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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (S. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes 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 April 24, 2014, the registrant had 8,176,083 shares of its Common Stock outstanding.

	March 31, 2014			December 31,
	(unaudited)			2013
Assets
Current assets:
Cash and cash equivalents	$	1,725		$	4,148
Accounts receivable-trade, net of allowance of $342 and $288 at March 31, 2014 and December 31, 2013		12,932			11,480
Inventories, net of allowance of $199 and $237 at March 31, 2014 and December 31, 2013		6,093			5,216
Cost and estimated earnings in excess of billings on uncompleted contracts		5,204			5,312
Prepaid expenses and other current assets		532			439
Total current assets		26,486			26,595
Property, plant and equipment, net		7,501			6,040
Advances to and investments in foreign joint ventures		12,825			13,033
Other assets		136			168
Total assets	$	46,948		$	45,836
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	7,960			5,850
Accrued payroll and benefits		1,179			1,911
Other accrued expenses		229			411
Billings in excess of costs and estimated earnings on uncompleted contracts		1,508			3,021
Short-term notes payable	—			—
Other current liabilities		70			120
Total current liabilities		10,946			11,313
Notes payable		1,500			500
Deferred income taxes		3,592			3,541
Deferred compensation		230			211
Total liabilities		16,268			15,565
Convertible preferred stock:
Redeemable convertible preferred stock, Series A, net of discount of $753 at March 31, 2014 and $764 at December 31, 2013; $0.001 par value, 1,000,000 shares authorized, issued and outstanding at March 31, 2014 and December 31, 2013		4,247			4,236
Stockholders’ equity:
Common stock; $0.001 par value, 50,000,000 shares authorized, 8,176,083 and 8,008,759 shares issued and outstanding at March 31, 2014 and December 31, 2013		8			8
Treasury stock, at cost (108,976 shares at March 31, 2014 and 49,863 shares at December 31, 2013)		(704	)		(238	)
Additional paid-in capital		10,767			10,494
Accumulated other comprehensive income		1,080			983
Retained earnings; including accumulated statutory reserves in equity method investments of $1,857 at March 31, 2014 and December 31, 2013		15,282			14,788
Total stockholders’ equity		26,433			26,035
Total liabilities and stockholders’ equity	$	46,948		$	45,836

	Three Months Ended March 31,
	2014			2013
Net sales	$	17,400		$	14,430
Cost of sales		14,828			11,450
Gross profit		2,572			2,980
Operating expenses:
Research and development		66			169
Selling and marketing		819			665
General and administrative		1,457			1,544
Total operating expenses		2,342			2,378
Income (loss) from domestic operations		230			602
Net equity income from foreign joint ventures’ operations:
Equity income from foreign joint ventures’ operations		474			1,458
Foreign joint ventures’ operations related expenses		(112	)		(51	)
Net equity income from foreign joint ventures’ operations:		362			1,407
Income (loss) from domestic operations and net equity income from foreign joint ventures’ operations		592			2,009
Other income (expense):
Interest expense and other, net		(12	)		(16	)
Income before income taxes		580			1,993
Provision for income taxes	—				255
Net income (loss) before dividends on redeemable convertible preferred stock		580			1,738
Dividends on redeemable convertible preferred stock		86			85
Net income (loss) attributable to common stockholders	$	494		$	1,653
Earnings (loss) per common share:
Basic	$	0.06		$	0.21
Diluted		0.06			0.18
Weighted - average number of common shares outstanding:
Basic		8,053,497			7,949,571
Diluted		8,625,258			9,383,378

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

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

	Three Months Ended March 31,
	2014			2013
Cash flows from operating activities:
Net income	$	580		$	1,738
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax provision (benefit)	—				255
Equity income from foreign joint ventures’ operations		(474	)		(1,458	)
Depreciation and amortization		232			186
Stock based compensation		190			197
Provision for bad debt	—				110
Allowance for obsolete inventory		(38	)		8
Gain on sale of property and equipment	—			—
Deferred compensation costs		19			33
Change in operating assets and liabilities:
Accounts receivable		(1,455	)		(1,793	)
Dividend declared receivables	—			—
Income taxes payable		(49	)		8
Inventories		(839	)		422
Costs and estimated earnings in excess of billings on uncompleted contracts		108			(371	)
Prepaid expenses and other current assets		(90	)		276
Accounts payable and accrued liabilities		1,195			1,761
Billings in excess of costs and estimated earnings on uncompleted contracts		(1,513	)		(113	)
Net cash provided by (used in) operating activities		(2,134	)		1,259
Cash flows from investing activities:
Purchases of property, plant and equipment and other assets		(1,661	)		(277	)
Proceeds from disposal of property, plant and equipment	—			—
Investment (in) foreign joint ventures’ operations	—			—
Proceeds from foreign joint ventures’ operations dividends		830		—
Net cash provided by (used in) from investing activities		(831	)		(277	)
Cash flows from financing activities:
Proceeds from sale of common stock, preferred stock, and warrants		83			6
Treasury stocks purchase		(466	)		(147	)
Preferred stock cash dividend		(75	)		(75	)
Advances from (repayment of) credit facility		1,000		—
Capital lease obligation payment	—				(40	)
Principal payments on short-term notes payable	—			—
Net cash provided by (used in) financing activities		542			(256	)
Net increase (decrease) in cash and cash equivalents		(2,423	)		726
Cash and cash equivalents, beginning of year		4,148			4,477
Cash and cash equivalents, end of year	$	1,725		$	5,203
Supplemental disclosures of cash flow information:
Interest paid	$	27		$	7
Income taxes paid	$	179		$	1

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

The accompanying condensed unaudited consolidated financial statements of American Electric Technologies, Inc. and its wholly-owned subsidiaries (“AETI”, “the Company”, “our”, “we”, “us”) as of March 31, 2014 and for the three 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 March 31, 2014 and results of operations for the three months ending March 31, 2014 and 2013. 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 consolidated financial statements included in on our Annual Report on Form 10-K for the year ended December 31, 2013, which was filed on March 28, 2014.

Basic earnings per common share is based on the weighted average number of common shares outstanding for the three months ended March 31, 2014 and 2013. Diluted earnings per common share is based on the weighted average number of common shares outstanding, plus the incremental shares that would have been outstanding upon the assumed conversion of convertible instruments, 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 per common share (in thousands, except shares and per share data):

	Three Months Ended
	March 31,
	2014		2013
Net income attributable to common stockholders	$	494	$	1,653
Weighted average basic shares		8,053,497		7,949,571
Dilutive effect of preferred stocks*, stock options and restricted stock units		571,761		1,433,807
Total weighted average diluted shares		8,625,258		9,383,378
Earnings per common share:
Basic	$	0.06	$	0.21
Dilutive	$	0.06	$	0.18

In January 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-01, Balance Sheet (Topic 210) – Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. ASU No. 2013-01 was issued to clarify that ordinary trade receivables and receivables are not within the scope of ASU No. 2011-11. ASU No. 2011-11 applies only to derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with specific criteria contained in the Codification or subject to a master netter arrangement or similar agreement. ASU No. 2013-01 is effective for annual periods beginning on or after January 1, 2013 and interim periods within those periods. The adoption of ASU No. 2013-01 did not have a significant impact on the Company’s consolidated financial position or results of operations.

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830) – Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. ASU No. 2013-05 provides guidance on releasing cumulative translation adjustments when a reporting entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. In addition, ASU No. 2013-05 provides guidance on the release of cumulative translation adjustments in partial sales of equity method investments and in step acquisition. ASU No. 2013-05 is effective on a prospective basis for annual periods beginning

after December 15, 2013 and interim periods within those periods. The adoption of ASU No. 2013-05 did not have a significant impact on the Company’s consolidated financial position or results of operations.

In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU No. 2014-08 changes the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in U.S. GAAP. Under ASU No. 2014-08, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. In addition, ASU No. 2014-08 requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The guidance also requires disclosure of pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. ASU No. 2014-08 is effective in the first quarter of 2015 with early adoption permitted. Management is currently evaluating the impact of ASU No. 2014-08 on the Company’s consolidated financial position, results of operations and disclosures.

The Company follows the guidance prescribed by the Accounting Standard Codification (“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. 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 March 31,
	2014			2013
Net sales:
Technical Products and Services	$	14,086		$	10,480
Electrical and Instrumentation Construction		1,762			2,528
American Access Technologies		1,552			1,422
	$	17,400		$	14,430
Gross profit:
Technical Products and Services	$	2,130		$	1,857
Electrical and Instrumentation Construction		305			908
American Access Technologies		137			215
	$	2,572		$	2,980
Income from domestic operations and net equity income from foreign joint ventures’ operations:
Technical Products and Services	$	2,027		$	1,554
Electrical and Instrumentation Construction		305			908
American Access Technologies		(268	)		(75	)
Corporate and other unallocated expenses		(1,834	)		(1,785	)
Income from domestic operations		230			602
Equity income from BOMAY		548			1,001
Equity income (loss) from MIEFE		(36	)		20
Equity income (loss) from AAG		(38	)		437
Foreign operations (expenses)		(112	)		(51	)
Net equity income from foreign joint ventures’ operations		362			1,407
Income from domestic operations and net equity income from foreign joint ventures’ operations	$	592		$	2,009

segments. With the exception of equity income from foreign joint ventures’ operations and joint venture management related expenses, all other costs, expenses and other income have been allocated to their respective segments.

We have interests in three joint ventures outside of the United States of America (“U.S.”) which are accounted for on the equity method:

Summary financial information of our foreign joint ventures in U.S. dollars was as follows at March 31, 2014 (unaudited) and December 31, 2013 and the three months ended March 31, 2014 and 2013 (in thousands):

	BOMAY				MIEFE				AAG
	2014		2013		2014		2013		2014		2013
Assets:
Total current assets	$	96,995	$	107,257	$	4,273	$	4,287	$	1,558	$	3,695
Total non-current assets		5,006		5,059		115		115		518		823
Total assets	$	102,001	$	112,316	$	4,388	$	4,402	$	2,076	$	4,518
Liabilities and equity:
Total liabilities	$	74,196	$	85,858	$	1,690	$	1,800	$	989	$	2,163
Total joint ventures’ equity		27,805		26,458		2,698		2,602		1,087		2,355
Total liabilities and equity	$	102,001	$	112,316	$	4,388	$	4,402	$	2,076	$	4,518

	Three Months Ended March 31,
	BOMAY				MIEFE				AAG
	2014		2013		2014		2013		2014			2013

Revenue	$	19,604	$	33,509	$	824	$	2,667	$	782		$	3,485
Gross Profit	$	2,935	$	4,288	$	359	$	482	$	109		$	1,556
Earnings	$	1,371	$	2,502	$	94	$	48	$	(73	)	$	891

The following is a summary of activity in investments in foreign joint ventures for the three months ended March 31, 2014, (unaudited):

	March 31, 2014
	BOMAY			MIEFE			AAG			TOTAL
	(in thousands)
Investments in foreign joint ventures:
Balance at December 31, 2013	$	10,609		$	1,138		$	1,286		$	13,033
Equity in earnings (loss) in 2014		548			(38	)		(36	)		474
Dividend distributions in 2014	—			—				(830	)		(830	)
Foreign currency translation adjustment		(31	)		8			171			148
Investments, end of period	$	11,126		$	1,108		$	591		$	12,825

Components of investments in foreign joint ventures:
Investment in joint ventures	$	2,033		$	15		$	54		$	2,102
Undistributed earnings		7,693			831			615			9,139
Foreign currency translation		1,400			262			(78	)		1,584
Investments, end of period	$	11,126		$	1,108		$	591		$	12,825

Under the equity method, the Company’s share of the joint ventures’ operations’ earnings or loss is recognized in the condensed consolidated statement 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.

On November 30, 2013, the Company entered into a $10 million Amended and Restated Credit Agreement with JP Morgan Chase Bank, N.A. The agreement replaced in its entirety the Company’s prior credit agreement, as amended, originally entered into with JP Morgan Chase Bank, N.A. in October of 2007.

The 2013 agreement has a maturity date of October 1, 2015. Under the agreement, the credit facility’s interest rate is London Interbank Offered Rate (“LIBOR”) (0.15% at March 31, 2014) plus 3.25% per annum and a commitment fee of 0.3% per annum on the unused portion of the credit limit each quarter. The 2013 agreement provides for usual and customary covenants and restrictions including that the borrower must maintain a fixed charge coverage ratio of no less than 1.25 to 1.00, and will not permit the ratio of consolidated total liabilities to consolidated net worth to exceed 1.00. Additionally, the borrower will not permit, at the end of each calendar quarter, for its net income for the most recently ended six month period to be less than $1.00.

The agreement is collateralized by the Company’s real estate in Beaumont, Texas, trade accounts receivable, equipment, inventories, and work-in-progress, and the Company’s U.S. subsidiaries are guarantors of the borrowing.

The Company has $1.5 million of borrowings outstanding under the JP Morgan Chase N.A. credit agreement at March 31, 2014 and $0.5 million at December 31, 2013. The company had additional borrowing capacity of $8.4 million and $7.9 million at March 31, 2014 and December 31, 2013 respectively.

In conjunction with the facility expansion at Beaumont, interest is being capitalized at the 30 day LIBOR rate. Interest capitalized for three months ending March 31, 2014 and 2013 was $5,000 and $0 respectively.

Inventories consisted of the following at March 31, 2014 (unaudited) and December 31, 2013 (in thousands):

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 2014 and 2013 is offset by a reduction of the valuation allowance provided in 2011. The tax provision for 2014 and 2013 reflects a 34% U.S. tax rate related to the equity in foreign joint ventures’ operations, net of dividends received for an effective rate of 0% and 13% because of the mix of US income or loss and foreign equity income.

The carrying amounts of cash and cash equivalents, trade accounts receivable and accounts payable approximate fair value as of March 31, 2014 and December 31, 2013 because of the relatively short maturity of these instruments.

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.

The initial value allocated to the warrants was recognized as a discount on the Series A Convertible Preferred Stock, with a corresponding charge to additional paid-in capital. The discount related to the warrants is accreted to retained earnings through the schedule redemption date of the redeemable Series A Convertible Preferred Stock. Discount accretion for the three months 2014 and 2013 totaled $11 and $10.

In late December 2013, the Company executed a new lease for office space at 1250 Wood Branch Park Drive, Houston, Texas. The lease covers approximately 13,000 square feet.

The term of the lease is 64 months and commences upon completion of tenant improvements, which were completed in March 2014.

The Company leases equipment (principally trucks and forklifts) under operating lease agreements that expire at various dates to 2016. Rental expense relating to operating leases and other short-term leases for the three months ended March 31, 2014 and 2013 amounted to approximately $64,000 and $72,000, respectively.

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

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Form 10-Q and the consolidated financial statements included in the 2013 Annual Report on Form 10-K filed on March 28, 2014. Historical results and percentage relationships set forth in the condensed consolidated statements of operations and cash flows, including trends that might appear, are not necessarily indicative of future operations or cash flows.

Except for historical and factual information, this document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, such as predictions of 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 2013 Annual Report on Form 10-K filed on March 28, 2014. 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.

American Electric Technologies, Inc. (the “Company”, “AETI”, “our”, “us” or “we”) was incorporated on October 21, 1996 as a Florida corporation under the name American Access Technologies, Inc. On May 15, 2007, we completed a business combination (the “M&I Merger”) with M&I Electric Industries, Inc. (“M&I”), a Texas corporation, and changed our name to American Electric Technologies, Inc. Our principal executive offices are located at 1250 Wood Branch Park Drive, Houston, Suite 600, Texas 77079 and our telephone number is 713-644-8182. Prior to the M&I Merger, our business consisted of the operations of the American Access segment described below.

Our corporate structure currently consists of American Electric Technologies, Inc., which owns 100% of both M&I Electric Industries, Inc. and American Access Technologies, Inc. The Company reports financial data for three operating segments: the Technical Products and Services (“TP&S”) segment and the Electrical and Instrumentation Construction (“E&I”) segment; which together encompass the operations of M&I, including its wholly-owned subsidiary, South Coast Electric Systems, LLC and its interest in international joint ventures’ operations in China, Singapore and Brazil; and the American Access (“AAT”) segment, which encompasses the operations of our wholly-owned subsidiary, American Access Technologies, Inc., including its Omega Metals division.

We have interests in three joint ventures outside of the U. S. which are accounted for on the equity method:

We are a leading provider of power delivery solutions to the global energy industry.

A key component of our company’s strategy is our international focus. We have two primary models for conducting our international business. First, we sell directly and through foreign sales agents that we have appointed. Many of those international partners also provide local service and support for our products in those overseas markets. Second, where local market conditions dictate, we have expanded internationally by forming joint venture operations with local companies in key markets such as China, Brazil and Singapore, where we can partner with the primary end-customer in those markets, there are local content requirements, or there is a competitive advantage for utilizing local manufacturing.

Our business strategy is to grow through organic growth in our key energy markets, to expand our solution set to our current market segments, to continue our international expansion, and to accelerate those efforts with acquisitions, while at the same time increasing earnings and cash flow per share to enhance overall stockholder value.

We are uniquely positioned to be the “turn-key” supplier for power delivery projects for our customers, where we are able to offer custom-designed power distribution and power conversion systems, power services, and electrical and instrumentation construction, all from one company.

Our power distribution products which support the oil and gas industry are capital-intensive and cyclical in nature. The U.S. shale drilling activity and related production continues to favorably impact the demand for our technical products and services. Our products marketed through our joint ventures in China, Singapore and Brazil are experiencing changing market conditions related to the energy demands in these regions coupled with economic weakness.

Our M&I Electric business has provided sophisticated custom-designed power distribution, power conversion, and automation and control systems for the energy industry since 1946. Our products are used to safely distribute and control the flow of electricity from the source of the power being generated (e.g. a diesel generator or the utility grid) to whatever mechanical device needs to use the power (drilling machinery, motors, other process equipment, etc.) at low and medium voltages.

Our power distribution products include low and medium voltage switchgear that provide power distribution and protection for electrical systems from electrical faults. Our products include both traditional low voltage and medium voltage switchgear, as well as a variety of arc-managed and arc-resistant switchgear to increase end-user safety in case of an arc-flash explosion. Our products are suitable for both ANSI (“American National Standards Institute”) and IEC (“International Electrotechnical Commission”) markets. Other power distribution products in our solution set include low voltage and medium voltage motor control centers, powerhouses, bus ducts, fuse and switch products, and other related power distribution equipment.

Our power conversion solutions include Analog, Digital SCR (“silicon controlled rectifier”) and Alternating Current Variable Frequency Drive (“AC VFD”) systems, that are used to adjust the speed and torque of an electric motor to match various user applications, primarily in the land and offshore drilling and marine vessel markets. Our Integrated Solar Inversion Station (ISIS™) is a 1 MW (megawatt) and 1.5MW integrated platform that includes an AC variable speed inverter, packaged with switchgear and a transformer, enabling quick set-up and reliable operation of utility-scale solar farms.

Our packaged solutions include power control rooms, eHouses, and other packaged electrical buildings that incorporate our power distribution and power conversion products for land or offshore deployment. Our packaged solutions also include Drillers Cabins for deployment in land and offshore drilling rigs.

Our automation and control solutions include PLC-based systems for the management of power in a user’s application. Our DrillAssist for land and offshore drilling and our vessel management systems for marine vessels are complete systems that enable the management of the drilling rig. DrillAssist includes auto-drill capabilities and a driller’s chair where the drilling rig operator manages the rig. DrillAssist and our vessel management system are based on technology from our March 2012 acquisition of the assets of Amnor Technologies, Inc.

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

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

Our technical services group provides low, medium and high voltage services to commission and maintain our customers’ electrical controls. We also provide low, medium and high voltage start-up/commissioning, preventative maintenance, emergency call out services, and breaker and switchgear refurbishment services to the Gulf Coast industrial market. We have expanded our services business to provide start-up and maintenance services for renewable projects, including wind and solar. We also provide power services to support our power distribution and power conversion products globally.

The E&I segment provides a full range of electrical and instrumentation construction and installation services to the Company’s markets. This segment’s services include new construction as well as electrical and instrumentation turnarounds, maintenance and renovation projects. Applications include installation of switchgear, AC and DC motors, drives, motor controls, lighting systems and high voltage cable.

This segment manufactures and markets zone cabling enclosures and custom 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 telecommunication network cabling, fiber optics and wireless solutions in a streamlined, flexible, and cost effective fashion. Omega Metals 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 region of the U.S. Representative customers of AAT include Chatsworth Products, Inc., Tyco Electronics and Panduit.

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 and Angra, Brazil.

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 condensed consolidated 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”.

Inventories – Inventories are stated at the lower of cost or market, with material value determined using an 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 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.

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

	Three Months Ended March 31,
	2014			2013
Net sales:
Technical Products and Services	$	14,086		$	10,480
Electrical and Instrumentation Construction		1,762			2,528
American Access Technologies		1,552			1,422
	$	17,400		$	14,430
Gross profit:
Technical Products and Services	$	2,130		$	1,857
Electrical and Instrumentation Construction		305			908
American Access Technologies		137			215
	$	2,572		$	2,980
Operating income (loss) from domestic operations and net equity in foreign joint ventures’ operations:
Technical Products and Services	$	2,027		$	1,554
Electrical and Instrumentation Construction		305			908
American Access Technologies		(268	)		(75	)
Corporate and other unallocated expenses		(1,834	)		(1,785	)
Income (loss) from domestic operations		230			602
Equity income from BOMAY		548			1,001
Equity income /(loss) from MIEFE		(36	)		20
Equity income /(loss) from AAG		(38	)		437
Foreign operations expenses		(112	)		(51	)

Net equity income from foreign joint ventures’ operations		362			1,407
Income (loss) from domestic operations and net equity income from foreign joint ventures’ operations	$	592		$	2,009

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 and joint venture management related 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 arm’s length basis. See footnote 5 in notes to condensed consolidated financial statements for detailed financial information on the foreign joint ventures.

A non-U.S. GAAP financial measure is generally defined as one that purports to measure historical or future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable U.S. GAAP measure. Please see the Company’s Annual Report on Form 10-K for 2013 filed on March 28, 2014 for a more in depth discussion of this indicator.

The table below shows the reconciliation of Net income (loss) attributable to common stockholders to Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the three months ended March 31, 2014 and 2013 (dollars in thousands):

Based on the increasing importance of the oil and gas sector for our business, management has begun capturing our financial results in three major market sectors in 2013. These sectors are: Oil and Gas; Power Generation and Distribution; and Marine and Other Industrials as discussed in Domestic Operations starting on page 13. This information is supplemental and provided to allow investors to follow our future success at marketing to various customer groups.

	For the Three Months Ended March 31, 2014 and 2013
	(in thousands)
2014	Oil & Gas			Power Generation & Distribution			Marine & Other Industrial			Total
Revenue	$	13,635		$	658		$	3,107		$	17,400
Gross Profit		2,076			131			365			2,572
Gross Profit as % of Revenue		15	%		20	%		12	%		15	%

2013
Revenue	$	9,081		$	482		$	4,867		$	14,430
Gross Profit		1,955			101			924			2,980
Gross Profit as of % of Revenue		22	%		21	%		19	%		21	%

Three Months Ended March 31, 2014 as Compared with the Three Months Ended March 31, 2013

Consolidated revenues increased $3.0 million at $17.4 million for the quarter ended March 31, 2014 from the comparable period in 2013. The TP&S segment’s revenue increase of $3.6 million or 34% was offset by a decrease in the E&I segment. The TP&S’s strong revenue growth is primarily due to increased demand for its technical products related to the continuing oil and gas related activity.

Consolidated gross profit for the quarter was $2.6 million. The consolidated gross profit decreased by $0.4 million compared to the prior year’s first quarter. This decrease was mainly attributable to decrease in the E&I and AAT segments partially offset by the increase of the TP&S segment. Decreased revenue and lower margins in both AAT and E&I segments reduced the gross profit compared to the same period in 2013, while the TP&S increase reflected increased focus on oil and gas projects with higher margins.

The TP&S segment’s revenue increased $3.6 million from $10.5 million for the quarter ended March 31, 2013, to $14.1 million for the quarter ended March 31, 2014, a 34% improvement which reflects the continued focus in the oil and gas market. Gross profit for the segment for the quarter ended March 31, 2014 was $2.1 million, an increase of $0.3 million over the quarter ended March 31, 2013.

The E&I segment reported revenue of $1.8 million for the quarter ended March 31, 2014, a decrease of $0.8 million, or 30%, from the quarter ended March 31, 2014, which primarily reflects a decrease in the field work related to construction activities on

power houses combined with the decreased revenue from independent industrial projects. Gross profit for the E&I segment during the quarter ended March 31, 2014 was $0.3 million, a decrease of $0.6 million from the prior year’s first quarter results due to extended work on fixed price contracts.

The AAT segment reported revenue of $1.6 million for the quarter ended March 31, 2014, up $0.1 million from the comparable prior year period, a 9% increase. Gross profit went down by $0.1 million for the quarter ended March 31, 2014, from $0.2 million in the prior year quarterly period. Gross profit as a percentage of net revenue decreased to 9% for the quarter ended March 31, 2014 from 15% in the comparable 2013 quarterly period. This segment continues to be challenged by competitive pricing and foreign competition.

The Company (AETI) continues to explore alternatives to address the financial performance of its AAT segment, including: a potential sale of AAT; the sale of certain of AAT’s assets; or redeploying these assets to other segments. No decision has been made and the business entity AAT continues to operate as a going concern. We expect to resolve this uncertainty during 2014

Research and development costs for the quarter ended March 31, 2014 were down to $66,000 from $169,000 for the quarter ended March 31, 2013, much of which relate to the continued development of the Company’s drilling controls systems and the ongoing development of Arc-Resistant products. This lower level reflects completions of initial developments and slower continuing refinements.

Selling and marketing expenses for the quarter ended March 31, 2014 were $0.8 million compared to the quarter ended March 31, 2013 of $0.7 million. This increase is primarily attributable to increased commissions on higher sales and timing of costs related to marketing and trade shows.

General and administrative expenses were down for the quarter ended March 31, 2014 compared to the same period in 2013 by $0.1 million due to a decrease in the Company’s employee stock compensation and bonus expenses partially offset by salary increases.

Net equity income from foreign joint ventures’ operations decreased for the quarter ended March 31, 2014 by $1.0 million to $0.4 million as compared to the quarter ended March 31, 2013. The decrease was driven by continued joint venture’s earnings weakness in China caused by lower activity and as non-recurring projects ended in Brazil.

As discussed in the Company’s 2013 Form 10-K, the BOMAY operations in China are seasonal as budgets are established for the year in March and BOMAY works to complete production to meet the annual target. After targets are met in the second or third quarter there is only minimal production in the fourth quarter. Budgets have been established for 2014 and BOMAY has returned to profitability in the first quarter after losses in late 2013. While these results are below those of the first quarter of 2013, we expect 2014 to be a profitable year.

On April 15, 2014, we notified our Joint Venture partner, Beppe Hans Eddy Askerbo, that we intended to withdraw from the AAG joint venture. We are organizing a new, wholly-owned subsidiary to conduct our continuing operations in Brazil. During this transition period, our consolidated results from Brazil will reflect the costs associated with the start-up of operations through the new entity in consolidated expenses. The Company is committed to the energy industry in Brazil serving our customers in the Brazilian market.

Interest expense and other, net was $12,000 for the quarter ended March 31, 2014, a decrease of $4,000 from the comparable 2013 quarter. The decrease primarily resulted from lower interest expense due to the capitalization of interest on our Beaumont expansion.

The provision for (benefit from) income taxes for the quarter ended March 31, 2014 was no expense which reflects the provision for taxes on the foreign joint venture equity earnings based on the annual estimated foreign joint venture equity earnings, net of dividends at 34% compared to an expense of $255 in the 2013 comparable quarter. As a result of the anticipated dividends meeting or exceeding expected equity income from Joint Ventures, the net federal tax provision was zero.

The Company’s backlog as of March 31, 2014 was $19.6 million compared to $23.6 million at December 31, 2013. The backlog for the TP&S segment was approximately $18 million as of March 31, 2014, a decrease of approximately $2.4 million as compared to the backlog at December 31, 2013. The backlog is expected to be realized as revenue during the remainder of the fiscal year.

The backlog for the E&I segment was approximately $1.6 million as of March 31, 2014, a decrease of $1.6 million as compared to the backlog at December 31, 2013. The backlog is expected to be realized as revenue during the remainder of the fiscal year.

The 2013 agreement has a maturity date of October 1, 2015. Under the agreement, the credit facility’s interest rate is London Interbank Offered Rate (“LIBOR”) 0.1549% plus 3.25% per annum and a commitment fee of 0.3% per annum on the unused portion of the credit limit each quarter. The 2013 agreement provides for usual and customary covenants and restrictions including that the borrower must maintain a fixed charge coverage ratio of no less than 1.25 to 1.00, and will not permit the ratio of consolidated total liabilities to consolidated net worth to exceed 1.00. Additionally, the borrower will not permit, at the end of each calendar quarter, for its net income for the most recently ended six month period to be less than $1.00.

During the three months ended March 31, 2014, the Company used cash of $2.1 million from operations as compared to providing $1.3 million for the same period in 2013. The impact on cash from the operating income was burdened by the consumption of cash by working capital of $2.9 million for the three months ended March 31, 2014 and for the quarter in 2013 the change in working capital generated $0.2 million. The increase in cash utilized by working capital is a result of increased inventory levels and increased billings resulting from the increase in product demand, primarily in TP&S.

During the three months ended March 31, 2014, the Company provided $0.8 million in cash for investing activities compared to $0.3 million for the comparable period in 2013. The increase in 2014 is mainly attributable to the construction at the manufacturing facility at Beaumont, computers and software purchases.

During the three months ended March 31, 2014, the Company utilized $0.5 million in cash from financing activities as compared to $0.3 million for the comparable period in 2013. The Company accessed its credit line for $1 million at the end of March to cover the cash utilized for the quarter ended March 31, 2014 was $0.4 million for the purchase of treasury shares in accordance with the employee stock incentive plan and preferred dividend of $0.08 million.

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.

Our market risk sensitive items do not subject us to material risk exposures. Our revolving credit facility remains available through October 1, 2015. At March 31, 2014, the Company had $1.5 million of variable-rate debt outstanding. At this borrowing level, a hypothetical relative increase of 10% in interest rates would have had an unfavorable but insignificant impact on the Company’s pre-tax earnings and cash flows. The primary interest rate exposure on variable-rate debt is based on the LIBOR rate (0.15% at March 31, 2014) 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.

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 sheets. In the current quarter this item increased from $983,000 at December 31, 2013 to $1,080,000 at March 31, 2014 due principally to the mix of the balance sheet items partially offset by the strength of the United States Dollar against the Chinese Yuan.

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

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. Copper, steel and aluminum represents a significant element of our material cost. Significant increases in the prices of these materials could reduce our estimated operating margins if we are unable to recover such increases from our customers.

An evaluation was carried out under the supervision and with the participation of our management, including our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of our disclosure controls and procedures as of March 31, 2014. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that the disclosure controls and procedures were effective as of March 31, 2014.

There were no changes in our internal controls over financial reporting that occurred during the quarter ended March 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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

There have been no material changes during the period ended March 31, 2014 in the risk factors as set forth in item 1A of our Annual Report on Form 10-K for the year ended December 31, 2013.

In conjunction with the issuance of common stock to employees upon conversion of vested restricted stock units under the 2007 Employee Stock Incentive Plan, between February 25, 2014 and March 12, 2014, the Company withheld 59,113 of such shares for employee withholding tax of $466,000 in accordance with the provisions of the Plan. These shares are reflected as treasury stock at March 31, 2014.

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

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

Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	¨	Smaller reporting company	x

		Page
	Part I. Financial Information
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets at March 31, 2014 and December 31, 2013	3
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2014 and 2013	4
	Consolidated Statement of Comprehensive Income (Loss) for the Three Months Ended March 31, 2014 and 2013	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2014 and 2013	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	21
Item 4.	Controls and Procedures	21
	Part II. Other Information
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	22
Signatures		23

	March 31, 2014			December 31, 2013
	(in thousands)
Raw materials	$	1,141		$	1,493
Work-in-process		4,048			2,834
Finished goods		1,103			1,126
		6,292			5,453
Less: allowance		(199	)		(237	)
Total inventories	$	6,093		$	5,216

	March 31, 2014			December 31, 2013
	(in thousands except percentages and ratios)
Working capital	$	15,540		$	15,282
Current ratio	2.4 to 1			2.4 to 1
Debt as a percent of total capitalization		6	%		2	%

AMERICAN ELECTRIC TECHNOLOGIES, INC.

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

By:	/s/ Andrew L. Puhala
Andrew L. Puhala
Senior Vice President and Chief Financial Officer (Principal Financial Officer)