AETI American Electric Technologies Inc

PROPOSAL NO. 1

TO APPROVE THE ISSUANCE OF COMMON STOCK IN CONNECTION WITH THE ACQUISITION OF STABILIS ENERGY LLC AND ITS SUBSIDIARIES

Acquisition structure

Under the terms of the Share Exchange Agreement, we will acquire directly 100% of the outstanding limited liability company membership interests of Stabilis from Holdings and 20% of the outstanding limited liability membership interests of PEG from AEGIS. PEG owns 100% of the outstanding capital stock of Prometheus. The balance of PEG, representing 80% ownership of Prometheus, is owned directly by Stabilis. As a result, Stabilis will become our direct 100% owned subsidiary and Prometheus will become our indirectly-owned 100% subsidiary. In the Share Exchange we will issue that number of shares of our common stock which is equal to approximately 90% of the shares of our common stock which will be deemed outstanding as of the completion of the Share Exchange which is based on the number of shares of our common stock outstanding immediately prior to the completion of the Share Exchange plus an additional number of shares of our common stock deemed outstanding assuming the conversion of our outstanding Restricted Stock Units and Deferred Directors Stock Units into common stock one a one-to-one basis.

The following illustrates the calculation of the number of shares of common stock that will be issued to acquired Stabilis and its subsidiaries upon the completion of the Share Exchange based upon the 9,391,314 shares of our common stock issued and outstanding on April     , 2019:

This exchange ratio will not change regardless of any fluctuation in the market price of our common stock prior to the closing. You will not know the exact number of shares of common stock we will issue in connection with the Share Exchange as of the date of the Special Meeting because the final determination of the number of shares to be issued in connection with the Share Exchange will be made after the date of the Special Meeting.

The following description of the material information about the Share Exchange, including the summary of the material terms and provisions of the Share Exchange Agreement and the descriptions of the opinion of our financial advisor, is qualified in its entirety by reference to the more detailed annexes to this Proxy Statement. We urge you to read all of the annexes to this Proxy Statement in their entirety.

The Share Exchange Agreement has been included as Annex A to provide you with information regarding its terms. It is not intended to provide any other factual information about us. Such information can be found elsewhere in this Proxy Statement and in the other public filings we make with the Securities and Exchange Commission, which are available without charge at www.sec.gov.

The Share Exchange Agreement contains representations and warranties the parties made to each other. The assertions embodied in those representations and warranties are qualified by information in confidential

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disclosure schedules that have been exchanged in connection with signing the Share Exchange Agreement. While we do not believe that the disclosure schedules contain information securities laws require us to publicly disclose, other than information that has already been so disclosed, the disclosure schedules do contain information that modifies, quantifies, and creates exceptions to the representations and warranties set forth in the attached Share Exchange Agreement. Accordingly, you should not rely on the representations and warranties as characterizations of the actual state of facts, since they are modified in important part by the underlying disclosure schedules. These disclosure schedules contain information that has been included in our prior public disclosures, as well as potential additional nonpublic information. Moreover, information concerning the subject matter of the representations and warranties may have changed since the date of the Share Exchange Agreement, which subsequent information may or may not be fully reflected in our public disclosures.

Background of the Share Exchange

On March 22, 2017, the Company and JCH Crenshaw Holdings, LLC (“JCH”), the holder of our outstanding Series A Convertible Preferred Stock (the “Series A Preferred Stock”) since 2012 and an affiliate of our director, Casey Crenshaw, entered into a letter agreement (the “Letter Agreement”) in order to facilitate American Electric’s loan from HD Special-Situations III, LP, a Delaware limited partnership (the “Lender”), pursuant to a Note Purchase Agreement (“NPA”) and Secured Term Note dated March 23, 2017 (the “Note”). Pursuant to the Letter Agreement, JCH agreed and acknowledged that until the earlier of (i) the one year anniversary of the Letter Agreement and (ii) the obligations under the NPA being paid in full (the “Standstill Period”), the Company, without the prior written consent of the Lender, would not declare, authorize or pay any dividends in cash to JCH with respect to the Series A Preferred Stock. Following the expiration of the Standstill Period, for so long as the obligations under the NPA remain outstanding, the Company may, at its sole discretion, declare, authorize or pay dividends in cash to JCH so long as no event of default exists under the Note or would result therefrom.

JCH further agreed that it would not exercise its redemption rights under the terms of the Series A Preferred Stock during the Standstill Period. Following the expiration of the Standstill Period, so long as the obligations under the NPA remain outstanding, JCH could compel the Company to redeem the Series A Preferred Stock pursuant its terms, provided no event of default exists under the Note or would result therefrom. JCH agreed that during the Standstill Period it would not seek enforcement of any other provision of the terms of the Series A Preferred Stock that is inconsistent with the Company’s obligations under Section 4(k) of the NPA. Following the Standstill Period, for so long as the obligations under the NPA remain outstanding, JCH could seek to enforce any such provisions so long as no event of default exists under the Note or would result therefrom.

In May 2017, JCH and its principal, Casey Crenshaw, who is a director of American Electric, initiated confidential discussions with members of the Company’s management team and Board of Directors regarding the Company’s business, strategy, capital structure, results of operations and financial position, as well as alternative possible transactions involving American Electric and the JCH investment in American Electric. JCH and American Electric entered into a customary confidentiality agreement on May 20, 2017 to facilitate these discussions. One aspect of such discussions was compensating JCH for agreeing to the restrictions on cash dividends and redemption of its Series A Preferred Stock. Another aspect of such discussions was a proposal by JCH and Mr. Crenshaw to contribute to American Electric a Houston, Texas-based JCH affiliate company which manufactures cryogenic transport and storage equipment for LNG for an amount of American Electric common stock equal to 51% of the number of shares then outstanding, to arrange a secured loan for $10 million to pay-off the Lender of the Company’s current loan and provide additional liquidity for future growth, to provide additional management team members to improve operating and financial performance and to receive a majority of the Company’s board seats. The American Electric board of directors established a Special Conflicts Committee to guide the consideration of such proposal.

American Electric undertook a serious consideration of this proposal, including engagement of BDO USA, LLP as a consultant and valuation expert. In July 2017, the American Electric board of directors decided not to pursue the proposal.

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On August 1, 2017, American Electric and JCH entered into an agreement (the “Repricing Agreement”) pursuant to which the original conversion price $5.00 per share of the 1,000,000 shares of Series A Preferred Stock sold to JCH in 2012 was reduced to $2.26 per share, and the original exercise price of $6.00 per share for 125,000 Common Stock Purchase Warrants sold to JCH in 2012 with the Series A Preferred Stock was reduced to $2.72 per share and the original exercise price of $7.00 per share for 200,000 Common Stock Purchase Warrants sold to JCH in 2012 with the Series A Preferred Stock was reduced to $3.17 per share to reflect the then current market value of our Common Stock in consideration of the restrictions on the payment of cash dividends on and redemption of the Series A Preferred Stock which JCH agreed to in the Letter Agreement in connection with the Company’s loan from the Lender.

In August 2017, American Electric engaged Oppenheimer to assist American Electric in exploring strategic alternatives. Beginning in September 2017, Oppenheimer assisted American Electric in pursuing multiple avenues including mergers of equals, sale of the business to strategic and financial partners, and various public and private equity financing options. After contacting approximately 55 parties, 15 non-disclosure agreements were signed, with multiple verbal and written proposals for financing and merger and acquisition of various types received. After discussion and negotiations with multiple parties on various structures, American Electric entered into an agreement to sell the U.S. based assets and operations of its M&I Electric Industries subsidiary to an affiliate of Myers Power Products, Inc. and that transaction closed on August 14, 2018. As a result of this sale, our current business and operations consists of our Brazilian subsidiary and our 40% interest in our China joint venture.

In connection with this sale, American Electric’s loan from the Lender was paid in full.

At the American Electric board of directors meeting on August 3, 2018 the directors discussed with Oppenheimer the reduced scope of the Company’s business following the M&I asset sale. Representatives of Oppenheimer indicated that a reverse merger transaction with a larger firm may be a possible strategic alternative since its investigation of strategic alternatives which led to the M&I asset sale did not develop any meaningful interest in the acquisition of the Company’s Brazilian subsidiary or interest in its China joint venture.

At the August 3, 2018 meeting, Mr. Crenshaw mentioned the possibility of an acquisition transaction involving three JCH affiliate companies following the M&I asset sale.

On August 9, 2018 Mr. Crenshaw and James Reddinger, CEO of Stabilis, attended an American Electric board meeting to present an overview of Stabilis Energy and discuss a potential reverse merger transaction between the companies.

On or about August 15, 2018, Mr. Crenshaw notified Peter Menikoff that he believed that the sale of the M&I assets to Myers Power Products, Inc. constituted a liquidation event under the terms of the Series A Preferred Stock held by JCH which entitled JCH to payment of the liquidation preference of $5,000,000 plus unpaid dividends.

On August 17, 2018, JCH made formal written demand to the Company for payment of the liquidation preference of $5.00 per share plus unpaid dividends on its 1,000,000 Series A Preferred Stock on the grounds that the M&I asset sale constituted a liquidation event under the terms of the Series A Preferred Stock. American Electric rejected JCH’s assertion that the M&I asset sale constituted a liquidation event under the terms of the Series A Preferred Stock. On August 20, 2018, we initiated a lawsuit in the District Court of Harris County, Texas, seeking a declaration that the liquidation preference obligation has not been triggered. On August 21, 2018, JCH filed a lawsuit against the Company in the District Court of Harris County, Texas to enforce its liquidation preference rights. Both lawsuits were dismissed without prejudice in October 2018.

On August 21, 2018, Mr. Crenshaw and Mr. Menikoff had a telephone discussion concerning the preferred stock dispute as well as the possible acquisition transaction.

On August 29, 2018, Mr. Crenshaw sent Mr. Menikoff a written presentation concerning the potential share exchange opportunity involving three JCH affiliated companies which Mr. Crenshaw mentioned at the August 9

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board meeting and in subsequent discussions with Mr. Menikoff. The three companies were Stabilis and its Prometheus subsidiary engaged in LNG production and distribution and a manufacturer of custom industrial components. American Electric, JCH and the three companies signed a mutual nondisclosure agreement to facilitate the exchange of information. After initial review of the matter, our board of directors declined to consider the acquisition of the industrial component manufacturer and agreed to consider the acquisition of Stabilis and its subsidiary.

On September 12, 2018, Mr. Reddinger provided Mr. Menikoff with a valuation analysis of Stabilis and Prometheus prepared by an investment banking firm. On September 13, 2018 Mr. Reddinger provided to Mr. Menikoff a proposed term sheet for a Share Exchange, proposed time-line for the transaction and a due diligence checklist.

On September 17, 2018, American Electric’s board of directors met by conference call to discuss the proposal. The board established a special committee (the “Special Committee”) consisting of three disinterested directors, Mr. Menikoff, Edward Kuntz and J. Hoke Peacock, with the authority to evaluate and recommend to the Board of Directors with regard to the potential acquisition including the conflict of interest between the Company and JCH and any of its affiliates, including Mr. Crenshaw. The Special Committee was to act on an informed basis, in good faith, and in the subjective belief that any action taken by the Committee be in the best interests of the stockholders of the Company. The Special Committee began establishing a team of professionals to assist in the potential acquisition transaction, including Locke Lord as legal counsel and Ham, Langston & Brezina, American Electric’s independent registered public accountant, for technical accounting matters. The Committee contacted Stout Group, Oppenheimer and one other investment banking firm about engagement as financial advisor to render a financial opinion with respect to the transaction. Oppenheimer was engaged on September 24, 2018.

On September 17, 2018, Ham, Langston & Brezina advised American Electric’s CFO, Bill Brod, that performing transactional advisory services are permitted under PCAOB and SEC auditor independence rules. The firm is was subsequently engaged to perform transactional advisory services.

On September 18, 2018, the Committee set up teams to conduct due diligence. An online data room was established where due diligence material can be posted and reviewed in connection with the proposed transaction.

By September 24, 2018, American Electric’s counsel, Locke Lord LLP (“Locke Lord”), and Stabilis’ counsel, Thompson & Knight LLP, had established contact and began working on the transaction.

On October 8, 2018, Mr. Menikoff and Mr. Crenshaw discussed parameters of the proposed Share Exchange. Mr. Crenshaw provided an improved offer to American Electric.

On October 9, 2018, the American Electric Special Committee held a conference call to discuss the proposed Share Exchange transaction. The Committee was in unanimous agreement to proceed with the project with a view towards execution of a non-binding term sheet for the Share Exchange.

In October 2018, Ham, Langston & Brezina performed various analyses of Stabilis’ financial position and operating results to identify risks surrounding Stabilis’ revenues/receivables transaction cycle, costs/payables transaction cycle and related party transactions. Results of analyses performed were communicated to Bill Brod, American Electric CFO.

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On October 19, 2018 Mr. Brod received and distributed updated interim financial statements of Stabilis and Prometheus.

On October 19, 2018 a term sheet was executed setting forth the indicative terms and conditions of the proposed Share Exchange but did not bind the parties to enter a definitive agreement for the transaction.

On October 25, Arthur Dauber, former director and CEO of American Electric and current employee, Mr. Brod, and Frank Gu, manager of Chinese operations for American Electric, meet with executives of Prometheus to review business and operations of Prometheus. They received a detailed presentation of the business and operations of Prometheus which was distributed to the entire American Electric board of directors.

On October 30, 2018 Special Committee member Mr. Kuntz meets with Mr. Reddinger and Andrew Puhala, Stabilis CFO, to review the business and operations of Stabilis and its subsidiaries.

On November 1, 2018 the American Electric board of directors meets to discuss the proposed Share Exchange. It is the sense of the meeting that the negotiations shall continue.

Following the November 1, 2018 board meeting, negotiations continued towards finalizing terms of a definitive Share Exchange agreement. These negotiations were carried out primarily by Mr. Menikoff representing the Committee and Mr. Reddinger representing the Stabilis parties. Counsel for American Electric and the Stabilis parties exchanged drafts of the definitive Share Exchange agreement and related documentation, including due diligence schedules, and ancillary agreements including a voting agreement among various American Electric stockholders and a registration rights agreement.

On November 28, 2018 Mr. Menikoff advised Mr. Reddinger that the definitive Share Exchange agreement was expected to be completed shortly and American Electric would be holding a board of directors meeting to receive the recommendation of the Committee and Oppenheimer’s analysis and opinion concerning the fairness of the transaction to American Electric and to vote on the Share Exchange agreement.

On December 7, 2018 the American Electric board of directors and the Special Committee each held a meeting primarily concerning the Share Exchange transaction. The Special Committee considered, among other things, the opinion of Oppenheimer, dated December 7, 2018, to the Special Committee as to the fairness, from a financial point of view and as of such date, to the Company, of the consideration to be paid by the Company, which opinion was based on and subject to the various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Oppenheimer. The directors heard a report from Locke Lord concerning the Share Exchange agreement All of the directors at the meeting, including the entire Special Committee, voted to approve the Share Exchange transaction and authorize the execution of the Share Exchange agreement and ancillary agreements.

On December 17, 2018 the definitive Share Exchange Agreement was signed.

Subsequent to the execution of the Share Exchange Agreement, Mr. Menikoff and Don Boyd, American Electric’s CFO, reviewed the Company’s cash flow and working capital projections through June 30, 2019 and concluded that it would be appropriate for American Electric to secure additional working capital. After considering various possible sources of funding, including borrowing, stock sales and the anticipated distribution from the Company’s Chinese joint venture, Mr. Menikoff approached Mr. Reddinger and Mr. Crenshaw about Stabilis as a source of working capital. After considering various alternatives with Jim Reddinger an amendment to the Share Exchange Agreement was entered into on May 8, 2019. Under the amendment Stabilis will reimburse American Electric for up to $650,000 of the fees and expenses of counsel, investment bankers and accountants incurred by American Electric in connection with the Share Exchange transaction and the number of shares of common stock to be issued by American Electric in the Share Exchange would be increased from 89% to 90% of the total shares to be outstanding upon completion of the Share Exchange.

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Our reasons for proposing the acquisition of Stabilis and its subsidiaries

Before approving the Share Exchange Agreement, the Special Committee and the board of directors sought to identify and consider the significant benefits and risks anticipated from the potential business combination with Stabilis and its subsidiaries. Based on these and other factors that the Special Committee and board members deemed relevant, the Special Committee and board of directors approved the Share Exchange Agreement and recommends that our stockholders approve the issuance of shares in connection with the acquisition of Stabilis and its subsidiaries pursuant to the Share Exchange Agreement and the other matters proposed for consideration at the Special Meeting. Our board of directors considered the following to be the major benefits expected from the acquisition of Stabilis and its subsidiaries.

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The above discussion of the potential benefits anticipated and given weight by our Special Committee and board of directors is not intended to be exhaustive. However, the discussion is believed to include all material factors considered by the Special Committee and our board of directors. In reaching the decision to approve the Share Exchange and recommend that our stockholders approve the issuance of shares in connection with the acquisition of Stabilis and its subsidiaries, our board of directors did not assign any relative or specific weights to the factors considered. In addition, individual directors may have given differing weights to different factors.

Opinion of Our Financial Advisor

We engaged Oppenheimer to render a written opinion, which we refer to as the opinion, to the Special Committee as to the fairness, from a financial point of view, to the Company of the Consideration to be paid by the Company in the proposed transaction pursuant to the Share Exchange Agreement. We selected Oppenheimer because Oppenheimer is a nationally recognized investment banking firm with substantial experience in transactions similar to the proposed transaction.

As part of its engagement, representatives of Oppenheimer attended (via conference call) the meeting of the Special Committee held on December 7, 2018, at which the Special Committee evaluated the proposed transaction. At this meeting, Oppenheimer reviewed the financial aspects of the proposed transaction and rendered its opinion, as of such date and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Oppenheimer as set forth in its opinion, as to the fairness, from a financial point of view, to the Company of the Consideration to be paid by the Company in the proposed transaction pursuant to the Share Exchange Agreement.

The description of the opinion set forth herein is qualified in its entirety by reference to the full text of the opinion, which is attached as Annex B to this Proxy Statement and is incorporated herein by reference, and describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Oppenheimer in preparing its opinion. Oppenheimer’s opinion speaks only as of the date of the opinion. The opinion was for the information of, and was directed to, the Special Committee (in its capacity as such) in connection with its consideration of the financial terms of the transaction. The opinion addressed the fairness, from a financial point of view, to the Company of the Consideration to be paid by the Company in the proposed transaction pursuant to the Share Exchange Agreement. It did not address the underlying business decision of the Special Committee to engage in the transaction or enter into the Share Exchange Agreement. It does not constitute a recommendation to the Special Committee in connection with the transaction or a recommendation to any holder of Common Stock or shareholder of any other entity as to how to vote in connection with the transaction or any other matter, nor does it constitute a recommendation on whether or not any stockholder should exercise any dissenters’ or appraisal rights that may be available to any stockholder.

In connection with the opinion, Oppenheimer reviewed, analyzed and relied upon information and material bearing upon the financial and operating condition of American Electric and the transaction, including, among other things:

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In rendering the opinion, Oppenheimer relied upon and assumed, without independent verification or investigation, the accuracy and completeness of all of the financial and other information provided to or discussed with Oppenheimer by American Electric and its employees, representatives and affiliates or otherwise reviewed by Oppenheimer. With respect to the Company Projections, Oppenheimer assumed, at the direction of our management and with our consent, without independent verification or investigation, that those forecasts and estimates were reasonably prepared on bases reflecting the best available information, estimates and judgments of our management as to our future financial condition and operating results. With respect to the Target Projections, Oppenheimer assumed, with our consent, without independent verification or investigation, that such forecasts and estimates, were reasonably prepared on bases reflecting the best available information, estimates and judgments of senior management of the Target as to the future financial condition and operating results of the Target. At the direction of representatives of American Electric, Oppenheimer also assumed that the final terms of the Share Exchange Agreement would not vary materially from those set forth in the draft reviewed by it. Oppenheimer also assumed, with our consent, that the transaction will be consummated during the time period contemplated by the Share Exchange Agreement and in accordance with its terms without waiver, modification or amendment of any material term, condition or agreement and in compliance with all applicable laws and other requirements and that, in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the transaction, no delay, limitation, restriction or condition would be imposed that would result in the disposition of any assets of American Electric or the Target or otherwise have an adverse effect on American Electric, the Target or the transaction or any expected benefits of the transaction. Oppenheimer also assumed that there were no material changes in the assets, liabilities, financial conditions, results of operations, business or prospects of either American Electric or the Target since the date of the last financial statements of each of American Electric and the Target, respectively, that were made available to Oppenheimer. Oppenheimer neither made nor obtained any independent evaluations or appraisals of the assets or liabilities, contingent or otherwise, of American Electric, the Target or any other party. Oppenheimer also assumed, with our consent, that the transaction would qualify as a tax-free transaction.

The forecasts, projections and estimates of American Electric and of the Target provided to Oppenheimer were not prepared with the expectation of public disclosure. All such information was based on numerous variables and assumptions that are inherently uncertain, including, without limitation, factors related to general economic and competitive conditions. Accordingly, actual results could vary significantly from those set forth in those forecasts, projections and estimates. Oppenheimer assumed, based on discussions with our management, that our forecasts, projections and estimates referred to above, provided a reasonable basis upon which

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Oppenheimer could form its opinion and Oppenheimer expressed no view as to any such information or the assumptions or bases therefor. Oppenheimer relied on all such information without independent verification or analysis and did not in any respect assume any responsibility or liability for the accuracy or completeness thereof.

Oppenheimer did not express any opinion as to our underlying valuation, future performance or long-term viability of American Electric or the Target. Oppenheimer did not express any view as to, and its opinion did not address, any terms or other aspects or implications of the transaction (other than the Consideration to be paid by the Company to the extent expressly specified therein) or any aspect or implication of any other agreement, arrangement or understanding entered into in connection with the transaction or otherwise, including, without limitation, the fairness of the amount or nature of the compensation resulting from the transaction to any individual officers, directors or employees of American Electric, or class of such persons, relative to the Consideration to be paid by the Company. In addition, Oppenheimer expressed no view as to, and its opinion did not address, our underlying business decision to proceed with or effect the transaction nor did its opinion address the relative merits of the transaction as compared to any alternative business strategies that might have existed for American Electric or the effect of any other transaction in which we might have engaged. Oppenheimer was not requested to, and did not, (a) initiate or participate in any discussions or negotiations with, or solicit any indications of interest from, third parties with respect to the transaction, the securities, assets, businesses or operations of American Electric or any other party, or any alternatives to the transaction, (b) negotiate the terms of the transaction, or (c) advise the Board, the Special Committee or any other party with respect to alternatives to the transaction. Oppenheimer’s opinion was necessarily based on the information available to Oppenheimer and general economic, financial and stock market conditions and circumstances as they existed and could be evaluated by Oppenheimer on the date of its opinion. It should be understood that, although subsequent developments may affect Oppenheimer’s opinion, Oppenheimer does not have any obligation to update, revise or reaffirm its opinion. Oppenheimer did not express any opinion as to what the value of the Company Common Stock actually would be when issued pursuant to the transaction or the price or range of prices at which the Company Common Stock may be purchased or sold, or otherwise be transferable, at any time. Oppenheimer assumed that the Company Common Stock to be issued in the transaction to the Exchanging Owners would be listed on the Nasdaq Capital Market.

Oppenheimer is not a legal, tax, regulatory or accounting advisor and Oppenheimer relied on the assessments made by us and our other advisors with respect to such issues. Oppenheimer’s opinion did not address any legal, tax, regulatory or accounting matters. In addition, Oppenheimer’s opinion did not constitute a solvency opinion or a fair value opinion, and Oppenheimer did not evaluate the solvency or fair value of American Electric or the Target under any federal or state laws relating to bankruptcy, insolvency, similar matters or otherwise.

In performing its analyses, Oppenheimer made numerous assumptions with respect to the industry performance, general business, economic, market and financial conditions and other matters, which are beyond the control of Oppenheimer and American Electric. Any estimates contained in the analyses performed by Oppenheimer are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by these analyses. Additionally, estimates of the value of businesses or securities do not purport to be appraisals or to reflect the prices at which such business or securities might actually be sold. Accordingly, these analyses and estimates are inherently subject to substantial uncertainty.

The following is a summary of the material financial analyses presented by Oppenheimer to the Special Committee in connection with its opinion. The summary is not a complete description of the financial analyses underlying the opinion or the presentation made by Oppenheimer to the Special Committee, but summarizes the material analyses performed and presented in connection with the opinion. The preparation of a fairness opinion is a complex analytic process involving various determinations as to appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion,

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Oppenheimer did not attribute any particular weight to any analysis or factor that it considered, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. The financial analyses summarized below include information presented in tabular format. Accordingly, Oppenheimer believes that its analyses and the summary of its analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on the information presented below in tabular format, without considering all analyses and factors or the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the process underlying its analyses and opinion. The tables alone do not constitute a complete description of the financial analyses.

Valuation of American Electric

Selected Public Companies Analyses. Oppenheimer performed selected public companies analyses of American Electric as described below. To perform these analyses, Oppenheimer used last-twelve-months, or LTM, financial information as of or for the period ended November 30, 2018 and market price information as of market close on December 4, 2018. Oppenheimer also used 2018, 2019 and 2020 earnings consensus “street” estimates for the selected public companies, to the extent publicly available, taken from a nationally recognized earnings estimate consolidator and financial forecasts and projections relating to the earnings of American Electric provided to Oppenheimer by our management. Certain financial data prepared by Oppenheimer, and as referenced in the tables presented below, may not correspond to the data presented in American Electric’ historical financial statements as a result of the different periods, assumptions and method used by Oppenheimer to compute the financial data presented. No company used as a comparison in the following selected public companies analyses is identical or directly comparable to American Electric. Accordingly, an analysis of these results is not purely mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

Using publicly available information, Oppenheimer compared the financial performance, financial condition and market performance of American Electric to the following 10 selected publicly traded companies:

Oppenheimer reviewed enterprise values of the selected public companies, calculated as fully-diluted equity values based on closing stock prices on December 4, 2018 plus debt, plus preferred stock, plus minority interest, less cash and cash equivalents, as multiples of projected calendar years 2018, 2019 and 2020 estimated earnings before interest, taxes, depreciation and amortization, referred to as EBITDA. Financial data of the selected companies were based on publicly available research analysts’ estimates, public filings and other publicly available information. The overall low to high ranges of calendar year 2018 estimated EBITDA multiples (Enterprise Value/Forward EBITDA) observed for the selected companies were 8.4x to 22.4x (with a median of 10.4x). The overall low to high ranges of calendar year 2019 estimated EBITDA multiples observed for the

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selected companies were 7.5x to 20.0x (with a median of 9.4x). The overall low to high ranges of calendar year 2020 estimated EBITDA multiples observed for the selected companies were 7.2x to 17.5x (with a median of 8.5x).

Oppenheimer then applied the median selected ranges of the average of calendar years 2018 and 2019, calendar year 2019 and calendar year 2020 of the EBITDA derived from the selected companies, adjusted by +/- 10%, to corresponding data of American Electric. Financial data of American Electric were based on internal estimates of American Electric management. This analysis resulted in low to high implied enterprise value ranges for American Electric of (i) $4.1 million to $5.1 million for the average of calendar years 2018 and 2019, (ii) $6.8 million to $8.4 million for calendar year 2019, and (iii) $11.4 million to $14.0 million for calendar year 2020.

Oppenheimer then calculated implied American Electric equity values for these periods by adding $2.6 million net cash as of September 30, 2018 to the enterprise values. These calculations yielded the following implied equity value ranges of American Electric of (i) $6.7 million to $7.6 million for the average of calendar years 2018 and 2019, (ii) $9.4 million to $10.9 million for calendar year 2019, and (iii) $14.0 million to $16.5 million for calendar year 2020.

Selected Transactions Analysis. Oppenheimer performed a selected transactions analysis as described below. To perform this analysis, Oppenheimer used financial data based on the acquired company’s then latest publicly available financial statements prior to the announcement of the acquisition. No company or transaction used as a comparison in the following selected transactions analysis is identical or directly comparable to American Electric or the proposed transaction. Accordingly, an analysis of these results is not purely mathematical. Rather, it involves complex considerations and judgments concerning differences in the financial and operating characteristics of the companies involved.

Oppenheimer reviewed publicly available information related to the following 12 selected merger and acquisition transactions announced since January 1, 2010:

Oppenheimer reviewed enterprise values, calculated as the purchase prices paid for the target companies’ equity in the selected transactions plus the target companies’ debt, less cash and cash equivalents, and as multiples of EBITDA of such target companies’ latest 12 months for which financial information was available at the time of announcement, or LTM EBITDA. Financial data of the selected transactions were based on research analysts’ estimates, public filings and other information publicly available (at the announcement of the applicable transaction). The overall low to high range of total enterprise value to LTM EBITDA observed for the selected transactions was 8.2x to 17.0x (with a median of 12.0x).

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Oppenheimer then applied median ranges of the LTM EBITDA multiples derived from the precedent M&A transactions, adjusted by +/- 10%, to corresponding data of American Electric projected 2019 adjusted EBITDA discounted to December 31, 2018 at a rate of 17.9%. Financial data of American Electric were based on internal estimates of American Electric management. This analysis resulted in low to high implied enterprise value ranges for American Electric of $7.5 million to $9.1 million.

Oppenheimer then calculated implied American Electric equity value by adding $2.6 million net cash as of September 30, 2018 to the implied enterprise values. This calculation yielded an implied equity value range of American Electric of $10.0 million to $11.7 million.

Stand-Alone Discounted Cash Flow Analysis. Oppenheimer conducted a discounted cash flow analysis, which is designed to imply a potential current value of American Electric by calculating the estimated present value of the standalone after-tax free cash flows that American Electric management forecasted to be generated during the calendar years ending December 31, 2018 through the calendar year ending December 31, 2022. Oppenheimer calculated terminal values for American Electric by applying to its estimated calendar year 2022 adjusted EBITDA a selected range of terminal value adjusted EBITDA multiples of 10.0x to 12.0x. The cash flow and terminal values were then discounted to present value using discount rates ranging from 16.9% to 18.9%, which were based on an estimated weighted average cost of capital. This analysis indicated an approximate implied enterprise value of American Electric of $20.1 million to $26.2 million. Oppenheimer then calculated implied American Electric equity value by adding $2.6 million net cash as of September 30, 2018 to the implied enterprise values. This calculation yielded an implied equity value range of American Electric of $22.7 million to $28.7 million.

Valuation of the Target

Selected Public Companies Analyses. Oppenheimer performed selected public companies analyses of the Target as described below. To perform these analyses, Oppenheimer used LTM financial information as of or for the period ended November 30, 2018 and market price information as of market close on December 4, 2018. Oppenheimer also used 2018, 2019 and 2020 earnings consensus “street” estimates for the selected public companies, to the extent publicly available, taken from a nationally recognized earnings estimate consolidator and financial forecasts and projections relating to the earnings of the Target provided to Oppenheimer by our management. Certain financial data prepared by Oppenheimer, and as referenced in the tables presented below, may not correspond to the data presented in the Target’s historical financial statements as a result of the different periods, assumptions and method used by Oppenheimer to compute the financial data presented. No company used as a comparison in the following selected public companies analyses is identical or directly comparable to the Target. Accordingly, an analysis of these results is not purely mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

Using publically available information, Oppenheimer compared the financial performance, financial condition and market performance of the Target to the following 8 selected publicly traded companies:

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Oppenheimer reviewed enterprise values of the selected public companies, calculated as fully-diluted equity values based on closing stock prices on December 4, 2018 plus debt, plus preferred stock, plus minority interest, less cash and cash equivalents, as multiples of projected calendar years 2018, 2019 and 2020 estimated EBITDA. Financial data of the selected companies were based on publicly available research analysts’ estimates, public filings and other publicly available information. The overall low to high ranges of calendar year 2018 estimated EBITDA multiples observed for the selected companies were 9.5x to 17.5x (with a median of 12.3x). The overall low to high ranges of calendar year 2019 estimated EBITDA multiples observed for the selected companies were 8.7x to 13.4x (with a median of 10.9x). The overall low to high ranges of calendar year 2020 estimated EBITDA multiples observed for the selected companies were 7.6x to 11.4x (with a median of 9.7x).

Oppenheimer then applied median selected ranges of the average of calendar years 2018 and 2019, calendar year 2019 and calendar year 2020 of the EBITDA derived from the selected companies, adjusted by +/- 10%, to corresponding data of the Target. Financial data of the Target were based on internal estimates of Target management. This analysis resulted in implied low to high enterprise value ranges for the Target of (i) $127.7 million to $156.0 million for the average of calendar years 2018 and 2019, (ii) $195.2 million to $238.5 million for calendar year 2019, and (iii) $307.3 million to $375.5 million for calendar year 2020.

Oppenheimer then calculated implied Target equity value for these periods by subtracting $14.5 million pro forma net debt as of September 30, 2018 from the calculated enterprise values. These calculations yielded the implied Target equity value range of (i) $113.1 million to $141.5 million for the average of calendar years 2018 and 2019, (ii) $180.6 million to $224.0 million for calendar year 2019, and (iii) $292.7 million to $361.0 million for calendar year 2020.

Selected Transactions Analysis. Oppenheimer performed a selected transactions analysis as described below. To perform this analysis, Oppenheimer used financial data based on the acquired company’s then latest publicly available financial statements prior to the announcement of the acquisition. No company or transaction used as a comparison in the following selected transactions analysis is identical or directly comparable to the Target or the proposed transaction. Accordingly, an analysis of these results is not purely mathematical. Rather, it involves complex considerations and judgments concerning differences in the financial and operating characteristics of the companies involved.

Oppenheimer reviewed publicly available information related to the following 15 selected merger and acquisition transactions announced since January 1, 2010:

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Oppenheimer reviewed enterprise values, calculated as the purchase prices paid for the target companies’ equity in the selected transactions plus the target companies’ debt, less cash and cash equivalents, and as multiples of EBITDA of such target companies’ LTM EBITDA. Financial data of the selected transactions were based on research analysts’ estimates, public filings and other information publicly available (at the announcement of the applicable transaction). The overall low to high range of total enterprise value to LTM EBITDA observed for the selected transactions was 3.4x to 21.6x (with a median of 11.6x).

Oppenheimer then applied median ranges of the LTM EBITDA multiples derived from the precedent M&A transactions, adjusted by +/- 10%, to corresponding data of the Target projected 2019 adjusted EBITDA discounted to December 31, 2018. Financial data of the Target were based on internal estimates of Target management, and calculations based on such estimates. This analysis resulted in low to high implied enterprise value range for the Target of $183.4 million to $224.2 million.

Oppenheimer then calculated implied Target equity value range by subtracting $14.5 million pro forma net debt as of September 30, 2018 from the implied enterprise value range. This calculation yielded an implied equity value range of the Target of $168.9 million to $206.7 million.

Stand-Alone Discounted Cash Flow Analysis. Oppenheimer conducted a discounted cash flow analysis, which is designed to imply a potential value of the Target by calculating the estimated present value of the standalone after-tax free cash flows that the Target was forecasted to generate during the calendar years ending December 31, 2018 through the calendar year ending December 31, 2023. Oppenheimer calculated terminal values for the Target by applying to its estimated calendar year 2023 adjusted EBITDA a selected range of terminal value adjusted EBITDA multiples of 10.0x to 12.0x. The cash flows and terminal values were then discounted to present value using discount rates ranging from 11.6% to 13.6%, which were based on an estimated weighted average cost of capital. This analysis indicated as approximate implied enterprise value of the Target of $374.7 million to $463.7 million. Oppenheimer then calculated implied Target equity value by subtracting $14.5 million pro forma net debt as of September 30, 2018 from the implied enterprise value range. This calculation yielded an implied equity value range of the Target of $360.2 million to $449.1 million.

Implied Ownership Range Analysis

Oppenheimer utilized the range of implied equity values of American Electric and the Target based on the Selected Public Company Analysis, the Selected Transactions Analysis and the Discounted Cash Flow Analysis to calculate the implied American Electric equity value contribution to the combined company’s implied equity values. In making such calculations, Oppenheimer calculated the high end number using the high Target implied equity value and the low American Electric implied equity value. The low end number was calculated using the low Target implied equity value and the high American Electric implied equity value. Oppenheimer also calculated the implied number of shares that would be issued to the Target owners in the Share Exchange based on the implied equity value of the Target to the combined company’s implied equity value based on the foregoing analytical methods.

Based on the Selected Public Company Analysis of equity valuation of American Electric and the Target, Oppenheimer calculated that the American Electric equity value represents 4.5% to 6.3% of the combined company equity value for the average of 2018 and 2019, 4.0% to 5.7% of the combined company equity value for calendar year 2019 and 3.7% to 5.3% of the combined company equity value for calendar year 2020. Based on the Selected Transactions Analysis of equity valuation of American Electric and the Target, Oppenheimer calculated that the American Electric equity value represents 4.3% to 6.1% of the combined company equity value. Based on the Discounted Cash Flow Analysis of equity valuation of American Electric and the Target, Oppenheimer calculated that the American Electric equity value represents 4.8% to 7.4% of the combined company equity value.

Oppenheimer also calculated that if the number of shares of American Electric to be issued in the Share Exchange was based on the relative equity valuation of the Target to the combined company equity value

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calculated using the Selected Public Company Analysis, the Selected Transactions Analysis and the Discounted Cash Flow Analysis, the number of shares to be issued by American Electric in the Share Exchange would range from 141 million to 291 million rather than the approximately 106 million issuable under the Share Exchange Agreement.

Miscellaneous. Other than in connection with this engagement and as financial advisor to American Electric in its sale of M&I Industries, Inc. to Myers Power Products, Inc., in the two years preceding the date of its opinion, Oppenheimer did not provide investment banking and financial services to American Electric or to the Target. Oppenheimer may in the future provide investment banking and financial advisory services to American Electric or the Target and may receive compensation for those services. Oppenheimer did not, and was not requested to, recommend the specific consideration payable in the Share Exchange. The type and amount of consideration payable in the Share Exchange was determined through negotiation between American Electric and the owners of Stabilis and Prometheus and was approved by the Special Committee and the Board of Directors of American Electric. The decision to enter into the Share Exchange Agreement was solely that of the Special Committee and Board of Directors of American Electric. Oppenheimer’s opinion and financial analyses were only one of a number of factors considered by the Special Committee and Board of Directors of American Electric in evaluating the Share Exchange and should not be viewed as determinative of the views of the Special Committee, Board of Directors of American Electric or management with respect to the Share Exchange or the Consideration to be paid by the American Electric in the Share Exchange. Under the terms of Oppenheimer’s engagement, American Electric has agreed to pay Oppenheimer for its opinion in connection with the transaction a fee of $450,000 payable upon delivery of Oppenheimer’s opinion. In addition, American Electric has agreed to reimburse Oppenheimer for its expenses, including fees and expenses of counsel, and to indemnify Oppenheimer and related parties against liabilities, including liabilities under federal securities laws, arising out of or in connection with the services rendered and to be rendered by Oppenheimer under its engagement.

Effects of the Share Exchange on American Electric common stock

Each share of our common stock that is issued and outstanding at the effective time of the Share Exchange will remain issued and outstanding after the acquisition of Stabilis and its subsidiaries. However, because additional shares of our common stock will be issued as a result of the Share Exchange, the aggregate equity interest of our current common stockholders will be substantially diluted from 100% of our issued and outstanding common stock prior to the Share Exchange to approximately 10% of our issued and outstanding common stock immediately after the completion of the Share Exchange. Just after the effective time of the Share Exchange, we will effectuate a reverse stock split of our outstanding common stock at a ratio from 1:2 to 1:6 if such reverse stock split is necessary to assure that our common stock meets the NASDAQ Capital Market requirement that our common stock trade at a price of $4.00 on the first day of trading following the completion of the Share Exchange or the board of directors determines that a reverse stock split is in the best interests of American Electric and its stockholders. See, “Proposal No. 3—Authorization of the board of directors to effect a reverse stock split at a ratio between 1:2 to 1:6 to be determined by our board of directors.”

Accounting treatment

The combination of American Electric and Stabilis and its subsidiaries will be accounted for under the purchase method of accounting as a reverse acquisition. Under this method of accounting, Stabilis will be treated as having acquired American Electric as of the date of the completion of the Share Exchange. The financial statements prepared after the completion of the Share Exchange will be a continuation of the financial statements of Stabilis and will include the operations of American Electric from the date of completion of the Share Exchange. The fair value of the American Electric assets and liabilities as of the date of the acquisition are added to the balance sheet of Stabilis.

The purchase price will be allocated to the net assets of American Electric assets based upon their estimated fair values as of the completion of the Share Exchange. Deferred tax assets and liabilities will be adjusted for the

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difference between the tax basis of the assets and liabilities and their estimated values. The excess, if any, of the total acquisition cost over the sum of the assigned fair values of the tangible and identifiable intangible assets acquired, less liabilities assumed, will be recorded as goodwill and periodically evaluated for impairment. Our financial statements issued after completion of the Share Exchange will reflect these values. Historical data published after the completion of the Share Exchange are of Stabilis and are not restated retroactively to reflect the combined historical financial position or results of operations of American Electric.

Material United States Federal Income Tax Consequences

The following is a summary of the material United States federal income tax consequences that are expected to apply to American Electric and our stockholders from the proposed preferred stock conversion, share exchange, reverse stock split, and name change. The following discussion is based upon the current provisions of the Internal Revenue Code of 1986, as amended (the “Code”), the regulations promulgated under the Code (the “Treasury Regulations”), Internal Revenue Service (“IRS”) rulings and pronouncements, and judicial decisions now in effect, all of which are subject to change at any time by legislative, judicial, or administrative action. Any such changes may be applied retroactively and could affect the accuracy of the statements and conclusions discussed below.

Neither American Electric nor the owners of Stabilis or Prometheus will request any rulings from the IRS or opinions from counsel with respect to the United States federal income tax consequences discussed below. This discussion does not in any way bind the IRS or the courts or in any way constitute an assurance that the IRS or the courts will accept the United States federal income tax consequences discussed below. Accordingly, each stockholder should consult with such stockholder’s own tax advisor with respect to all of the potential tax consequences to such stockholder.

The Share Exchange Agreement

The Share Exchange is structured so that it should qualify as an exchange described in Section 351 of the Code in which the transferors consisting of the owners of Stabilis will have control of American Electric for purposes of Section 368(c) of the Code. Control for purposes of Section 368(c) of the Code means that the transferors after the exchange will have ownership of 80% or more of all outstanding classes of stock of American Electric, which will be the case. Because the share exchange should qualify as an exchange within the meaning of Section 351 of the Code, American Electric should not recognize any gain or loss. Stockholders will not exchange or surrender their American Electric stock or receive any separate consideration in the share exchange. Accordingly, you should not recognize gain or loss because of the share exchange.

The Reverse Stock Split

The reverse stock split should constitute a “recapitalization” for United States federal income tax purposes as described in Section 368(a)(1)(E) of the Code. Therefore, other than with respect to any cash payments you receive for fractional shares, you should not recognize any gain or loss upon your exchange of pre-reverse stock split shares for post-reverse stock split shares. The aggregate tax basis of the post-reverse stock split shares received in a reverse stock split (including any fraction of a post-reverse stock split share deemed to have been received) should be the same as the aggregate tax basis in the pre-reverse stock split shares exchanged. If you receive cash upon the redemption of your fractional share interests in the post-reverse stock split shares because of the reverse stock split, you should recognize any gain or loss equal to the difference between your adjusted basis in the fractional share interests redeemed and the amount of cash received for such fractional share interests. Your holding period for the post-reverse stock split shares should include the period during which you held the pre-reverse stock split shares surrendered.

Preferred Stock Conversion

Mr. Crenshaw’s conversion of 1,000,000 shares of American Electric Series A Preferred Stock for 2,212,389 shares of American Electric common stock should be viewed as the exchange of property for

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American Electric stock for United States federal income tax purposes. A corporation recognizes no gain or loss on the receipt of money or other property in exchange for stock of such corporation under Section 1032 of the Code. As such, neither American Electric nor its shareholders, except for Mr. Crenshaw, should recognize any gain or loss upon this stock conversion.

American Electric Name Change

The amendment of the articles of incorporation to change the name of American Electric to Stabilis Energy, Inc. should constitute a type F reorganization for United States federal income tax purposes as described in Section 368(a)(1)(F) of the Code as a change in American Electric’s identity. A corporation and its shareholders generally do not recognize any gain or loss in a type F reorganization. As such, neither American Electric nor you should recognize any gain or loss upon the name change.

WE INTEND THIS DISCUSSION TO PROVIDE ONLY A SUMMARY OF THE MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. WE DO NOT INTEND THAT IT BE A COMPLETE ANALYSIS OR DESCRIPTION OF ALL POTENTIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. IN ADDITION, WE DO NOT ADDRESS TAX CONSEQUENCES WHICH MAY VARY WITH, OR ARE CONTINGENT UPON, INDIVIDUAL CIRCUMSTANCES. MOREOVER, WE DO NOT ADDRESS ANY NON-INCOME TAX OR ANY FOREIGN, STATE OR LOCAL TAX CONSEQUENCES. ACCORDINGLY, WE STRONGLY URGE YOU TO CONSULT YOUR TAX ADVISOR TO DETERMINE YOUR PARTICULAR UNITED STATES FEDERAL, STATE, LOCAL OR FOREIGN INCOME OR OTHER TAX CONSEQUENCES WITH RESPECT TO YOUR INDIVIDUAL CIRCUMSTANCES.

Appraisal rights

Holders of our common stock will not have appraisal or dissenters’ rights in connection with the acquisition of Stabilis and its subsidiaries or the other proposals to be considered at the Special Meeting.

Board of directors and executive officers after the Share Exchange

As of the completion of the Share Exchange, our board of directors will consist of six directors, five of whom will be designated by Holdings and one of whom, Casey Crenshaw, is a current member of our board. Holdings has designated James Reddinger, James Aivalis, Will Crenshaw, Ben Broussard and Mush Kahn to be new directors upon completion of the Share Exchange. On or prior to the completion of the Share Exchange, the other members of our current board will deliver their resignations to us. The remaining director will then fill the vacancies created by the resignations with the designees of Holdings to serve until the 2019 annual meeting of stockholders. The Company intends to appoint additional directors in the future.

Our executive officers following the Share Exchange will be:

Set forth below is information concerning each of the individuals who will be serving as an executive officer or director of American Electric following the completion of the Share Exchange.

Casey Crenshaw, age 44, has been the Executive Chairman of Stabilis since November 2018. Mr. Crenshaw previously served as President of Stabilis from its formation in February 2013 until November 2018. Mr. Crenshaw also serves as President and a member of the Board of Directors of The Modern Group, Ltd, a privately owned diversified manufacturing, parts and distribution, rental/leasing and finance business

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headquartered in Beaumont, Texas. Mr. Crenshaw has held various executive positions with The Modern Group since 1997, including over 10 years as CFO. Mr. Crenshaw has been a director of American Electric since 2012. Mr. Crenshaw holds a BA in Finance from Texas A&M University.

James Reddinger, age 48, has been the Chief Executive Officer of Stabilis since November 2018. Mr. Reddinger has held various executive positions with Stabilis, including Chief Financial Officer and Chief Operating Officer from 2013 to 2018. Prior to joining Stabilis, Mr. Reddinger was a private investor from 2010-2013. Mr. Reddinger was previously employed by UBS from 2004 to 2010 and Credit Suisse from 1998 to 2004. Mr. Reddinger holds an AB from Harvard University and an MBA from the JL Kellogg School of Management at Northwestern University.

Andrew Puhala, age 49, has been Chief Financial Officer of Stabilis since November 2018 and VP of Finance for The Modern Group, Ltd since August 2017. From September 2015 to June 2017 he served as Chief Financial Officer of ERA Group Inc. (NYSE:ERA), a provider of helicopter transport services primarily to the energy industry. Mr. Puhala served as Chief Financial Officer of American Electric from January 2013 to September 2015 and CFO of AccessESP from 2011- 2012. Mr. Puhala held a variety of senior financial roles at Baker Hughes, Inc. from 1996 - 2011 including VP finance- Middle East Region, Division Controller and Assistant Treasurer. Mr. Puhala is a Certified Public Accountant and received a BBA in Accounting and an MPA from the University of Texas at Austin.

Mushahid “Mush” Khan, age 51, founded mkhangroup, LLC (MKG), an investment and advisory firm targeting companies in manufacturing and related industries in 2015 and has served as its CEO since founding. Mr. Khan has also been the President and Chief Executive Officer of APS Plastics and Manufacturing (APS), a full-service custom plastic component manufacturer since January 2016. Mr. Khan acquired APS in 2016, in partnership with Framework Capital Partners. Mr. Khan has also provided consulting services since 2015. Mr. Khan is also active in community service. He currently holds a board position with TXRX Labs, KIPP Houston Public Schools and Connect Communities, and is past board chair of Crisis Intervention of Houston as well as Devereaux Texas Treatment Centers. He is also an active member of Young Presidents Organization (YPO), Greater Houston Partnership’s advanced manufacturing workgroup, and Houston Exponential’s advanced manufacturing workgroup. Mr. Khan holds an MBA from The University of Houston (Clear Lake), and a BS in Mechanical Engineering from Louisiana State University.

Will Crenshaw, age 74, is the Chairman and CEO of The Modern Group, Ltd., a privately owned conglomerate of manufacturing and rental businesses serving the oil and gas, agriculture, power generation, storage, and transportation industries. Mr. Crenshaw acquired then, Modern Inc., in 1963 and expanded the business from 3 employees to 3,000 across 100 locations spanning the globe. Mr. Crenshaw holds a honorary Doctorate Degree from Lamar University and presently resides in Beaumont, Texas with his wife of 49 years, Joy Crenshaw.

Ben Broussard, age 40, has been the Director of Finance for The Modern Group, Ltd., since 2013 and COO of its financing business, M/G Finance Co., Ltd., since 2017. Mr. Broussard began his career as a commercial banker with Washington Mutual Bank in 2001. After leaving the bank In 2008, he worked at T-Mobile until 2011 and then as a consultant to Microsoft’s Global Procurement Group from 2011 to 2013. Mr. Broussard holds a BA from the University of Notre Dame and JD from South Texas College of Law Houston.

James Aivalis, age 60, has served as CEO, President and Director of Prometheus Energy Group since January 2013. He has been a Managing Member of AEGIS NG, LLC since April 2016. From May 2006 through June 2012, Mr. Aivalis was the CEO and President of ThruBit, LLC, a Venture Capital funded company focused on drilling and evaluation technologies for horizontal wells and unconventional hydrocarbon reservoirs. From 2002 to 2006, Mr. Aivalis was GM/Managing Director at TenarisConnections, with global responsibilities for high performance OCTG premium connections. Mr. Aivalis served with Schlumberger from 1981 to 2002 with domestic and international roles in Management, Operations, Engineering, Project Management and Sales and

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Marketing. Mr. Aivalis served from October 2009 to September 2018 as a Non-Executive Director and Business Advisor with XACT Downhole Telemetry, Inc. in Calgary, Canada, and from August 2011 to December 2013 as a Business Advisor to Zinc Air Inc., developing grid scale flow batteries. Since June 2018, Mr. Aivalis has been a member of the Advisory Board at Florida Institute of Technology for the College of Engineering and Sciences. Mr. Aivalis holds a Bachelor of Science degree in Ocean Engineering from Florida Institute of Technology, has authored six patents focused on well construction and optimization technologies, and is a long-standing member of the Society of Petroleum Engineers.

Regulatory Approvals

We do not believe the Share Exchange to be subject to the reporting and waiting provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 which prevents transactions meeting certain size tests, and not otherwise exempt, from being completed until required information and materials are furnished to the Antitrust Division of the U. S. Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) and the related waiting period expires or is terminated early. Accordingly, no filings have been made or are presently contemplated with the DOJ and FTC in relation to the Share Exchange.

Interests of certain persons in the Share Exchange agreement

In considering the recommendation of the American Electric Special Committee and Board of Directors with respect to issuing shares of American Electric common stock pursuant to acquire Stabilis and its subsidiaries and the other matters to be acted upon at the Special Meeting, our Stockholders should be aware that certain members of the American Electric Board of Directors and executive officers of American Electric have interests in the Share Exchange that may be different from, or in addition to, interests they have as American Electric stockholders.

Casey Crenshaw, a director of American Electric since 2012, beneficially owns and controls each of JCH, Holdings, Stabilis, PEG and Prometheus, which are parties to the Share Exchange Agreement. Mr. Crenshaw also beneficially owns shares of American Electric common stock and Series A Preferred Stock which have 25% of the voting rights of American Electric stockholders as of the Record Date of the Special Meeting. Mr. Crenshaw will be Executive Chairman of American Electric upon completion of the Share Exchange. Mr. Crenshaw will beneficially own shares of American Electric common stock equal to 95% to the total shares of American Electric common stock to be issued to the owners of Stabilis and its subsidiaries in the Share Exchange. Upon completion of the Share Exchange Mr. Crenshaw will beneficially own 88.4% of the total outstanding shares of American Electric common stock and will be able to control all matters requiring stockholder approval, including the election of directors and the approval of corporate transactions requiring stockholder approval, without seeking the approval of the other stockholders. Upon completion of the Share Exchange, American Electric will register for sale under the Securities Act of 1933 the shares of common stock which will be issued in the Share Exchange Agreement, including the shares which will be beneficially owned by Mr. Crenshaw. These registration rights are discussed in greater detail in the section titled “ Agreements Related to the Share Exchange-Registration Rights Agreement ” in this Proxy Statement.

Six of American Electric’s current or past directors or entities they control, have entered into a voting agreement in connection with the Share Exchange. The parties to the voting agreement have the right to vote 40% of the voting rights at the Special Meeting and have agreed to vote these shares in favor of the proposals set forth in this Proxy Statement. The voting agreement is discussed in greater detail in the section titled “ Agreements Related to the Share Exchange-Voting Agreement ” in this Proxy Statement.

One current director of American Electric, Casey Crenshaw, will continue to be a director of American Electric after the completion of the Share Exchange.

American Electric will purchase, prior to the completion of the Share Exchange, a six-year prepaid irrevocable “D&O tail policy” for the non-cancellable extension of the directors’ and officers’ liability coverage

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of American Electric’s existing directors’ and officers’ insurance policies for a claims reporting or discovery period of at least six years from and after the completion of the Share Exchange.

Costs and expenses of the Share Exchange

We estimate that fees and expenses related to the Share Exchange, consisting of fees and expenses of our financial advisor, attorneys, and accountants, proxy statement printing and distribution and related charges, Securities and Exchange Commission and NASDAQ filing fees and travel expense, will total approximately $1.2 million, whether or not the Share Exchange is completed or our common stock continues to trade on the Nasdaq Capital Market. Stabilis has agreed to reimburse American Electric for up to $650,000 of fees and expenses of our investment bankers, counsel and accountants.

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AGREEMENTS RELATED TO THE SHARE EXCHANGE

Voting Agreement

Six American Electric stockholders (the “Stockholder Parties”), each of whom is a current or past director of American Electric or an entity controlled by such persons, are parties to a voting agreement dated as of December 17, 2018 (the “Voting Agreement”) among themselves pursuant to which, among other things, each of these stockholders agreed, solely in his or its capacity as an American Electric stockholder, to vote all of his or its shares of American Electric common or preferred stock (i) to approve the issuance of our common stock in connection with the acquisition of Stabilis and its subsidiaries; (ii) to approve an amendment to the articles of incorporation of American Electric to increase the number of authorized shares of common stock from 50,000,000 to 300,000,000 shares; (iii) to authorize the board of directors to effect a reverse stock split of our common stock at a ratio between 1:2 to 1:6 to be determined by our board of directors; (iv) to approve an amendment to our articles of incorporation to change our name to Stabilis Energy, Inc.; (v) to adjourn the Special Meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the Special Meeting to approve the foregoing matters; and (vi) in favor of other actions contemplated in the Voting Agreement and actions required in furtherance thereof.

The Stockholder Parties have also agreed to vote their American Electric shares at the Special Meeting against approval of any proposal in opposition to or in competition with the foregoing matters and against any other proposal, action or transaction which would be reasonably expected to impede, frustrate, prevent or materially delay the foregoing matters.

The Stockholder Parties have also granted Casey Crenshaw and James Reddinger an irrevocable proxy to vote their respective shares of American Electric common and preferred stock in accordance with the Voting Agreement. These stockholders may vote their shares of American Electric stock in accordance with the foregoing matters.

The Stockholder Parties have agreed in the Voting Agreement on behalf or themselves and their controlled affiliates to not directly or indirectly initiate, solicit or knowingly encourage any third person to make an inquiry, proposal, or offer relating to the foregoing matters or assist any third person in preparing or soliciting an offer relating in any way to or that could otherwise lead to an alternative proposal to the Share Exchange.

Under the Voting Agreement, the Stockholder Parties have also agreed not to transfer their shares of American Electric common or preferred stock, or take any action which would violate or conflict with their representations, warranties or obligations under the Voting Agreement.

The Voting Agreement shall remain effective until the earlier of (i) the termination of the Share Exchange Agreement in accordance with its terms; (ii) the completion of the Share Exchange; (iii) delivery by all parties to the Voting Agreement or a notice of termination of the Voting Agreement upon any amendment to the Share Exchange Agreement which alters or amends the Share Exchange Agreement or any form of agreement or document attached to the Share Exchange Agreement in a manner adverse to the parties to the Voting Agreement in any material respect; or (iv) the mutual written agreement of the parties to the Voting Agreement and American Electric to terminate the Voting Agreement.

The Stockholder Parties beneficially own shares of American Electric common and preferred stock with 40.3% of the voting rights entitled to vote at the Special Meeting.

The Stockholder Parties are:

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Registration Rights Agreement

In connection with the completion of the Share Exchange Agreement, a Registration Rights Agreement will be executed and delivered by and among American Electric, Holdings and AEGIS (the “Registration Rights Agreement”). The shares that are the subject of the Registration Rights Agreement include the American Electric common stock issued to Holdings and AEGIS pursuant to the Share Exchange Agreement and any other securities issued or issuable with respect to such common stock by way of stock dividend or stock split or combination of shares, recapitalization, merger, consolidation or reorganization (the “Registrable Securities”). Such securities will no longer be subject to registration rights when disposed of pursuant to an effective registration statement; sold pursuant to Rule 144 and the transferee received securities that are not restricted securities as defined in Rule 144; securities which have ceased to be outstanding; or securities held by holder that is not Holdings or AEGIS or an affiliate thereof to whom registration rights have not been transferred in accordance with the Registration Rights Agreement.

Shelf Registrations. Under the Registration Rights Agreement, American Electric has agreed to:

Piggyback Registration Rights. The Company has also granted piggyback registration rights under the Registration Rights Agreement, pursuant to which the Company will:

Holdback Agreements. In connection with any underwritten public offering by American Electric or any holder of Registrable Securities pursuant to the Registration Rights Agreement, each holder of Registrable

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Securities is subject to restrictions on public sale or distribution of similar securities for a lock-up period up to 60 days of the date of the final prospectus or prospectus supplement for the underwritten offering. However, holders of Registrable Securities may not be restricted from effecting any public sale or distribution of securities for more than 120 days in any 12 month period. American Electric is also subject to effecting a public offering of similar securities or hedging transactions related to such securities during a lock-up period reasonably requested by the managing underwriter.

Registration Expenses. American Electric pay will pay the registration and listing expenses of the holders of the Registrable Securities that are included in a demand or piggyback registration, but shall not be responsible for underwriting fees and disbursements, discounts or commissions attributable to the sale of Registrable Securities.

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ABOUT STABILIS AND ITS SUBSIDIARIES

Summary

Stabilis Energy (“Stabilis”) is a vertically integrated provider of small-scale liquefied natural gas (“LNG”) production, distribution and fueling services to multiple end markets in North America. We have safely delivered over 200 million gallons of LNG through more than 20,000 truck deliveries during our 15-year operating history, which we believe makes us one of the largest and most experienced small-scale LNG providers in North America. Our diverse customer base utilizes LNG as a fuel source in a variety of applications in the industrial, energy, mining, utilities and pipelines, commercial, and high horsepower transportation markets. Our customers use LNG as an alternative to traditional fuel sources, such as diesel, fuel oil, and propane, and as a means to lower fuel costs and reduce their environmental footprint. Our customers also use LNG as a “virtual pipeline” solution when natural gas pipelines are not available or are curtailed. We believe being an experienced, integrated small-scale LNG supplier of natural gas makes us well positioned to meet our customers’ increasing LNG fuel needs and to grow rapidly into new markets.

According to Qatar Petroleum, the global LNG market is projected to grow by more than 35% over the next 15 years due to the declining cost of natural gas and growing environmental concerns that are driving the use of cleaner fuels. We believe that similar macro trends are driving increased demand for small-scale LNG in North America. According to ADI Analytics (“ADI”), an independent energy market research and advisory firm, the North American small-scale LNG market was 499 million gallons in 2018 and is projected to grow by 271% to 1.9 billion gallons by 2030 (a 11.5% compound annual growth rate) due to the increased adoption of LNG across multiple end markets. Our annual LNG gallons sold increased 89% in 2018 and we expect that increasing North American demand for LNG will support future growth in our business.

Stabilis seeks to provide our customers with safe, reliable and cost effective LNG fueling solutions. We provide multiple products and services to our customers, including:

LNG Production and Sales —Stabilis builds and operates cryogenic natural gas processing facilities, called “liquefiers”, that convert natural gas into LNG through a multiple stage cooling process. We currently own and operate a liquefier that can produce up to 120,000 LNG gallons (455 cubic meters) per day. We also purchase LNG from third-party production sources which allows us to supply customers in markets where we do not own liquefiers. We define “small-scale” LNG production to include liquefiers that produce less than 1,000,000 LNG gallons per day (3,788 cubic meters per day).

Transportation and Logistics Services —Stabilis offers our customers a “virtual natural gas pipeline” by providing them with turnkey LNG transportation and logistics services. Our supply and logistics team can have LNG delivered quickly and efficiently to most locations in North America. We deliver LNG to our customers’ work sites from both our own production facility and our network of 25 third-party production sources located throughout North America. We own a fleet of LNG fueled trucks and cryogenic trailers to transport and deliver LNG. We also outsource similar equipment and transportation services from qualified third-party providers as required to support our customer base. We define “small-scale” LNG distribution to include distribution by trailer or tank container (up to 15,000 LNG gallons) or marine vessels that carry less than 8,000,000 LNG gallons (approximately 30,000 cubic meters).

Cryogenic Equipment Rental —Stabilis owns and operates a rental fleet of 150 mobile LNG storage and vaporization assets, including: transportation trailers, electric and gas-fired vaporizers, ambient vaporizers, storage tanks, and mobile vehicle fuelers. We also own several stationary storage and regasification assets. We believe this is one of the largest fleets of small-scale LNG equipment in North America. Our fleet consists primarily of trailer-mounted mobile assets, making delivery to and between customer locations more efficient. We deploy these assets on job sites to provide our customers with the equipment required to transport, store, and consume LNG in their fueling operations.

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Engineering and Field Service Support Services —Stabilis has experience in the safe, cost effective, and reliable use of LNG in multiple customer applications. We have also developed many processes and procedures that we believe improve our customers’ use of LNG in their operations. Our engineers help our customers design and integrate LNG into their fueling operations and our field service technicians help our customers mobilize, commission and reliably operate on the job site.

Stabilis generates revenue by selling and delivering LNG, which in many instances involves us providing engineering and field support services, to our customers. We also generate revenue by renting cryogenic equipment to our customers. We sell each product and service separately or as a bundle depending on the customer’s needs. LNG pricing depends on market pricing for natural gas and competing fuel sources (such as diesel, fuel oil, and propane among others), as well as the customer’s purchased volume, contract duration and credit profile.

Stabilis’ customers use natural gas in their operations for multiple reasons, including lower fuel cost, more stable fuel costs, reduced environmental emissions, and improved operating performance. We serve customers in a variety of end markets, including industrial, energy, mining, commercial, utilities and pipelines, and high horsepower transportation. We believe that LNG consumption will continue to increase in these end markets in the future.

Stabilis believes that that our extensive operating experience positions us to be a leader in the North American small-scale LNG market. We operate an LNG liquefier and have executed approximately 200 turnkey LNG supply and distribution projects for our customers. We plan to leverage this experience to grow our business by investing in new LNG production and distribution assets throughout North America. We will also seek to consolidate the market by acquiring existing LNG production and distribution assets to create greater operating scale and efficiencies.

Stabilis was founded in 2013 to build and operate small-scale LNG production facilities. We opened our first natural gas liquefaction facility in Texas in 2015. Stabilis Energy, LLC is a Texas Limited Liability Company and is taxed as a Corporation for U.S. Federal Income Tax purposes. In 2017, through a party under common control with Stabilis, we acquired 80% of PEG Partners LLC, the parent company of Prometheus Energy Group, Inc., a leading provider of LNG distribution services, to create what we believe is the largest integrated small-scale LNG production and distribution company in North America. Prometheus Energy was founded in 2003.

Stabilis’ principal executive office is located at 10375 Richmond Ave., Suite 825, Houston, Texas 77042. Our telephone number is (866) LNG-FUEL and our website address is www.stabilisenergy.com. The reference to Stabilis’ website is not intended to incorporate the information on the website into this Proxy Statement.

Market for Small-Scale LNG in North America

LNG can be used to deliver natural gas to locations where pipeline service is not available, has been interrupted, or needs to be supplemented. LNG can also be used to replace a variety of alternative fuels, including distillate fuel oil (including diesel fuel and other fuel oils) and propane, among others. We believe that these alternative fuel markets are large and provide significant opportunities for LNG substitution. U.S. Energy Information Administration (“EIA”) data for the U.S. market size for these alternative fuels in 2018 was as follows:

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Note: Assumes 1.7 LNG gallons per distillate fuel oil gallon, 1.1 LNG gallons per propane gallon, and 264 LNG gallons per cubic meter

Source: U.S. Energy Information Administration and ADI Analytics

This market size does not include Mexico, Canada, or Latin America. According to ADI, the North American small-scale LNG market was 499 million gallons in 2018 and is projected to be 1.9 billion gallons by 2030. This implies that LNG comprised approximately 0.4% of the combined U.S. distillate and propane markets in 2018 and will comprise approximately 1.6% of the current combined market size by 2030. We believe that LNG is a suitable substitute for most diesel and propane applications and that the LNG market share growth projected in the table above should be achievable based on current market trends.

We believe that the following factors could drive significant LNG market growth in North America over the next decade:

Less Expensive than Alternative Fuels . Technological advances in natural gas production have unlocked significant new reserves in North America. We believe that these proven, abundant and growing reserves of natural gas have the potential to produce among the highest volumes of natural gas in the world. This abundant supply of natural gas has supported relatively low natural gas prices in North America. The cost of natural gas in the United States and Canada currently is less than the cost of crude oil on an energy equivalent basis. In addition, because the price of the natural gas commodity makes up a smaller portion of the total cost of LNG relative to the commodity portion of competing fuels, the price of LNG is less sensitive to variations in the underlying commodity cost. These factors have made LNG cheaper than competing fuel sources at most times over the past ten years, and we believe that LNG will maintain this cost advantage into the foreseeable future.

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The following chart sets forth the wholesale price of Propane, Ultra-Low No. 2 Diesel, Indicative Liquefied Natural Gas and Natural Gas (Henry Hub).

Lower Emissions than Alternative Fossil Fuels. Natural gas contains less carbon than most other fossil fuels and, as a result, produces fewer carbon dioxide emissions when burned. The National Energy Technology Laboratory indicates that new natural gas power plants emit between 50% and 60% less carbon dioxide compared with emissions from a typical coal plant. The Argonne National Laboratory indicates that natural gas vehicles produce between 13% and 21% fewer greenhouse gas emissions than comparable gasoline and diesel fueled vehicles. Additional studies indicate that natural gas also produces lower particulate matter and sulfur emissions than other fossil fuels. We believe the relative environmental benefits of natural gas as a fuel could become increasingly important if, as we expect, air quality regulations become increasingly stringent, new regulations mandating low carbon fuels are enacted, and our customers expand their corporate sustainability mandates to lower greenhouse gas emissions and increase fuel diversity.

Better Safety than Alternative Fuels. The physical characteristics of LNG make it a safer fuel when compared to diesel and propane because it boils and dissipates rapidly into the air when spilled instead of pooling on or near the ground. If released, LNG is also less combustible than diesel and propane because it ignites at relatively high temperatures and within a narrow flammability range when mixed with air. In addition, LNG fuel tanks and systems used in natural gas applications are subjected to a number of federal and state required safety tests, such as fire, environmental hazard, burst pressure and crash testing that ensure their safety.

Established LNG Production and Distribution Technology. ADI Analytics reports that small-scale LNG production and distribution technologies have been proven and are now widely available from multiple vendors. Small-scale liquefiers are available in modular formats from several vendors and many of them have established track records of reliable and safe operating performance. LNG transport trailers, storage vessels, and vaporization equipment are also available from multiple vendors, and most of this equipment also comes with an established

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operating track record. We believe that the availability of proven small-scale LNG production and distribution technologies reduces the technology risk in growing the industry, but it also places a premium on the owner / operator’s construction and operating capabilities.

Increasing Growth in Renewable Energy Production: Energy production from renewable energy sources, in particular wind and solar, is growing rapidly across the world as many governments and businesses seek to reduce their carbon emissions. The International Renewable Energy Agency (“IRENA”) reports that global power capacity based on renewable energy increased 7.9% in 2018 with solar and wind accounting for 84% of the growth. IRENA projects similar growth trends for the renewable energy production over the next several years. However, wind and solar are intermittent energy sources that require back-up energy sources that can come into service quickly and reliably. We believe that natural gas driven turbines are the preferred back-up power source as they meet these operating requirements and use relatively clean natural gas fuel. We believe that natural gas power generation could support the growth of wind and solar energy production and that LNG could be a preferred source of natural gas fuel for off-pipeline applications.

Our Products, Services and Other Business Activities

Stabilis’ principal products, services and business activities are described below. Financial information about the revenue we receive from these activities is discussed in this Proxy Statement in Management’s Discussion and Analysis of Financial Condition and Results of Operations of Stabilis.

LNG Production.  Stabilis owns and operates an LNG liquefier near George West, Texas, which we call the “George West Liquefier”, that has the capacity to produce 43.8 million LNG gallons (165,909 cubic meters) per year or 120,000 LNG gallons (455 cubic meters) per day. This plant includes a dual truck trailer loading system and a 270,000 LNG gallon (1,023 cubic meters) storage tank system. The George West Liquefier was 96.5% dispatchable in 2018 with the only shutdowns coming for routine scheduled maintenance. We intend to build or acquire additional liquefiers throughout North America over the next several years as we seek to optimize our North American LNG supply network.

Stabilis believes that we can construct new LNG liquefiers quickly and cost effectively which will allow us to provide cost competitive LNG to our customers. We constructed the George West plant, which commenced commercial operations in 2015, in under eighteen months at a total cost of approximately $47.0 million, or $644 per annual ton of LNG production, which is below the midpoint of the world-scale LNG industry’s published liquefier construction costs of $511 to $867 per ton excluding ancillary infrastructure. We believe that our projected construction costs are competitive with those of world scale LNG export facilities because our plants would be built from standard modular designs, which reduces engineering and construction costs, and require fewer permits and approvals than larger export facilities, which reduces our permitting costs and timeline for completion. We anticipate that new liquefiers we construct will produce between 100,000 – 450,000 LNG gallons per day (379 to 1,705 cubic meters per day) and we believe that our LNG liquefier construction and operations experience will allow us to construct future liquefiers for approximately $490 - $550 per ton. LNG production capacity can be expanded at existing liquefaction sites at lower costs (approximately $200 - $250 per ton) and in shorter timeframes (less than twelve months) than greenfield facilities due to existing gas supply, electrical supply, site work, and gas processing systems.

Stabilis believes that our new liquefiers will be able to produce LNG at costs that make it a competitive fuel source for our customers. Based on our operating experience at the George West Liquefier, our direct costs to liquefy gas range from $0.15 - $0.20 per LNG gallon ($1.82 - $2.42 per MMBtu) when the plant is operating in excess of 50% capacity. This includes plant operating costs, such as electricity and labor, but does not include the cost of the natural gas feedstock. This liquefaction cost could vary by time and plant location if input costs change. Our direct cost to deliver LNG via truck transportation is approximately $0.05 - $0.10 per gallon per every 100 miles traveled. These costs of liquefaction and transportation exclude corporate expenses such as sales

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and marketing, administration, and financing, among others. We believe that this cost of production and distribution will allow our LNG to be competitive with alternative fuel sources in most commodity market environments.

Stabilis owns a second liquefier that has a production capacity of 9.1 million LNG gallons (34,470 cubic meters) per year or 25,000 LNG gallons (95 cubic meters) per day. This liquefier is in storage awaiting deployment near Midland, Texas and we are actively exploring sites where it could be located in West Texas. We believe that this liquefier could be commissioned as early as 2020. If we determine that LNG demand in West Texas exceeds the capacity of this liquefier, we could either expand the production of this liquefier or install a larger liquefier that is similar to our George West Liquefier. We are also in the process of evaluating other opportunities to develop liquefiers throughout the North America, including several locations in Mexico, Canada, and the United States.

LNG Sales. Stabilis supplies our customers with LNG produced at our own liquefaction facility as well as LNG produced at third-party facilities. We make the determination of LNG supply sources based on the cost of LNG, the transportation cost to deliver to regional customer locations, the quality of the LNG, and the reliability of the supply source. Our network of 25 third-party LNG production facilities located throughout North America includes: 1) utility owned peak shaving plants, 2) natural gas/helium processing facilities, and 3) other merchant LNG production facilities similar to our George West Liquefier. We have contracts with these production sources that allow us to purchase LNG for our customers as required and without firm or long-term volume commitments. We believe that our third-party supply network is the largest and most complete in North America allowing us access to approximately 500 million LNG gallons (1.9 million cubic meters) of capacity annually on an as required basis. Occasionally the LNG we obtain from third parties may be purchased under take-or-pay contracts that require us to purchase minimum volumes. In situations where firm take or pay contracts are required, we try to support them with back-to-back customer purchase agreements. Currently we have one take-or-pay LNG supply contract that is matched to contracted customer demand. In 2018, we purchased approximately 51% of our LNG from third-party suppliers and we produced the remainder at the George West Liquefier.

Stabilis sells LNG on a bulk or wholesale basis to our customers. We sell LNG through supply contracts that are priced on a regional commodity index-plus basis, such that LNG sales under these contracts increase or decrease as a result of changes in the commodity cost of natural gas. We sell LNG to our customers based on the same commodity index we buy natural gas to reduce our exposure to commodity prices changes. We sell LNG fuel at prices we set based on prevailing market conditions. Our pricing methodology depends on our cost of natural gas and LNG production, the customer’s commercial requirements, the price of competing energy sources, volumes required, contract duration, and the customer’s credit profile. Although we have long-term commercial relationships with many of our customers, our customer contracts are generally short-term in nature.

Transportation and Logistics Services . Stabilis offers its customers a “virtual natural gas pipeline” by providing them with turnkey transportation and logistics services for delivery from the LNG production source to the LNG consumption site. Our logistics and scheduling team offers 24-hour support to our customers. We utilize customized telemetry and fuel dispatch software systems to optimize our LNG deliveries. Customers can call our logistics team and have LNG delivered quickly and efficiently to almost any location in North America. We deliver LNG to our customers’ sites with our fleet of 45 tanker trailers, where it is stored and then vaporized on demand to fuel our customers consuming equipment which includes engines, turbines, generators, furnaces, dryers, boilers, kilns, and pipelines.

Stabilis owns a fleet of LNG fueled trucks that are used to make deliveries to our customers near the George West plant. We also have contracts with multiple national and regional trucking companies to deliver LNG to our customers. These carriers are certified to transport hazardous materials and the drivers are trained on safe LNG operating and delivery procedures. We believe that our established relationships with these carriers gives us a unique ability to reliably and safely deliver LNG to almost any location in North America on short notice.

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Cryogenic Equipment Rental . Stabilis believes that we own the largest rental fleet of mobile LNG storage, transportation and vaporization equipment in North America. Our asset base includes 150 pieces of equipment, including: transportation trailers, electric and gas-fired vaporizers, ambient vaporizers, storage tanks, and mobile vehicle fuelers. We use these assets to provide customers with the necessary equipment to transport, store, and consume LNG in their operations.

Stabilis rents our cryogenic and related equipment to customers based on day rates that vary by the cost and availability of our equipment, and align with our customers’ contract terms. Our equipment is designed specifically for use in small-scale LNG applications and includes the safety and operational features that our customers and our regulators require. We believe that our current fleet of equipment can support significant growth in volumes in our business. We continually evaluate adding additional equipment as required by our customers to optimize their operations.

Engineering and Field Service Support Services . Stabilis believes it has significant experience in the safe, cost efficient and reliable use of LNG in multiple customer applications. Our engineering team provides our customers with safe and effective LNG fueling plans. Our engineering services are usually included in our efforts to sell and commission customer projects, however sometimes we bill customers for them on an hourly or fixed project basis. Our staff of 25 trained field service technicians help our customers use LNG safely and efficiently on their job sites. We generally bill our customers for field service technicians on a day rate basis but sometimes this cost is included in bundled pricing.

Our Customers

Stabilis serves customers in a variety of end markets, including industrial, energy, utilities and pipelines, mining, commercial, and transportation within the United States, Mexico and Canada. We believe these customer markets are well suited to use LNG because they consume relatively high volumes of fuel, operate in mobile, temporary or off-pipeline locations, have limited access to alternative fuel sources, and/or are facing increasingly stringent emissions or other environmental requirements. We currently serve approximately 38 customers.

Industrial. Industrial applications for LNG include sand and aggregate producers, asphalt plants, greenhouses, food processers, paper mills, agricultural dryers, and general manufacturing facilities. Remote sand producers and mobile asphalt plants that use LNG to produce heat for their processing and drying operation are among our largest customers. LNG often replaces propane, fuel oil, or diesel fuel in these applications. These customers often cannot justify the cost of new pipeline infrastructure and using LNG requires minimal up-front costs, regulatory approvals, and lead time requirements. We believe LNG is optimal for these applications because it is cost-effective with stable pricing, offers consistent supply without curtailments, provides an energy density that minimizes storage requirements, and has a clean and consistent burn that makes heating operations more predictable. Based on our experience, sand production facilities can consume 10,000 to 20,000 LNG gallons per day and asphalt plants can use 5,000 to 10,000 LNG gallons per day.

Energy. Energy producers use high horsepower engines to power their drilling and pressure pumping operations. LNG displaces some of the total diesel fuel consumption in these applications using dual-fuel engine

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technology. We believe that energy producers can use LNG to reduce fuel costs and to meet environmental emissions requirements. Based on our experience, dual-fuel drill rigs can consume 1,000 to 5,000 LNG gallons per day and dual-fuel pressure pumping spreads can consume 10,000 to 20,000 LNG gallons per day. Recently, energy producers began using the field gas being produced in their operations to fuel the turbine engines that power their pressure pumping spreads. While turbines can burn field gas, they often require significant amounts of LNG for primary or back-up fuel supply because field gas often varies widely in volume, composition, and pressure. Based on our experience, turbine driven pressure pumping operations can consume 30,000 to 60,000 LNG gallons per day when using LNG as the primary fuel.

Utilities and Pipelines . North America has an expansive network of pipelines that, based on age and increasingly more stringent regulations, require routine testing and maintenance. During such events LNG fueling solutions can provide flow assurance to address natural gas supply interruptions during pipeline hydrostatic testing, repairs, gas distribution system curtailments, or unplanned outages. Such solutions can also provide a bridge for large industrial or utility customers before permanent pipelines are installed. LNG is becoming more predominant in regions where natural gas demand is growing and utilities and pipelines are required to continue to meet critical peak gas demand. LNG can provide an economic solution to support these supply requirements during peak weather conditions, gas curtailments and/or pipeline repairs. LNG usage in utility and pipeline applications varies significantly by project type.

Mining . Mines, including those producing metals, rare earth materials, and coal, are often located in remote locations that are off the electrical grid and do not have natural gas pipeline access. Mines use LNG to fuel electrical generators and to produce heat for their processing activities. Several mines have also tested using LNG as a fuel for their mine trucks and other high horsepower engine equipment. In addition to fuel cost benefits, LNG can help reduce emissions at mines that are often located in environmentally sensitive areas. Based on our experience, power generation and heating applications at mines can consume 10,000 to 100,000 LNG gallons per day.

Commercial . Commercial locations, including offices, calls centers, data centers, campuses, often need fuel for primary or back-up power generation. LNG often replaces propane or diesel fuel in these applications. LNG usage in commercial applications varies significantly by location size and purpose.

Transportation . LNG is being used to fuel high horsepower engines in multiple transportation applications, including over-the-road trucking, mine haul trucks, locomotives, and marine engines due to reduced emissions and cost savings benefits. Extensive LNG fueling networks exist currently in the United States, the European Union, and China. Regulatory requirements are accelerating the adoption of LNG as a transportation fuel in other markets, particularly in the marine sector. The International Maritime Organization (“IMO”) has imposed a global sulphur cap of 0.5% on ships trading outside of established emission control areas starting in January 2020, a level that could be difficult to achieve using common marine fuels, such as heavy fuel oil, but could be achieved using LNG. Large marine vessels can take several hundred thousand gallons of LNG in a single fuel bunkering event. LNG is also being tested as a fuel for rail locomotives and mining trucks, and is also a commonly used rocket propellant. LNG usage in transportation application varies by the horsepower requirements of the application.

Mexico. The volume of U.S. produced natural gas going to Mexico has been increasing significantly over the last several years as pipelines have been built to deliver natural gas to major Mexican cities and utility sites. However, a large portion of Mexico does not have access to these pipelines and are not expected to have access soon so LNG can be used to provide energy to these areas. We believe we are currently one of the largest small-scale LNG exporters to Mexico with multiple truckloads crossing the border from our George West Liquefier daily. Primary end markets for LNG in Mexico include the industrial, mining, and commercial sectors. We believe that the demand for LNG will continue to grow as the population and economy grow.

Canada. Canada is rich with natural resources including oil and gas, rare earth mining and minerals and timber. The recovery, processing, and utilization of these resources however is often done in remote areas that do

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not have access to natural gas pipelines or electrical grids. Primary end markets for LNG in Canada include the industrial and mining sectors. We believe that the demand for LNG will continue to grow as the economy grows and the focus on reducing environmental emissions increases. Certain provinces in Canada already have stringent carbon reduction programs that we believe incentivize the use the LNG.

Growth Strategy

Stabilis’ primary business objective is to provide superior returns to our shareholders by becoming the leading vertically integrated small-scale LNG provider in the Americas. We intend to accomplish this objective by implementing the following growth strategies:

Expand our LNG production business throughout North America. Stabilis believes that the customers and markets we serve could benefit from localized LNG supply sourcing. To this end, we believe that expanding our LNG liquefaction footprint throughout North America will enhance our competitive position by lowering our delivered cost and by creating a comprehensive and reliable supply network for our customers. We intend to leverage our liquefier development, construction, and operations experience to develop new liquefiers in markets that require LNG supply. We plan to both build new liquefiers and acquire existing liquefiers based on whichever offers the best service to our customers and returns to our investors.

In addition to growth in our existing domestic markets, Stabilis plans to focus on opening liquefiers in Mexico and Canada. We believe that both countries are attractive development opportunities given their lack of natural gas pipeline infrastructure in certain regions and focus on reducing environmentally harmful emissions. Both markets are also home to large fuel consumers such as mines, manufacturing and process facilities, and remote commercial and residential communities. Currently we are pursuing partnerships and acquisition opportunities in both countries that we believe will give us the capabilities required to grow rapidly in both markets.

Expand our LNG distribution business throughout North America. Stabilis believes that expanding our LNG distribution capabilities throughout North America will enhance our competitive position by creating a comprehensive and reliable supply network for our customers, lowering our delivered LNG costs, and expanding our ability to service new industries and geographies. We currently provide LNG distribution and field service support throughout the United States and parts of Mexico and Canada. We plan to expand our distribution capabilities by adding equipment to our fleet, including the high-flow, high pressure vaporization equipment required by pipelines and turbine powered pressure pumping spreads. We also plan to expand our marine distribution capabilities by adding LNG transportation and bunkering vessels to our fleet. In addition, we plan to explore opportunities that expand our geographic reach and industry expertise, including acquisitions of companies that already service our targeted customers. Finally, we plan to explore opportunities to expand into the compressed natural gas (“CNG”) market to become a comprehensive mobile natural gas solution provider for our customers.

Consistent with our strategy to expand of our LNG production business, Stabilis will focus the expansion of our LNG distribution business on the United States, Mexico and Canada. We believe that supporting our liquefiers with our distribution capabilities optimizes our asset base and our ability to service our customers. We also plan to expand our third-party LNG supply network in these markets so we can provide our customers with comprehensive and reliable service.

Use our LNG production and distribution expertise to expand into Latin and South America. Stabilis believes there is a significant opportunity to leverage our expertise in LNG production and distribution to expand our business into power generation opportunities in Latin and South America. Our business development team is identifying utilities and industrial energy consumers that may view LNG as a compelling alternative to traditional distillate fuels. We believe it will be compelling for them to enter into long-term contracts that support the development of the infrastructure required to deliver LNG directly to their power generation and other assets. We

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are currently developing partnerships and customer relationships in various regions of Latin and South America. We expect that these markets will require some combination of LNG production or sourcing, local logistics, distribution services and field support, paired with Stabilis owned power generation assets in some instances.

Maintain financial strength and flexibility . Stabilis will seek to maintain a conservative balance sheet which we believe will allow us to better react to market opportunities. We believe that maintaining adequate balance sheet flexibility, along with positive cash flows from operations, will provide us with sufficient liquidity to execute on our business strategies.

Competition

The market for natural gas is highly competitive. Stabilis believes the biggest competition for LNG in these applications are distillate fuels and propane as they power the majority of engines and generators in our target markets. We also compete with other fuel sources including pipeline natural gas and CNG. We believe we have multiple competitors in the market for natural gas fuel, including:

Stabilis competes with other natural gas companies, as well as other fossil fuel sources, based on a variety of factors, including, among others, cost, supply, availability, quality, cleanliness and safety of the fuel. Location is often a primary competitive factor as transportation costs limit the distance LNG can be hauled at competitive prices. We believe we compare favorably with many of our competitors on the basis of these factors; however, some of our competitors have longer operating histories and market based experience, larger customer bases, more expansive brand recognition, deeper market penetration and substantially greater financial, marketing and other resources than our business. As a result, they may be able to respond more quickly to changes in customer preferences, legal requirements or other industry or regulatory trends, devote greater resources to the development, promotion and sale of their products, adopt more aggressive pricing policies, dedicate more effort to infrastructure and systems development in support of their business or product development activities and exert more influence on the regulatory landscape that impacts the natural gas fuel market. Additionally, utilities and their affiliates typically have unique competitive advantages, including a lower cost of capital, substantial and predictable cash flows, long-standing customer relationships, greater brand awareness, and large sales and marketing organizations.

Stabilis does not believe that we compete with mid-scale and world-scale LNG liquefiers that produce more than 1,000,000 LNG-gallons (18,939 cubic meters) per day or 0.6 metric tons per year. These large LNG production facilities, such as those operated by Cheniere Energy and Freeport LNG, typically are designed and permitted to fill large marine vessels that deliver cargos of 21,120,000 LNG-gallons (80,000 cubic meters) or more to large import terminals in foreign markets. We do not believe that any of them currently have or plan to have truck loading facilities that would be required to supply LNG to small-scale LNG customers. We also do not believe that any mid-scale or large-scale liquefiers currently have plans to install LNG loading capabilities for vessels smaller than 7,920,000 LNG-gallons (30,000 cubic meters).

Competitive Strengths

Stabilis believes that we are well positioned to execute our business strategies based on the following competitive strengths:

LNG is an economically and environmentally attractive product. Stabilis believes that the combination of cost benefits and environmental benefits makes LNG a compelling fuel source for many energy consumers. We

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believe that LNG can be delivered to customers at prices that are lower and more stable than what they would pay for distillate fuels or propane. In addition, several of our customers have reported that LNG as a fuel decreases their operating costs by reducing equipment maintenance requirements and providing more consistent burn characteristics. We also believe that many of our customers use LNG because it can significantly reduce harmful carbon dioxide, nitrogen oxide, sulphur, particulate matter, and other emissions as compared to oil-based fuels.

Demonstrated ability to execute LNG projects safely and cost effectively. Stabilis has produced and delivered over 200 million gallons of LNG to our customers throughout our 15-year operating history. Our experience includes building and operating LNG production facilities, delivering LNG from third-party sources to our customers, and designing and executing a wide-variety of turnkey LNG fueling solutions for our customers using our cryogenic equipment fleet supported by our field service team. We have experience serving customers in multiple end markets including industrial, energy, utilities and pipelines, mining, commercial, and transportation. We also have experience exporting LNG to Mexico and Canada. Finally, we believe our team is among the most experienced in the small-scale LNG industry. We believe that we can leverage this proven LNG execution experience to grow our business in existing markets and expand our business into new markets.

Comprehensive provider of “virtual natural gas pipeline” solutions throughout North America. Stabilis offers our customers a comprehensive off-pipeline natural gas solution by providing the supply infrastructure, transportation and logistics, and field service support necessary to deliver LNG to them in a program that is tailored to their consumption needs. We believe we own one of the largest fleets of cryogenic transportation, storage, and vaporization equipment in North America. We can provide our customers LNG and related services for a wide variety of applications almost anywhere in United States, and we plan to expand our geographic coverage in Mexico and Canada. We believe that our ability to be a “one stop shop” for all of our customers’ off-pipeline natural gas requirements throughout North America is unique among LNG providers.

Ability to leverage existing LNG production and delivery capabilities into new markets. Stabilis believes that our experience producing and distributing LNG can be leveraged to grow into new geographic and service end markets. Over the past 15 years we have expanded our service area across the United States, northeastern Mexico, and western Canada. We have also expanded our industry coverage to include multiple new end markets and customers. We accomplished this expansion into new markets by leveraging our LNG production and distribution expertise, in combination with our cryogenic engineering and project development capabilities, to meet new customer needs.

Sales and Marketing

Stabilis markets our products and services primarily through our direct sales force, which includes sales representatives covering all of our major geographic and customer markets, as well as attendance at trade shows and participation in industry conferences and events. Our technical, sales and marketing teams also work closely with federal, state and local government agencies to provide education about the value of natural gas as a fuel and to keep abreast of proposed and newly adopted regulations that affect our industry.

Seasonality

A portion of Stabilis’ operating revenues and profits relate to providing backup gas for the local distribution infrastructure in the United States and Mexico to support utilities during times of peak heating demand from November through March. Revenues are generally lower from April to October during the months when heating demand is seasonally lower.

Government Regulation and Environmental Matters

Stabilis is subject to a variety of federal, state, provincial and local laws and regulations relating to the environment, health and safety, labor and employment, building codes and construction, zoning and land use,

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public reporting and taxation, among others. Any changes to existing laws or regulations, the adoption of new laws or regulations, or failure by us to comply with applicable laws or regulations could result in significant additional expense to us or our customers or a variety of administrative, civil and criminal enforcement measures, any of which could have a material adverse effect on our business, reputation, financial condition and results of operations. Regulations that significantly affect our operating activities are described below. Compliance with these regulations has not had a material effect on our capital expenditures, earnings or competitive position to date, but new laws or regulations or amendments to existing laws or regulations to make them more stringent could have such an effect in the future. We cannot estimate the costs that may be required for us to comply with potential new laws or changes to existing laws, and these unknown costs are not contemplated by our existing customer agreements or our budgets and cost estimates. We believe that we are in compliance with all environmental and other governmental regulations.

Construction and Operation of LNG Liquefaction Plants.  To build and operate LNG liquefaction plants, Stabilis must apply for facility permits or licenses that address many factors, including storm water and wastewater discharges, waste handling, and air emissions related to production activities and equipment operation. The construction of LNG plants must also be approved by local planning boards and fire departments.

Transportation of LNG.  Federal and state safety standards require that LNG is moved by qualified drivers in cryogenic containers designed for LNG transportation. Drivers are subject to USDOT regulations, such as FMCSA, Hazardous Materials Regulations, and state certification requirements, such as certifications by the Alternative Energy Division of the Railroad Commission of Texas. Cryogenic containers have to undergo annual USDOT visual inspections and periodic pressure tests. Motor vehicles equipped with an LNG container or other motor vehicles used principally for transporting LNG in portable containers in Texas have to be registered with the Railroad Commission of Texas.

Transfer of LNG.  Federal safety standards require each transfer of LNG to be conducted in accordance with specific written safety procedures. These procedures must require that qualified personnel be in attendance during all LNG transfer operations, and these procedures must be implemented, and copies of the procedures must be available/displayed, at each LNG transfer location.

Storage and Vaporization of LNG at Customer Sites. To install and operate both temporary and permanent storage and vaporization equipment, Stabilis may apply for permits or licenses that address many factors, including waste handling and air emissions related to onsite storage and equipment operation or consult with customers so they may apply for needed permits. The operation and siting of storage and vaporization of LNG may also require approval by local planning boards and fire departments.

Import  & Export of LNG. To import or export LNG from the United States to Mexico and Canada via truck, numerous authorizations are required. In support of our business in Canada, Stabilis maintains an import and export license from the United States Department of Energy (“DOE”) and from the National Energy Board of Canada (“NEB”). We maintain an Emergency Response Action Plan (“ERAP”) with Transport Canada. In support of our business in Mexico, we maintain an export license from the DOE and our customers in Mexico maintain import permits to bring the LNG into the country. Exporting LNG in large quantities would require additional permits and licenses from various regulatory agencies, including the DOE and the Federal Energy Regulatory Commission (“FERC”). We do not have these permits at this time but could file for such authorizations in the future.

Employees

As of December 31, 2018, Stabilis had 46 employees. We believe our relations with employees are satisfactory. None of our employees are currently subject to a collective bargaining agreement.

Intellectual Property

The intellectual property portfolio of Stabilis and its subsidiaries includes patents and trademarks. The Company has two pending patent applications in the United States, including a provisional patent application for

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the use of natural gas for well enhancement and a non-provisional patent application for use of natural gas deliquification. Additionally, the Company owns or has exclusive rights to five U.S. and one foreign patent (Mexico). The last patent to expire in the U.S. will expire in January 2031, absent any adjustments or extensions. In addition, the Company has three pending trademark applications including two in the United States and one in Canada. Additionally, the Company owns or has exclusive rights to eight U.S. trademarks and one foreign trademark (Canada) pending final approval.

We believe that our existing facilities are adequate for our operations and their locations allow us to efficiently serve our customers.

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SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

We are providing the following financial information to assist you in your analysis of the financial aspects of our proposed acquisition of Stabilis and its subsidiaries. This information is only a summary and you should read it in conjunction with our historical consolidated financial statements, and the historical financial statements of Stabilis and the other information included elsewhere in this proxy statement.

Selected Historical Financial Data of Stabilis and its Subsidiaries

The selected financial data as of December 31, 2018 and 2017 and for the years ended December 31, 2018 and 2017 are derived from Stabilis’ audited consolidated financial statements included in this Proxy Statement. The historical results are not necessarily indicative of the operating results to be expected in the future. The selected historical financial data should be read in conjunction with “Stabilis Management’s Discussion and Analysis of Financial Condition and Results of Operations of Stabilis” and the consolidated financial statements and related notes included elsewhere in this Proxy Statement.

Selected Unaudited Pro Forma Condensed Combined Financial Data

The following selected unaudited pro forma condensed combined financial information was prepared using the purchase method of accounting. For accounting purposes, Stabilis is considered to be acquiring American Electric. The unaudited pro forma condensed combined balance sheet data assume that the share exchange took place on December 31, 2018 and combine American Electric’s historical balance sheet at December 31, 2018 with Stabilis’ historical balance sheet at December 31, 2018. The unaudited pro forma condensed combined statement of operations data for the year ended December 31, 2018 assumes the Share Exchange took place on January 1, 2018 and combines American Electric’s statement of operations for the year then ended with Stabilis’ statement of operations for the year ended December 31, 2018.

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The selected unaudited pro forma condensed combined financial data are presented for illustrative purposes only and are not necessarily indicative of the combined financial position or results of operations of future periods or the results that actually would have been realized had the entities been a single entity during these periods. The selected unaudited pro forma condensed combined financial data as of and for the year ended December 31, 2018 are derived from the unaudited pro forma condensed combined financial information commencing at page      and should be read in conjunction with that information. See “Unaudited Pro Forma Condensed Combined Financial Statements.”

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COMPARATIVE PER SHARE DATA

The following table presents comparative per share data regarding the income, cash dividends declared and book value for American Electric common stock on a historical and pro forma combined basis. The unaudited pro forma combined information was prepared using the purchase method of accounting with Stabilis treated as the acquirer.

The information shown below should be read in conjunction with the consolidated financial statements of American Electric and the related notes, appearing elsewhere in this proxy statement, the consolidated financial statements of Stabilis and the related notes, appearing elsewhere in this proxy statement, and the unaudited pro forma financial statements appearing elsewhere in this proxy statement. The following information is not necessarily indicative of the results of continuing operations or combined financial position that would have resulted had the share exchange been consummated at the beginning of the periods presented, nor is it necessarily indicative of the results of operations of future periods or future combined financial position.

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MARKET PRICE AND DIVIDEND INFORMATION

American Electric

American Electric common stock currently trades on the NASDAQ Capital Market under the symbol “AETI.” The closing bid price of AETI common stock on the NASDAQ Capital Market on May     , 2019 was $         per share.

As of March 7, 2019, there were 48 stockholders of record of American Electric common stock.

American Electric has not paid cash dividends on its common stock and has no intention to do so at the current time.

Stabilis

Stabilis’ LLC membership interests are not publicly traded, and Stabilis does not currently file reports with the Securities and Exchange Commission.

Stabilis has not paid any cash distributions on its limited liability company membership interests.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF STABILIS

Unless the context indicates otherwise, all references to “Stabilis,” the “Company,” “we,” “us,” or “our” in this discussion refer to Stabilis Energy, LLC and Subsidiaries., together with its majority and wholly owned subsidiaries. This discussion should be read together with our consolidated financial statements and related notes included in this Proxy Statement, and all cross references to notes included in this discussion refer to the identified note in such consolidated financial statements.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This Proxy Statement contains forward-looking statements that are based on the beliefs of our management and reflect our current expectations as contemplated under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. When used in this proxy statement, the words “estimate”, “project”, “believe”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “may”, should”, “will”, the negative of these words or other variations thereon or comparable terminology are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events based on currently available information and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in those forward-looking statements, and discussed in further detail in the section of this proxy statement entitled “Certain Risk Factors Associated with the Acquisition of Stabilis and Prometheus”, including the fact that, following the acquisition, the actual results of the combined company could differ materially from the expectations set forth in this proxy statement. The forward-looking statements contained in this proxy statement speak only as of the date of the proxy statement. Except as required by applicable regulations, American Electric does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this proxy statement, including the occurrence of unanticipated events.

Overview

Stabilis Energy (“Stabilis”) is a vertically integrated provider of small-scale liquefied natural gas (“LNG”) production, distribution and fueling services to multiple end markets in North America. Our diverse customer base utilizes LNG as a fuel source in a variety of applications in the industrial, energy, mining, utilities and pipelines, commercial, and high horsepower transportation markets. Our customers use LNG as an alternative to traditional fuel sources, such as diesel, fuel oil, and propane, and as a means to lower fuel costs and reduce their environmental footprint. Our customers also use LNG as a “virtual pipeline” solution when natural gas pipelines are not available or are curtailed.

Stabilis seeks to provide our customers with safe, reliable and cost effective LNG fueling solutions. We provide multiple products and services to our customers, including:

LNG Production and Sales —Stabilis builds and operates cryogenic natural gas processing facilities, called “liquefiers”, that convert natural gas into LNG through a multiple stage cooling process. We currently own and operate a liquefier that can produce up to 120,000 LNG gallons (455 cubic meters) per day. We also purchase LNG from third-party production sources which allows us to support customers in markets where we do not own liquefiers. We define “small-scale” LNG production to include liquefiers that produce less than 1,000,000 LNG gallons per day (3,788 cubic meters per day).

Transportation and Logistics Services —Stabilis offers our customers a “virtual natural gas pipeline” by providing them with turnkey LNG transportation and logistics services in North America. We deliver LNG to our customers’ work sites from both our own production facility and our network of 25 third-party production sources located throughout North America. We own a fleet of LNG fueled trucks and cryogenic trailers to transport and deliver LNG. We also outsource similar equipment and transportation services from qualified third-party providers as required to support our customer base. We define “small-scale” LNG distribution to include distribution by trailer or tank container (up to 15,000 LNG gallons) or marine vessels that carry less than 8,000,000 LNG gallons (approximately 30,000 cubic meters).

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Cryogenic Equipment Rental —Stabilis owns and operates a rental fleet of 150 mobile LNG storage and vaporization assets, including: transportation trailers, electric and gas-fired vaporizers, ambient vaporizers, storage tanks, and mobile vehicle fuelers. We also own several stationary storage and regasification assets. We believe this is one of the largest fleets of small-scale LNG equipment in North America. Our fleet consists primarily of trailer-mounted mobile assets, making delivery to and between customer locations more efficient. We deploy these assets on job sites to provide our customers with the equipment required to transport, store, and consume LNG in their fueling operations.

Engineering and Field Support Services —Stabilis has experience in the safe, cost effective, and reliable use of LNG in multiple customer applications. We have also developed many processes and procedures that we believe improve our customers’ use of LNG in their operations. Our engineers help our customers design and integrate LNG into their fueling operations and our field service technicians help our customers mobilize, commission and reliably operate on the job site.

Stabilis generates revenue by selling and delivering LNG to our customers. We also generate revenue by renting cryogenic equipment and providing engineering and field support services. We sell each product and service separately or as a bundle depending on the customer’s needs. LNG pricing depends on market pricing for natural gas and competing fuel sources (such as diesel, fuel oil, and propane among others), as well as the customer’s purchased volume, contract duration and credit profile.

Stabilis’ customers use natural gas in their operations for multiple reasons, including lower fuel cost, more stable fuel costs, reduced environmental emissions, and improved operating performance. We serve customers in a variety of end markets, including industrial, energy, mining, commercial, utilities and pipelines, and high horsepower transportation. We believe that LNG consumption will continue to increase in these end markets in the future.

2018 & 2017 Developments

On February 28, 2017, the Company acquired Prometheus Energy Group Incorporated (“Prometheus”) in a transaction between entities under common control and Prometheus became an 80% owned subsidiary of the Company. Because the entities are under common control, the assets and liabilities of Prometheus were transferred to the Company at their historic cost (see Note 4 Acquisition of PEG Partners, LLC to our consolidated financial statements for further discussion)

Prometheus markets and distributes LNG as an alternative to traditional fuel sources, such as diesel fuel and propane. It also provides LNG to supplement pipelines that require additional natural gas supply. Prometheus serves a wide variety of North American end markets, including utilities and pipelines, industrial, energy, mining, and high horsepower transportation markets.

Prometheus owns a fleet of cryogenic transportation, storage and vaporization trailers and related equipment that it utilizes at customer sites. Prometheus provides its customers with logistics, delivery, onsite storage and vaporization, project management, and operations and maintenance services. Prometheus supplies its customers with LNG from third party suppliers.

In 2014, the Company acquired a 50% beneficial interest in Stabilis LNG Eagle Ford, LLC (“LNG EF”) and Stabilis FHR Oilfield LNG, LLC (“FHR”). Management determined that the 50% beneficial interest provided the Company significant influence but not a controlling financial interest. Through May 19, 2017, the Company reported its share of income or loss from its 50% interest in LNG EF and FHR using the equity method of accounting. On May 19, 2017, the Company acquired the remaining 50% interests in LNG EF and FHR. Accordingly, after the purchase date all income and expense items from the date of purchase forward have been consolidated (see Note 3 Step Acquisition of Equity Interests to our consolidated financial statements for further discussion).

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On November 28, 2018, the Company’s members and related party creditors entered into a two-step Contribution and Exchange Agreement to form LNG Investment Company, LLC (“LNG Investment”) and restructure the capitalization of the Company. On November 30, 2018, the members contributed 1,000 membership units in the Company to LNG Investment in exchange for 2,000 Class B units in LNG Investment. The contribution and exchange of units resulted in the Company becoming a wholly owned subsidiary of LNG Investment. Subsequently, the related party creditors of the Company and holders of an aggregate net carrying amount of $48.7 million of indebtedness, each contributed their individual indebtedness to LNG Investment in exchange for Class A units in proportion to their percentage of indebtedness in total. An aggregate of 4,874.28 Class A units were issued by LNG Investment to the related party creditors of the Company (see Note 11 Members Equity to our consolidated financial statements for further discussion).

On December 17, 2018, the Company entered into a definitive share exchange agreement with American Electric Technologies, Inc. (“AETI”) to enter into a business combination transaction. At the closing, the Company’s owners will contribute 100% of their outstanding membership units to AETI in exchange for AETI common stock resulting in the Company and its subsidiaries becoming a wholly-owned subsidiary of AETI. The proposed transaction has been approved by the board of directors of AETI and the Company’s owners, and will be submitted to the shareholders of AETI for approval of the issuance of AETI common stock in connection with the transaction and other transaction-related matters at a Special Meeting of Shareholders. The transaction is expected to close during the third quarter of 2019, subject to customary closing conditions.

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Revenue

LNG Product Revenue. During the Current Year our LNG Product revenues increased $14.7 million versus the Prior Year. This increase was attributable to the acquisition of Prometheus on February 28, 2017, the purchase of the remaining interest in the LNG EF and FHR joint venture in May of 2017, and growth in the existing Stabilis business.

The impact of including twelve months of Prometheus revenue contributed $1.5 million of the increase in LNG Product revenue for the Current Year. The consolidation upon the purchase of the remaining interest of LNG EF and FHR contributed $1.3 million of LNG product revenue growth in the Current Year. Stabilis and Prometheus LNG revenue from its existing business increased $11.9 million in the Current Year due to higher volumes and improved pricing. The additional volumes were driven by distribution partners for industrial applications, new oilfield customers, sand drying applications, and exports into Mexico.

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Rental, Service, and Other Revenue. Rental and service revenues increased by $2.2 million in the Current Year. The increase was attributable to a full year of revenue in 2018 from the acquisitions ($1.7M) and volume growth referenced in LNG product revenue. ($0.5M).

Operating Expenses

Costs of LNG Product. Cost of LNG Product is comprised of the commodity (natural gas), liquefaction cost, and the transportation of LNG to the end destination.

Cost of product in the Current Year went up $9.6 million or 67% compared to a $14.7 million or 94% increase in product revenue. The lower costs as a percentage of revenue was primarily due to increases in LNG sourced from Stabilis’ liquefaction plant rather than third party liquefiers and lower transportation costs due to the geographic mix of customers.

Costs of Rental, Service, and Other Revenue. These costs include the internal cost of staff field technicians, transportation, equipment rentals, equipment maintenance, and the logistics team that provide a continuous supply of LNG to customer sites safely and timely to avoid any production disruptions at the customer site. This cost increased $1.1 million or 31% in the Current Year primarily due to the Company’s acquisition of Prometheus.

Selling, general and administrative . Selling, general and administrative expense increased $2.7 million or 58% during the Current Year as compared to the Prior Year. This increase was primarily driven by the acquisition of Prometheus ($0.5 million), the consolidation of the JV ($0.3 million), transaction related costs ($1 million), and additional expenses to support growth ($0.8 million).

Depreciation . Depreciation expense increased $1.8 million during the Current Year as compared to the Prior Year. This increase was primarily driven by the consolidation of a joint venture in May 2017 ($1.7 million) including the liquefaction plant in George, West, Texas and the associated vehicles, storage, and vaporization equipment. Additionally, there were two more months of depreciation ($0.5 million) related to Prometheus assets in the Current Year due to the February 2017 acquisition of Prometheus.

Other Operating Income

Total Other Operating Income. Other operating income decreased $26.0 million in the Current Year as compared to the Prior Year. In the Prior Year the Company acquired 80% of Prometheus in a transaction between entities under common control resulting in a $13.1 million bargain purchase gain and acquired the remaining 50% ownership of LNG EF and FHR in a step acquisition resulting in a $13.9 million bargain purchase gain. Before the Company fully owned LNG EF and FHR, Stabilis incurred a $1.1 million loss in 2017 from its investment in these entities.

Other Income. Other income is primarily the Alternative Fuels excise tax credits. Income recognized for the Current year and Prior Year was $320 thousand and $48 thousand, respectively due to lapses in legislation governing these credits.

Interest expense. Interest expense increased $1.1 million during the Current Year as compared to the Prior Year. The increase was attributable to a higher principal balance on related party debt as a result of the April 1, 2018 amendments and extensions on related party notes payable which rolled accrued and unpaid interest into principal along with an incremental borrowing of $1.1 million (see footnote 9 in the Notes to the Consolidated Financial Statements for further discussion). In addition, the Company entered into certain capital leases during the year.

Gain / (loss) on the disposal of fixed Assets . The Company sold equipment in the Current Year for proceeds of $0.9 million resulting in gains of $0.3 million. In the Prior Year, equipment sales generated $2.4 million of proceeds and resulted in a $1.6 million loss.

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Income tax expense . The Company did not incur an income tax expense in the Current Year or Prior Year due to its net losses resulting in benefits which are offset by a valuation allowance.

Liquidity and Capital Resources

Overview

As of December 31, 2018, we had $1.2 million in cash and cash equivalents on hand and $16.3 million in outstanding long-term debt (of which $6.4 million is due in the next twelve months).

We have historically funded the business primarily through cash flows from operations, short-term notes payable, debt from finance companies and related parties, and capital contributions. We have used a portion of our cash flows to invest in fixed assets to support growth. We have also used cash to pay interest and principal amounts outstanding under our borrowings. We generally collect from our customers within 30 days and pay our vendors in 45 days. This enables the Company to utilize working capital to reduce borrowings and to fund capital expenditures.

The Company is subject to substantial business risks and uncertainties inherent in the LNG industry. There is no assurance that the Company will be able to generate sufficient cash flows in the future to sustain itself or to support future growth.

Management concluded positive cash flows from operations are attainable primarily due to the following: (i)recent increases in sales volumes, (ii) the conversion in the Current Year of $48.7 million of our existing related party debt to equity, and (iii) the August 2017 amendment to our promissory note to Chart Industries thereby reducing our mandatory debt service payments.

Improved cash flow projections are supported by the recent increase in sales, and the reduction of operating costs as a percent of sales. Accordingly, management believes the business will generate sufficient cash flows from its operations to fund the business for the next 12 months.

Operating Activities

Net cash used in operating activities totaled $0.4 million and $3.7 million for Current Year and Prior Year, respectively. The decrease in net cash used in operating activities of $3.3 million as compared to the Prior Year was primarily attributable to increases in revenues from the acquisition of Prometheus in February 2017 and the acquisition of LNG EF in May 2017. The growth from acquisition was coupled with organic increases in revenues from higher volumes pricing in the Current Year. Revenue growth of 83% outpaced Operating expenses growth of 52% in the Current Year

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Investing Activities.

Net cash provided by investing activities totaled $0.1 million and $1.5 million for the Current Year and Prior Year, respectively. The decrease in cash provided by investing activities in the Current Year of $1.4 million as compared to the Prior Year was primarily attributable to a reduction in the proceeds from sale of fixed assets of $1.5 million and an increase in fixed asset purchases of $0.8 million in the Current Year, partially offset by the absence of net cash paid in the acquisitions of LNG EF and PEG in the Prior Year.

Financing Activities.

Net cash provided by financing activities totaled $0.1 million and $3.1 million for the Current Year and Prior Year, respectively. The decrease of $2.9 million was primarily attributable to a decrease in proceeds from long-term borrowings from related parties of $4.7 million offset by decreases in principal payments on long- term borrowings of $1.9 million.

Sources of Liquidity and Capital Resources

Our principal sources of liquidity have consisted of cash on hand, cash provided by our operations, and proceeds from asset sales. In addition, the Company secured financing from a key vendor and obtained equipment financing by MG Finance, a related party. Lastly, the majority member has provided financial support as required.

Future Cash Requirements:

Secured Term Note Payable

On May 19, 2017, the Company, purchased the remaining 49% ownership of LNG EF and 50% ownership of FHR resulting in the ownership of 100% controlling interest (see Note 3 Step Acquisition of Equity Interests ) therefore requiring consolidation and assumption of the related debt. The Secured Term Note Payable was amended on August 21, 2017 whereby only the payment terms of principal and interest were modified to be payable in eight installments as follows: (i) $2.5 million plus accrued interest due on August, 24, 2017, (ii) $2.5 million plus accrued interest due on August 24, 2018, (iii) $2.5 million plus accrued interest due on August 24, 2019, (iv) four equal payments of $1.5 million plus accrued interest on each anniversary date of August 24, 2019 thereafter, (v) and $0.6 million plus accrued interest on the remaining unpaid balance of the Amended Secured Term Note Payable on August 24, 2024. In the event all principal and interest is not paid in full by August 24, 2023, the Company is obligated to make an additional payment of $2.2 million. As the Company intends to pay the entire balance by August 24, 2023, the $2.2 million penalty has not been included in our long-term debt.

Capital Lease Obligations

On February 28, 2017, the Company took effective control of Prometheus (See Note 4 Acquisition of PEG Partners, LLC ), and as a result, certain lease agreements to finance new equipment purchases were assumed with an aggregate amount of $10.2 million. Under the terms of the lease agreements, the Company’s monthly payments were interest-only for the first 12 months at an annual rate of 6%. The Company will then repay 80% of the of the outstanding lease obligations over the remaining term of 36 months at an annual interest rate of 10%.

During the third quarter of 2018, the Company entered into various lease agreements to finance new equipment purchases with an aggregate amount of $1.5 million. Under the terms of the lease agreements, the Company’s monthly payments are due over a 24-month term at an annual interest rate of 9.5%. At the end of the 24-month term, the Company has the option to purchase the equipment at 20% of the assets original value.

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Contribution of Related Party Debt to Equity

Effective November 30, 2018, the Company’s related party debt in the aggregate amount of $48.7 million was converted into member’s equity (see Note 11 Members Equity for further discussion ).

We believe our current cash, cash equivalents and cash provided by our operating and financing activities will satisfy our business requirements for at least the 12 months following the date of this report. Subsequent to this period we may need to raise additional capital to fund any planned or unanticipated capital expenditures, investments, debt repayments or other expenses that we cannot fund through available cash, cash provided by our operations or other sources, such as with equity, debt or any other financing that may be available.

We anticipate having credit availability provided by our majority shareholder. Additionally, we may seek to raise additional capital by selling assets, obtaining new or restructuring existing debt, obtaining equity capital, or any combination of these or other potential sources of capital.

Uses of Liquidity and Capital Resources

We require cash to fund our operating expenses and working capital requirements, including costs associated with fuel sales, capital expenditures, debt repayments and repurchases, equipment purchases, maintenance of LNG production facilities, mergers and acquisitions (if any), pursuing market expansion, supporting sales and marketing activities, support of legislative and regulatory initiatives, and other general corporate purposes. While we believe we have sufficient liquidity and capital resources to fund our operations and repay our debt, we may elect to pursue additional financing activities such as refinancing existing debt, or debt or equity offerings to provide flexibility with our cash management.

We anticipate spending between $2.5 million and $3.5 million in capital expenditures in 2019, which primarily relates to the purchase of machinery and equipment.

Debt Level and Debt Compliance

We had total indebtedness of $16.3 million in principal as of December 31, 2018, of which approximately $6.3 million, $4.9 million, $1.5 million, $1.5 million, $1.5 million and $0.6 million is expected to become due in 2019, 2020, 2021, 2022, 2023 and thereafter, respectively. Additionally, we expect our total interest payment obligations relating to our indebtedness to be approximately $1.1 million for the year ending December 31, 2019. Certain of the agreements governing our outstanding debt, which are discussed in Note 9, Notes Payable to our consolidated financial statements, have certain non-financial covenants with which we must comply. As of December 31, 2018, we were in compliance with all of these covenants.

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Contingencies

In the normal course of our business, we become involved in various litigation matters. In addition, from time to time, we are involved in tax and other disputes with various government agencies. Management has used estimates in determining our potential exposure to these matters and has recorded reserves in our financials statements related thereto as appropriate. It is possible that a change in estimates related to these exposures could occur, but we do not expect such changes in the estimated costs would have a material effect on our business, consolidated financial position or results of operations.

Critical Accounting Policies

Revenue Recognition

Revenue is measured as consideration specified in a contract with a customer and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Amounts are billed upon completion of service or transfer of a product and are generally due within 30 days.

Revenues from contracts with customers are disaggregated into (1) LNG product and (2) Rental, service, and other.

LNG product revenue generated includes the revenue from the product and delivery of the LNG to our customer’s location. Product contracts are established by agreeing on a sales price or transaction price for the related item. Product revenue is recognized upon delivery of the related item to the customer, at which point the customer controls the product and the Company has an unconditional right to payment. Payment terms for product contracts are generally within thirty days from the receipt of the invoice.

Rental and service revenue generated by the Company includes equipment and people provided to the customer to support the use of LNG in their application. Rental contracts are established by agreeing on a rental price or transaction price for the related piece of equipment and the rental period which is generally daily or monthly. The Company maintains control of the equipment that the customer uses and can replace the rented equipment with similar equipment should the rented equipment become inoperable or the Company chooses to replace the equipment for maintenance purposes. Revenue is recognized as the rental period is completed and for periods that cross month end, revenue is recognized for the portion of the rental period that has been completed to date. Payment terms for rental contracts are generally within thirty days from the receipt of the invoice. Performance obligations for rental revenue are considered to be satisfied as the rental period is completed based upon the terms of the related contract. Service revenue generated by the Company consist of mobilization and demobilization of equipment and onsite technical support while customers are consuming LNG in their applications. Service revenue is billed based on contractual terms that can be based on an event (ie mobilization or demobilization) or an hourly rate. Revenue is recognized as the event is completed or work is done. Payment terms for service contracts are generally within thirty days from the receipt of the invoice. Performance obligations for service revenue are considered to be satisfied as the event is completed based or work is done per the terms of the related contract.

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All outstanding accounts receivable, net of allowance, on the consolidated balance sheet are typically due and collected within the next 30 days.

Impairment of Long-Lived Assets

LNG liquefaction facilities, and other long-lived assets held and used by the Company are reviewed periodically for potential impairment whenever events or changes in circumstances indicate that a particular assets’ carrying value may not be recoverable. Recoverability generally is determined by comparing the carrying value for the asset to the expected undiscounted future cash flows of the asset. If the carrying value of the asset is not recoverable, the amount of impairment loss is measured as the excess, if any, of the carrying value of the asset over its estimated fair value. The estimated undiscounted future cash flows are based on projections of future operating results; these projections contain estimates of the value of future contracts that have not yet been obtained, future commodity pricing, our future cost structure, among others. Projections of future operating results and cash flows may vary significantly from actual results. Management reviews its estimates of cash flows on an ongoing basis using historical experience, business plans, overall market conditions, and other factors.

Income Taxes

Deferred income taxes are accounted for under the asset-and-liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general and administrative expenses.

Fair Value Measurements

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in the fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels in accordance with US GAAP:

Level 1 Inputs—Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

Level 2 Inputs—Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 Inputs—Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby, allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

Recently Adopted Accounting Changes and Recently Issued and Adopted Accounting Standards.

For descriptions of recently adopted and issued accounting standards, see Note 1— Basis of Presentation and Summary of Significant Accounting Policie s of our Notes to Consolidated Financial Statements.

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Off-Balance Sheet Arrangements

As of December 31, 2018, other than operating leases we had no transactions that met the definition of off-balance sheet arrangements that may have a current or future material effect on our consolidated financial position or operating results.

Quantitative and Qualitative Disclosures about Market Risk

In the normal course of business, the Company encounters several significant types of market risks including commodity and interest rate risks.

Commodity Price Risk

Due to the nature of the LNG distribution business, the Company has short term agreements with suppliers to contract for LNG purchases. These contracts extend for various period and minimums. The index rate pricing for natural gas may increase or decrease in the future based upon market conditions. Contracts for the purchase of LNG for future delivery are generally for fixed volumes at fixed prices.

Commodity price risk is the risk of loss arising from adverse changes in market rates and prices. We are able to limit our exposure to fluctuations in natural gas prices by structuring our contract pricing with customers so that it mirrors the volatility in our supply cost with vendors. Our exposure to market risk associated with LNG price changes may adversely impact our business. We do not currently have any derivative arrangements to protect against fluctuations in commodity prices, but to mitigate the effect of fluctuations in LNG prices on our operations, we may enter into various derivative instruments.

Interest Rate Risk

The Company entered into a Note Payable with Chart Energy & Chemicals, Inc. (the “Lender”) where the Lender agreed to sell the Company certain equipment for the liquefaction plant in George West, TX. The total value of the agreement was not to exceed $20.5 million and was billed in advances based on a “Milestone Payment Schedule”. This Note Payable bears interest at a variable rate and exposes us to interest rate risk. Interest is calculated under the terms of the Note Payable based on a calculation of 3% plus the London interbank offered rate at the end of each month. Assuming the $9.1 million principal amount at December 31, 2018 remains outstanding, the impact on interest expense of a 1% increase or decrease in the interest rate would be approximately $0.1 million per year. We do not currently have or intend to enter into any derivative arrangements to protect against fluctuations in interest rates applicable to our outstanding indebtedness.

Foreign Currency Exchange Rate Risk

We conduct all of our operations in U.S. dollars, and as such, our results of operations and cash flows have not been impacted by fluctuations due to changes in foreign currency exchange rates. Further, we do not currently have or intend to enter into any derivative arrangements to protect against such fluctuations.

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

We have prepared the following pro forma condensed combined financial statements to show the effect of the proposed business combination of American Electric with Stabilis and its subsidiaries under the purchase method of accounting with Stabilis treated as having acquired American Electric. The pro forma condensed combined balance sheet is prepared as though the proposed Share Exchange had occurred on December 31, 2018 and the pro forma condensed combined statement of operations as though it had occurred on January 1, 2018. The following information does not give effect to any reverse stock split of our common stock described in Proposal No. 3.

The unaudited pro forma combined financial data should be read together with the historical financial statements, including the notes thereto, of American Electric and Stabilis and its subsidiaries included in this proxy statement.

These unaudited pro forma combined financial statements are for informational purposes only. They do not purport to indicate the results that would have actually been obtained had the business combination been completed on the assumed date or for the periods presented, or that may be realized in the future. The unaudited pro forma condensed combined financial data includes adjustments to record the assets and liabilities of the acquired company at their estimated fair values and is subject to further adjustment as additional information becomes available and as detailed valuation studies are performed after completion of the transaction.

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