of the notice made pursuant to Section 2.1 and provide the name of the managing underwriter or underwriters that the Requisite Holders propose to engage in connection with the proposed public offering. If the managing underwriter of such underwritten offering shall inform the Company and the Stockholders requesting that their Covered Securities be registered pursuant to this Section 2 by letter of its belief that the amount of Covered Securities requested to be included in such registration exceeds the amount which can be sold in (or during the time of) such offering within a price range acceptable to the Requisite Holders, then the Company will include in such registration such amount of Covered Securities which the Company is so advised can be sold in (or during the time of) such offering pro rata on the basis of the amount of such Covered Securities so proposed to be sold and so requested to be included by the respective Stockholders.

2.4 A registration shall not be deemed to have been effected (i) unless it has become effective and remained effective for the period specified in subsection 2.1.4, (ii) if, after it has become effective, such registration is terminated by a stop order,

injunction or other order of the Commission or other governmental agency or court, or (iii) if the conditions to closing specified in any purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied for any reason, other than as a result of the voluntary termination of such offering by the Requisite Holders or any failure by the Requisite Holders to satisfy or perform the conditions or covenants on their part to be satisfied or performed.

Section 3. Piggy-Back Registration Rights .

3.1 If the Company proposes to file, on its own behalf or on behalf of any holder of Common Stock or other securities of the Company, a Registration Statement under the Securities Act on Form S-1 or S-3 or similar forms available for use by the Company, other than pursuant to Section 2 of this Agreement or on Form S-8 in connection with a dividend reinvestment, employee stock purchase or employee stock option plan or similar plan or on Form S-4 in connection with a merger, consolidation or reorganization, the Company shall give written notice to each Stockholder at least ten (10) days before the filing with the Commission of such Registration Statement. Such notice shall offer to include in such filing all or a portion of the Registrable Securities owned by each Stockholder. If a Stockholder desires to include all or a portion of its Registrable Securities in such Registration Statement, it shall give written notice to the Company within three (3) business days after the date of mailing of such offer specifying the amount of Registrable Securities to be registered (for purposes of this Section 3, “ Covered Securities ”). The Company shall thereupon include in such filing the Covered Securities, subject to priorities in registration set forth in this Agreement, and subject to its right to withdraw such filing, and shall use its reasonable best efforts to effect the registration under the Securities Act of the Covered Securities.

3.2 The right of a Stockholder to have Covered Securities included in any Registration Statement in accordance with the provisions of this Section 3 shall be subject to the following conditions:

3.2.1 The Company shall have the right to require that the Stockholder agree to refrain from offering or selling any shares of Common Stock that it owns which are not included in any such Registration Statement filed on the Company’s behalf in accordance with this Section 3 for any reasonable time period, not to exceed ninety (90) days, as may be specified by any managing underwriter of the offering to which such Registration Statement relates.

3.2.2 If (i) a registration pursuant to this Section 3 involves an underwritten offering of the securities being registered to be distributed (on a firm commitment basis) by or through one or more underwriters of recognized standing under underwriting terms appropriate for such a transaction and (ii) the managing underwriter of such underwritten offering shall inform the Company and the Stockholders who have requested that their Covered Securities be registered pursuant to this Section 3 by letter of its belief that the amount of Covered Securities requested to be included in such registration exceeds the amount which can be sold in (or during the time of) such offering within a price

range acceptable to the Company or the requesting Stockholders holding a majority of the Covered Securities, then the Company will include in such registration such amount of securities which the Company is so advised can be sold in (or during the time of) such offering as follows: (A) if the Registration Statement was filed by the Company on its own behalf, first , the securities being offered by the Company for its own account; second , the Covered Securities of the Stockholders which are requested to be included in such registration pro rata on the basis of the amount of such Covered Securities so proposed to be sold and so requested to be included by such Stockholders; and third , the securities of the Company, if any, proposed to be included in the registration by any other holders of the Company’s securities (whether or not such holders have contractual rights to include such securities in the registration); and (B) if the Registration Statement was filed by the Company on behalf of a Person other than the Company, first , the securities of the Company being offered by the Person requesting such registration; second , the Covered Securities of the Stockholders which are requested to be included in such registration pro rata on the basis of the amount of such Covered Securities so proposed to be sold and so requested to be included by such Stockholders; third , the securities of the Company, if any, that the Company proposes to offer for its own account; and fourth , the securities of the Company, if any, proposed to be included in the registration by any other holders of the Company’s securities (whether or not such holders have contractual rights to include such securities in the registration).

3.2.3 The Company shall furnish each Stockholder with such number of copies of the Prospectus as such Stockholder may reasonably request in order to facilitate the sale and distribution of its Covered Securities.

3.3 Notwithstanding the foregoing, the Company in its sole discretion may determine not to file the Registration Statement or proceed with the offering as to which the notice specified in Section 3.1 is given, without liability to the Stockholders.

Section 4. Participation in Underwritten Registrations. A Stockholder may not participate in any registration hereunder which relates to an underwritten offering unless such Stockholder (a) agrees to sell its Registrable Securities included in such registration on the basis provided in any underwriting arrangements approved by the holders of at least a majority of the Registrable Securities to be included in such registration, or by a Person appointed by such holders to act on their behalf to approve such arrangements, and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements, provided, however , that no Stockholder shall be required to make any representations or warranties to, or agreements with, the Company or any underwriters other than such representations, warranties or agreements as are customary and reasonably requested by the underwriters.

Section 5. No Contravening Agreements . From and after the date of this Agreement, the Company will not, without the prior written consent of Stockholders holding at least a majority of the Registrable Securities then outstanding (assuming for purposes of such calculation the conversion of all Series A Preferred and the exercise of all Warrants in each case

then constituting Registrable Securities), enter into any agreement with respect to its securities that violates or is detrimental to the rights granted to the Stockholders in this Agreement. The foregoing shall not restrict or prevent the Company from entering into any other agreement with any party pertaining to the registration by the Company of such party’s Common Stock, provided, however, that no such agreement shall grant to any Person registration rights that are superior or preferential to the rights granted to the Stockholders hereunder or that would otherwise frustrate the purposes of this Agreement. The Company represents and warrants to the Stockholders that, as of the date hereof, the Company is not a party to any agreement, other than this Agreement, pertaining to the registration by the Company of Common Stock or any security convertible into or exchangeable for Common Stock.

Section 6. Expenses. The Company shall bear all the fees and expenses in connection with any registration under this Agreement, other than commissions and discounts of brokers, dealers and underwriters. Such fees and expenses will include, without limitation, (i) all registration and filing fees (including without limitation fees and expenses (x) with respect to filings required to be made with The Financial Industry Regulatory Authority, Inc. or any successor thereto and (y) of compliance with securities or blue sky laws (including without limitation reasonable fees and disbursements of counsel for the underwriters and selling Stockholders in connection with qualifications of the Registrable Securities and determination of the eligibility of the Registrable Securities for investment under the laws of such jurisdictions as the managing underwriter or underwriters, if any, or the selling Stockholder may designate)), (ii) printing expenses (including without limitation the expenses of printing certificates for securities in a form eligible for deposit with The Depository Trust Company and of printing Prospectuses if the printing of Prospectuses is requested by any selling Stockholder), (ii) messenger, telephone an delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) fees and disbursements of one counsel for all selling Stockholders (which counsel will be selected by Stockholders holding a majority of the securities sought to be included in the Registration Statement), (vi) fees and disbursements of all independent certified public accountants (including the expenses of any special audit and comfort letters required by or incident to such performance), and (vii) fees and expenses of all other Persons retained by the Company. Notwithstanding anything to the contrary herein contained, each selling Stockholder may have its own separate counsel (in addition to the one counsel for all selling Stockholders) in connection with the registration of any of its Registrable Securities, which counsel may participate therein to the full extent provided herein; provided that all fees and expenses of such separate counsel will by paid for by such selling Stockholder.

Section 7. Recall of Prospectuses, etc. With respect to a Registration Statement or amendment thereto filed pursuant to this Agreement, if, at any time, the Company notifies the Stockholders that an amendment to such Registration Statement or an amendment or supplement to the Prospectus included therein is necessary or appropriate, the Stockholders will forthwith cease selling and distributing Registrable Securities thereunder and will, upon the Company’s request, forthwith redeliver to the Company all copies of such Registration Statement and Prospectuses then in its possession or under its control. The Company will use its best efforts to cause any such amendment or supplement to become effective as soon as practicable and will furnish the Stockholders with a reasonable number of copies of such amended or supplemented Prospectus (and the period during which the Company is required to use its best efforts to maintain such Registration Statement in effect pursuant to this Agreement will be increased by a

number of days equal to the number of days in the period from the date on which the Stockholders were required to cease selling and distributing Registrable Securities thereunder to the date on which the Company delivers copies of such effective amendment or supplement to the Stockholders).

Section 8. Cooperation. The Company shall be entitled to require the Stockholders to cooperate with the Company in connection with a registration of Registrable Securities pursuant to this Agreement and each Stockholder will furnish (i) such information concerning such Stockholder as may be required by the Company or the Commission in connection therewith and (ii) such representations, undertakings and agreements as may be required by the Commission in connection therewith.

Section 9. Registration Procedures. Upon the receipt of a request for registration of any Registrable Securities pursuant to Section 2 or Section 3 of this Agreement, the Company will use its best efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company will as expeditiously as possible:

9.1.1 Prepare and file with the Commission a Registration Statement on an appropriate form under the Securities Act and use its best efforts to cause such Registration Statement to become effective at the earliest practicable date; provided, that before filing a Registration Statement or Prospectus or any amendments or supplements thereto, including documents incorporated by reference after the initial filing of any Registration Statement, the Company will promptly furnish to the holders of Registrable Securities to be registered pursuant to this Agreement (the “ Registered Holders ”) and the underwriters, if any, copies of all such documents proposed to be filed, which documents will be subject to the review of the Registered Holders and the underwriters, and the Company will not file any Registration Statement or amendment thereto, or any Prospectus or any supplement thereto (including such documents incorporated by reference) to which the Registered Holders or the underwriters, if any, shall reasonably object in light of the requirements of the Securities Act and any other applicable laws and regulations.

9.1.2 Prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period; cause the related Prospectus to be filed pursuant to Rule 424(b) (or any successor provision) under the Securities Act; cause such Prospectus to be supplemented by any required prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424(b) (or any successor provision) under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended methods of disposition set forth in such Registration Statement or Prospectus or supplement to such Prospectus.

9.1.3 Notify the Registered Holders and the managing underwriters, if any, promptly, and (if requested by any such Person) confirm such advice in writing, (i) when a Prospectus or any supplement to a Prospectus or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission for amendments or supplements to a Registration Statement or related Prospectus or for additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceeding for that purpose, (iv) if at any time the representations and warranties of the Company contemplated by subsection 9.1.10 cease to be true and correct, (v) of the receipt by the Company of any notification with respect to the suspension of qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, (vi) of the happening of any event which requires the making of any changes in a Registration Statement or related Prospectus so that such documents will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and (vii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate or that there exist circumstances not yet disclosed to the public which make further sales under such Registration Statement inadvisable pending such disclosures and post-effective amendment.

9.1.4 Make reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction, at the earliest possible moment.

9.1.5 If requested by the managing underwriters or the Registered Holders, immediately incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriters or the Registered Holders request be included therein relating to such sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of shares of Registrable Securities being sold to such underwriters and the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten (or best efforts underwritten) offering of the Registrable Securities to be sold in such offering; make all required filings of such prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and supplement or make amendments to any Registration Statement if requested by the Registered Holders or any underwriter of such Registrable Securities.

9.1.6 Upon request of a Registered Holder or a managing underwriter, if any, furnish to such Registered Holder and such managing underwriter, if any, without charge, at least one signed copy of the Registration Statement, any post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference).

9.1.7 Deliver without charge to the Registered Holders and the underwriters, if any, as many copies of the Prospectus or Prospectuses (including each preliminary prospectus) and any amendment or supplement thereto as such Persons may reasonably request; and the Company consents to the use of such Prospectus or any amendment or supplement thereto by such Registered Holders and the underwriters, if any, in connection with the offer and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto.

9.1.8 Prior to any public offering of Registrable Securities, register or qualify or cooperate with the Registered Holders, the underwriters, if any, and respective counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such domestic jurisdictions, as the Registered Holders or an underwriter reasonably requests in writing; keep each such registration or qualification effective during the period the Registration Statement is required to be kept effective and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the applicable Registration Statement; provided, however, that the Company will not be required in connection therewith or as a condition thereto to qualify generally to do business or subject itself to general service of process in any such jurisdiction where it is not then so subject.

9.1.9 Upon the occurrence of any event contemplated by subsection 9.1.3(ii)-(vii) above, prepare, to the extent required, a supplement or post-effective amendment to the applicable Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchaser of the Registrable Securities being sold thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

9.1.10 Enter into such agreements (including an underwriting agreement) and take all such other actions in connection therewith in order to expedite or facilitate the disposition of such Registrable Securities and in such connection, whether or not an underwriting agreement is entered into and whether or not the Registrable Securities to be covered by such registration are to be offered in an underwritten offering: (i) make such representations and warranties to the Registered Holders as to the Registration Statement, Prospectus and documents incorporated by reference, if any, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when requested; (ii) obtain opinions of counsel to the Company and updates thereof with respect to the Registration Statement and the Prospectus in the form,

scope and substance which are customarily delivered in underwritten offerings; (iii) in the case of an underwritten offering, enter into an underwriting agreement in form, scope and substance as is customary in underwritten offerings and obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be satisfactory to the managing underwriters and the Registered Holders) addressed to the Registered Holders and the underwriters, if any, covering the matters customarily covered in opinions delivered in underwritten offerings and such other matters as may be requested by the Registered Holders and such underwriters; (iv) obtain comfort letters and updates thereof from the Company’s independent certified public accountants addressed to the Registered Holders and the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in comfort letters by accountants in connection with underwritten offerings; (v) if any underwriting agreement is entered into, the same shall set forth in full the indemnification provisions and procedures customarily included in underwriting agreements in underwritten offerings; and (vi) the Company shall deliver such documents and certificates as may be requested by the Registered Holders and the managing underwriters, if any, to evidence compliance with clause (i) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The above shall be done at each closing under such underwriting or similar agreement or as and to the extent required thereunder.

9.1.11 Make available for inspection by a representative of the Registered Holders, any underwriter participating in any disposition pursuant to such registration, and any attorney or accountant retained by the Registered Holders or such underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representative, underwriter, attorney or accountant in connection with such registration; provided, that any records, information or documents that are designated by the Company in writing as confidential shall be kept confidential by such Persons unless disclosures of such records, information or documents is required by court or administrative order.

9.1.12 Otherwise use its best efforts to comply with all applicable rules and regulations of the Commission and make generally available to its security holders earning statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder, no later than 90 days after the end of any 12-month period (i) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in a firm or best efforts underwritten offering and (ii) beginning with the first day of the Company’s first fiscal quarter next succeeding each sale of Registrable Securities after the effective date of a Registration Statement, which statements shall cover said 12-month periods.

9.1.13 Use its reasonable best efforts to list all Registrable Securities covered by the Registration Statement on the securities exchanges or trading markets on which any of the equity securities of the Company of the same class as the Registrable Securities are then listed.

9.1.14 Engage an appropriate transfer agent and provide such transfer agent with printed certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company, and provide a CUSIP number for the Registrable Securities.

9.1.15 At all times during the term of this Agreement, maintain the effectiveness of the registration of the Common Stock under the Exchange Act and use its reasonable best efforts to prepare and file in a timely manner all documents and reports required by the Exchange Act.

9.1.16 If the Company, in the exercise of its reasonable judgment, objects to any change requested by the Registered Holders or the underwriters, if any, to any Registration Statement or Prospectus or any amendments or supplements thereto (including documents incorporated or to be incorporated therein by reference) as provided for in this Section 9, the Company shall not be obligated to make any such change and such Registered Holders may withdraw their Registrable Securities from such registration, in which event (i) the Company shall pay all expenses incurred in connection with such Registration Statement or amendment thereto or Prospectus or supplement thereto, and (ii) in the case of a registration being effected pursuant to Section 2, such registration shall not count as one of the registrations the Company is obligated to effect pursuant to Section 2.

Section 10. Indemnification .

10.1 In the event of any registration of any securities under the Securities Act pursuant to this Agreement, the Company will indemnify and hold harmless the Stockholders, any underwriter and each other Person, if any, who controls a Stockholder or underwriter within the meaning of the Securities Act, and the respective officers, directors, partners, members and employees of such Stockholders, underwriters and controlling Persons, from and against any and all losses, claims, damages or liabilities, joint or several, to which any such indemnified Person may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or action in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in a Registration Statement or preliminary prospectus or final or summary prospectus contained therein, or any amendment or supplement thereto, and any other document prepared by the Company and provided to Registered Holders for their use in connection with the registered offering, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements made therein (in the case of a Prospectus or preliminary prospectus, in light of the circumstances under which they were made) not misleading, and will reimburse such indemnified Persons for any

reasonable legal and other expenses incurred by them in connection with investigating or defending any such action or claim, excluding any amounts paid in settlement of any litigation, commenced or threatened, if such settlement is effected without the prior written consent of the Company; provided, however, that the Company will not be liable to an indemnified Person in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon an untrue statement or omission or alleged untrue statement or omission made in a Registration Statement, preliminary prospectus or final or summary prospectus or any amendment or supplement thereto or other document, in reliance upon and in conformity with written information furnished to the Company by or on behalf of such indemnified Person, specifically for use in the preparation thereof; and provided further, that the indemnity agreement contained in this Section 10 with respect to any preliminary prospectus shall not inure to the benefit of any indemnified Person using the same in respect of any loss, claim, damage, liability or action asserted by someone who purchased shares from such Person if a copy of an amended preliminary prospectus or prospectus supplement was delivered by the Company to the Registered Holders and the underwriters, if any, prior to the pricing of the sale of the securities (if an underwritten offering) or prior to the effectiveness of the Registration Statement, but was not delivered to the purchaser of the securities from the indemnified Person, and the untrue statement or omission or alleged untrue statement or omission of a material fact contained in such preliminary prospectus was corrected in the amended preliminary prospectus or prospectus supplement.

10.2 In the event of any registration of securities under the Securities Act pursuant to this Agreement, the Registered Holders, severally and not jointly, will indemnify and hold harmless the Company, each of its directors and officers, any underwriter and each other Person, if any, who controls the Company or such underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities to which any such indemnified Person may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or action in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in such Registration Statement or preliminary prospectus or final or summary prospectus contained therein, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements made therein (in the case of a Prospectus or preliminary prospectus, in light of the circumstances under which they were made) not misleading, and will reimburse such indemnified Persons for any reasonable legal and other expenses incurred by them in connection with investigating or defending any such action or claim, excluding any amounts paid in settlement of any litigation, commenced or threatened, if such settlement is effected without the prior written consent of the indemnifying Registered Holder; but in all cases only if, and to the extent that, any such loss, claim, damage, liability or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission therein made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the indemnifying Registered Holder specifically for use in the preparation thereof. Notwithstanding the foregoing, the amount of the indemnity provided by each Registered Holder pursuant to this Section 10 shall not exceed the net proceeds received by such Registered Holder in the related registration and sale.

10.3 Promptly after receipt by a party entitled to indemnification under subsection 10.1 or 10.2 hereof of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under either of such subsections, notify the indemnifying party in writing of the commencement thereof. In case any such action is brought against the indemnified party and it shall so notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in, and, to the extent that it so chooses, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party that it so chooses, such indemnifying party shall not be liable for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof, provided, however, that if the indemnifying party fails to take reasonable steps necessary to diligently defend such claim within twenty (20) days after receiving notice from the indemnified party that the indemnified party believes the indemnifying party has failed to take such steps, the indemnified party may assume its own defense and the indemnifying party shall be liable for any expenses therefor. The indemnity and contribution agreements in this Section 10 are in addition to any liabilities which the indemnifying parties may have pursuant to law.

10.4 If the indemnification provided for in this Section 10 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to herein, or is insufficient to hold the indemnified party harmless therefrom, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in this Section 10, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 10 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

Section 11. Sales under Rule 144. With a view to making available to the Stockholders the benefits of Rule 144 promulgated under the Securities Act and any other similar rule or regulation of the Commission that may at any time permit the Stockholders to sell the Registrable Securities without registration, the Company agrees to:

(a) make and keep available adequate current public information, as those terms are understood and defined in Rule 144 (or any successor provision);

(b) file with the Commission in a timely manner all reports and other documents required to be filed by the Company under the Securities Act and the Exchange Act; and

(c) furnish to any Stockholder forthwith upon request (i) a written statement by the Company that it has complied with the foregoing requirements and (ii) such other information as may be reasonably requested by Stockholder in availing itself of any rule or regulation of the Commission which permits the selling of any such securities without registration.

Section 12. Removal of Legend. The Company agrees, to the extent allowed by law, to remove any legends on certificates representing Registrable Securities describing transfer restrictions applicable to such securities (i) upon the sale of such securities pursuant to an effective Registration Statement under the Securities Act or in accordance with the provisions of Rule 144 under the Securities Act, or (ii) upon the written request of any holder of Registrable Securities if such securities may then be sold without restriction under Rule 144.

Section 13. Lock-Up Agreements . If requested by a managing underwriter, each holder of Registrable Securities agrees not to sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any Registrable Securities (or other securities) of the Company held by such holder (other than those included in the registration) for a 30-day period (or such longer period requested by the managing underwriter which shall in no event exceed 90 days).

Section 14. Notices. Any notices or other communications required or permitted hereunder shall be in writing and be deemed to have been given if mailed, three business days after being deposited in the United States mail, postage prepaid and registered or certified at the addresses listed on the signature pages hereof or at such other address of which the Company or Investor has been advised by notice hereunder. Notice shall be deemed effective upon receipt or refusal.

Section 15. Modification. Notwithstanding anything to the contrary in this Agreement or otherwise, no modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless in writing and signed by the Company and the Stockholders holding not less than a majority of the Registrable Securities (assuming for purposes of such calculation the conversion of all Series A Preferred and exercise of all Warrants in each case then constituting Registrable Securities) then outstanding. Any such modification, amendment or waiver shall be binding on all holders of Registrable Securities and all Persons who may thereafter acquire any Registrable Securities.

Section 16. Non-Waiver. The failure to enforce at any time any of the provisions of this Agreement, or to require at any time performance by any other party of any of the provisions hereof, shall in no way be construed to be a waiver of such provisions.

Section 17. Partial Invalidity. If any clause, sentence, paragraph, section or part of this Agreement shall be deemed invalid, unenforceable or against public policy, the part that is invalid, unenforceable or contrary to public policy shall not affect, impair, invalidate or nullify the remainder of this Agreement, but the invalidity, unenforceability or contrariness to public policy shall be confined only to the clause, sentence, paragraph, section or part of this Agreement so invalidated, unenforceable or against public policy.

Section 18. Termination of Registration Right. Notwithstanding any other provision of this Agreement to the contrary, the registration rights granted under Section 2 will terminate as to any Stockholder upon the first day the Stockholder is able to sell all of the Registrable Securities then owned by such Person under Rule 144 within any given three-month period.

Section 19. Construction. The language in all parts of this Agreement shall in all cases be construed simply, according to its fair meaning, and shall not be construed strictly for or against either of the parties hereto.

Section 20. Governing Law. This Agreement shall be governed and construed according to the laws of the State of Texas, without regard to its conflicts of law principles.

Section 21. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute but one and the same instrument.

Section 22. Further Assurances . The parties hereto will do such further acts and things necessary to ensure that the terms of this Agreement are carried out and observed.

Section 23. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.

Section 24. Specific Performance. The parties agree that, to the extent permitted by law, (i) the obligations imposed on them in this Agreement are special, unique and of an extraordinary character, and that in the event of a breach by any such party damages would not be an adequate remedy and (ii) the other party shall be entitled to specific performance and injunctive and equitable relief in addition to any other remedy to which it may be entitled at law or in equity.

[ Remainder of Page Intentionally Left Blank ]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.


AMERICAN ELECTRIC TECHNOLOGIES, INC.

By:
Name:		Charles M. Dauber
Title:		President

Address for Notice:

American Electric Technologies, Inc.

6410 Long Drive

Houston, Texas 77087

Attention: Frances Powell Hawes

With a copy (which shall not constitute notice) to:

Joel Bernstein

2666 Tigertail Avenue, Suite 104

Miami, Florida 33133

Signature Page to Registration Rights Agreement


JCH CRENSHAW HOLDINGS, LLC

By:
Name:
Title:

Address for Notice:

JCH Crenshaw Holdings, LLC

470 Orleans St., 7 ^th Floor

Beaumont, Texas 77701

Attention: Casey Crenshaw

With a copy (which shall not constitute notice) to:

Thompson & Knight LLP

333 Clay Street

Suite 3300

Houston, Texas 77002

Attention: Jerry L. Metcalf

Fax: (832) 397-8217

Signature Page to Registration Rights Agreement

CONSENT AND EIGHTH AMENDMENT TO LOAN AGREEMENT

THIS CONSENT AND EIGHTH AMENDMENT TO LOAN AGREEMENT (this “ Consent and Amendment ”) is made and entered into effective as of April 30, 2012, by and between AMERICAN ELECTRIC TECHNOLOGIES, INC. , a Florida corporation (“ Borrower ”), and JPMORGAN CHASE BANK, N.A. , a national association (“ Lender ”). Capitalized terms used herein that are not otherwise defined shall have the meaning assigned to such terms in the Loan Agreement (hereinafter defined).

R E C I T A L S :

WHEREAS, Borrower has entered into a Securities Purchase Agreement dated April 13, 2012 (the “SPA”) with JCH Crenshaw Holdings, LLC (“Crenshaw”) pursuant to which the Borrower will issue and sell to Crenshaw certain shares of the Borrower’s Series A Preferred Stock (the “ Preferred Stock ”) and certain warrants to purchase shares of the Borrower’s common stock (the “ Warrant s”);

WHEREAS, under the SPA and the other documents related thereto, Borrower has agreed to pay certain dividends to Crenshaw as the holder of the Preferred Stock;

WHEREAS, Borrower has requested Lender consent to the transactions contemplated by the SPA and the payment of dividends to Crenshaw in accordance with Borrower’s Articles of Amendment of Articles of Restatement of Articles of Incorporation dated as of April 13, 2012 (“Borrower’s Articles”); and

WHEREAS, Lender has agreed to consent to the SPA, the issuance and sale of the Preferred Stock and Warrant and the payment to Crenshaw of the dividends required under the Borrower’s Articles, subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Loan Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

A G R E E M E N T :

1. Consent and Amendment . (a) Provided that (i) issuance and sale to Crenshaw of the Preferred Stock and Warrants and (ii) the payment of dividends to Crenshaw for its Preferred Stock is consummated in accordance with the terms of the SPA and the Borrower’s Articles, the Lender hereby consents to the SPA and the Borrower’s Articles and waives any Default or Event of Default under the Credit Agreement occurring as a result thereof. Further, Section 7(e) of the Loan Agreement which limits dividends and redemptions is hereby amended for the limited purpose of allowing the dividends payable to Crenshaw and the redemption of the Preferred Stock, each as set forth in Borrower’s Articles.

SEVENTH AMENDMENT – Page 1

(b) This consent and amendment is limited solely to the extent provided herein and will not have any applicability to any other obligation of the Borrower. This Consent and Amendment will not be deemed to create any course of dealing or precedent for future consents, amendments or waivers nor shall it be construed to be a consent or amendment, except as specifically provided in this Section 1 , of any term, condition or provision of the Credit Agreement. The Borrower, by its execution hereof, hereby acknowledges that it has conducted its own due diligence in regard to the SPA and that it has not relied on the Lender in any way in regard thereto. Specifically, the Lender has not provided any information about the SPA or Crenshaw or otherwise undertaken to assist or advise the Borrower in any way in regard thereto. The Borrower agrees to provide to the Lender copies of the final, executed SPA, the Warrants, the Borrower’s Articles and any other documents related thereof and agrees to indicate to the Lender any substantial changes thereto from the drafts provided to Lender previously. Should the SPA, the terms of the Warrants, the Borrower’s Articles change in any material respect, the Lender reserves the right to rescind this Consent and Amendment by written notice to the Borrower.

2. Conditions of Effectiveness . This Consent and Amendment shall become effective when, and only when, Lender shall have received counterparts of this Consent and Amendment executed by Borrower and Section 1 hereof shall become effective when, and only when, Lender shall have additionally received any and all other documentation as Lender may reasonably require.

3. Representations and Warranties of Borrower . Borrower represents and warrants as follows:

(a) Borrower is duly authorized and empowered to execute, deliver and perform this Consent and Amendment and all other instruments referred to or mentioned herein to which it is a party, and all action on its part requisite for the due execution, delivery and the performance of this Amendment has been duly and effectively taken. This Consent and Amendment, when executed and delivered, will constitute valid and binding obligations of Borrower enforceable in accordance with its terms. This Amendment does not violate any provisions of Borrower’s Articles of Incorporation, By-Laws, or any contract, agreement, law or regulation to which Borrower is subject, and does not require the consent or approval of any regulatory authority or governmental body of the United States or any state.

(b) The representations and warranties made by Borrower in the Loan Agreement are true and correct as of the date of this Amendment.

(c) No event has occurred and is continuing which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

4. Reference to and Effect on the Loan Documents .

(a) Upon the effectiveness of Section 1 hereof, on and after the date hereof, each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import, and each reference in the Loan Documents shall mean and be a reference to the Loan Agreement as amended hereby.

SEVENTH AMENDMENT – Page 2

(b) Except as specifically amended above, the Loan Agreement and the Note(s), and all other instruments securing or guaranteeing Borrower’s obligations to Lender (collectively, the “ Loan Documents ”) shall remain in full force and effect and are hereby ratified and confirmed. Without limiting the generality of the foregoing, the Loan Documents and all collateral described therein do and shall continue to secure the payment of all obligations of Borrower under the Loan Agreement and the Note(s), as amended hereby, and under the other Loan Documents.

(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of Lender under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.

5. Costs and Expenses . Borrower agrees to pay on demand all costs and expenses of Lender in connection with the preparation, reproduction, execution and delivery of this Amendment and the other instruments and documents to be delivered hereunder, including the reasonable fees and out-of-pocket expenses of counsel for Lender. In addition, Borrower shall pay any and all fees payable or determined to be payable in connection with the execution and delivery, filing or recording of this Consent and Amendment and the other instruments and documents to be delivered hereunder, and agrees to save Lender harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such fees.

6. Execution in Counterparts . This Consent and Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument.

7. Governing Law . This Amendment shall be governed by and construed in accordance with the laws of the State of Texas.

8. Facsimile Documents and Signatures . For purposes of negotiating and finalizing this Amendment, if this document or any document executed in connection with it is transmitted by facsimile machine, it shall be treated for all purposes as an original document. Additionally, the signature of any party on this document transmitted by way of a facsimile machine shall be considered for all purposes as an original signature. Any such faxed document shall be considered to have the same binding legal effect as an original document. At the request of any party, any faxed document shall be re-executed by each signatory party in an original form.

9. Joinder of Guarantor . M & I Electric Industries, Inc. and American Access Technologies, Inc., Guarantor as defined in the Loan Agreement, join in the execution of this Consent and Amendment to evidence Guarantor’s consent to the terms hereof, to confirm Guarantor’s continuing obligations under the terms of the Guaranty Agreement, and to acknowledge that without such consent and confirmation, Lender would not enter into this Amendment or otherwise consent to the terms hereof. Additionally, Guarantor represents to Lender that Guarantor is duly authorized and empowered to execute, deliver and perform this

SEVENTH AMENDMENT – Page 3

Amendment, and all action on its part requisite for the due execution, delivery and the performance of this Amendment has been duly and effectively taken. This Amendment, when executed and delivered, will constitute valid and binding obligations of Guarantor enforceable in accordance with its terms.

10. Final Agreement . THIS WRITTEN CONSENT AND AMENDMENT OF LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed in multiple counterparts, each of which is an original instrument for all purposes, all as of the day and year first above written.

[Signature page follows.]

SEVENTH AMENDMENT – Page 4


BORROWER:

AMERICAN ELECTRIC TECHNOLOGIES, INC.

By:		/s/ Charles Dauber
		Charles Dauber,
		Chief Executive Officer

LENDER:

JPMORGAN CHASE BANK, N.A.

By:		/s/ Robert Morgan
		Robert Morgan,
		Vice President


GUARANTOR:

M & I ELECTRIC INDUSTRIES, INC.

By:		/s/ Charles Dauber
		Charles Dauber,
		Chief Executive Officer

AMERICAN ACCESS TECHNOLOGIES, INC.

By:		/s/ Charles Dauber
		Charles Dauber,
		Chief Executive Officer

SEVENTH AMENDMENT – Page 5

NINTH AMENDMENT TO LOAN AGREEMENT

THIS NINTH AMENDMENT TO LOAN AGREEMENT (the “ Ninth Amendment ” or “ this Amendment ”) is made and entered into effective as of August , 2012, by and between AMERICAN ELECTRIC TECHNOLOGIES, INC. , a Florida corporation (“ Borrower ”), and JPMORGAN CHASE BANK, N.A. , a national association (“ Lender ”).

R E C I T A L S :

WHEREAS, Borrower and Lender entered into a Letter Loan Agreement dated October 31, 2007 (which as the same may have been or may hereafter be amended from time to time is herein called the “ Loan Agreement ”; the terms defined therein being used herein as therein defined unless otherwise defined herein); and

WHEREAS, Borrower and Lender desire to amend certain terms and provisions of the Loan Agreement.

A G R E E M E N T :

1. Amendments to the Loan Agreement . The Loan Agreement is, effective the date hereof, and subject to the satisfaction of the conditions precedent set forth in Section 2 hereof, hereby amended as follows:

(a) Amendment to Section 1(a) . Section 1(a) of the Loan Agreement is hereby deleted in its entirety and the following is substituted therefor:

“(a) Commitment . Subject to the terms and conditions set forth herein, Lender agrees to make loans (each of which is a “ Loan ”, and collectively the “ Loans ”) to Borrower, on a revolving basis (the “ Borrowing Base Facility ”) from time to time during the period commencing on the date hereof and continuing through July 1, 2014 (the “ Maturity Date ”), the maturity date of the promissory note evidencing the Borrowing Base Facility, such amounts as Borrower may request hereunder; provided , however , the total principal amount (the “ Borrower’s Loan Limit ”) outstanding at any time shall not exceed the lesser of (i) an amount equal to the Borrowing Base and (ii) $10,000,000 minus the aggregate face amount of any Letters of Credit. Subject to the terms and conditions hereof, Borrower may borrow, repay and reborrow hereunder. If at any time the outstanding advances under the Borrowing Base Facility exceed the Borrower’s Loan Limit as shown on any reports delivered to Lender under Section 6(d)(ii) or

NINTH AMENDMENT – Page 1

as indicated by Lender’s own records, Borrower shall, on the date of the delivery of such report to Lender or on the date of notice from Lender as to Lender’s records, prepay on the Borrowing Base Facility such amount as may be necessary to eliminate such excess, plus all accrued but unpaid interest thereon. The sums advanced under the Borrowing Base Facility shall be used for general corporate purposes and working capital. As used in this Agreement, the term “ Borrowing Base ” shall have the meaning set forth in Exhibit A attached hereto, and the term “adjusted net income” shall mean, as of any date, Borrower’s net income from operations as determined in accordance with GAAP, plus depreciation and amortization.”

(b) Amendment to Section 8(a) . Section 8(a) of the Loan Agreement is hereby amended by deleting the definition of Consolidated Tangible Net Worth in its entirety and the following is substituted therefor:

“(i) “Consolidated Net Worth ” means the book value, as shown on its financial statements of all of Borrower’s and its Subsidiaries’ assets less Consolidated Total Liabilities.”

(c) Amendment to Section 8(b)(ii) . Section 8(b)(ii) of the Loan Agreement is hereby deleted in its entirety and the following is substituted therefor:

“(ii) Total Liabilities to Net Worth Ratio . Permit, as of the end of each calendar quarter, the ratio of Consolidated Total Liabilities to Consolidated Net Worth to be more than 1.00 to 1.00.”

(d) Amendment to Section 8(b)(iii) . Section 8(b)(iii) of the Loan Agreement is hereby deleted in its entirety and the following is substituted therefor:

“(iii) Net Profit . Permit, at any time, its net income for the six month period most recently ending to be less than $1.00.”

2. Conditions to Effectiveness . This Amendment shall become effective when, and only when, Lender shall have received counterparts of this Amendment executed by Borrower and Section 1 hereof shall become effective when, and only when, Lender shall have additionally received any and all other documentation as Lender may reasonably require.

3. Representations and Warranties of Borrower . Borrower represents and warrants as follows:

(a) Borrower is duly authorized and empowered to execute, deliver and perform this Amendment and all other instruments referred to or mentioned herein to which it is a party, and all action on its part requisite for the due execution, delivery and the performance of this Amendment has been duly and effectively taken. This Amendment, when executed and delivered, will constitute valid and binding obligations of Borrower enforceable in accordance with its terms. This Amendment does not violate any provisions of Borrower’s Articles of

NINTH AMENDMENT – Page 2

Incorporation, By-Laws, or any contract, agreement, law or regulation to which Borrower is subject, and does not require the consent or approval of any regulatory authority or governmental body of the United States or any state.

(b) The representations and warranties made by Borrower in the Loan Agreement are true and correct as of the date of this Amendment.

(c) No event has occurred and is continuing which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

4. Reference to and Effect on the Loan Documents .

5. Costs and Expenses . Borrower agrees to pay on demand all costs and expenses of Lender in connection with the preparation, reproduction, execution and delivery of this Amendment and the other instruments and documents to be delivered hereunder, including the reasonable fees and out-of-pocket expenses of counsel for Lender. In addition, Borrower shall pay any and all fees payable or determined to be payable in connection with the execution and delivery, filing or recording of this Amendment and the other instruments and documents to be delivered hereunder, and agrees to save Lender harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such fees.

6. Execution in Counterparts . This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument.

7. Governing Law . This Amendment shall be governed by and construed in accordance with the laws of the State of Texas.

NINTH AMENDMENT – Page 3

8. Facsimile and Emailed Documents and Signatures . For purposes of negotiating and finalizing this Amendment, if this document or any document executed in connection with it is transmitted by facsimile machine or by electronic mail, it shall be treated for all purposes as an original document. Additionally, the signature of any party on this document transmitted by way of a facsimile machine or electronic mail shall be considered for all purposes as an original signature. Any such faxed or emailed document shall be considered to have the same binding legal effect as an original document. At the request of any party, any faxed or emailed document shall be re-executed by each signatory party in an original form.

9. Joinder of Guarantor . M & I Electric Industries, Inc. and American Access Technologies, Inc., Guarantor as defined in the Loan Agreement, join in the execution of this Amendment to evidence Guarantor’s consent to the terms hereof, to confirm Guarantor’s continuing obligations under the terms of the Guaranty Agreement, and to acknowledge that without such consent and confirmation, Lender would not enter into this Amendment or otherwise consent to the terms hereof. Additionally, Guarantor represents to Lender that Guarantor is duly authorized and empowered to execute, deliver and perform this Amendment, and all action on its part requisite for the due execution, delivery and the performance of this Amendment has been duly and effectively taken. This Amendment, when executed and delivered, will constitute valid and binding obligations of Guarantor enforceable in accordance with its terms.

10. Final Agreement . THIS WRITTEN AMENDMENT OF LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[Signature page follows.]

NINTH AMENDMENT – Page 4


BORROWER:

AMERICAN ELECTRIC TECHNOLOGIES, INC.

By:
		Charles Dauber,
		Chief Executive Officer

LENDER:

JPMORGAN CHASE BANK, N.A.

By:
		Robert Morgan,
		Vice President


GUARANTOR:

M & I ELECTRIC INDUSTRIES, INC.

By:
		Charles Dauber,
		Chief Executive Officer

AMERICAN ACCESS TECHNOLOGIES, INC.

By:
		Charles Dauber,
		Chief Executive Officer

NINTH AMENDMENT – Page 5

Exhibit 31.1

CERTIFICATIONS

I, Charles M. Dauber, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of American Electric Technologies, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 14, 2012

By:

/s/ Charles M. Dauber

Charles M. Dauber

Principal Executive Officer

Exhibit 31.2

CERTIFICATIONS

I, Frances Powell Hawes, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of American Electric Technologies, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 14, 2012

By:

/s/ Frances Powell Hawes

Frances Powell Hawes

Principal Financial Officer

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Charles M. Dauber, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of American Electric Technologies, Inc. on Form 10-Q for the fiscal quarter ended June 30, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of American Electric Technologies, Inc.

August 14, 2012

By:

/s/ Charles M. Dauber

Charles M. Dauber

Principal Executive Officer

I, Frances Powell Hawes, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of American Electric Technologies, Inc. on Form 10-Q for the fiscal quarter ended June 30, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of American Electric Technologies, Inc.

August 14, 2012

By:

/s/ Frances Powell Hawes

Frances Powell Hawes

Principal Financial Officer

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company