4. Investments in Foreign Joint Ventures

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

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

—

M&I Electric Far East, Ltd. ("MIEFE”), in which the Company holds a 41% interest, MIEFE’s general manager holds an 8% interest and, Sonepar of France holds a 51% interest. The business is currently inactive and the investment in MIEFE was written down to zero in the first quarter of 2016.

BOMAY was formed in 2006 in China with a term of 12 years. The term of the joint venture may be extended upon agreement of all parties. In such case, the joint venture shall apply for the extension to the relevant Chinese authority six months before expiry of the venture.

There were no sales to joint ventures for the three months ended June 30, 2016 and 2015. Sales to joint ventures totaled $0.04 million and $0.15 million for the six months ended June 30, 2016 and 2015.

Summary (unaudited) financial information of our foreign joint ventures in U.S. dollars was as follows at June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015 (in thousands):

	BOMAY				MIEFE
	2016		2015		2016			2015
Assets:
Total current assets	$	68,493	$	68,151	$	1,033		$	2,365
Total non-current assets		3,898		4,131		55			70
Total assets	$	72,391	$	72,282	$	1,088		$	2,435
Liabilities and equity:
Total liabilities	$	45,464	$	44,415	$	1,193		$	1,930
Total joint ventures’ equity		26,927		27,867		(105	)		505
Total liabilities and equity	$	72,391	$	72,282	$	1,088		$	2,435

	Three Months Ended June 30,
	BOMAY				MIEFE
	2016		2015		2016			2015

Revenue	$	17,000	$	13,426	$	178		$	1,701
Gross Profit	$	2,118	$	2,120	$	147		$	504
Earnings	$	1,032	$	660	$	50		$	47


	Six Months Ended June 30,
	BOMAY				MIEFE
	2016		2015		2016			2015

Revenue	$	23,987	$	22,228	$	840		$	3,435
Gross Profit	$	3,262	$	3,834	$	318		$	687
Earnings	$	1,065	$	1,139	$	(619	)	$	(137	)

The following is a summary of activity in investments in foreign joint ventures for the six months ended June 30, 2016 (unaudited):

	June 30, 2016
	BOMAY**			MIEFE			TOTAL
	(in thousands)
Investments in foreign joint ventures:
Balance at December 31, 2015	$	10,896		$	208		$	11,104
Equity in earnings (loss) in 2016		426			(3	)	$	423
Dividend distributions in 2016		(589	)		-		$	(589	)
Foreign currency translation adjustment		(293	)		5		$	(288	)
Investments, end of period	$	10,440		$	210		$	10,650

Components of investments in foreign joint ventures:
Investment in joint ventures	$	2,033		$	15		$	2,048
Undistributed earnings		7,935			(15	)	$	7,920
Foreign currency translation		472			210		$	682
Investments, end of period	$	10,440		$	210		$	10,650

Accumulated statutory reserves of $2.72 million in equity method investments at June 30, 2016 and December 31, 2015, respectively, are included in AETI’s consolidated retained earnings. In accordance with the People’s Republic of China, (“PRC”), regulations on enterprises with foreign ownership, an enterprise established in the PRC with foreign ownership is required to provide for certain statutory reserves, namely (i) General Reserve Fund, (ii) Enterprise Expansion Fund and (iii) Staff Welfare and Bonus Fund, which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A non-wholly-owned foreign invested enterprise is permitted to provide for the above allocation at the discretion of its board of directors. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends.

Under the equity method of accounting, the Company’s share of the joint ventures’ operations’ earnings or loss is recognized in the condensed consolidated statement of operations as equity income (loss) from foreign joint ventures’ operations. Joint venture income increases the carrying value of the joint venture investment and joint venture losses, as well as dividends received from the joint ventures, reduce the carrying value of the investment. During the six months ended June 30, 2016, the Company recognized losses from its investment in MIEFE of $0.27 million. Losses were applied to the investment balance to the extent of the Company’s initial investment, with the remaining $0.27 million accrued in other current liabilities to reflect the Company’s intention to fund their share of losses.

The Company reviews its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable or the inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment.