<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT TO:
FORM 10-QSB
________________________________________________________________________________
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended June 30, 1999
[_] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
AMERICAN INTERNATIONAL INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Commission file number: 000-25223
Nevada 88-0326480
------ ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
601 Cien Street, Suite 235, Kemah, Texas 77565-3065
---------------------------------------- ----------
(Address of Principal Executive Office) (Zip Code)
281-334-9479
------------
(Registrant's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [_]
As of November 30, 1999 registrant had 124,182,018 shares of Common Stock
outstanding.
<PAGE>
PART I
Item 1. Financial Statements
American International Industries, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Unaudited Audited
1999 1998
(Restated - (Restated -
June 30, and December 31, Note 9) Note 9)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current
Cash $ 644,941 $ 2,149,916
Trading securities 1,431,262 418,770
Marketable securities available-for-sale - 115,884
Restricted certificate of deposit 150,000 -
Accounts receivable, net of allowance
for doubtful accounts 3,908,030 1,641,469
Accounts receivable, related party 141,571 -
Notes receivable 62,190 116,190
Inventories, net of reserve 1,241,645 1,055,091
Other 112,290 141,996
- -----------------------------------------------------------------------------------------
Total current assets 7,691,929 5,639,316
Real estate held for sale 1,239,584 1,239,584
Property and equipment, net of accumulated depreciation 4,995,310 5,060,372
Goodwill, net of amortization 1,812,160 1,085,616
Non-compete agreements, net of amortization 352,500 417,500
Investment in equity investee 300,000 -
Restricted certificate of deposit 1,000,000 -
Other 81,796 125,793
- -----------------------------------------------------------------------------------------
Total assets $ 17,473,279 $ 13,568,181
- -----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
American International Industries, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Unaudited Audited
1999 1998
(Restated - (Restated -
June 30, and December 31, Note 9) Note 9)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 3,469,088 $ 1,451,717
Accrued expenses 669,476 481,227
Margin loan from a financial institution 344,717 195,645
Accrued property taxes 361,188 386,601
Notes payable, current portion 655,674 116,144
Notes payable to related parties, current portion 175,912 459,972
Capital lease obligations, current portion 1,017,293 584,552
- -----------------------------------------------------------------------------------------------
Total current liabilities 6,693,348 3,675,858
Notes payable, less current portion 1,568,276 1,599,909
Notes payable to related parties, less current portion 376,531 320,324
Capital lease obligations, less current portion 266,024 776,388
Other 19,729 -
- -----------------------------------------------------------------------------------------------
Total Liabilities 8,923,908 6,372,479
- -----------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock, $.001 par value:
10,000,000 shares authorized, none issued - -
Common stock, $.001 par value; 200,000,000 shares authorized 124,926 121,116
Additional paid-in capital 16,768,147 15,726,799
Deficit (8,211,202) (8,045,998)
- -----------------------------------------------------------------------------------------------
8,681,871 7,801,917
Less: Common stock subscriptions receivable (100,000) (550,000)
Treasury stock, at cost - 220,000 and 238,000
shares in 1999 and 1998, respectively (32,500) (37,251)
Accumulated other comprehensive gain (loss) - (18,964)
- -----------------------------------------------------------------------------------------------
Total stockholders' equity 8,549,371 7,195,702
- -----------------------------------------------------------------------------------------------
Total liabilities and stockholders equity $ 17,473,279 $ 13,568,181
- -----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
American International Industries, Inc.
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Operations
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Unaudited Unaudited
1999 1998
(Restated - (Restated -
For the three months ended June 30, Note 9) Note 9)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Sales $ 5,699,866 $ 632,326
Cost of sales 5,072,203 414,014
- ---------------------------------------------------------------------------------------------------------------------------
Gross Profit 627,663 218,312
Operating Expenses 1,684,631 454,004
- ---------------------------------------------------------------------------------------------------------------------------
Operating Loss (1,056,968) (235,692)
- ---------------------------------------------------------------------------------------------------------------------------
Other Income (Expense):
Interest and dividend income 16,303 3,115
Investment income 944,923 -
Interest expense (117,050) (15,678)
Other income 6,872 23,171
- ---------------------------------------------------------------------------------------------------------------------------
Total other income (expense), net 851,048 10,608
Net loss before deemed dividends (205,920) (225,084)
Deemed dividends - (2,038,038)
- ---------------------------------------------------------------------------------------------------------------------------
Net loss applicable to common stockholders $ (205,920) $ (2,263,122)
- ---------------------------------------------------------------------------------------------------------------------------
Loss per common share - basic and diluted (0.00) (0.03)
Weighted average shares outstanding 124,853,043 89,755,522
- ---------------------------------------------------------------------------------------------------------------------------
Consolidated Statements of Comprehensive Loss
- ---------------------------------------------------------------------------------------------------------------------------
Net loss (205,920) (225,084)
Unrealized gain on securities available for sale
Unrealized holding gain arising during the period 62,875 -
Less: reclassification adjustment for gains included in net income (1,031,703) -
- ---------------------------------------------------------------------------------------------------------------------------
Comprehensive Loss $ (1,174,748) $ (225,084)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
American International Industries, Inc.
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Operations
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Unaudited Unaudited
1999 1998
(Restated - (Restated -
For the six months ended June 30, Note 9) Note 9)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Sales $ 9,913,885 $ 1,150,082
Cost of sales 8,006,668 777,100
- ------------------------------------------------------------------------------------------------------------
Gross Profit 1,907,217 372,982
Operating Expenses 2,876,136 771,285
- ------------------------------------------------------------------------------------------------------------
Operating Loss (968,919) (398,303)
- ------------------------------------------------------------------------------------------------------------
Other Income (Expense):
Interest and dividend income 30,279 -
Investment income 902,430 -
Interest expense (204,322) (27,100)
Other income 75,886 39,392
- ------------------------------------------------------------------------------------------------------------
Total other income (expense), net 804,273 12,292
Net loss before deemed dividends (164,646) (386,011)
Deemed dividends - (2,038,038)
- ------------------------------------------------------------------------------------------------------------
Net loss applicable to common stockholders $ (164,646) $(2,424,049)
- ------------------------------------------------------------------------------------------------------------
Loss per common share - basic and diluted (0.00) (0.03)
Weighted average shares outstanding 124,853,043 70,675,734
- ------------------------------------------------------------------------------------------------------------
Consolidated Statements of Comprehensive Loss
- ------------------------------------------------------------------------------------------------------------
Net loss (164,646) (386,011)
Unrealized gain on securities available for sale
Unrealized holding gain arising during the period 1,051,720 -
Less: reclassification adjustment for gains included in net income (1,032,756) -
- ------------------------------------------------------------------------------------------------------------
Comprehensive Loss $ (145,682) $ (386,011)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
American International Industries, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Unaudited Unaudited
1999 1998
(Restated - (Restated -
For the three months ended June 30, Increase (Decrease) in Cash Note 9) Note 9)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Loss before deemed dividends $ (205,920) $ (225,084)
Adjustments to reconcile net loss before deemed dividends to net cash used in
operating activities:
Depreciation and amortization 259,192 48,938
Bad debt reserve 12,000 -
Realized gain on sale of securities (1,096,128) -
Loss on disposal of equipment - 210
Increase in market value of equity securities 151,205 -
Changes in assets and liabilities, net of acquired assets and liabilities:
Accounts receivable (2,679,594) 48,394
Inventories (122,512) (10,602)
Other current assets 85,121 -
Purchase of trading securities, net (685,014) -
Other assets 58,960 (3,000)
Accounts payable and accruals 2,791,369 (56,255)
Deferred revenue (103,010) -
Accrued property taxes (50,756) -
- ------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (1,585,087) (197,399)
- ------------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Proceeds from available-for-sale investment securities, net 1,284,554 -
Capital expenditures (62,782) (9,466)
Notes receivable (1,500) (32,340)
Cash paid in acquisitions (141,306) -
Purchase of restricted certificates of deposit (1,150,000) -
Investment in equity investee (300,000) -
- ------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (371,034) (41,806)
- ------------------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Proceeds from stock subscriptions 30,000 1,454,000
Proceeds from notes payable 527,411 -
Repayments of notes payable (296,774) (9,952)
Principal payments on capital lease obligations (52,779) (1,668)
Purchase of treasury stock 4,190 -
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities $ 212,048 $ 1,442,380
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
American International Industries, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Unaudited Unaudited
1999 1998
(Restated - (Restated -
For the three months ended June 30, Increase (Decrease) in Cash Note 9) Note 9)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net increase (decrease) in cash $ (1,744,073) $ 1,203,175
Cash at beginning of period 2,389,014 138,236
Cash at end of period 644,941 1,341,411
- -----------------------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information:
Interest paid 118,472 15,678
- -----------------------------------------------------------------------------------------------------------------------
Non-Cash Transactions:
Subscriptions of common stock - 500,000
- -----------------------------------------------------------------------------------------------------------------------
Acquisition of land for common stock - 305,444
- -----------------------------------------------------------------------------------------------------------------------
Deemed dividend - 2,038,838
- -----------------------------------------------------------------------------------------------------------------------
Assumption of property taxes on purchase of land - 300,000
- -----------------------------------------------------------------------------------------------------------------------
Net sales of securities on margin 22,968 -
- -----------------------------------------------------------------------------------------------------------------------
Stockholder debt forgiveness 365,158 -
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
American International Industries, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Unaudited Unaudited
1999 1998
(Restated - (Restated -
For the six months ended June 30, Increase (Decrease) in Cash Note 9) Note 9)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Loss before deemed dividends $ (164,646) $ (386,011)
Adjustments to reconcile net loss before deemed dividends to net cash used in
operating activities:
Depreciation and amortization 508,938 102,296
Bad debt reserve (61,490) -
Inventory reserve (8,468) -
Realized gain on sale of securities (1,145,033) -
Loss on disposal of equipment - 210
Decrease in market value of equity securities 242,603 -
Changes in assets and liabilities, net of acquired assets and liabilities:
Accounts receivable (2,282,955) 43,443
Inventories (111,629) (29,887)
Other current assets (38,657) -
Purchase of trading securities, net (1,167,967) -
Other assets 115,839 (3,000)
Accounts payable and accruals 2,388,261 25,407
Deferred revenue 19,756 -
Accrued property taxes (50,756) -
- ------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (1,756,204) (247,542)
- ------------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Proceeds (purchase) of available-for sale securities, net 1,167,605 (6,983)
Capital expenditures (161,956) (10,489)
Notes receivable (7,000) (68,442)
Cash paid in acquisitions (141,306) -
Investment in equity investee (300,000) -
Purchase of restricted certificates of deposit (1,150,000) -
- ------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (592,657) (85,914)
- ------------------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Proceeds from issuance of stock 456,000 1,576,000
Proceeds from notes payable 1,135,311 94,000
Repayments of notes payable (555,528) (54,830)
Principal payments on capital lease obligations (196,087) (3,294)
Purchase of treasury stock 4,190 -
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities $ 843,886 $ 1,611,876
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
American International Industries, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Unaudited Unaudited
1999 1998
(Restated - (Restated -
For the six months ended June 30, Increase (Decrease) in Cash Note 9) Note 9)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net increase (decrease) in cash $(1,504,975) $1,278,420
Cash at beginning of period 2,149,916 62,991
Cash at end of period 644,941 1,341,411
- ----------------------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information:
Interest paid 204,322 27,100
- ----------------------------------------------------------------------------------------------------------------------
Non-Cash Transactions:
Acquisition of land for common stock - 305,444
- ----------------------------------------------------------------------------------------------------------------------
Deemed dividend - 2,038,838
- ----------------------------------------------------------------------------------------------------------------------
Assumption of property taxes on purchase of land - 300,000
- ----------------------------------------------------------------------------------------------------------------------
Purchase of securities on margin 149,072 -
- ----------------------------------------------------------------------------------------------------------------------
Stockholder debt forgiveness 365,158 -
- ----------------------------------------------------------------------------------------------------------------------
Subscriptions of common stock - 550,000
- ----------------------------------------------------------------------------------------------------------------------
Purchase of subsidiary assets and liabilities through
the issuance of common stock and options:
Accounts receivable $ 87,215 $ -
- ----------------------------------------------------------------------------------------------------------------------
Inventory 36,496 -
- ----------------------------------------------------------------------------------------------------------------------
Property and equipment 43,000 -
- ----------------------------------------------------------------------------------------------------------------------
Other assets 1,885 -
- ----------------------------------------------------------------------------------------------------------------------
Goodwill 674,764 -
- ----------------------------------------------------------------------------------------------------------------------
Accounts payable 76,498 -
- ----------------------------------------------------------------------------------------------------------------------
Notes payable 30,500 -
- ----------------------------------------------------------------------------------------------------------------------
Notes payable to related parties 30,000 -
- ----------------------------------------------------------------------------------------------------------------------
Other liabilities 220 -
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
American International Industries, Inc.
Notes to Consolidated
Financial Statements (Unaudited)
Note 1
Presentation of Interim Financial Statements
The accompanying consolidated financial statements include the accounts of
American International Industries, Inc. and its wholly owned subsidiaries. All
significant intercompany transactions and balances have been eliminated in
consolidation. The consolidated balance sheet as of December 31, 1998 has been
audited. The consolidated balance sheet as of June 30, 1999, the consolidated
statements of operations for the three months and six months ended June 30, 1999
and June 30, 1998, and the consolidated statements of cash flows for the three
months and six months ended June 30, 1999 and June 30, 1998, have been prepared
by the Company, without audit. In the opinion of management, all adjustments
necessary to present fairly the financial condition, results of operations and
cash flows have been reflected in the accompanying financial statements.
Certain information and disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted. These financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in the
Company's Form 10-KSB/A for the year ended December 31, 1998. The results of
operations for the three-month and six- month periods ended June 30, 1999 are
not necessarily indicative of the operating results for the full year ending
December 31, 1999.
Note 2
Acquisition
In April 1999, the Company acquired 100% of the outstanding shares of Tough
Trucks and Accessories, Inc., dba Armor Linings ("Armor"). Armor operates a
facility in Houston, for the application of spray-on liners for truck beds,
undercoating and rust-proofing of vehicles, and wholesale and retail sales of
truck accessories. Customers include many of the Houston area auto and truck
dealerships. Armor has established commercial applications of the coatings,
which are applied for corrosion resistance and noise suppression in diverse
uses. A manufacturing company has Armor apply the lining to the inside of
housings for large turbine engines. Other applications include surfaces exposed
to corrosive materials in chemical and refining plants, lining the interior of
refuse containers (dumpsters), spraying floors and decks, and other applications
where a tough surface, resistant to corrosion, moisture and wear is needed. The
chemicals are supplied by Marald, which was acquired by the Company in January
1999. The Company paid cash in the amount of $143,000 and assumed approximately
$85,000 related to certain equipment lease obligations. The acquisition was
accounted for as a purchase.
Note 3
Investment in Signal Products, Inc.
In March, 1999, the Company acquired a minority interest in Signal Products,
Inc. (Signal), a California corporation, which owns the exclusive license to
market handbags and leather accessories bearing the "Guess" trademark. The
shares related to that transaction were placed in escrow pending a business
evaluation of Signal. Release of the shares from escrow is to be made upon
satisfactory determination of Signal's value. Such evaluation has not been
completed to date.
Note 4
Realized Gain on Available-for-Sale Equity Securities
In April and May, 1999 the shares of Hertz Technology Group, Inc., which had
been classified as securities available for sale, were sold in a sequence of
transactions. The total proceeds of those sales amounted to $1,272,117, the
total cost of the shares was $239,361 and the total realized gain amounted to
$1,032,756.
Note 5
In May, 1999, the Company purchased for investment purposes, 400,000 freely
tradable shares (giving effect to a 1 for 5 reverse split) of Worldwide Net,
Inc. (WWN) for a total of $300,000, representing 20% of the total outstanding
common shares of WWN. WWN is an inactive public company, traded as an over-the-
counter-bulletin-board company with nominal assets.
<PAGE>
Note 6
Subsequent Events
On June 28, 1999, the Company entered into a definitive agreement to acquire
100% of the optical and digital title, special effects and the scan and record
operations of Pacific Title/ Mirage Studios (Pac Title). In September 1999, the
Company decided not to proceed with the acquisition at this time.
Note 7
Litigation
The Company has been involved in litigation through the suit it filed against
the former principal stockholder of Acqueren. That action, filed in Galveston
County, Texas, related to representations made by those selling shareholders of
Acqueren, prior to the acquisition. On August 17, 1999, those selling
shareholders filed an action in New York, alleging misrepresentations by AIII.
Management expects the outcome of such litigation will not have a material
adverse effect on the Company.
Note 8
Segment Information
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
Net sales: 1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Industrial/Commercial 4,845,862 632,326 7,302,564 1,150,082
Media/Entertainment 854,004 0 2,011,321 0
Real Estate 0 0 600,000 0
- ----------------------------------------------------------------------------------
Consolidated net sales 5,699,866 632,326 9,913,885 1,150,082
- ----------------------------------------------------------------------------------
Income (loss) from operations:
Industrial/Commercial 96383 (29,249) 168,791 (77,248)
Media/Entertainment (475,098) 0 (693,514) 0
Real Estate (30,499) (15,562) 451,602 (22,143)
Oil & Gas (3,999) (5,014) (8,282)
Corporate (644,754) (186,882) (890,784) (290,630)
- ----------------------------------------------------------------------------------
Consolidated operating
income (loss) (1,056,968) (235,692) (968,919) (398,303)
- ----------------------------------------------------------------------------------
A summary of identifiable assets
Industrial/Commercial 10,293,211 1,924,311
Media/Entertainment 3,954,360 0
Real Estate 1,439,736 906,306
Oil & Gas 65,573 9,863
Corporate 1,720,399 1,335,822
- ----------------------------------------------------------------------------------
Consolidated assets 17,473,279 4,176,302
- ----------------------------------------------------------------------------------
</TABLE>
NOTE 9. - RESTATEMENT OF PRIOR PERIODS
The Company's financial statements for the periods ended June 30, 1999 and
1998 and December 31, 1998 have been restated to reflect the acquisitions of
TRE, Brenham, Midtowne and real estate held for sale at the seller's historical
cost plus assumed liabilities. The acquisition were previously recorded at fair
value. The acquisitions, consisting of real estate and mineral rights, have been
recorded at carry-over cost since the shareholders of the entities of all these
acquisition transactions are under common control. Accordingly, the Company
restated its financial statements to reflect the real estate held for sale and
natural gas and mineral interests at the seller's carry-over cost. In addition,
the Company recorded a deemed dividend of $2,038,038 which represents the fair
value of the assets acquired in excess of the predecessor carry-over historical
cost.
The Company also made adjustments to (i) reclassify debt forgiveness of
$365,159 from a stockholder as contributed capital, (ii) record additional legal
and accounting expenses of $241,850 and (iii) reduce amortization expense of
$30,000 previously taken on oil and gas properties.
The effects of the restatements are as follows:
<TABLE>
<CAPTION>
As Previously Reported As Restated
---------------------------------- ----------------------------------
June 30 1999 December 31 1998 June 30 1999 December 31 1998
------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C>
Consolidated Balance Sheets:
Real Estate held for sale............... $4,852,622 $ 4,910,140 $1,239,584 1,239,584
Natural gas and mineral interests,
net of amortization of $135,000
and $105,000........................... 210,000 240,000 - -
Deficit................................. (3,781,156) (4,192,960) (8,211,202) (8,045,998)
</TABLE>
<TABLE>
<CAPTION>
Six Months ended: Six Months ended:
---------------------------------- ----------------------------------
June 30 1999 June 30 1998 June 30 1999 June 30 1998
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Consolidated Statement of Loss:
Operating expenses...................... 2,664,286 $ 801,285 2,876,136 $ 771,285
Operating loss.......................... (757,069) (428,303) (968,919) (398,303)
Net income (loss) applicable to common
stockholders.......................... 412,363 (416,011) (164,646) (2,424,049)
Income (loss) per share - basic and
diluted............................... (.00) $ (.01) (.00) $ (.03)
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The statements contained herein and other information contained in this report
may be based, in part, on management's estimates, projections, plans and
judgments. As such, these are forward looking statements and involve a number of
risks and uncertainties. A number of factors, which could cause actual results
to differ significantly, include general economic conditions, competitive market
influences, technology changes, and other influences beyond the control of
management.
In order to make this document easier to read, the following defined terms are
used: Northeastern Plastics, Inc. ("NPI"), Modern Film Effects, Inc., d/b/a
Cinema Research Corporation ("CRC"), Marald, Inc. ("Marald"), Tough Truck and
Accessories, Inc., d/b/a Armor Linings ("Armor Linings"), Har-Whit / Pitt's &
Spitt's, Inc. ("Har-Whit"), Texas Real Estate Enterprises, Inc. ("TREE"),
Brenham Oil & Gas, Inc. ("Brenham"), and Acqueren, Inc. ("Acqueren").
Restatement of Prior Periods
The Company's financial statements for the periods ended June 30, 1999 and 1998
and December 31, 1998 have been restated to reflect the acquisitions of TRE,
Brenham, Midtowne and real estate held for sale at the seller's historical cost
plus assumed liabilities. The acquisitions were previously recorded at fair
values. The transactions have been recorded at carry-over cost since the
shareholders of the entities of all these acquisition transactions are under
common control. Accordingly, the Company restated its financial statements to
reflect the real estate held for sale and natural gas and mineral interests at
the seller's historical carry-over cost. In addition, the Company recorded a
deemed dividend which represents the fair value of the assets acquired in excess
of the predecessor carry-over historical cost. The effects of the restatement
are described in Note 9 to the Company's consolidated financial statements.
The Company also made adjustments to (i) reclassify debt forgiveness from a
stockholder as contributed capital, (ii) record additional legal and accounting
expenses and (iii) reduce amortization expense previously taken on oil and gas
properties.
Results of Operations - Consolidated AIII
Three months ended June 30, 1999 compared to three months ended June 30, 1998.
Consolidated net loss for the three-month period ended June 30, 1999 was
$205,920 as compared to a loss during the three months ended June 30, 1998 of
$225,084. The factors contributing to the consolidated net loss for the periods
are discussed below:
<PAGE>
The net sales for the three months ended June 30, 1999, were $5,699,866 as
compared to $632,326 for June 30, 1998, such 801% increase being primarily
attributable to the inclusion of the sales of NPI, CRC, Marald, and Armor
Linings. NPI sales for the three-month period ended June 30, 1999 were
$3,730,677. CRC revenues for the three month period ended June 30,1999 were
$854,004. During the quarter, CRC experienced a decline in revenues due to a
general downturn in movie production. Marald had revenues of $462,279, net of
inter-company sales of $39,414. Armor Linings sales were $131,407. Har-Whit
sales for the three months ended June 30, 1999 were $521,499 as compared to
$632,326 for the three months ended June 30, 1998. TREE had no sales during the
three-month period ended June 30, 1999, and had no sales activity for the
comparable three months of 1998. Brenham reported $1,513 royalty income in the
current quarter, as compared to $14,944 during the comparable three months of
1998. The activity of Acqueren during the three months ended June 30, 1999,
consisted of investments and trading in various investment and available for
sale equity securities; such activity resulting in unrealized investment losses
of $151,205 and realized investment income of $1,096,128. Cost of sales as a
percentage of net sales for the three months ended June 30, 1999 was
approximately 89%, with gross margins of 11%, as compared to approximately 65.5%
cost of sales and 34.5% gross margins during the three-month period ended June
30, 1998. The change is the result of the inclusion of NPI, which sustained
gross margins averaging 9.3% during this quarter. CRC posted negative margins
averaging 9.4% during the three months ended June 30, 1999, while Har-Whit
sustained 31.0% margins in 1999 as compared to 34.5% margins in 1998. Marald
sustained margins during the current quarter of 29.8%, while Armor Lining's
margin was 38.4% of sales.
Operating expenses for the three months ended June 30, 1999 were $1,684,631 as
compared to $454,004 for the three months ended June 30, 1998. This increase is
primarily the result of the acquisitions of NPI, which had operating expenses of
$271,965 during the current quarter and CRC, which incurred operating expenses
of $394,810. Marald incurred $111,008 in operating expenses during the three
months ended June 30, 1999. Armor Linings operating expenses during the quarter
were $38,198. TREE incurred operating expenses, primarily property taxes, of
$33,499. Har-Whit sustained operating expenses of $174,809 during the three-
months ended June 30, 1999 as compared to $247,561 during the comparable period
last year. AIII incurred operating expenses at the corporate level of $ 643,331
for the three months ended June 30, 1999, including $ 333,917 of legal &
professional fees and $25,000 amortization of goodwill. During the comparable
period of 1998, AIII sustained operating expenses of $186,882.
Other income (expense) amounted to $23,175 for the three-month period ended June
30, 1999 including interest income of $14,507 and dividend income of $1,796.
Acqueren reported unrealized investment losses of $151,205 and realized
investment income of $1,096,128. Interest expense during the current quarter
amounted to $117,050. During the comparable three months last year, other income
of $26,286 and $15,678 of interest expense was incurred. The increased interest
expense for 1999 results from the bank debt attributable to acquired companies
and the financing cost associated with equipment leases of CRC.
Six months ended June 30, 1999 compared to six months ended June 30, 1998.
Consolidated net loss for the six-month period ended June 30, 1999 was $164,646
as compared to a loss during the six months ended June 30, 1998 of $386,011. The
factors contributing to the consolidated net income for the period are discussed
below:
The net sales for the six months ended June 30, 1999, were $9,913,885 as
compared to $1,150,082 for June 30, 1998, such 762% increase being primarily
attributable to the inclusion of the sales of NPI, CRC, Marald, Armor Linings
and TREE. NPI had sales for the six-month period of $5,276,066. CRC revenues for
the six month period ended June 30,1999 were $2,011,321. Marald had revenues of
$935,145 net of inter-company sales of $39,414, while Armor Linings revenues
amounted to $131,407. Har-Whit sales for the six months ended June 30, 1999 were
$959,946 as compared to $1,150,082 for the six months ended June 30, 1998. TREE
had sales of $600,000 for the six-month period ended June 30, 1999, while it had
no sales activity for the comparable six months of 1998. Brenham reported
royalty income of $5,821 in the current six months compared to $24,630 during
the first six months of 1998. The activity of Acqueren during the six months
ended June 30, 1999, consisted of investments and trading in various investment
and available for sale equity securities; such activity resulting in unrealized
investment losses of $242,603 and realized investment earnings of $1,145,033.
Cost of sales as a percentage of net sales for the six months ended June 30,
1999 was approximately 80.8%, with gross margins of 19.2%, as compared to
approximately 67.6% cost of sales and 32.4% gross margins during the six-month
period ended June 30, 1998. The change is the result of the inclusion of NPI,
which sustained gross margins averaging 11.5% during the six months. CRC posted
margins averaging 7.7% during the six months ended June 30, 1999, while Har-Whit
sustained 30.7% margins in 1999, as compared to 32.4% margins in 1998. During
the first six months of 1999, TREE experienced margins of 83.3% on its sale of
real estate rights, as the $100,000 cost associated with the contract
constituted 16.7% of sales.
Operating expenses for the six months ended June 30, 1999 were $2,876,136 as
compared to $771,285 for the six months ended June 30, 1998. NPI had operating
expenses of $510,357 during the six months ended June 30, 1999. CRC incurred
operating expenses of $ 848,187 including certain costs of relocating the
digital operations to the optical facility. Marald incurred $192,822 in
operating expenses during the six months ended June 30, 1999. Armor Linings
operating expenses during the six months were $38,198. TREE incurred operating
expenses, primarily property taxes, of $48,398. Har-Whit sustained operating
expenses of $310,326 during the six months ended June 30, 1999 as compared to
$450,230 during the comparable period last year. During the six months ended
June 30, 1999 operating expenses of Brenham totaled $5,014. During the six
months ended June 30, 1999, AIII incurred expenses at the corporate level of
$890,784, including $ 406,521 of legal & professional fees and $50,000
amortization of goodwill, as compared to $290,630 during the comparable period
last year.
Other income (expense) amounted to $106,165 for the six-month period ended June
30, 1999 including interest and dividend income of $30,279. Acqueren reported
unrealized investment losses of $242,603 and realized investment income of
$1,145,033 during the six months. Interest expense of $204,322 during the first
six months of 1999 compares to $27,100 of interest expense in the comparable
period last year. Other income (expense) for the six-month period ended June 30,
1998 was $39,392.
<PAGE>
Net Income and Comprehensive Income
The consolidated net loss for the three-month period ended June 30, 1999 was
$205,920 as compared to the net loss of $225,084 sustained in the three months
ended June 30, 1998. During the three months ended June 30, 1999, TREE had a net
loss of $31,647, due primarily to the accrual of property taxes, as compared to
a loss of $8,062 in the prior year. NPI posted net income of $72,163, Har-Whit
had a net loss of $28,056, CRC posted a loss of $560,601 and Brenham had net
income of $ 1,963. Marald posted earnings of $36,487 and Armor Linings reported
income of $13,123. AIII sustained a loss of $639,447 at the corporate level.
Acqueren reported earnings of $930,095, primarily attributable to its realized
gain on marketable securities. Of the prior period's loss, $183,767 was incurred
by AIII at the corporate level, Brenham had income of $ 10,945, losses of $8,062
at TREE, and a loss of $44,200 was attributable to the Har-Whit operations.
Consolidated net losses for the six-month period ended June 30, 1999 were
$164,646 as compared to the net loss of $386,011 sustained in the six months
ended June 30, 1998. During the six months ended June 30, 1999, TREE had net
income of $458,022, NPI posted net income of $95,449, Har-Whit had a net loss of
$44,034, CRC posted a loss of $799,184 and Brenham had net income of $ 1,809.
Marald earned $103,572 and Armor Linings earned $13,123 AIII sustained a loss of
$885,514 at the corporate level. Acqueren reported income of $ 892,111. Of the
prior period's loss, $467,577 was incurred by AIII at the corporate level,
$16,363 income by Brenham, $12,143 loss by TREE, offset by earnings of $77,346
by Har-Whit.
Liquidity and Capital Resources - Consolidated AIII
Total assets at June 30, 1999, were $17,473,279, as compared to $13,568,181 at
December 31, 1998, an increase of 28.8%. The increase is primarily attributable
to increase in the value of trading securities and securities available for
sale, increased inventories and accounts receivable at NPI and Har-Whit, and the
acquisition of Marald, Inc. and Armor Linings.
Total liabilities at June 30, 1999, were $8,923,908, as compared to $6,372,479
at December 31, 1998. The increase is primarily attributable to increased
activity by NPI and the acquisitions of Marald and Armor Linings.
At June 30, 1999, AIII's current working capital was $998,581 as compared to
$1,963,458 at December 31, 1998. The decrease in working capital is primarily
attributable to the purchase of restricted certificates of deposit securing
indebtedness of CRC and Har-Whit. AIII's consolidated cash position at June 30,
1999, was $ 644,941 as compared to $2,149,916 at December 31, 1998. The value of
investments in marketable securities at June 30, 1999 was $1,431,262 compared to
$534,654 at December 31, 1998. Accounts receivable, at June 30, 1999 were
$3,908,030 compared to $1,641,469 at December 31 1998, the increase being
attributable to the seasonal increase in sales of NPI and the acquisition of
Marald and Armor. Inventories were $1,241,645 at June 30, 1999 as compared to
$1,055,091 at December 31, 1998.
<PAGE>
For the three months ended June 30, 1999, AIII had $1,585,087 net cash used by
operations, $371,034 net cash used in investing activities, and $212,048 of net
cash provided by financing activities. For the three-month-period ended June
30, 1998, the Company used $197,399 in operations, used $41,806 in investing
activities, and provided $1,442,380 through financing activities. The change
reflects increased activities of the Company as compared to the first quarter of
1998. During June, an agreement was reached whereby David Miller, a former owner
of CRC, granted CRC forgiveness of $365,158 owed to him as reimbursement of
various expenses and advances made by him to the Company. CRC recorded a
contribution to equity attributable to such forgiveness.
To date, the Company has no commitment for any additional financing and there
can be no assurance that any such financing will be available or, if it is
available, that it will be available on acceptable terms. If adequate funds are
not available to satisfy either short or long-term capital requirements, the
Company may be required to limit its operations significantly.
Media/Entertainment Segment:
- ----------------------------
Results of Operations - Modern Film Effects, Inc., dba Cinema Research
Corporation
For the three months ended June 30, 1999, CRC had net sales of $854,004,
operating expenses of $394,810 and sustained an operating loss of $475,098.
Sales for the period were adversely affected by general downturn affecting the
movie industry and seasonal influences as well as the anticipation by the
studios, of the merger with Pac Title. Expecting that the new work would be
performed at the Pac Title facilities, several of the studios began booking
their work at Pac Title. It is expected that those influences will continue to
be reflected in operating results for some time. In anticipation of the merger,
staff reductions resulted in additional payroll expense due to payment of
severance and accrued vacation time. The net loss for the June, 1999 quarter was
$560,601.
For the six-month period ended June 30, 1999, CRC recorded sales of $2,011,321,
operating expenses of $848,187 and sustained an operating loss of $693,514.
Interest expense of $106,001 brings the year-to-date losses to $799,184.
Liquidity and Capital Resources - CRC
Total assets of CRC at June 30, 1999, were $3,954,360, total liabilities were
$3,315,918, and CRC had negative current working capital of $1,543,306. For the
three months ended June 30, 1999, CRC had $61,430 provided by operations,
$50,840 used in investing activities, and used $85,033 in financing activities.
For six months ended June 30, 1999, CRC had $188,598 net cash provided from
operations, $124,840 net cash used in investing activities, and $36,658 net cash
used by financing activities.
CRC has arranged a line of credit, secured by the pledge of a restricted
certificate of deposit of AIII, to provide the financing necessary to support
its operations and to meet the ongoing cash requirements of the company.
Expenditures for upgrading equipment may be made to maintain the ability to
provide quality services. Losses and costs associated with the attempted merger
with Pac Title added to the financing requirements of CRC.
In September 1998, CRC borrowed $1,000,000 in the form of a promissory note from
a financial institution at the institution's prime rate, which matures in
November, 2000. That borrowing was used to retire bank and other indebtedness,
which existed prior to the acquisition by AIII. The $1,000,000 note is secured
by the assets of CRC and the pledge of a certificate of deposit, owned by AIII.
AIII has committed to funding the operations of CRC until December 31, 1999.
During June, 1999 an agreement was reached with David Miller, a former
stockholder of CRC, whereby Miller granted CRC forgiveness of $365,158 owed to
him as reimbursement of various expenses and advances made by him to the
Company. CRC recorded a contribution to equity related to such forgiveness.
Industrial/ Commercial Segment
- ------------------------------
Results of Operations - Northeastern Plastics, Inc.
For the three months ended June 30, 1999 NPI had net sales of $3,730,677,
operating expenses were $271,965, and operating income of $74,427. Other income
(expense) of $(2,264) includes net interest expense. Net income for the three
months was $72,163.
<PAGE>
Liquidity and Capital Resources-NPI
NPI financed its operations during the three months ended June 30, 1999 through
internally generated cash flows. For the three months ended June 30, 1999, NPI
used $443,685 in operating activities, used $2,750 in investing activities, and
had $165,000 provided through financing activities. Total assets of NPI at June
30, 1999, were $ 4,296,725, total liabilities were $3,320,901 and current
working capital was $1,093,291. For the six months ended June 30, 1999 NPI had
$586,856 used by operations, used $6,855 in investing activities and had
$165,000 provided through financing activities.
At June 30, 1999, NPI had an outstanding note payable to a former stockholder of
Acqueren of $300,000 at an interest rate of 6% per annum, with payments of
$100,000 due in August 1999 and 2000 and the remainder due in August 2001. The
Company has been involved in litigation through the suit filed against the
former principal stockholder of Acqueren. That action, filed in Galveston
County, Texas, related to representations made by certain selling shareholders
of Acqueren, prior to the acquisition. On August 17, 1999, those selling
shareholders filed an action in New York alleging misrepresentations by AIII.
Related to that litigation, the Company was required to pay through the court,
the outstanding balance of the note and accrued interest.
Results of Operations - Har-Whit / Pitt's & Spitt's, Inc.
Har-Whit sales for the three months ended June 30, 1999 amounted to $521,499, a
decrease of 17.5% compared to the $632,326 sustained in 1998. The decrease in
sales is attributable to increased competitive pressures in bidding for
fabrication work, due to the downturn in oil & gas related work.
Har-Whit cost of sales amounted to $359,834 or 69.0% of sales and margins of
$161,665 represent 31.0% of sales during the three months ended June 30, 1999.
During the three-month period ended June 30, 1998, Har-Whit cost of sales of
$414,014 constituted 65.5%, and margins of $218,312 were 34.5% of sales.
Operating expenses of $174,809 comprised 33.5% of sales during the three-month
period ended June 30, 1999 as compared to $247,561, 39%, in the comparable
period in 1998. The operating loss of $13,144 for the three months ended June
30, 1999 compares to an operating loss of $29,249 during the three-month period
ended June 30, 1998. Interest expense in the three months ended June 30, 1999 of
$15,651 compares to $ 15,678 in the comparable period in 1998.
For the six months ended June 30, 1999 sales amounted to $959,946, a decrease of
16.5% compared to the $1,150,082 sustained in 1998. The decrease in sales is
attributable to increased competitive pressures in bidding for fabrication work,
due to the downturn in oil & gas related work.
Har-Whit cost of sales amounted to $664,881 or 69.3% of sales and margins of
$295,065 represent 30.7% of sales during the six months ended June 30, 1999.
During the six-month period ended June 30, 1998, Har-Whit cost of sales of
$777,100 constituted 67.5%, and margins of $372,982 were 32.4% of sales.
Operating expenses of $310,326 comprised 32.3% of sales during the six-month
period ended June 30, 1999 as compared to $450,230, 39.1%, in the comparable
period in 1998. The operating loss of $15,261 for the six months ended June 30,
1999 compares to an operating loss of $77,248 during the six-month period ended
June 30, 1998. Interest expense in the six months ended June 30, 1999 of $31,762
compares to $27,100 in the comparable period in 1998.
Liquidity and Capital Resources - Har-Whit
Har-Whit has arranged a $150,000 line of credit with a financial institution
secured by its accounts receivable and pledge of the parent company's
certificate of deposit. The interest rate for the line of credit is at 7.75%
and the note matures in May 2000. At June 30, 1999, Har-Whit had an outstanding
note payable to a financial institution of $552,286 at an interest rate of 9.75%
per annum due in monthly payments of $7,895 through February 2003 with the
<PAGE>
remaining amount due in March 2003. During the three months ended June 30, 1999,
Har-Whit had $46,033 used in operating activities, $3,750 used in investing
activities, and provided $32,186 through financing activities. During the six
months ended June 30, 1999, Har-Whit had $9,477 provided by operating
activities, $3,750 used in investing activities, and provided $9,127 through
financing activities.
Results of Operations - Marald, Inc. dba Unlimited Coatings
During the three-month period ended June 30, 1999, Marald had sales of $462,279,
net of inter-company sales of $39,414, cost of sales of $352,262, comprising
70.2% of sales, and margins of $149,431 represent 29.8% of sales. Operating
expenses of $111,008 were 22.1% of sales. Interest expense was $1,936 and net
income of $36,487 represented 7.3% of sales. Truck sales and the demand for
spray-on liners continue to increase. Marald has launched an enhanced marketing
and dealer support program to capture market share and introduce additional
products through the dealer network.
During the six-month period ended June 30, 1999, Marald had sales of $935,145,
cost of sales of $675,258, comprising 69.3% of sales, and margins of $299,301
represent 30.7% of sales. Operating expenses of $192,822 were 19.8% of sales.
Interest expense was $2,909 and net income of $103,572 represented 10.6% of
sales.
Liquidity and Capital Resources - Marald
Marald has arranged a $100,000 working capital line of credit, with interest at
prime plus two percent, secured by its inventory and accounts receivable and
parent guarantee, and a $125,000 line of credit secured by the parent, at prime
plus two percent. Increasing sales levels may require additional working
capital financing. Although there is no assurance, Marald expects to be able to
secure such financing on favorable terms. During the three months ended June 30,
1999, Marald had $51,795 used in operating activities, $487 used in investing
activities, and provided $96,712 through financing activities. During the six
months ended June 30, 1999, Marald had $11,355 used by operating activities,
$8,071 used in investing activities, and provided $74,193 through financing
activities.
Results of Operations - Armor Linings, dba Tough Trucks & Accessories, Inc.
Since its acquisition on April 29,1999, Armor Linings sales amounted to
$131,407, cost of sales of $80,944 were 61.6% of sales, operating expenses were
$38,198 and net income was $13,123.
Liquidity and Capital Resources - Armor
At June 30, 1999 Armor had no financing requirements as its operations have been
financed through its internal cash flows. Although there is no assurance, it is
expected that working capital financing will be available at favorable terms
when the growth of the company requires such arrangements. For the period from
acquisition through June 30, 1999, Armor generated $8,117 from operations, used
$714 in investing activities, and used $5,183 in financing activities.
Year 2000 Compliance
The Year 2000 issue is the result of computer systems that use two digits rather
than four to define the applicable year, which may prevent such systems from
accurately processing dates ending in the year 2000 and after. This could result
in system failures or in miscalculations causing disruption of operations,
including, but not limited to, an inability to process transactions, to send and
receive electronic data, or to engage in routine business activities and
operations.
Management has spoken to all management personnel at each of its subsidiaries
regarding their company's reliance on computer systems. Based upon these
discussions, management believes that the Company does not have significant
exposure to the Year 2000 issue. The subsidiaries operations do not rely on
computer operations for conducting the significant parts of their business, and
accordingly, the Company does not believe that its products and services involve
any material Year 2000 risks. In the first quarter of 1999, the Company
established a formal Year 2000 task force to develop and implement a Year 2000
readiness program.
The Company has implemented Year 2000 compliant accounting systems, policies and
procedures throughout all of the subsidiaries. The implementation of
standardized systems and procedures should facilitate improved and more
efficient reporting and analysis of data.
In addition to reviewing its internal systems, the Company is in communications
with its significant customers and vendors concerning Year 2000 compliance,
including electronic commerce. There can be no assurance that the systems of
other companies that interact with the Company will be sufficiently Year 2000
compliant so as to avoid an adverse impact on the Company's operations,
financial condition and results of operations.
<PAGE>
The costs to address the Year 2000 issue did not have a material adverse effect
on the Company's financial condition, results of operations or liquidity.
The Company has substantially completed its Year 2000 remediations. However;
there can be no assurance that the Company will not be adversely affected by the
inability of other companies whose systems interact with the Company to become
Year 2000 compliant and by potential interruptions of utility, communication or
transportation systems as a result of Year 2000 issues.
Although the Company expects that its internal systems are Year 2000 compliant
as described above, the Company has prepared a contingency plan that specifies
what it plans to do if it or important external companies are not Year 2000
compliant in a timely manner.
PART II
Item 1. Legal Proceedings
On December 10, 1998, the Company filed an Original Petition and Request for
Temporary Injunction for breach of contract and common law and stock fraud in
connection with the Company's acquisition of Acqueren, Inc. against TDA
Industries, Inc. and Fred Friedman in the 56th Judicial District Court of
Galveston, Texas. The Company has claimed the defendants misrepresented the
amount of equity in Acqueren as represented in the acquisition agreement. The
Company is seeking actual damages in the amount of not less than $1,100,000, in
addition to further relief, which it may be entitled to. On August 17, 1999,
TDA Industries, Inc. filed an action in the United District Court in the
Southern District of New York, alleging violations of various securities laws,
common law fraud, and breach of contract. TDA Industries, Inc. has requested
monetary damages, and has requested a receiver be appointed for Acqueren, Inc.
pending litigation. The Company was required to pay to the Court the $300,000
note payable to TDA and accrued interest
Item 2. Changes in Securities
The following information sets forth-certain information, as of November 11,
1999, for all securities the Company sold since May 13, 1999, without
registration under the Act, excluding any information "previously reported" as
defined in Rule 12b-2 of the Securities Exchange Act of 1934. There were no
underwriters in any of these transactions, nor were any sales commissions paid
thereon.
In June 1999, the Company issued 10,000 shares of common stock as a gift to the
child of a former director. The Company believes the transaction was exempt
from registration pursuant to Section 4(2) of the Act.
Item 3. Default upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are to be filed as part of this Form 10-QSB:
Exhibit No. Identification of Exhibit
----------- -------------------------
<PAGE>
3(i)(1) Certificate of Incorporation of the Company, and Amendments
thereto.
3(ii)(1) Amended and Restated By-laws of the Company
4.1(1) Common Stock Certificate, American International Industries, Inc.
4.2(1) Common Stock Certificate, Acqueren, Inc.
4.3(1) Common Stock Certificate, Har-Whit/Pitt's & Spitt's, Inc.
10.1(1) Daniel Dror, Sr. Employment Agreement dated May 14, 1998
10.2(1) Daniel Dror, Sr. Employment Agreement dated October 16, 1998
10.3(1) Marc Fields Employment Agreement
10.4(1) Jordan Friedberg Employment Agreement
10.5(2) Shabang! Merchant Service Agreement
10.6(3) American International Industries, Inc. Lease
10.7(2) Brenham Oil and Gas, Inc. Royalty Interest
10.8(2) Brenham Oil and Gas Interest Lease
10.9(2) Modern Film Effects, Inc. Lease
10.10(2) Northeastern Plastics, Inc. Lease
27(4) Financial Data Schedule
____________________
(1) Filed previously on registration statement Form 10-SB SEC File No. 000-
25223.
(2) Filed previously on the Company's annual report on Form 10-KSB SEC File No.
000-25223.
(3) Filed previously on registration statement Form 10-SB/A SEC File No. 000-
25223.
(4) Filed herewith
(b) There have been no reports filed on Form 8-K.
SIGNATURES
----------
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the undersigned, thereunto duly authorized.
American International Industries, Inc.
Date: December 21, 1999 By: /s/ Daniel Dror
---------------
Daniel Dror
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 64,941
<SECURITIES> 1,431,262
<RECEIVABLES> 4,111,791
<ALLOWANCES> 0
<INVENTORY> 1,241,645
<CURRENT-ASSETS> 7,691,929
<PP&E> 4,995,310
<DEPRECIATION> 0
<TOTAL-ASSETS> 17,473,279
<CURRENT-LIABILITIES> 6,693,348
<BONDS> 0
0
0
<COMMON> 124,926
<OTHER-SE> 8,424,445
<TOTAL-LIABILITY-AND-EQUITY> 17,473,279
<SALES> 9,913,885
<TOTAL-REVENUES> 9,913,885
<CGS> 8,006,668
<TOTAL-COSTS> 8,006,668
<OTHER-EXPENSES> 2,876,136
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 204,322
<INCOME-PRETAX> (164,646)
<INCOME-TAX> 0
<INCOME-CONTINUING> (164,646)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (164,646)
<EPS-BASIC> .00
<EPS-DILUTED> .00
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